Facing Job Loss After 20+ Years: How Can My Friend's Father Secure His Retirement Rights?

Hello All, Hope you all are doing well. My friend's father, currently 63 years old and coming from a lower-middle-class family, has been working full-time for a mid-sized textile export Pvt. Ltd. company in Ahmedabad, Gujarat, India for more than two decades. He started as an office assistant when the company was established, without any written employment agreement in place. However, the company boss has now asked him to leave permanently, after signing some unknown documents, next month due to his old age, without providing any notice period or retirement benefits, as the company is no longer willing to pay his salary. The company does not issue any salary slips or documentary proof, but he has an active EPF and ESIC account with the company for the past two decades. He has managed to obtain an EPF slip and a salary slip from a decade ago. His monthly salary has been increased from 4000 (his joining salary over two decades ago) to 6000 (current salary), which is well below minimum wages.

Note: He has been working for the past 5-6 months with an artificial limb as he lost one leg last year (with a 75% locomotor disability certificate from the Government of India). During his hospitalization of 2-3 months, he did not receive any salary. Although his family followed the leave procedure at the ESIC office and submitted the ESIC leave documents to his company, the company closed his ESIC account, marking "LEFT SERVICE" in the ESIC portal, resulting in him not receiving any ESIC leave benefits, salary, or ESIC medicine benefits during this period. His ESIC account was reopened by the same company upon his return, but there is a non-contribution period (gap) of approximately 4-5 months.

Guidance Needed on Employment Issues

Kindly provide your valuable guidance on the issues below:

1. As the company will not issue any relieving letter and may classify it as a termination rather than retirement, what retirement and other benefits such as gratuity, leave encashment, EPF, etc., can he claim?

2. How can all such benefits be calculated for his income when no salary breakdown/salary slip is available?

3. Despite working full-time for over two decades, his salary is much lower than the minimum wages, and his annual increment is minimal. What are the regulations regarding minimum wages and minimum increments in his case? Can he request a higher last salary?

4. How can he access ESIC retirement benefits for medicines, considering that ESIC rules require recent continuous contributions for five years, but there is a recent gap of 4-5 months in the last year?

5. What steps can he take or where can he file a complaint if his boss refuses to provide any benefits?

6. Please share any relevant Indian resources or similar reference cases in India, if possible.

7. Given that the company is clearly infringing on employee rights, what are the key rights of a private employee protected by the law in this situation?

Thanks in advance.

Filing a Complaint with the Labour Office

There is no need to talk to the employer or anybody connected with the employer, but he should go to the Labour Office and find the appropriate authority to file a complaint. It is ridiculous that such sheer exploitation happens in India, perhaps only in Gujarat.

I am sure that the employer will try to delete all records relevant to his employment, but the fact that somebody in the factory would be a witness to his employment, other than the ESI registration and PF registration, is enough for him to establish that he was employed.

Right to Minimum Wages

His right to get a salary at par with the minimum wages notified by the Gujarat Government will also be materialized with retrospective effect. However, the Labour Officer has the authority only to make it applicable for six months.

Retirement Benefits and Compensation

Regarding the retirement benefits, since there was no communication of superannuation and no document like a Standing Order to prove that the employees would retire on attaining a certain age, this will come under the purview of the termination of employment under the Industrial Disputes Act. Therefore, he should get compensation at the rate of 15 days' wages for every completed year of service.

In addition to this, the employer should pay him gratuity as per the Payment of Gratuity Act, which is again at the rate of 15 days' wages for every completed year of service.

Withdrawal of EPF and Medical Benefits

He can apply for the withdrawal of EPF and, of course, will get a pension from EPFO with retrospective effect from the date of reaching 58 years of age. He can continue to get the medical benefits from the ESIC by paying Rs 120 per year as a contribution.

Review of Denial of ESI Benefits

The denial of ESI benefits at the time when he had surgery should also be reviewed, and the employer's action of striking his name from the rolls should be challenged.

