WAGES & LABOUR LAWS

THE PAYMENT OF WAGES ACT, 1936

INTRODUCTION

With the growth of industries in India, problems relating to payment of wages to persons
employed in industry took an ugly turn. The industrial units were riot making payment of
wages to their workers at regular intervals and wages were not uniform. The industrial
workers were forced to raise their heads against their exploitation.
In 1926, Government of India wrote to local governments to ascertain the position with
regard to the delays which occurred in the payment of wages to the persons employed in
Industry. Material so collected was placed before the Royal Commission on Labour which was
appointed in 1929. On the report of the Commission, Government of India re-examined the
subject and in February, 1933 the Payment of Wages Bill, 1933, was introduced in the
Legislative Assembly and circulated for the purpose of-eliciting opinions. A motion for the
reference of the Bill to a Select Committee was tabled but the motion could not be passed
and the Bill lapsed. In 1935 the Payment of Wages Bill, based upon the same principles as the
earlier Bill of 1933 but thoroughly revised was introduced in the Legislative Assembly on 15th
February, 1935. The Bill was referred to the Select Committee. The Select Committee
presented its report on 2nd September, 1935. Incorporating the recommendations of the
Select Committee, the Payment of Wages Bill, 1935 was again introduced in the Legislative
Assembly. “The Payment of Wages Bill, 1935 having been passed by the Legislative
Assembly received its assent on 23rd April, 1936. It came on the Statute Book as THE
PAYMENT OF WAGES ACT, 1936 (4 of 1936).”
The rationale behind the Minimum Wages Act, 1948 is to empower the Central Government
and State Governments to fix minimum wages in certain employments so as to prevent the
exploitation of the labour class which is usually unorganized, by the capitalist class. The
objectives of the Act are as follows:

 To provide for fixation of minimum wages in scheduled employments.

 To provide for periodical revision of minimum wages so fixed.
 To provide for a summary procedure for recovery of the balance with penalty and
subsequent prosecution of the employer who pays less than the minimum wages fixed by
the Government.
 To provide for the appointment of Advisory Committees and Boards having equal number of
representatives of both employers as well as workers.

Object and scope of the Act

 The main objects of the payment of wages Act are:
 To make sure, regular and timely payment of wages to the employees,
 To check unlawful deductions being made from wages and illogical fines being
imposed on the employed persons.
 The scope of the Act extends to the whole of India.
Purpose of the Act
The main objective of the Act is to avoid unnecessary delay in the payment of wages and to
prevent unauthorized deductions from the wages. Every person employed in any factory,
upon any railway or through sub-contractor in a railway and a person employed in an
industrial or other establishment. The State Government may by notification extend the
provisions to any class of persons employed in any establishment or class of establishment.
The benefit of the Act prescribes for the regular and timely payment of wages (on or before
7th day or 10th day of after wage period is greater than 1000 workers) and Preventing
unauthorized deductions being made from wages and arbitrary fines.
Salary statics
Wages are averaging less than Rs. 6500.00 per month only are covered or protected by the
Act by the amendment in 2005 by {Section 1(6)}.Wages means contractual wages and not
overtime wages. They are not to be taken into account for deciding the applicability of the
Act in the context of section 1(6) of the Act. Wages must be paid in current coin or currency
notes or in both and not in kind. It is, however, permissible for an employer to pay wages
by cheque of by crediting them in the bank account if so authorized in writing by an
employed person.
Summary of the provisions of the Act
The provisions of the Act regarding the imposition of fines on the employed person are as
follows such as, The employer must exhibit on his premises a list of acts or omissions for
which fines can be imposed, Before imposing a fine on an employed person he must be
given an opportunity of showing cause against the fine, The amount of fine must not exceed
3 percent of the wages, A fine cannot be imposed on an employed person who is under the
age of 15 years, A fine cannot be recovered by instalments or after 90 days from the day of
the act or omission for which it is imposed, The moneys realized from fines must be applied
to purposes beneficial to employed persons.
Subsection 8(3), 10(1-A) & Rule 15} deals with Any person desiring to impose a fine on an
employed person or to make a deduction for damage or loss shall explain personally or in
writing to the said person the act or omission, or damage or loss in respect of which the fine
or deduction is proposed to be imposed, and the amount of fine or deduction, which it is
proposed to impose, and shall hear his explanation in the presence of at least one other
person, or obtain it in writing.
Employer's duty
Employer's required to display the abstracts of the Act in his factory or establishment. Every
employer must display in his factory or establishment a notice containing the abstracts of
the Act and the rules made thereunder in English and also in the language understood by
the majority or the persons.
Conclusion
The Payment wages act is a regulation drawn up to protect the employee’s rights from being
infringed by the employer. The employee should be paid on time and should not be
harassed against anything during the employment. It has however given a lot of protections
to employees and will continue to do so in the future as well.
 Minimum Wages Act 1948
The Minimum Wages Act 1948 is an Act of Parliament concerning Indian labour law that sets
the minimum wages that must be paid to skilled and unskilled labours. The Indian
Constitution has defined a 'living wage' that is the level of income for a worker which will
ensure a basic standard of living including good health, dignity, comfort, education and
provide for any contingency. However, to keep in mind an industry's capacity to pay the
constitution has defined a 'fair wage'. Fair wage is that level of wage that not just maintains a
level of employment, but seeks to increase it keeping in perspective the industry’s capacity
to pay. To achieve this in its first session during November 1948, the Central Advisory Council
appointed a Tripartite Committee of Fair Wage. This committee came up with the concept of
Minimum Wages. A minimum wage is such a wage that it not only guarantees bare
subsistence and preserves efficiency but also provides for education, medical requirements
and some level of comfort. India introduced the Minimum Wages Act in 1948, giving both the
Central government and State government jurisdiction in fixing wages. The act is legally non-
binding, but statutory. Payment of wages below the minimum wage rate amounts to forced
labour. Wage Boards are set up to review the industry’s capacity to pay and fix minimum
wages such that they at least cover a family of four’s requirements of calories, shelter,
clothing, education, medical assistance, and entertainment. Under the law, wage rates in
scheduled employments differ across states, sectors, skills, regions and occupations owing to
difference in costs of living, regional industries' capacity to pay, consumption patterns, etc.
Hence, there is no single uniform minimum wage rate across the country and the structure
has become overly complex. “The highest minimum wage rate as updated in 2012 is Rs.
322/day in Andaman and Nicobar to Rs. 38/day in Tripura.”

