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ESSENTIAL EMPLOYMENT LAWS

FOR ENTREPRENEURS

by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
FOR – PGPSE PARTICIPANTS
mobile : 91+9414430763

5 DECEMBER 09 www.afterschool.tk 1
About factories act ....

Click on the following link


http://www.scribd.com/doc/13065872/Factories-Act
http://www.scribd.com/doc/11629083/Factories-Act

5 DECEMBER 09 www.afterschool.tk 2
About Industrial disputes act

Click on the following link :


http://www.scribd.com/doc/11629531/Industrial-Dis

5 DECEMBER 09 www.afterschool.tk 3
About ESI ACT

Click on the links


http://www.scribd.com/doc/11784811/The-Employe
http://www.scribd.com/doc/11953668/The-Employe
http://www.scribd.com/doc/29859609/Esi-Act-for-E

5 DECEMBER 09 www.afterschool.tk 4
About PF

http://www.scribd.com/doc/11628930/Employees-P

5 DECEMBER 09 www.afterschool.tk 5
About workmen's compensation
act

Click this link :


http://www.scribd.com/doc/11761837/Workmens-C

5 DECEMBER 09 www.afterschool.tk 6
About (standing orders) act

http://www.scribd.com/doc/11629618/Industrial-Em

5 DECEMBER 09 www.afterschool.tk 7
On workmen's compensation act

Click the link :


http://www.scribd.com/doc/11692538/Workmens-C

5 DECEMBER 09 www.afterschool.tk 8
If you employ worker through a contractor,
should you get registered under contract
labour act ?

Yes
if you want to engage twenty or more persons through a
contractor you have to get itself registered.
Section 7 of the Act lays down that every principal employer of
an establishment to which the Act applies shall make an
application to the registering officer in the prescribed manner for
registration of the establishment within the prescribed time limit.
A registration fee varying from Rs. 20 to Rs. 500 which is related
to the number of workmen employed as contract labour

5 DECEMBER 09 www.afterschool.tk 9
Can Govt. Abolish contract
labour?
Yes, it has abolished in many industries like coal mine, gypsym
mining etc.
Before abolishing the govt. Will consult board and other
authorities.
You can also apply to govt to abolish contract labour (if they are
being exploited). If the govt. Refuses, it will give reason. If the
government doesnt give you reason for refusing to abolish
contract labour, it amounts to non-application of mind to the
requirements of Section 10(2) and the court can order abolition of
contract labour (GEA v. Union of India, 1997 Lab IC 1701 Bom.)

5 DECEMBER 09 www.afterschool.tk 10
Can industrial tribunal abolish
contract labour ?
Vegolis Private Ltd. v. The Workmen, (1971)II-LLJ p. 567:
No
after enforcement of the Contract Labour (Regulation and
Abolition) Act, 1970, the sole jurisdiction for abolition of
contract labour in any particular operation vested with the
appropriate Government and thereafter the Tribunals have no
jurisdiction to abolish contract labour. Supreme Court cannot
under Article 32 of the Constitution order for abolition of
Contract Labour System in any establishment (1985 1 SCC
630) (so we have to approach govt. For this) .

5 DECEMBER 09 www.afterschool.tk 11
Can court order for regularisation
of contract labour ?
In some cases yes (it is debatable matter)
Air India Statutory Corporation v. United Labour
Union, AIR 1997 SC 645 :
Supreme court held that a High Court in exercise of
its jurisdiction under Article 226 of the Constitution,
can ask a principal employer to absorb the workman
concerned after abolition of the contract labour.
However, the court overrules this judgement in Steel
Authority of India v. National Union of Water Front
Workers and others, AIR 2001 SC 3527
5 DECEMBER 09 www.afterschool.tk 12
Is it necessary for a contractor to
get registered under the act before
employing contract labour ?

Yes
Sec 12 : no contractor to whom the Act applies
can undertake or execute any work though
contract labour except under and in accordance
with the license issued in that behalf by the
licensing officer.

5 DECEMBER 09 www.afterschool.tk 13
What are the important health and
safety provisions ?

Canteen : (sec. 16) : if there are 100 or more


workers
first aid, rest room, drinking water, latrines,
urinals, washing facilities etc. Should be
provided to the workers

5 DECEMBER 09 www.afterschool.tk 14
What are the punishments under
the contract labour act ?

Sec. 24 : 3 month imprisonment / 1000/-


penalty

5 DECEMBER 09 www.afterschool.tk 15
Registers / returns under contract
labour act ...

“small establishments” (establishments employing not less


than 10 persons and not more than 19 persons) are
required to furnish a core Return in Form A and maintain
Registers Form B, Form C, and Form D and “very small
establishments” (establishments employing not more than
9 persons) are required to furnish return in Form A and
maintain Register in Form E under this Act

5 DECEMBER 09 www.afterschool.tk 16
5 DECEMBER 09 www.afterschool.tk 17
Which is the main law regulating
working conditions of contract
labour ?