Role of Labour Department and Media

All these will be possible only if somebody takes it up and fights for him. It all depends on the attitude of the personnel in the Labour department to help an employee. Though the objective of such departments is to help the working class and to protect their rights under various Labour Acts, many of them consider it as a place for their living and enjoyment. If the officer concerned is not inclined to the employer's money, he will succeed.

I am sure that if the media is enlightened, something positive can happen. I long if I were in Gujarat to help the poor man...!

Thanks a lot, sir, for your quick response. Sir, is there any way possible for him to get minimum wages with minimum increments as per Gujarat Government rules for the last two decades instead of just 6 months? Also, how can he determine his rightful minimum wage and minimum increment figures for Gujarat?

As his employer has verbally instructed him not to come from next month, should he wait for the current month's salary and then file a complaint at the labor office? Additionally, are there any other offices apart from the labor office where he should lodge a complaint?

Thanks in advance.

The first level to raise such complaints and disputes is the Labour Officer/Assistant Labour Commissioner. However, the Courts (Labour courts and Tribunals) have the power to make decisions from the date of joining. I would seek the assistance of our Senior member, Umakanthan Sir, a retired Labour Commissioner from Tamil Nadu, for more clarity on this matter.

His right to receive minimum wages cannot be denied by the employer, and gratuity and other benefits should be calculated based on these statutory wages. To understand how gratuity is affected, he may need to wait for 30 days of remaining unemployed.

If he is on a notice period and continues to work, he will receive his salary for that month. Legal action can only be initiated after he has left the organization.

Umakanthan Sir, your valuable comments on this issue would be greatly appreciated.

Dear Madhu, I have already gone through the thread and the replies you have given. Under the peculiar circumstances of the case marked by total violation of labor laws allegedly on the part of the employer and unexplained inaction on the part of the employee for many years of continuous service under the same employer, I don't think that any answer better than yours can be given at this stage.

The narrative in the initial post about the initial and current monthly salaries does not seem to be believable given the length of service rendered so far and the designation of the individual mentioned. Perhaps the individual might have been employed as a domestic servant in the residence of the employer, and his wages would have been charged under the business account with such a fictitious designation. The fact that he was enrolled as a member of EPF and insured with the ESIC by his employer would be sufficient proof of his employment, and the salary can be ascertained from the records of the organizations concerned, or the employer can be asked to produce the records at the appropriate stage of any dispute raised later in this regard. In my experience, I have found that normally both disputants come forward with only half-truths at the initial stage.

As it stands, the cause of action for claiming gratuity has not yet arisen, although there seems to be a fair chance to make a claim for minimum wages under Section 20(2) of the Minimum Wages Act, 1948. However, it may be advisable for strategic reasons to delay claiming gratuity under Section 7 of the Payment of Gratuity Act, 1972 soon after his actual termination. I would also suggest to the poster to interact with the employee in a manner that brings out the actual details of his employment before taking any legal action for remedy.

Kind regards

Thank you, Umakanthan Sir and Madhu Sir, for your quick and valuable suggestions. Sir, it appears that the employer was consistently providing only the minimum wage "without any annual increment" for two decades to a full-time regular employee. Is there a rule to provide at least some (minimum) increment, such as 3% of the basic salary, to regular employees? If so, could you please provide any relevant case or act details?

I understand that to claim for minimum wages under section 20(2) of the MW Act, 1948, the employee would need to approach the Labor office. Is this correct, sir?

As the employer does not disclose any leave balance details, is there a rule to ensure a minimum allocation of Medical Leaves (ML), Earned Leaves (EL), etc., for this regular employee? Can the employee request leave encashment for EL, ML? Additionally, what other types of leaves can be claimed for leave encashment apart from EL and ML? Kindly provide any relevant case or act details.

Thanks.

Dear Adi Cool,

Your reference to the establishment as "Textile Export Pvt. Limited Company" indicates just its constitution and not its classification, such as whether it is a 'factory' comprising the administrative office situated within its premises under the Factories Act, 1948, or an exclusive office situated elsewhere as an 'establishment' coming under the Gujarat Shops and Establishments Act, 1948. Thus, this classification criterion of the said establishment is very pertinent to ascertain the statutory employment benefits like rates of minimum wages, types of leave, and their scales, etc.