CONTENTS:-
The Act provides for fixing wage rate (time, piece, guaranteed time, and overtime) for any
industry.
1) While fixing hours for a normal working day as per the act should make sure of the
following:

 The number of hours that are to be fixed for a normal working day should have one or
more intervals/breaks included.
 At least one day off from an entire week should be given to the employee for rest.
 Payment for the day decided to be given for rest should be paid at a rate not less than
the overtime rate.
2) If an employee is involved in work that categorises his service in two or more scheduled
employments, the employee’s wage will include respective wage rate of all work for the
number of hours dedicated at each task.
3) It is mandatory for the employer to maintain records of all employee’s work, wages and
receipts.
4) Appropriate governments will define and assign the task of inspection and appoint
inspectors for the same.
Exclusions:-

 Workers: Wages to disabled people and those payable to a dependent family member
of the employer
 Industries: Un-scheduled industries are generally excluded. With every revision of
minimum wages, a state can add a minimum wage for an occupation or specify it for a
sector.

Enforcement:-
Officers of Central Industrial relations Machinery looks after the enforcement of provisions
of the Minimum Wages Act in the Central Sphere. Whereas the responsibility to enforce the
act elsewhere lies with respective State Governments/Union Territories.
PROBLEMS:-
42% of all wage earners in India receive wages below the national minimum wage floor rate.
The data used for these statistics includes half of casual labourers and 1/4th of those salaried.
Female workers and those in rural areas are more likely to be paid below a minimum wage.
Those who are illiterate or have no mid-level education are most likely to be paid below a
minimum wage. For Salaried workers, if they are employed in agriculture, it is more likely that
they are paid higher than the minimum wage. Whereas casual workers in construction and
unionised workers in production and manufacturing are likely to receive wages at the
minimum wage rate. In sum, the implementation and enforcement of minimum wages is
dismal and marginalised groups and communities suffer the most. The government has
announced that many amendments are underway to improve enforcement such as penal
action against violations and mandatory revision of minimum wages every 5 years.
•Large Unemployment: Ensuring a payment at the minimum wage rate does not ensure
employability to a willing worker. Many workers out of desperation then accept a wage below
the minimum wage. Workers are too weak and vulnerable to demand their rights and after
liberalisation, collective rights to have grown weaker with decreasing power of trade unions.
These two factors combined give the employer the capacity to offer employment at wages
below the minimum wage rate. There have also been cases where workers are paid wages
below the minimum wage floor in government funded road and construction projects.
•Less protection against inflation: Real minimum wage rates may decline in the face of
accelerating inflation for three main reasons. Firstly, wages are not revised as frequently as
prescribed in the norms i.e. not more than 5 years. In fact it is believed that revision every 3
years and even alternate years not only to help workers from increasing costs of living but
also to improve supervision of the act. Secondly, many states do not provide for dearness
allowance, a safeguard against inflation and finally minimum wages are not linked to a “cost
of living index.”
•Exemptions from payment of Minimum Wages: Government projects have been known to
resort to various channels for paying wages below the minimum wage rate. They use methods
such as special notifications and exemption clause (26-2) of the Minimum Wages Act.
•Lack of awareness: Many citizens are not aware of the existence of a statutory provision
that ensures a minimum wage rate. "80% of workers earn less than INR 20/day or less than
half of government stipulated minimum wage rate (rural INR 49 and urban INR 67).
•Delays and inaction: There are delays in appointment of committees for fixation, revision
and implementation. A lot of industries and industries do not fall under the purview of the
act as their specific minimum wage rates are yet to be fixed. Permanent Labour Inspectors
have not been posted in many districts and those posted are known to not visit their districts
regularly.

