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Deliberated Texts on Labour Law Compliance

Two days training program held at HRD Center of KPTCL Bangalore
on 26 & 27th October 2009.
Faculty: Ram K Navaratna- Chief Executive- HR Resonance, Bangalore.
(Visit: hrresonance.googlepages.com).
Training program excerpts compiled by: Mr.K.V.Seetharamaiah, AO, TL&SS Dvn.,
Holenarasipura Participant of the program.
Labour Laws:
Concurrent List: Where there is involvement of both Centre and States.
Central: There are 47 Acts on Labour Laws.
States:

Shops and Commercial Establishments.

Labour laws include:

(a)
(b)
(c)
(d)

Factories Act 1948

Shops and Commercial Establishment Act 1951
Plantation Labour Act 1951
Building and Other Construction workers (Regulation of Employment &
Conditions of Service) Act 1996.
1% Cess has to be recovered from the owners if the total cost of construction of
buildings, even if it is for domestic purpose, exceeds Rs. 1000000.

Laws relating to payment:

1.
2.
3.
4.

Payment of Wages Act 1936

Minimum Wage Act 1948
Payment of Bonus Act 1965
Equal Remuneration Act 1976.

Laws relating to Service conditions:

1. Contract Labour (Regulation and Abolition) Act 1970
2. The Inter-State Migrant Workmen (Regulation of employment and conditions of
Service Act 1979
3. Industrial Employment (Standing Orders) Act 1946
4. Industrial Disputes Act 1947.
Laws relating to Employment:
1. Employment Exchange (Compulsory Notification of Vacancies) Act 1959

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2. Child Labour (Prohibition & Abolition) Act 1986 (Employment of child labour
attracts penalty upto Rs. 10000 and imprisonment or both.
3. Holidays Industrial Establishment (National and Festival Holidays) Act 1963.
Laws relating to Welfare:
1.

Labour Welfare Fund Act 1965 (Example Rs.3/- recovered from employees and
corporation contribution of Rs. 6/- during December month every year)
2. Building and Other Construction Workers Welfare Cess Act 1996
Trade Union Act 1926
Other Labour Laws:
1. Sales Promotion Employees (conditions of service) Act 1976
2. Motor Transport Workers Act 1961
3. Apprentices Act 1961
4. Gratuity Act (applicable where more than 10 employees are engaged.
INDUSTRIAL DISPUTES ACT:
Works Committee is applicable where more than 100 workers are employed.
CONTRACT LABOUR ACT: Applicable where more than 20 contract employees are
engaged.
Motor Transport Workers are applicable where more than 5 employees are hired.
Provident Fund and Employees State Insurance Act applicable where more than 20
employees are working.
Building: Applicable where more than 10 workers are employed.
Maternity Act: Where more than 10 workers are working. Workers include both male
and female.
Approach to Law:
1. Positive Approach.
2. Natural Approach (Duty bound)
3. Rationale behind law.
Path to success:
1. Human values
2. Morality
3. Follow law
Changing expectations:
1. Removal of Inspector Raj

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2. User friendly.
Stake-holders:
1.
2.
3.

Employers
Employees
Government

Consequences of non-compliance of laws:

1.
2.
3.
4.
5.
6.

Death, destruction, diseases

Employees sufferings and their families
Mental anguish
Social stigma
May turn anti-social and anti-national
Long term effect on economy and psychology.

Consequences of non-compliance of laws:

1.
2.
3.
4.
5.

Fines
Imprisonment
Suspension of Licence from operating in future
Bad publicity
Strain on employer-employee relationship.

Broad compliance:
1.
2.
3.
4.

Rights of employees are protected.

Awareness on the duties of employees
Compensation, Welfare, PF.
Common mistakes and issues of concern.

Labour Law compliance:

1.
2.
3.
4.

Avert - The damages

Read the law - Have insight
Comply the law - Be safe
Know the law - Practice it

Strict compliance with sincerity and right spirits.

1.
2.
3.

Manage the law before it manages you;

Compliance is cheaper than litigation cost;
Sham contract:

Labour laws facilitate employers to regulate conditions.

Do not follow the path set by others. Make others follow the path set by you. (Japanese
saying).

PART - II:
1. Payment of Wages Act
The Act is applicable irrespective of the number of employees in any organization.
The above Act is applicable where monthly wages are upto and inclusive of Rs. 10000.
Wages are payable in cash. They can be payable by cheque or credit to the account of
employees also but on mutually agreed basis.
Payment of Wages: A wage period should not be longer than one month.
Wages include Basic, DA, Production and Incentives and all other
Allowances.
Responsibility for payment rests with the Manager or Occupier.
employer.