CONTRACT LABOUR (REGULATION


AND ABOLITION) ACT, 1970

5 DECEMBER 09 www.afterschool.tk 18
Where does the contract labour
act apply ?

Sec 1(4):
1. every establishment which employes 20 or
more contract labour
2. every contractor which employes 20 or
more contract labour

5 DECEMBER 09 www.afterschool.tk 19
Who is a contractor ?

a person who undertakes to produce a given


result for the establishment, other than a mere
supply of goods or articles of manufacture to
such establishment, through contract labour or
who supplies contract labour for any work of
the establishment and includes a sub-
contractor. [Section 2(1)(c)]
5 DECEMBER 09 www.afterschool.tk 20
What is the meaning of
establishment in contract labour
act ?

any office or department of the


Government or local authority,
any place where any industry, trade,
business, manufacture or occupation is carried
on. [Section 2(1)(e)]

5 DECEMBER 09 www.afterschool.tk 21
Who is a workman in contract
labour act ?

“Workman” means any person employed in or


in connection with the work of any
establishment to do any skilled, semi-skilled or
unskilled, manual, supervisory, technical or
clerical work for hire or reward, whether the
terms of employment be expressed or implied,
but doesnt include manager. (sec. 2(1)(i)
5 DECEMBER 09 www.afterschool.tk 22
What is the role of boards under
contract labout act ?

Central Advisory Contract Labour Board to


advise the Central Government & State
Advisory Contract Labour Board to advise
state government on matters relating to
contract labour regulation.

5 DECEMBER 09 www.afterschool.tk 23
When will the govt. Ban contract
labour in an industry ?

When it is a regular work and regular workers


are required through out the year.
When it is done ordinarily through regular
workmen in that establishment similar thereto;
when it is sufficient to employ considerable
number of wholetime workmen. (Section 10)

5 DECEMBER 09 www.afterschool.tk 24
5 DECEMBER 09 www.afterschool.tk 25
Who will ensure that standing
orders are fair for employees?

The Industrial employment (standing Orders)


Act 1946 has imposed a duty on the Certifying
Officer, to consider the reasonableness and
fairness of the Standing Orders before
certifying the same.

5 DECEMBER 09 www.afterschool.tk 26
Where does the The Industrial
employment (standing Orders)
Act 1946 apply?

It applies to every industrial establishment


wherein 100 or more workmen are employed
or were employed on any day during the
preceding twelve months.

5 DECEMBER 09 www.afterschool.tk 27
How does the certifying officer proceeed
with the draft standing order received
from the employer?
On receipt of the draft Standing Order from the
employer, the Certifying Officer forwards its
copy to the trade union of the workmen or
where there is no trade union, then to the
workmen in the prescribed manner together
with a notice requiring objection (the
objections have to be raised in 15 days), and
later modies it as per the objections /
clarifications.
5 DECEMBER 09 www.afterschool.tk 28
When does the standing order
become enforceable ?

It becomes enforceable on the expiry of 30


days from the date on which the authenticated
copies are sent to employer and workers
representatives (these copies are sent within 7
days of the certification).

5 DECEMBER 09 www.afterschool.tk 29
Where any workman is suspended by the
employer pending investigation or inquiry into
complaints or charges of misconduct against
him, the employer shall pay to such a workman
the subsistence allowance

5 DECEMBER 09 www.afterschool.tk 30
What is the notice period for
retrenchment ?

One month notice or one months pay in lieu


of notice should be given in smaller
(employing less than 100 employees)
establishments [Sec. 25F(a)] Three months
notice or three months pay should be given in
larger (employing more than 100 employees)
establishments. [Sec.25N (1)(a).]
5 DECEMBER 09 www.afterschool.tk 31
What is layoff compensation
payable ?
Fifty percent of Basic+ DA.[Sec.25( c)] In case
permission is not obtained/refused full wages. [Sec 25
(M) (8). If the employee refuse to accept alternative
employment under the same employer within a radius
of 5 Miles the worker is not eligible for any
compensation.[Sec.25(E)(1). If not reported for
attendance no compensation. [Sec.25(E)(2). If lay off
is due to strike or go slow by another section of the
unit, No compensation [Sec.25(E)(3).]

5 DECEMBER 09 www.afterschool.tk 32
Can we retrench employees
randomly ?

No
Retrench the last worker appointed under a
particular category first For re-employment,
retrenched worker shall have preference over
other persons

5 DECEMBER 09 www.afterschool.tk 33
What is illegal strike / lock out ?

In Public Utility Service [Sn.22(1)and(2),23,30,19] Without


giving 14 days notice. Commenced after 42 days of notice.
Prior to the date indicated in the notice. During the pendency
of proceedings During the period when a settlement or award
is in operation on same matters. In non PUSs a) in breach of
contract ,b) during the pendency of proceedings, c) during
the settlement or award is in operation.[Sn.23,20,19] In both
the strike / lockout will be illegal if continued after Govt.
ban [Sec.10(4A),24]

5 DECEMBER 09 www.afterschool.tk 34
What is the difference between
strike and lockout?

Strike:by workmen Refusal to work or accept


employment. Under common understanding or
acting in concert. [Section 2q]
lockout : By employer - Temporary closure Refusal
to continue to employ the persons employed.
[Section 2(l).