THE PAYMENT OF BONUS ACT, 1965

INTRODUCTION

The practice of paying bonus in India appears to have originated during First World War when
certain textile mills granted 10% of wages as war bonus to their workers in 1917. In certain
cases of industrial disputes demand for payment of bonus was also included. In 1950, the Full
Bench of the Labour Appellate evolved a formula for determination of bonus. A plea was
made to raise that formula in 1959. At the second and third meetings of the Eighteenth
Session of Standing Labour Committee (G. O.I.) held in New Delhi in March/April 1960, it was
agreed that a Commission be appointed to go into the question of bonus and evolve suitable
norms. A Tripartite Commission was set up by the Government of India to consider in a
comprehensive manner, the question of payment of bonus based on profits to employees
employed in establishments and to make recommendations to the Government. The
Government of India accepted the recommendations of the Commission subject to certain
modifications. To implement these recommendations the Payment of Bonus Ordinance, 1965
was promulgated on 29th May, 1965. To replace the said Ordinance the Payment of Bonus
Bill was introduced in the Parliament.
STATEMENT OF OBJECT AND REASONS
A Tripartite Commission was set by the Government of India by their resolution No.WB-
20(9)/61, dated 6th December, 1961 to consider in a comprehensive manner, the question of
payment of bonus based on profits to employees employed in establishments and to make
recommendations to the Government. The Commission’s Report containing their
recommendations was received by the Government on 24th January, 1964. In their
Resolution No. WB- 20(3)/64, dated the 2nd September, 1964, the Government announced
acceptance of the Commission’s recommendations subject to a few modifications as were
mentioned therein. With a view to implement the recommendations of the Commission as
accepted by the Government, the Payment of Bonus Ordinance, 1965, was promulgated on
29th May, 1965. The object of the Bill is to replace the said Ordinance.
The notes on clauses explain the various provisions of the Bill.
ACT 21 OF 1965

“The Payment of Bonus Bill having been passed by both the Houses of Parliament received
the assent of the President on 25th September, 1965. It came on the Statute Book as THE
PAYMENT OF BONUS ACT, 1965 (21 of 1965).”

The Scope and Extent of the Payment under Bonus Act 1965

The preamble of the Act states that the main objective of the Act is to provide for the
payment of bonus, persons in certain establishments on the basis of profits just to maintain
peace and harmony between labour and capital. The scheme of the Act, broadly stated, is
four- dimensional i.e.-
(i) To impose statutory liability upon the employer of an establishment covered by this Act to
pay bonus to employees of the establishment;

(ii) To define the principle of payment of bonus according to the prescribed formula;

(iii) To provide for minimum and maximum bonus and liking the payment of bonus with the
‘set on’ and ‘set off scheme; and

(iv) To provide machinery for the enforcement of the liability for payment of bonus.

A minimum bonus has been fixed by the act at 8.33% of the wages or salary of an employee
irrespective of the fact whether there is a profit in the concern or not. Bonus is no longer
linked with production or producing. Liabilities for payment of bonus are statutory liability
and not a contingent liability.

