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COMPENSATION

REGULATIONS
IN
INDIA

By:
Mayank Jain
Soniya Tiwari
Chinmayi
Archana
Agenda
 Minimum Wages Act, 1948

 Payment of Bonus Act, 1965

 Payment of Gratuity Act, 1972


THE MINIMUM WAGES ACT, 1948
 AN ACT TO PREVENT “SWEATED LABOUR AND
EXPLOITATION OF LABOUR”

 The Act extends to the whole of India

 Requires the Central and State Govt. to fix minimum


rates of wages in certain scheduled employment.

 Minimum wages fixed REVISED from time to time


within 5 yrs. -- Sec. 3(1)(b)
Wages
Sec. 2(h)
 All remunerations capable of being
expressed in terms of money &
includes HRA but does not include:
 Value of any house accommodation,
supply of light, water
 Contribution to PF
 Any travelling allowance
 Any gratuity payable on discharge
Important Sections
 Minimum Wage – weather to be paid
in cash or kind (Sec 11)
 Payment of Minimum Wages is
obligatory on employer (Sec 12)
 Wages of a worker who works less
than normal working day (Sec 15)
 Offences and Penalties (Sec 22)
Responsibility of the Employer

 to follow the directions and fix wages of the


workers at the rate not less than the one fixed
 to maintain Register of Wages in form XI showing
rate of wages payable,
actual amount paid,
attendance & overtime,
deductions for EPF, ESI and other,
net amount paid,
date of payment and
signature of respective employee.
 Wages slip in form XIII showing the above details
to be given to every employee.
THE PAYMENT OF BONUS ACT,
1965
 An Act to provide for the payment of Bonus to
persons in certain establishments on the basis
of profits, production or productivity.
 Extends to the whole of India.
 Applies to every establishment wherein 20 or
more are employed
 The Appropriate Govt. shall apply the Act to any
other establishment, including a factory to
which the Factories Act, 1948 applies, wherein
less than 20 workers are employed provided the
number of persons employed is not less than
10.
Eligibility to Bonus
 employee whose salary/ wages does not
exceed Rs 10000 per month
 who has worked in the establishment for
not less than 30 days
 Not disqualified to claim bonus due to
fraud, theft or any other misconduct
 Bonus of very person drawing salary
between Rs 3500/- and Rs 10000/- per
month shall be calculated as if his salary
were Rs 3500 pm
For calculating the number of
working days
 the days for which the worker has been laid
off
 the days he has been on leave with pay
 the days he has been absent due to
temporary disablement caused by an
employment injury
 the days a woman employee has been on
maternity leave
shall be taken in to account.
Rate of Bonus

 Minimum :8.33% of salary/wages


 Maximum 20% of salary/wages
 Computation of bonus as per Schedule I to IV
of the Act.
 Adjust any interim bonus paid while making
payment of the final bonus.
Disputes on Bonus
 The Bonus Act does not provide
for any machinery to resolve
disputes relating to bonus. For
this, the Industrial Dispute Act
shall be referred to.
THE PAYMENT OF GRATUITY
ACT, 1972
 The Payment of Gratuity Act, 1972 extends
to the whole of India.

 Applies to every factory, mine, plantation


and other establishment wherein 10 or
more workers are employed.
Gratuity is in the nature of
a retirement benefit
payable to an employee for
a long and meritorious
service.
• It is not paid to an employee gratuitously or
merely as a matter of boon. It is paid for
the service rendered by him to the
employer (Delhi Cloth and General Mills
Co; Ltd Vs The Workmen)
Gratuity is payable to an employee on
termination of his employment after he has
rendered continuous service for not less than
five years
 on his superannuation
 on his resignation
 on his death or disablement due to employment injury or
disease

Payment of Gratuity shall be forfeited:

to the extent of the damage or loss caused by the


employee to the property of the employer
where the service of the employee is terminated
due to misconduct
Rate of gratuity

 15 days wages for every completed year


of service
 The average pay of the monthly rated
employee shall be taken by
dividing the monthly salary/ wages by
26 and not by 30
Piece rate workers and
Seasonal establishments
 For piece rated workers, average
of the three months wages
immediately preceding the day of
leaving shall be taken as average
rate of wage
 An employee in a seasonal
establishment shall be paid @
seven days wages for each
season
Salary ceiling
 The Amendment Act of 1994
removed the salary ceiling of
an employee, but the
maximum gratuity payable
shall be Rs 3.5 lakh.
Continuous Service
 An employee is in service in a
calendar year provided he has
worked for
 190 days in case employee is
employed below the ground and
 240 days in any other case.
Continuous service (contd.)

The days he/she has been


 laid off under an agreement or under the ID
Act or as permitted by the Standing Orders
 on leave with pay
 absent due to temporary disablement due
to employment injury
 on maternity leave
shall be taken as worked for the
calculation of 190/240 days.
For seasonal employment 75%
attendance during a season shall
constitute service in a year

 An employee who has worked for 4 years


11 months and 10 days not eligible for
gratuity as decided in P. Raghavalu and
Sons Vs Additional Labour Court, Andhra
Pradesh, as the qualifying phrases ‘part
thereof in excess of six months’ shall be
taken only for calculation of gratuity and
not for determining the eligibility of
gratuity.
THANK YOU