5 DECEMBER 09 www.afterschool.tk 35
How is govt. Promoting
arbitration of industrial disputes?

When conciliation fails, and if the parties wish to


refer the issue for arbitration, both the sides shall
sign an arbitration agreement in Form C under Rule
7 and send it to Government. The Government will
then appoint an arbitrator. [Sn.10(2),10A.]
Arbitration award is implemented like an
adjudication award. Thus arbitration is a legal
process to mitigate industrial dispute
5 DECEMBER 09 www.afterschool.tk 36
What is the role of labour courts
under Industrial disputes act?
They are constituted by the appropriate Govt. for
the adjudication of industrial disputes relating to any
matter specified in the Second Schedule and for
performing such other functions as may be assigned
to them under this Act. Second schedule covers
matters like strike, lockout, standing order;
Discharge or dismissal of workmen including re-
instatement of, or grant of relief to, workmen
wrongfully dismissed; Withdrawal of any customary
concession / privilege etc.
5 DECEMBER 09 www.afterschool.tk 37
What is the role of Industrial
tribunals ?
They are for adjudication of industrial
disputes relating to any matter specified in the
Second Schedule or the Third Schedule and
for performing such other functions as may
be assigned to them the matters covered by
them are : 1.Wages, including the period and
mode of payment; 2.Compensatory and other
allowances; 3.Hours of work and rest
intervals; 4.Leave with wages and holidays;
5 DECEMBER 09
5.Bonus
www.afterschool.tk 38
What is the role of conciliation officer under
Industrial dispute act ?
Conciliation = agreement through negotiation /
dialogue
he gets the parties to sign a settlement in Form H
(under rule 58 (1) and make necessary entries in the
register in Form O and sent a copy to the Govt.
[Sec12(3) Rules 58(1),(3)&75.] If he fails to bring
about a settlement, he has to bring the fact to the
attention of the Government under Sec 12(4).
Conciliation process should be closed within 14
days.
5 DECEMBER 09 www.afterschool.tk 39
What is the meaning of worker in
Industrial Disputes act ?

Sec [2(s)] –Employees doing any manual,


unskilled, skilled, technical, operational,
clerical work irrespective of their salary.
Supervisors drawing wages less than 1600/-
are workers, but Managers are excluded
irrespective of their salary.

5 DECEMBER 09 www.afterschool.tk 40
What is the 3 way test of
industries as per Industrial
disputes act?

Cooperation between employer and


employee.
Systematic activity.
Satisfy the human wants or needs.

5 DECEMBER 09 www.afterschool.tk 41
What is the difference between
arbitration / conciliation /
adjudication?
Arbitrator = a third party tries to find a solution after
hearing both the party. The third party is appointed
jointly by both the parties in dispute based on
mutual consent
Adjudication = court (labour court / industrial
tribunal / national tribunal / adjudication officer)
may give judgement which is binding
conciliation = both the parties negotiate and find an
amicable settlement
5 DECEMBER 09 www.afterschool.tk 42
Can a unit be closed without
permission in Industrial dispute
act ?
No. permission is required for permanent closure of (a) a place
of employment, or (b) a part of establishment [Sec.2 (cc).]
However, no permission required in smaller units [Sec.25K]
Where Permission is required ,application should be submitted
(in the case of factories, mines and plantations) to the Govt.
with copy to the Union at least 90 days in advance. [Sec 25(O)
(1)] If no reply is received within 60 days permission can be
assumed [Sec.25(O)(3).]

5 DECEMBER 09 www.afterschool.tk 43
What are the unfair trade practices
on the part of employer under
industrial disputes act ?
To start employer-sponsored trade unions

discharging or punishing a workman just because he urged


other workmen to join or organise a trade union
discharging or dismissing a workman for taking part in any
strike (not being a strike which it deemed to be an illegal strike
under this Act)
changing seniority rating of workmen as punishment for
joining union activities.

5 DECEMBER 09 www.afterschool.tk 44
What is the meaning of wages in
Industrial Disputes act ?

[Sec 2(rr)] = Basic, D A, Value of house


accommodation, traveling concession, commission
and or other remuneration payable under the contract .
However, Bonus, retirement benefits etc. are not
wages

5 DECEMBER 09 www.afterschool.tk 45
When is the national tribunal
constituted ?

It is constituted by the Central Government for the


adjudication of industrial disputes which, in the
opinion of the Central Government, involve questions
of national importance or are of such a nature that
industrial establishments situated in more than one
State are likely to be interested in, or affected by such
disputes.