Occupier means

Wages are payable on or before 7th or 10th of the month following the month in which
service is rendered.
Payment should be made on or before 7th where less than 1000
employees are employed and on or before 10th where 1000 or more employees are
employed.
Wages are payable to dismissed or discharged employees within 2 days of
termination.
Deductions:
1. Authorized deductions
2. Fines, deductions for absence, damage, house accommodation, Income-Tax, Cooperative Society
Law allows for deductions upto 75% in respect of co-operatives..
Fine is imposable only for prescribed acts or omissions.
Fine not to exceed 3% of wages in a wage period.
Contracting out:
Difference between Act and Rules:
Act is like mother. Rules are meant for implementation of the provisions made in
the Act.
Preservation of Records:
Records relating to Income-Tax should be preserved for a period of not less than 10
years.
Abstract of Payment of Wages should be displayed both in Kannada and English.

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General obligations of employers:
1.
2.
3.
4.
5.
6.
7.
8.

Wage period
Payment within stipulated time
Payment in current coin and currency notes
Not to impose penalties without following prescribed procedures
Afford facilities to inspectors
Not to indulge in contracting out
Payment of undisbursed wages in respect of death of a person
Maintenance of Registers and Records

MINIMUM WAGES ACT 1948:

Wages means and includes Wages plus DA. 26 days are reckoned in a month for wages
i.e. Wages divided by 26.
1. Minimum wages to be revised once in 5 years.
2. Payment of wages to be in cash
Penalties:
1. 10 Times payment can be imposed as penalty
Discrimination:
Discrimination is not permissible on the basis of gender when the work is of same
nature and same quantum.
Minimum Wages: For Contract labour.
Unskilled persons
Semi skilled persons
Skilled persons
Highly skilled persons

Rs. 2635 pm
Rs. 2785 pm
Rs. 3335 pm

PAYMENT OF BONUS ACT:

Bonus is payable to those who are drawing a salary of Rs. 10000 and below.
includes Basic and DA.

Salary

An employee to be eligible for Bonus should have worked for a minimum period of 30
days in an accounting period. (It is financial year also in respect of KPTCL).
Forefeitue for Dismissed employees.
Minimum bonus is 8.33% and maximum 20%.
Bonus is payable within 8 months after the accounting period is over.

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Even a loss making unit is liable to pay bonus.
Payment of Gratuity Act:
One should have worked for a minimum period of 5 years to be eligible for gratuity.
This clause does not apply in case of death. Gratuity is payable to the persons who attain
superannuation or retire or tender resignation or face death or suffer disablement due to
disease or accident. Gratuity is calculated as follows:
Last Pay Drawn x 15 days x Number of years of service put in
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15 in the above formula denotes half month salary for every completed year of service.
Maximum amount of gratuity is Rs. 3.5 lakhs.
No attachment can be given by any court on the gratuity amount.
Tax exemption is accorded on gratuity amount upto Rs. 3.5 lakhs only.
WORKMENS COMPENSATION ACT:
Employers liability arises in respect of payment of compensation when an employee
suffers injury by accident out of, and in the course of his employment.
An employer is not liable to pay compensation due to injury which does not result in total
or partial disablement exceeding a period of 3 days.
Accident due to workman under the influence of drinks or drugs.
Willful disobedience of workman to an order expressly given or to a rule that prohibits an
employee from doing an act from the point of view of security and safety of workman.
Compensation has to be paid as soon as it falls due.
Payment made in the absence or without the knowledge of the Commissioner (refers to
Labour Commissioner) does not amount to compensation. In other words payment
directly made shall not be treated as compensation under the Act.
Employer has to make provisional payment with the Commissioner when dispute arises
with regard to the payment of compensation.
Compensation shall be paid by the insurer in case the employer is declared insolvent.
Contracting out is null and void.
Note: Contracting out means acting in contravention of the provisions made in the law.
Application for compensation shall be submitted in Form 22.