Now, let me answer your latest queries as follows:

a) No Indian Labor Law relating to wages prescribes the grant of annual increment to employees. 'Wages' or 'Salary' can be in the form of a certain consolidated amount or bifurcated into various components such as basic and allowances for any wage period not exceeding one month. It depends on various factors like the nature of work, type of industry, agreement between the employer and union of workmen, etc. A noteworthy feature of fixation under the Minimum Wages Act, 1948, is that the minimum rates of wages are fixed and revised with the bifurcation of the gross wages into basic and variable dearness allowance to neutralize the effect of inflation. Thus, the statutory minimum wages always remain incremental. As per the ratio decidendi of the honorable Supreme Court of India in the Airfreight Corporation case [1999 LLR 1008], 'wages' or 'salary' has to be taken as a single package that shall always remain at par with the statutory minimum rates of wages, and if it is split into basic and allowances, only those allowances mentioned in the inclusive part of the definition of the term under the MW Act, 1948, have to be taken into account for determining the parity between the industry wages and the statutory minimum wages.

b) YES; the authority under section 20(1) of the MWA, 1948 is normally the Deputy Labor Commissioner of Labor appointed by the appropriate Government for the area of the place of employment.

c) This question can be answered only with reference to the classification of the establishment and the establishment-specific labor law applicable to it. Normally, the accumulated portion of the earned leave alone is encashable on termination of employment.

Hello, sir, It is a GST registered factory in Ahmedabad urban area of Gujarat under Form GST REG-06 [see Rule 10(1)]. Its details obtained from the GST website are as follows:

Nature of Core Business Activity
Nature Of Core Business Activity: Manufacturer

Nature of Business Activities
1. Factory / Manufacturing
2. Wholesale Business

Trade Name
*** EXPORTS PRIVATE LIMITED

Constitution of Business/ENTITY TYPE
Private Limited Company

NATURE OF BUSINESS
Factory / Manufacturing

DEPARTMENT CODE
RANGE II

Taxpayer Type / REGISTRATION TYPE
Regular

Effective Date of Registration
01/04/2017

GSTIN / UIN Status
Active

Its Principal Place of Business, office, and factory all have the same registered address.

Sir, can it now be determined whether it falls under the Factories Act, 1948, or under the Gujarat Shops and Establishments Act, 1948? Which specific labor law will be applicable to it?

What types of leave can be encashable in this case? How to calculate it without any documentary proofs?

Also, as this employee was among the initial employees recruited, even before the company was officially registered, from which period can he actually claim for gratuity benefits, i.e., from the start of his EPF deduction (as EPF deduction was started after 1-2 years) or from when the company was actually started, as documentary evidence is missing?

Apart from gratuity, encashable leaves, and EPF, is there anything else which he can claim as a retirement benefit?

Thanks in advance, sir.

Since this is a manufacturing organization, the only leave available is earned leave or annual leave with wages. This can be accumulated only up to 24 days unless otherwise provided for in any separate settlement with the workers/unions. The unavailed leave can be encashed in full.

Other than the gratuity, the PF accumulation, and the pension due from the EPFO, there are no other benefits available to a retired person. The employer will be ready to offer a gratuity, but the question is, what is the amount and how is it calculated? That needs to be carefully studied. Regarding gratuity, the calculation should be based on at least the latest minimum wages.

He can also get the ESI extended by paying the required annual contribution of ₹120. This will be very helpful to him.

Madhu Sir, In Gujarat, textile manufacturing units do have recognized/representative unions. Can he not take support from them to make this poor man's life easier in handling this situation? Just a thought.

Regards, Suresh

Certainly, he can approach the union and make a representation through the union. But in an establishment that pays just what is required by law, you can imagine the role of a trade union. It is due to the inactivity of the unions that these workers are getting exploited.