5 DECEMBER 09 www.afterschool.tk 46
What are the unfair practices by
workers under Industrial disputes
act ?

To undertake gherao / go slow / violent activities


To motivate or indulge in willful damage to
employer's property.
To indulge in acts of force or violence or to hold out
threats of intimidation against any workman with a
view to preventing him from attending work. Etc

5 DECEMBER 09 www.afterschool.tk 47
What is the period of pendency?

When the matter of dispute is sent to


arbitration / adjudication / conciliation, the
pendency starts and continues till the
judgement and its implementation. Pendcncy
means the matter is in the process of legal
solution – during the period of pendency –
there cant be any action against workers /
strikes / lockouts / dismissals etc.
5 DECEMBER 09 www.afterschool.tk 48
Can a trade union leader be
punished / dismissued during
pendency period ?
No , not without prior permission from the authority during
this period [Sn.33(3) Rule 60(1) Form J] If the employer
violates these provisions the aggrieved workman can file
complaint before the authority in Form I. The authority shall
pass orders after hearing the parties. [Sn. 33A, Rule 59]
Note:- Even if the approval is granted the worker is not barred
from raising dispute under section 2(k) or 2A.

5 DECEMBER 09 www.afterschool.tk 49
What is the role of works
committee ?

It is constituted in every factory where 100 or


more workers are working in a plant. Works
commitee looks after day to day issue
regarding plant management, shift, work
schedule etc. It has 50% representatives from
workers and equal number of representatives
from employers. It has to be constituted as per
Industrial Disputes act.
5 DECEMBER 09 www.afterschool.tk 50
What is the role of Joint
Management council?

Whenever there are 500 or more workers


working in a factory, there is a JMC. This is
again a participatory forum. 50%
representatives are from workers and
remaining from employer
it decides about managerial issues relating to
factory, its supervision, overall management.
5 DECEMBER 09 www.afterschool.tk 51
What is the role of conciliation
officer ?

He is appointed to bring about settlement


between disputing parties in case of industrial
disputes.

5 DECEMBER 09 www.afterschool.tk 52
What is the role of labour
inspectors ?

They are appointed in each district. They look


after implementation of important laws like
factories act, industrial disputes act etc. And
try to ensure well being of workers

5 DECEMBER 09 www.afterschool.tk 53
What is the role of tripartite
bodies in India?

Most of the policies relating to labour is taken


care of by tripartite bodies. ILC is one such
tripartite body(indian labour conference). At
the international level, we have ILO
(International labour office), which is also a
tripartite body. Tripartite = three parties :
1. labour 2. employer 3. government
5 DECEMBER 09 www.afterschool.tk 54
What is the role of adjudication
officer ?

They are appointed under industrial disputes


act to look into matters relating to industrial
disputes. They are judicial officers.

5 DECEMBER 09 www.afterschool.tk 55
What is the meaning of industry
under Industrial disputes act ?

“Industry” means any business, trade,


undertaking, manufacture or calling of
employers and includes any calling service,
employment, handicraft, or industrial
occupation or avocation of workmen. [Section
2(j)]

5 DECEMBER 09 www.afterschool.tk 56
What are the tests of industry ?

1. it should be well organised and systematic activity


2. there should be production and distribution of
goods and services to satisfy human needs
3. there should be cooperation between employer and
employee
Profit motive is not necessary
read : Bangalore Water Supply and Sewerage Board
v. A Rajiappa, AIR 1978 SC 548

5 DECEMBER 09 www.afterschool.tk 57
contd....

professions, clubs, educational institutions. co-


operatives, research institutes, charitable projects and
other kindred adventures, if they fulfil the triple tests
listed in (1), cannot be exempted from the scope of
Section 2(j)
Sovereign functions or functions not connected to
others are not industry. So ATIRA is industry, but PRL
is not an industry. Hosptial, municipality are industry,
but purely voluntary services are not industry.

5 DECEMBER 09 www.afterschool.tk 58
What is industrial dispute under
Industrial disputes act?

“Industrial Dispute” means any dispute or


difference between employers and employers,
or between employers and workmen, or
between workmen and workmen, which is
connected with the employment or non-
employment or the terms of employment or
with the conditions of labour, of any person.
[Section 2(k)]
5 DECEMBER 09 www.afterschool.tk 59
Are gardners looking after the garden
attached to bungalows provided by the
company to its officers and directors
employees under Industrial dispute act?