Application of the Act:-

According to section 1(2), the payment of Bonus Act extends to whole of India and applies to
every factory and other establishment in which 20 or more persons are employed on any day
during an accounting year. The Act came into force i.e. September 25, 1965.
A provision in Sec. 1(3) by the Amendment Act of 1976 now empowers the appropriate
government to make the provisions of this Act applicable to any establishment employing less
than twenty but not less than ten persons.
The appropriate government can do so after giving notice of not less than two months by
issuing a notification in the official gazette and specifying therein the accounting year from
which the enforcement of the provisions will be made. This amendment has benefited the
employees of smaller concerns which were not formerly covered by the Act. Once the Act has
been made irrespective of the fact that the number of persons employed therein falls below
twenty or below the number specified in the notification as the case may be at a later stage.
 THE EQUAL REMUNERATION ACT, 1976

An Act to provide for the payment of equal remuneration to men and women workers and
for the prevention of discrimination, on the ground of sex, against women in the matter of
employment and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Twenty-seventh Year of the Republic of India as

follows:—

This Act may be called the Equal Remuneration Act, 1976.

(2) It extends to the whole of India.
(3) It shall come into force on such date1, not being later than three years from the passing
of this Act, as the Central Government may, by notification, appoint and different dates may
be appointed for different establishments or employments.

1. Duty of employer to pay equal remuneration to men and women workers for same work
or work of a similar nature. — No employer shall pay to any worker, employed by him in an
establishment or employment, remuneration, whether payable in cash or in kind, at rates less
favourable than those at which remuneration is paid by him to the workers of the opposite
sex in such establishment or employment for performing the same work or work of a similar
nature.
(2) No employer shall, for the purpose of complying with the provisions of sub-section, reduce
the rate of remuneration of any worker.
(3) Where, in an establishment or employment, the rates of remuneration payable before the
commencement of this Act for men and women workers for the same work or work of a
similar nature are different only on the ground of sex, then the higher (in cases where there
are only two rates), or, as the case may be, the highest (in cases where there are more than
two rates), of such rates shall be the rate at which remuneration shall be payable, on and
from such commencement, to such men and women workers:
Provided that nothing in this sub-section shall be deemed to entitle a worker to the revision
of the rate of remuneration payable to him or her with reference to the service rendered by
him or her before the commencement of this Act.

2. No discrimination to be made while recruiting men and women workers.—On and from
the commencement of this Act, no employer shall, while making recruitment for the same
work or work of a similar nature, [or in any condition of service subsequent to recruitment
such as promotions, training or transfer,] make any discrimination against women except
where the employment of women in such work is prohibited or restricted by or under any law
for the time being in force:
Provided that the provisions of this section shall not affect any priority or reservation for
Scheduled Castes or Scheduled Tribes, ex-servicemen, retrenched employees or any other
class or category of persons in the matter of recruitment to the posts in an establishment or
employment.
3. Advisory Committee. — For the purpose of providing increasing employment opportunities
for women, the appropriate Government shall constitute one or more Advisory Committees
to advise it with regard to the extent to which women may be employed in such
establishments or employments as the Central Government may, by notification, specify in
this behalf.
(2) Every Advisory Committee shall consist of not less than ten persons, to be nominated by
the appropriate Government, of which one-half shall be women.
(3) In tendering its advice, the Advisory Committee shall have regard to the number of women
employed in the concerned establishment or employment, the nature of work, hours of work,
suitability of women for employment, as the case may be, the need for providing increasing
employment opportunities for women, including part-time employment, and such other
relevant factors as the Committee may think fit.
(4) The Advisory Committee shall regulate its own procedure.
(5) The appropriate Government may, after considering the advice tendered to it by the
Advisory Committee and after giving to the persons concerned in the establishment or
employment an opportunity to make representations, issue such directions in respect of
employment of women workers, as the appropriate Government may think fit.

The salient features of the Equal Remuneration Act, 1976

 The Act is a Central Legislation and applies to the whole of India.

 The objective of the Act is to provide for protection against discrimination of women
workers on the ground of sex, about the payment of equal remuneration in the matter
of employment.
 Restricting the employer to create terms and conditions in a contract of service or work
of labour contrary to equal pay for equal work doctrine and the provisions of Equal
Remuneration Act.
 The Act doesn’t make a distinction like employment or the period of employment and
applies to all workers even if engaged only for a day or few days.
 No overriding effect is given to any agreement, settlement or contract to the provisions
of the Equal Remuneration Act.
 Any settlement or any agreement with the employee that is detrimental to the employee
isn’t allowed. The Ministry of Labour and The Central Advisory Committee are responsible
for enforcing this Act.
 Meaning of equality of work: The equality of work is not based solely on the designation
or the nature of work but also on factors like qualifications, responsibilities, reliabilities,
experience, confidentiality, functional need and requirements commensurate with the
position in the hierarchy are equally relevant.
 When the employer doesn’t comply with the provisions of the act, he will be liable to pay
fine, imprisonment, or both
 LAWS FOR LABOUR WELFARE & SOCIAL SECURITY