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The commissioner is vested with powers to call for further deposits in case of fatal
accidents (Form 22A). The Commissioner shall enjoy the powers of a Civil Court.
Appeal:
Can go in for appeal in Honble High Court within 60 days.
An employer is bound by law to:
1. Deposit the amount with the Commissioner
2. Deposit compensation as soon as it falls due
3. Adopt prescribed method of calculation
4. Report fatal accidents or serious bodily injuries
5. Not indulge in contracting out
MATERNITY BENEFIT ACT:
1. Applicable in organizations where 10 or more employees.
2. Where the woman employee has worked for a minimum period of 80 days before
delivery.
3. Maternity leave is granted for a minimum period of 84 days (12 weeks)
a. 6 weeks during pre-natal period
b. 6 weeks during post-natal period
4. A conceived woman cannot be dismissed or discharged on this ground
5. Medical certificate has to be produced by the woman employee to be entitled for
benefit under the Act
6. 6 weeks of leave are granted under the Act in the event of miscarriage.
7. 2 weeks of leave are extra for the woman who has undergone tubectomy
operations. Another 30 days in case of extended sickness subject to proof.
8. Unmarried woman is not barred from enjoying the benefits of the Act
9. 15 minutes break shall be allowed f to feed the infants till 15 months age of the
baby.
10. Annual Reports to be submitted.
11. Medical bonus Rs.2500.
12. If mother dies after giving birth to the baby, the benefit under the Act should be
extended to legal heir..
CONTRACT LABOUR (REGULATION AND ABOLITION) ACT:
The employer should:
1. manage both deliverables and expectations;
2. give full access to organization;
3. have communications with contractors quite often;
4. educate the contractor;
5. not jump into hasty conclusions;
6. listen and learn;
7. fund the project properly.
This Act applies to the concerns where 20 or more contract labourers are engaged.

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Registration and Licencing:
Registration is compulsory and under section 7 and licence under section 12 of the
Act.
Registration can be revoked if the licences are not renewed.
Appropriate
government is empowered to prohibit the contract labour under section 10.
Welfare and health:
The contractor is under obligations to provide canteen, rest room, first-aid facilities,
drinking water supply, latrines, urinals and washing facilities.
Payment of wages:
The Principal employer is responsible where the contractor fails to discharge his
legitimate duties subject to recoveries, if any, from the contractor.
When the contractor fails to make payment to the workers employed by him, the
principal employer should shoulder the responsibility for making payment and the
amount so paid can be recovered from the bill of the contractor.
Penal action will be taken for non-compliance.
The Principal employer has to maintain the Register of Contractors.
Laws applicable to Contract Labour Act are:
1. Payment of Wages Act
2. Minimum Wages Act
3. National Festival Holidays Act
4. Bonus Act
5. Gratuity Act
6. Workmens Compensation Act
7. Maternity Benefit Act
EMPLOYEES PROVIDENT FUND ACT:
1.
2.

Applicable to cases where 20 or more persons are employed (Factory engaged

in any industry specified in schedule in which 20 or more persons are
employed)
Any other establishment employing 20 or more persons or class of such
establishments which the central government may by notification in the
official gazette specify in this behalf.

Employer in relation to factory means Manager or Occupier.

Provident fund is compulsory upto salary of Rs. 6500. (Equal contribution.12%.
No attachment shall stand valid for Provident Fund amount. Employer is not at liberty to
reduce the wages. An employee has to give nomination in favour of the member(s) of
his/her family.

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The amount recovered towards Provident Fund should be credited to the account of the
employee on any day by 15th.
Form No. 5 is meant for addition of employees; form No. 10 for deletion of employees.
Form 12 A should be used along with challan and annual return has to be submitted in
Form 6A.
Rate of damages in percentage:
Less than 2 months
2 months and above but less than 4 months
4 months and above but less than 6 months
6 months and above

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10
15
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Duties of contractor: He/she has to:

1. cover all the employees;
2. obtain nomination;
3. file monthly/annual returns;
4. subscription payment in time;
5. annual slips;
6. expeditiously settle the claims;
Claims: Claims forms are obtainable free of cost from the PF office. Guidance can be
obtained from PRO and submit the claims and obtain the acknowledgement.
Accumulated amount has to be transferred to the name of new employer in case the
employer is changed. Nomination has to be executed for PF/EPF. Grievances and
redressal has to be registered.
INDUSTRIAL DISPUTES ACT:
Works Committee has to be set up where 100 workers or more are employed.
Strikes and Lock-outs without notice are illegal.
21 days notice has to be served in case of changes to be effected a stipulated in the S.9A.
Retrenchment: Last come first go basis shall be adopted.
Methodology:
Facultys abilities seen in making these laws very simple with many examples and
practicals. Explanation methods were superb. Made two days session very very
interesting without bore though subjects are dry. Due to this he evinced interest to many
of the participants. His Kannada songs on the above laws in his book Karmika Kavya
Sankalana really need applaud by all Kannadigas. These songs and his Labour law
Abstracts book in Kannada which he published containing 11 labour laws which are
translated to Kannada by him are extremely useful to each and everybody. Worth to
preserve this book.
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