Yes, they are engaged in operations


incidentally connected with the main industry
carried on by the employer.
Read : J.K. Cotton Spinning and Weaving
Mills Co. Ltd. v. L.A.T., AIR 1964 S.C. 737

5 DECEMBER 09 www.afterschool.tk 60
What type of work is performed
by worker in Industrial disputes
act?

1. skilled or unskilled
2. clerical
3. technical
4. supervisory work

5 DECEMBER 09 www.afterschool.tk 61
Is teacher a worker in Industrial
disputes act. ?

No
Sunderambal v. Government of Goa [AIR
(1988) SC 1700. (1989)

5 DECEMBER 09 www.afterschool.tk 62
Is labour officer working in a
textiles mill a worker ?

Yes
superivisor work is also included as per
Industrial disputes act – so he is also a worker

5 DECEMBER 09 www.afterschool.tk 63
What is the meaning of strike in
Industrial disputes act?

“Strike” means a cessation of work by a body


of persons employed in any industry acting in
combination, or a concerted refusal, or a
refusal under a common understanding of any
number of persons who are or have been so
employed to continue to work or to accept
employment. [Section 2(q)]
5 DECEMBER 09 www.afterschool.tk 64
on the sudden death of a fellow-
worker, the workmen acting in
concert refuse to resume work. Is
it a strike?

Yes
read : Textile Workers’ Union v. Shree
Meenakshi Mills, (1951)

5 DECEMBER 09 www.afterschool.tk 65
What are the various types of
strikes?
Sit down
go slow
hunger strike
tool down
work to rule
stay in
pen down etc.
5 DECEMBER 09 www.afterschool.tk 66
If a strike is resorted to by the workers in support of
their reasonable, fair and bona fide demands in
peaceful manner, then can the strike be justified?

Yes
read : Gujarat Steel Tubes Ltd. v. Gujarat Steel
Tubes Majdoor Sabha, AIR 1980 SC 1896

5 DECEMBER 09 www.afterschool.tk 67
What is the the doctrine of
“apportionment of blame”?

According to this doctrine, when the workmen


and the management are equally to be blamed,
the Court awards half of the wages.

5 DECEMBER 09 www.afterschool.tk 68
What is lockout in Industrial
disputes act?

“Lock-out” means the temporary closing of a


place of employment, or the suspension of
work, or the refusal by an employer to continue
to employ any number of persons employed by
him. [Section 2(l)]

5 DECEMBER 09 www.afterschool.tk 69
What is lay off in Industrial
disputes act ?

“Lay-off” means the inability of an employer


to give employment due to : shortage of coal,
power or raw materials, accumulation of
stocks, break-down of machinery, natural
calamity any other connected reason to an
employee whose name appears on muster roll.
[Section 2(kkk)]

5 DECEMBER 09 www.afterschool.tk 70
What is retrenchment under
Industrial disputes act ?

“Retrenchment” means the termination by the


employer of the service of a workman for any
reason whatsoever, otherwise than as a
punishment inflicted by way of disciplinary
action, and doesnt include VRS,
superannuation, retirement due to ill health etc.
(sec. 2(oo))
5 DECEMBER 09 www.afterschool.tk 71
Is transfer / closure of a unit
falling in Industrial disputes act?

Read :
sec. 25F,25F,25FFF

5 DECEMBER 09 www.afterschool.tk 72
Can a company retrench its
surplus employees under
industrial disputes act?
Yes
read :
Parry & Co. Ltd. v. P.C. Pal, (1970) II L.L.J. 429,
the Supreme Court observed that the management has a right to
determine the volume of its labour force consistent with its
business or anticipated business and its organisation. If for
instance a scheme of reorganisation of the business of the
employer results in surplusage of employees, no employer is
expected to carry the burden of these employees.

5 DECEMBER 09 www.afterschool.tk 73
What is Unfair Labour Practice

It means any of the practices specified in the


Fifth Schedule. [Section 2(ra)]

21.

5 DECEMBER 09 www.afterschool.tk 74
Can dismissal of Individual
employee be called an industrial
dispute?

Yes
read sec. 2A

5 DECEMBER 09 www.afterschool.tk 75
What are the main authorities
under Industrial disputes act?

These are :
Conciliation Officers. Boards of Conciliation.
Court of Inquiry.Labour Tribunals. Industrial
Tribunals National Works Committee

5 DECEMBER 09 www.afterschool.tk 76
What is a hazardous process in
factories act?

any process or activity in relation to an industry specified in


the First Schedule, which may raw material or use process
which may cause harm to the health of the persons engaged in
or connected therewith, or
result in the pollution of the general environment;
[Section 2(cb)]

5 DECEMBER 09 www.afterschool.tk 77
What is a factory in factories act?

“Factory” includes any premises including the precincts thereof


whereon ten or more workers are working, or were working on
any day of the preceding twelve months, and in any part of which a
manufacturing process is being carried on with the aid of power or is
ordinarily so carried on; or
whereon twenty or more workers are working, or were working on a
day of the preceding twelve months, and in any part of which a
manufacturing process is being carried on without the aid of power,
or is ordinarily so carried on.