1. Workmen compensation Act 1948

An Act to provide for certain benefits to employees in case of sickness, maternity and
‘employment injury’ and to make provision for certain other matters in relation thereto.
WHEREAS it is expedient to provide for certain benefits to employees in case of sickness,
maternity and employment injury and to make provision for certain other matters in relation
thereto;
It is hereby enacted as follows: —

1. Title: This Act may be called the Employees’ State Insurance Act, 1948.
2. It extends to [the whole of India.
(3) It shall come into force on such date or dates as the Central Government may, by
notification in the Official Gazette, appoint, and different dates may be appointed for
different provisions of this Act and [for different States or for different parts thereof].
(4) It shall apply, in the first instance, to all factories (including factories belonging to the
Government other than seasonal factories.
Provided that nothing contained in this sub-section shall apply to a factory or establishment
belonging to or under the control of the Government whose employees are otherwise in
receipt of benefits substantially similar or superior to the benefits provided under this Act.

(5) The appropriate Government may, in consultation with the Corporation and [where the
appropriate Government is a State Government, with the approval of the Central
Government, after giving [one month’s] notice of its intention of so doing by notification in
the Official Gazette, extend the provisions of this Act or any of them, to any other
establishment, or class of establishments, industrial, commercial, agricultural or otherwise.
Provided that where the provisions of this Act have been brought into force in any part of a
State, the said provisions shall stand extended to any such establishment or class of
establishments within that part if the provisions have already been extended to similar
establishment or class of establishments in another part of that State.

(6) A factory or an establishment to which this Act applies shall continue to be governed by
this Act not withstanding that the number of persons employed therein at any time falls
below the limit specified by or under this Act or the manufacturing process therein ceases to
be carried on with the aid of power.]

OBJECTIVE OF THE ACT

The Employees Slate Insurance Act (ESI Act) was enacted with the object of introducing a
scheme of health insurance for industrial workers. The scheme envisaged by it is one of
compulsory State Insurance providing for certain benefits in the event of sickness, maternity
and employment injury to workmen employed in or in connection with the work in factories
other than seasonal factories. The ESI Act, which has replaced the Workmen' Compensation.
DEFINITIONS

(1) "confinement" means labour resulting in the issue of a living child or labour after 26 weeks
of pregnancy resulting in the issue of a child whether alive or dead to be given compensation;

(2) "contribution" means the sum of money payable to the Corporation by the principal
employer in respect of an employee and includes any amount payable by or on behalf of the
employee in accordance with the provisions of this Act and is bound to do so irrespective of
employee;

(6) "Corporation" means the Employees' State Insurance Corporation set up under this act

(6A) "dependant" means any of the following relatives of a deceased insured person,
namely,-

(i) a widow, a legitimate or adopted son who has not attained the age of 25 years, an
unmarried legitimate or adopted daughter. (2010 amendment), a widowed mother;

(ii) if wholly dependent on the earnings of the insured person at the time of his death, a
legitimate or adopted son or daughter who has attained the age of 25 years and is infirm;
(2010 amendment)

(iii) if wholly or in part dependent on the earnings of the insured person at the time of his
death,-

(a) a parent other than a widowed mother,

(b) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or
adopted or illegitimate if married and a minor or if widowed and a minor,
(c) a minor brother or an unmarried sister or a widowed sister if a minor,
(d) a widowed daughter-in-law,
(e) a minor child of a pre-deceased son,
(f) a minor child of a pre-deceased daughter where no parent of the child is alive, or
(g) a paternal grand-parent if no parent of the insured person is alive,

(8) "employment injury" means 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;
(11) "Family" means all or any of the following relatives of an insured person, namely,-

(i) a spouse;
(ii) a minor legitimate or adopted child dependent upon the insured person;
(iii) a child who is wholly dependent on the earnings of the insured person and who is-
(a) receiving education, till he or she attains the age of twenty-one years,
(b) an unmarried daughter;
(iv) a child who is infirm by reason of any physical or mental abnormality or injury and is
wholly dependent on the earnings of the insured person, so long as the infirmity continues;
(v) Dependant parents, whose income from all sources does not exceed such income as may
be prescribed by the Central Government;
(vi) in case the insured person is unmarried and his or her parents are not alive, a minor
brother or sister wholly dependent upon the earnings of the insured person.