I have not gone into detail about the calculation side of wages, and it is possible only with the latest CPI (Consumer Price Index) based on which the dearness allowance (special allowance) is calculated. Moreover, the notification (minimum wages) says that the special allowance is Re. 0.20 per day or Rs 5.20 per month for every five points above 7270. The base for this CPI point is not available. I have noticed that there are different CPIs with different bases, and the one matching this is 1960=100, and the CPI against that base is 7608.37. That means the DA will be 7608.37-7270=338.37 divided by 5 multiplied by 0.20=13.53 or Rs 351.78 per month. If you take the basic of skilled, considering the 20 years of experience, of Zone A, then the daily wages will be Rs 474+14=488, giving a monthly total of Rs 12688.

Even an intervention of the union may result in the calculation of gratuity on this amount, but what about the arrears payable to the poor worker? True, a representation by the union as an industrial dispute may lead to calculating the minimum wages based on the minimum wages every six months backward. It is also possible that the union may demand payment with interest and the implementation of minimum wages forthwith, so that no other worker is denied this right. But my apprehension is, is it possible in a company which can deny the statutory wages over these years?

Dear Madhu Ji, The minimum wages for the Unskilled category in Gujarat in April 2022 were Rs. 359.30 per day for Zone I and Rs. 351.30 per day for Zone II. In October 2022, it was Rs. 363.30 and Rs. 355.30 per day for Zone I and II, respectively. As I am preoccupied with an urgent assignment, I am sharing this information for your reference.

Regards,
Sna

Thank you all for taking an active interest in this case. There is no union available in this mid-sized textile manufacturing company in Ahmedabad, Gujarat.

- Is it possible to get the increments as arrears for two decades by filing a complaint with the labor office, considering that the Provident Fund (PF) and Employee State Insurance (ESI) deductions were regular? If yes, kindly provide the relevant act clause or any similar cases that have been filed before.

- With over 20 years of continuous service in the same position, could he be classified as a skilled or semi-skilled employee under the Minimum Wages Act?

- Since no official leave was taken, and there is no existing employee agreement, what would be the maximum number of earned leave (EL) days he could cash out as a private employee, similar to the case of government employees with a maximum of 300 EL days?

Thank you in advance.

Calculation of Minimum Wages

Regret to say that the calculation of minimum wages retrospectively for 20 years is not possible. As already mentioned, you can obtain it for 6 months. However, if the authority is satisfied with the non-compliance regarding the Minimum Wages Act, then you can expect it for a longer period back. Contributions to ESI and PF are irrelevant in this context.

Categorization of Workers

The categorization of workers into skilled, semi-skilled, or unskilled is based on the level of supervision required for a specific job. While it is true that a person with 20 years of experience may work independently and be considered skilled, this classification cannot be established now. Any claims about skill level by the employer will need approval.

Leave Accumulation

Legally, an employee can accumulate up to 24 days of leave only. The practice of encashing 300 leaves in government services does not apply in this situation.

Given the gravity of the issues, it is my considered opinion that the querist should pursue the matter by approaching the competent Labour Department authority. Once action is taken, the issues and facts material to the controversy are bound to unfold.

Thank you, everyone, for your valuable advice. Under labor law, as the minimum wages are revised in Gujarat from April 1, 2023, after a gap of 8 years, will the new minimum wages be implemented immediately, i.e., from April 1, 2023, or from October 1, 2023, or from his joining (anniversary) date for this permanent employee of a factory? Under labor law, is this permanent employee of the factory entitled to a salary of 1 month's notice period or 3 months' notice period? Thanks in advance.

Notification of Revised Minimum Wages

The notification calling on employers to pay revised minimum wages will have a date on which the said minimum wages will be effective. In some cases, the notification may have a retrospective effect. In such cases, only the employee can demand back wages. It will be a universal date and not with reference to the anniversary date of each employee joining the company.

Eligibility for Notice Period and Retrenchment Compensation

An employee coming under the purview of the Industrial Disputes Act is eligible to get a one-month notice period or salary in lieu of the notice, as well as compensation for retrenchment at the rate of 15 days' wages for every year of service. This is provided under section 25F of the Industrial Disputes Act. At the same time, if the establishment has more than 100 workers, then the employer is liable to give three months' notice or salary in lieu of that notice following section 25N of the same Act.