5 DECEMBER 09 www.afterschool.tk 78
What is manufacturing process in
factories act?
making, altering, repairing, ornamenting, finishing, packing,
oiling, washing, cleaning, breaking up, demolishing, or otherwise,
treating or adopting any article or substance with a view to its use,
sale, transport, delivery or disposal
pumping oil, water or sewage or any other substance;
generating, transforming, transmitting power;
composing types for printing, printing by letter-press,
lithography, photogravure or other similar process, or book-binding;
constructing, reconstructing, repairing, refitting, finishing or
breaking up ships or vessels
preserving or storing any article in cold storage. [Section 2(k)]
5 DECEMBER 09 www.afterschool.tk 79
If the labourer is to produce bidies rolled in a certain
form and how the labourer carried out the work is
his own concern and is not controlled by the firm.
The firm is concerned only with getting bidies
rolled in a particular style with certain contents. Is it
a factory ?

No -
read Shankar Balaji Waje v. State of
Maharashtra, AIR 1963 Bom. 236,

5 DECEMBER 09 www.afterschool.tk 80
Is Munim in a factory a worker.

Yes

5 DECEMBER 09 www.afterschool.tk 81
Is a person employed by a gas manufacturing works
as a coolie for excavating and digging trenches
outside the factory for laying pipes for transporting
gas to consumers a worker under factories act.

No

5 DECEMBER 09 www.afterschool.tk 82
Is a soap-works, a carpenter
preparing the packing cases a
worker under factories act?

Yes

5 DECEMBER 09 www.afterschool.tk 83
What is the test of ownership
under factories act?

whether a person is an owner (occupier /


manager) or not is the possession or vesting in
of the ultimate control of the factory. The
control should be an ultimate one.

5 DECEMBER 09 www.afterschool.tk 84
Is it necessary to give notice
before starting a factory?

Section 7 imposes an obligation on the


occupier of a factory to send a written notice,
containing prescribed particulars, to the Chief
Inspector at least 15 days before an occupier
begins to occupy or use a premises as a factory
and at least 30 days before the date of
resumption of work in case of seasonal
factories
5 DECEMBER 09 www.afterschool.tk 85
What is certificate of fitness?

Under Section 69 of the Act, before a young


person is employed in the factory, a Certifying
Surgeon has to certify that such person is fit for
that work in the factory. To get this certificate,
an application to a Certifying Surgeon has to
made by employer / employee / guardian of the
worker.
5 DECEMBER 09 www.afterschool.tk 86
Under sec. 79, how many leaves
are available to a worker under
factories act?

– One day for every 20 days (for adults , for


children it is 15) of work performed by them
during the

5 DECEMBER 09 www.afterschool.tk 87
Can a worker carry forward leaves
to next year under factories act?

Yes, If any worker does not avail any earned


leave entitled to him during the calendar year,
it can be carried forward to the next calendar
year subject to the maximum of 30 days for an
adult worker and 40 days for a child worker.

5 DECEMBER 09 www.afterschool.tk 88
What types of safety provisions
are there in factories act?
Have fencing of factories
check self acting machines
check hoists, lifts etc.
Protect eyes of workers
have adequate space & working condicitions
for worker
have clean, neat, and safe factories
5 DECEMBER 09 www.afterschool.tk 89
What types of safety provisions
are there in factories act for
childern and women?

Dont employ during night shift


dont appoint near cotton opener or other such
dangerous factories
Give proper leave / holidays

5 DECEMBER 09 www.afterschool.tk 90
What is injury under ESI Act?

a personal injury to an employee caused by


accident or an occupational disease arising out
of and in the course of his employment, being
an insurable employment, whether the accident
occurs or the occupational disease is contracted
within or outside the territorial limits of India.
[Section 2(8)]
5 DECEMBER 09 www.afterschool.tk 91
5 DECEMBER 09 www.afterschool.tk 92
5 DECEMBER 09 www.afterschool.tk 93
CAN MINIMUM WAGE BE
PAID IN CASH OR KIND ?

Only in Cash
(read sec. 11 of minimum wages act)

5 DECEMBER 09 www.afterschool.tk 94
Should casual workmen should be included for the purpose of
ascertaining the strength of workmen in terms of Section 1(3)
of Employee PF & MP act 1952