(12)"factory" means any premises including the precincts thereof whereon 10 or more
persons are employed or were employed on any day of the preceding 12 months, and in any
part of which a manufacturing process is being carried on or is ordinarily so carried on, but
does not include a mine subject to the operation of the Mines Act, 1952 or a railway running
shed. (2010 amendment)

(14A) "managing agent" means any person appointed or acting as the representative of
another person for the purpose of carrying on such other person's trade or business, but
does not include an individual manager subordinate to an employer;

(14B) "miss-carriage" means expulsion of the contents of a pregnant uterus at any period
prior to or during the 26 weeks of pregnancy but does not include any miss-carriage,

(15A) "permanent partial disablement" means such disablement of a permanent nature, as

reduces the earning capacity of an employee in every employment which he was capable of
undertaking at the time of the accident resulting in the disablement:

(22) "wages" means all remuneration paid or payable, in cash to an employee, if the terms
of the contract of employment, express or implied, were fulfilled and includes any payment
to an employee in respect of any period of authorized leave, lock-out, strike which is not
illegal or lay -off and other additional remuneration, if any, paid at intervals not exceeding
two months, but does not include-

(a) any contribution paid by the employer to any pension fund or provident fund, or under
this Act;

(b) (any travelling allowance or the value of any travelling concession;

(c) any sum paid to the person employed to defray special expenses entailed on him by the
nature of his employment; or

(d) any gratuity payable on discharge.

 MATERNITY BENEFIT ACT 1961

An Act to regulate the employment of women in certain establishment for certain period
before and after child-birth and to provide for maternity benefit and certain other benefits.

Be it enacted by Parliament in the Twelfth Year of the Republic of India as follows: -

1) This Act may be called the Maternity Benefit Act, 1961.

(2) It extends to the whole of India.
(3) It shall come into force on such date as may be notified in this behalf in the Official
Gazette, --
(a) In relation to mines and to any other establishment wherein persons are employed for the
exhibition of equestrian, acrobatic and other performances, by the Central Government, and
(b) In relation to other establishments in State, by the State Government.

2. Application of Act. -- It applies in the first instance, to every establishment being a

Factory, mine or plantation [including any such establishment belonging to Government
And to every establishment wherein persons are employed for the exhibition of equestrian,
acrobatic and other performances]:

Provided that the State Government may, with the approval of the Central Government, after
giving not less than two months’ notice of its intention of so doing, by notification In the
official on In the official Gazette, declare that all or any of the provisions of this Act shall apply
also to any other establishment or class of establishments, industrial, commercial, agricultural
or otherwise.

(2) [Save as otherwise provided in 6[sections 5A and 5B] nothing contained in this Act] shall
apply to any factory or other establishment to which the provisions of the Employees’ State
Insurance Act, 1948 (84 of 1948), apply for the time being.

In this Act, unless the context otherwise requires, --

(a) “Appropriate Government” means in relation to an establishment being a mine 7[or an
establishment where persons are employed for the exhibition of equestrian, acrobatic and
other performances], the Central Government and in relation to any other establishment, the
State Government;
(b) “Child” includes a still-born child;
(c) “Delivery” means the birth of a child;
(d) “Employer” means –
(i) in relation to an establishment which is under the control of the Government, a person or
authority appointed by the Government for the supervision and control of employees or
where no person or authority is so appointed, the head of the department;
(ii) in relation to an establishment which is under any local authority, the person appointed
by such authority for the supervision and control of employees or where no person is so
appointed, the chief executive officer of the local authority;
(iii) in any other case, the person who are the authority which has the ultimate control over
the affairs of the establishment and where the said affairs are entrusted to any other person.
4. Employment of, or work by, women prohibited during certain period. – No employer
shall knowingly employ a woman in any establishment during the six weeks immediately
following the day of her delivery or her miscarriage.

(2) No woman shall work in any establishment during the six weeks immediately following the
day of her delivery of her miscarriage.

(3) Without prejudice to the provisions of section 6, no pregnant woman shall, on a request
being made by her in this behalf, be required by her employer to do during the period specified
in sub-section.

(4) any work which is of an arduous nature or which involves long hours of standing or which
in any way is likely to interfere with her pregnancy or the normal development of the foetus,
or is likely to cause her miscarriage or otherwise to adversely affect her health.

(4) The period referred to in sub-section shall be –

(a) At the period of one month immediately preceding the period of six weeks, before the
date of her expected delivery;
(b) Any period during the said period of six weeks for which the pregnant woman does not
avail of leave of absence under section 6.

5. Right to payment of maternity benefit. -- (1) Subject to the provisions of this Act, every
woman shall be entitled to, and her employer shall be liable for, the payment of maternity
benefit at the rate of the average daily wage for the period of her actual absence immediately
preceding and including the day of her delivery and for the six weeks immediately following
that day.