No,
it was held by the Rajasthan High Court in Bikaner Cold
Storage Co. Ltd. v. Regional P.F. Commissioner, Rajasthan,
1979 Lab. I.C. 1017, that persons employed in the normal
course of the business of the establishment should be
considered as the persons employed for the purposes of Section
1(3)(a) and persons employed for a short duration or on
account of some urgent necessity or abnormal contingency,
which was not a regular feature of the business of the
establishment cannot be considered as employees for the
purpose of determining the employment strength
5 DECEMBER 09 www.afterschool.tk 95
Is an employee appointed through a contractor
an employee within the meaning of Employee
PF & MP Act 1952
YES
“Employee” means any person who is employed for wages in
any kind of work, manual or otherwise, in or in connection
with the work of an establishment and who gets his wages
directly or indirectly from the employer and includes any
person
1. employed by or through a contractor in or in connection
with the work of the establishment;
2. engaged as an apprentice, not being an apprentice engaged
under Apprentices Act, 1961 or under the standing orders of
the establishment. [Section 2(f)]
5 DECEMBER 09 www.afterschool.tk 96
What is manufacturing process as
per Employee PF and MP act
1952?
It is similar to meaning as given in Factories
act.
It means any process for making, altering,
repairing, ornamenting, finishing, packing,
oiling, washing, cleaning, breaking up,
demolishing or otherwise treating or adapting
any article or substance with a view to its use,
sale, transport, delivery or disposal. [Section
2(i-c)]
5 DECEMBER 09 www.afterschool.tk 97
Does the payment of gratuity act
apply to factories also ?
Yes , According to Section 1(3), the Act applies to:
1. every factory, mine, oilfield, plantation, port and railway
company
2. every shop or establishment in which ten or more persons are
employed, or were employed, on any day of the preceding twelve
months;
3. such other establishments or class of establishments in which ten
or more employees are employed, or were employed, on any day of
the preceding twelve months

5 DECEMBER 09 www.afterschool.tk 98
Who is an employee under
payment of gratuity act?
Section 2(e) defines employee as any person (other than an
apprentice) employed on wages, in any establishment, factory, mine,
oilfield, plantation, port, railway company or shop, to do any skilled,
semiskilled, or unskilled, manual, or supervisory, technical or
clerical work, whether the terms of such employment are express or
implied and whether or not such person is employed in a managerial
or administrative capacity but does not include any such person who
holds a post under the Central or a State Government and is
governed by any other Act or by any rules providing for payment of
gratuity.

5 DECEMBER 09 www.afterschool.tk 99
What are the cases when employee is not in continuous
service under payment of gratuity act?

Service is not continuous, in case of legal


termination of service and subsequent re-
employment.

5 DECEMBER 09 www.afterschool.tk 100


How is gratuity calculated under
payment of gratuity act ?

Gratuity is calculated on the basis of


continuous service as defined above i.e. for
every completed year of service or part in
excess of six months, at the rate of fifteen days
wages last drawn. The maximum amount of
gratuity allowed under the Act is Rs.
3,50,000/-.
5 DECEMBER 09 www.afterschool.tk 101
If a person dies, and his nominee
is a minor, who will get gratuity ?
in the case of death of the employee, it shall be
paid to his nominee and if no nomination has
been made, to his heirs and where any such
nominees or heirs is a minor, the share of such
minor, shall be deposited with the controlling
authority who shall invest the same for the
benefit of such minor in such bank or other
financial institution, as may be prescribed, until
such minor attains majority
5 DECEMBER 09 www.afterschool.tk 102
What is the time limit for payment
of gratuity under payment of
gratuity act?
Section 7(3) of the Payment of Gratuity Act
says that the employer shall arrange to pay the
amount of gratuity within thirty days from the
date of its becoming payable to the person to
whom it is payable. In case of delay, simple
interest at the rate of 10 per cent per annum has
to be paid alongwith.
5 DECEMBER 09 www.afterschool.tk 103
After how much years of service,
is an employee eligible for
gratuity ?

An employee is eligible for receiving gratuity


payment only after he has completed five years
of continuous service. This condition of five
years is not necessary if the termination of the
employment of an employee is due to death or
disablement.

5 DECEMBER 09 www.afterschool.tk 104


What is the penalty in case of
false statement under payment of
gratuity act?

If any person makes a false statement for the


purpose of avoiding any payment to be made
by him under this Act, he shall be punishable
with imprisonment for a term which may
extend to six months, or with fine which may
extend to ten thousand rupees or with both.

5 DECEMBER 09 www.afterschool.tk 105


What is the time limit for payment
of bonus under payment of bonus
act?

the bonus should be paid within a period of


eight months from the close of the accounting
year.

5 DECEMBER 09 www.afterschool.tk 106


Can a company adopt productivity
linked bonus instead of profit
linked bonus under payment of
bonus act?

Yes, employees and employers can develop


and operate a scheme of bonus payment linked
to production or productivity in lieu of bonus
based on profits

5 DECEMBER 09 www.afterschool.tk 107


Which types of companies are
covered by Payment of Bonus
Act?

every factory and to every establishment where


20 or more workmen are employed on any day
during an accounting year

5 DECEMBER 09 www.afterschool.tk 108


Which employee can get bonus
under payment of bonus act?

Every employee shall be entitled to be paid by


his employer in an accounting year, bonus
provided he has worked in the establishment
for not less than thirty working days in that
year.

5 DECEMBER 09 www.afterschool.tk 109


Can surplus profit be carried
forward to next years for payment
of bonus under payment of bonus
act?
Yes, Sec. 15 & IV schedule : if allocable surplus exceeds the
amount of maximum bonus payable to the employees in the
establishment under Section 11, then, the excess shall, subject
to a limit of twenty per cent of the total salary or wage of the
employees employed in the establishment in that accounting
year, be carried forward for being set on in the succeeding
accounting year and so on up to and inclusive of the fourth
accounting year

5 DECEMBER 09 www.afterschool.tk 110


What is the minimum bonus under
payment of bonus act?

Section 10 : 8.33 per cent of the salary

5 DECEMBER 09 www.afterschool.tk 111


A person is guilty of committing
fraud in a company. Can he still
claim bonus under payment of
bonus act?
No
No bonus in the case of : 1. fraud;
2. riotous or violent behaviour while on the
premises or the establishment;
3. theft, misappropriation or sabotage of any
property of the establishment. (Section 9)

5 DECEMBER 09 www.afterschool.tk 112


How is available surplus
calculated under payment of
bonus act?

gross profits for the accounting year after


deducting therefrom the sums referred to in
Section 6 & section 7 .

5 DECEMBER 09 www.afterschool.tk 113


What are the sums deductible
under sec. 6 of Payment of bonus
act ?

1. direct tax
2. development rebate
3. depreciation applicable
4. any other sum as specified in schedule III

5 DECEMBER 09 www.afterschool.tk 114


How is gross profit calculated
under payment of bonus act?

The process is given in schedule I & II in


details.

5 DECEMBER 09 www.afterschool.tk 115


How is bonus computed under
payment of bonus act?
First, Gross Profit is calculated as per First or Second
Schedule. From this Gross Profit, the sums deductible under
Section 6 are deducted. To this figure, we add the sum equal to
the difference between the direct tax calculated on gross profit
for the previous year and direct tax calculated on gross profit
arrived at after deducting the bonus paid or payable to the
employees. The figure so arrived will be the available surplus.
Of this surplus, 67% in case of company (other than a banking
company) and 60% in other cases, shall be the “allocable
surplus” which is the amount available for payment of bonus to
employees.

5 DECEMBER 09 www.afterschool.tk 116


If a company opens a branch, is
that a separate establishment
under payment of bonus act?
Yes – if there is separate balance sheet and
profit and loss account are prepared and
maintained in respect of any such department
or undertaking or branch then such department,
undertaking or branches shall be treated as a
separate establishment for the purpose of
computation of bonus ; otherwise no,

5 DECEMBER 09 www.afterschool.tk 117


What is salary under payment of
bonus act ?
Sec. 2(21) : The “salary or wage” means all remuneration
(other than remuneration in respect of over-time work)
capable of being expressed in terms of money, which
would, if the terms of employment, express or implied,
were fulfilled, be payable to an employee in respect of his
employment or of work done in such employment and
includes dearness allowance , it includes all cash
payments but doesnt include commission, TA, retirement
benefits, and reimbursements

5 DECEMBER 09 www.afterschool.tk 118


Who is an employee under
payment of bonus act?

“Employee” means any person (other than an


apprentice) employed on a salary or wages not
exceeding Rs. 10,000 per month in any
industry to do any skilled or unskilled, manual,
supervisory, managerial, administrative,
technical or clerical work of hire or reward,
whether the terms of employment be express or
implied. [Section 2(13)]
5 DECEMBER 09 www.afterschool.tk 119
Who is employer under payment
of bonus act ?
1. in relation to an establishment which is a factory, the
owner or occupier of the factory/ agent of such owner /the
legal representative of a deceased owner /manager of the
(named as manager under Clause (f) of Sub-section 7(1) of
the Factories Act, 1948)
2. in relation to any other establishment, the person who, or
the authority which, has the ultimate control over the affairs
of the establishment / manager/ managing director /
managing agent [Section 2(14)]

5 DECEMBER 09 www.afterschool.tk 120


Download links for basic
preparation
http://www.scribd.com/doc/6681094/1-August-Busi
http://www.scribd.com/doc/23393512/11-July-Busin
http://www.scribd.com/doc/23393829/18-July-Busin
http://www.scribd.com/doc/6583876/4-July-Busines
http://www.scribd.com/doc/6683819/Business-Law-
http://www.scribd.com/doc/14646886/Business-Law
http://www.scribd.com/doc/18276825/Indian-Contra
http://www.scribd.com/doc/13132546/Indian-Contra
http://www.scribd.com/doc/13065925/Sale-of-Good
5 DECEMBER 09 www.afterschool.tk 121
Download links...

http://www.scribd.com/doc/13065899/Negotiable-In
http://www.scribd.com/doc/25295622/Company-La
http://www.scribd.com/doc/11765249/Company-La
http://www.scribd.com/doc/25885860/Company-Me
http://www.scribd.com/doc/25950024/E-governance

5 DECEMBER 09 www.afterschool.tk 122


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5 DECEMBER 09 www.afterschool.tk 123

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