Explanation. – For the purpose of this sub-section, the average daily wage means the average
of the woman’s wages payable to her for the days on which she has worked during the period
of three calendar months immediately preceding the date from which she absents herself on
account of maternity, or one rupee a day, whichever is higher.

(2) No woman shall be entitled to maternity benefit unless she has actually worked in an
establishment of the employer from whom she claims maternity benefit for a period of not less
than one hundred and sixty days in the twelve months immediately preceding the date of her
expected delivery:
Provided that the qualifying period of one hundred and sixty days aforesaid shall not apply to
a woman who has immigrated into the State of Assam and was pregnant at the time of the
immigration.
Explanation: - For the purpose of calculating under this sub-section the days on which a
woman has actually worked in the establishment, the days for which she has been laid-off
during the period of twelve months immediately preceding the date of her expected delivery
shall be taken into account.

(3) The maximum period for which any woman shall be entitled to maternity benefit shall be
twelve weeks, that is to say, six weeks up to and including the day of her delivery and six weeks
immediately following that day: Provided that where a woman dies during this period, the
maternity benefit shall be payable only for the days up to and including the day of her death.
 THE EMPLOYEES’ PROVIDENT FUNDS AND
MISCELLANEOUS PROVISIONS ACT, 1952
An Act to provide for the institution of provident funds, pension fund and deposit-linked
insurance fund for employees in factories and other establishments.

Be it enacted by Parliament as follows:-

This Act may be called the Employees‟ Provident Funds and Miscellaneous Provisions Act,
1952.

(2) It extends to the whole of India except the State of Jammu and Kashmir.

(3) Subject to the provisions contained in section 16, it applies –

(a) To every establishment which is a factory engaged in any industry specified in Schedule I
and in which twenty or more persons are employed and
(b) To any other establishment employing twenty or more persons or class of such
establishments which the Central Government may, by notification in the Official Gazette,
specify, in this behalf:
Provided that the Central Government may, after giving not less than two months‟ notice of
its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to
any establishment employing such number of persons less than twenty as may be specified
in the notification.

(4) Notwithstanding anything contained in sub-section 3 of this section or-sub-section 1 of

section16, where it appears to the Central Provident Fund Commissioner, whether on an
application made to him in this behalf or otherwise, that the employer and the majority of
employees in relation to any establishment have agreed that the provisions of this Act should
be made applicable to the establishment, he may, by notification in the Official Gazette, apply
the provisions of this Act to that establishment on and from the date of such agreement or
from any subsequent date specified in such agreement.

(5) An establishment to which this Act applies shall continue to be governed by this Act
notwithstanding that the number of persons employed therein at any time falls below
twenty.

Objective and applicability of the Employees’ Provident Fund & Misc. Provisions Act,
1952 – The EPF & MP Act, 1952 is created for the purpose of social welfare of an employee.
Any factory or establishment engaging 20 or more employees, whether directly or through
contractors is liable to be covered under this Act.

Basic Wages – The contribution is calculated on the basic wages and dearness allowance but
does not include food allowance, house rent allowance (HRA), overtime allowance, bonus,
commission etc.

Wage Limit – The wage limit to be covered under this Act is Rs.15, 000/- per month.
Quantum of Contribution – The contribution of the employer shall be calculated at 10% of
the wages in general and 12% in certain classes of establishment as prescribed by the Central
Government. An employee shall pay the equal share of contribution as paid by his employer.

Penalty for Default of Payment by the Employer – An employer is liable to pay damages on
being a defaulter. However, this can extend up to imprisonment of 3 years and a fine of Rs.
10, 000/-

Voluntary Contribution – An establishment having less than 20 employees can also cover
itself voluntarily under the EPF & MP Act, 1952 unlike the ESI Act, 1948 which does not allow
voluntary coverage.

Purpose & Object The Employees' Provident Funds & Miscellaneous Provisions Act,
1952has been enacted with the main objective of protecting the interest
of the employees after their retirement and their dependents after death
of the employee. The Act provides insurance to workers and their
dependents against risks of old age, retirement, discharge,
retrenchment or death.

EPF Applicability  The Employees' Provident Funds & Miscellaneous Provisions

Act, 1952 extends to whole of India except the state of Jammu &
Kashmir.
 It applies on every establishment employing 20 or more persons
& engaged in industry specified in Schedule I of the Act or any
other activity notified by the Central Government.
 It applies to all departments / branches of an establishment
wherever situated.
 Any establishment employing even less than 20 persons can be
covered voluntarily under section 1(4) of the Act.
EPF Eligibility  Employees drawing salary / wages at the time of joining up-to Rs.
6,500/- per month are governed by the provisions of the Act;
 Employees drawing salary / wages more than Rs. 6,500/- per
month may also be brought under the purview of the Act at the
discretion of the management and by furnishing a joint
undertaking to the Provident Fund Commissioner;
 Employees engaged through the Contractor in or in connection
with the work of an establishment are also covered under the
purview of the Act.
 THE PAYMENT OF GRATUITY ACT, 1972

An Act to provide for a scheme for the payment of gratuity to employees engaged in factories,
mines, oilfields, plantations, ports, railway companies, shops or other establishments and for
matters connected therewith or incidental thereto. Be it enacted by Parliament in the
Twenty-third Year of the Republic of India as follows:-

(1) This Act may be called the Payment of Gratuity Act, 1972.

(2) It extends to the whole of India: Provided that in so far as it relates to plantations or ports, it shall
not extend to the State of Jammu and Kashmir.

(3) It shall apply to-

(a) Every factory, mine, oilfield, plantation, port and Railway Company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation
to shops and establishments in a State, in which ten or more persons are employed, or were
employed, on any day of the preceding twelve months;
(c) 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, as the Central Government
may, by notification, specify in this behalf.

(3-A) A shop or establishment to which this Act has become applicable shall continue to be governed
by this Act, notwithstanding that the number of persons employed therein at any time after it has
become so applicable falls below ten.

(4) It shall come into force on such date as the Central Government may, by notification, appoint.

“The main purpose and concept of gratuity is to help the workman after the retirement,
whether the retirement is a result of the rules of superannuation or physical disability or
impairment of the vital part of the body. Gratuity is the amount which is not connected with
any consideration and has to be considered as something given freely for the service the
employee has rendered to the organization for more than 5 years”

APPLICABILITY:-

 Every factory (as defined in Factories Act), mine, oilfield, plantation, port and railway.
 Every shop or establishment to which Shops & Establishment Act of a State applies in
which 10 or more persons are employed at any time during the year end.
 Any establishment employing 10 or more persons as may be notified by the Central
Government.
 Once Act applies, it continues to apply even if employment strength falls below 10
CONTINUOUS SERVICE. -

An employee shall be said to be in continuous service even his/her service in interrupted by

way

 sickness,
 accident,
 leave,
 absence from duty without leave,
 leave with full wage,
 temporary disablement,
 laid-off period,
 Maternity leave for 12 weeks (in case of female) whether such uninterrupted or
interrupted service was rendered before or after the commencement of this Act.

In case of period of one year

Employee will be treated as he in continuous service, if he is employed by employer for the

period of

 190 days employment under the ground in mines, or in establishment which works less
than 6 days in a week.
 240 days in case of other any establishments (factories, companies, etc.)

In case of period of 6 months

Employee will be treated as he in continuous service, if he is employed by employer for the

period of

 95 days employment under the ground in mines, or in establishment which works less
than 6 days in a week.
 120 days in case of other any establishments (factories, companies, etc.)

An employee of a seasonal establishment shall be deemed to be in continuous service if

he has actually worked for not less than 75% of the numbers of days on which the
establishment was in operation during the 1 year or 6 months. Seasonal Establishments
in which, although work is carried on throughout the year, the number of employees is
regularly subject to seasonal fluctuations for reasons associated with the weather, their
sales or their location. For example, hotels and restaurants in health spas and holiday
resorts, gravel and sand pits and stone quarries are deemed to be seasonal
establishments.
3. CONTROLLING AUTHORITY. –

The appropriate Government may, by notification, appoint any officer to be a controlling

authority, who shall be responsible for the administration of this Act and different
controlling authorities may be appointed for different areas.

4. PAYMENT OF GRATUITY. -

(1) Gratuity shall be payable to an employee on the termination of his employment after he
has rendered continuous service for not less than 5years, -

(a) On his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of 5 years shall not be necessary where
the termination of the employment of any employee is due to death or disablement:

Provided further that in the case of death of the employee, gratuity payable to him shall be
paid to his nominee or, 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.

Calculation of gratuity

Gratuity = Monthly salary X 15 X Number of years of service

26

 Monthly salary= last month drawn salary by the employee.

 26 = total number of working days in a month.
 15 = number of days in half of the month.

[Sec 4(3)] The maximum amount of gratuity payable to an employee shall not
exceed 3, 50,000/- rupees. (According to the latest 2010 amendment the maximum
gratuity payable amount was increased to rupees 10, 00,000/-).