INDIAN LABOUR LAWS

The prosperity of any economy to a large extend depends on the industry. The success of any industry is based on the cordial relation between the members of the industry. That is economic progress of the country is largely depends on the good relation between the employer and employee. Similar to the protection given to investors, Shareholders and other stakeholders, labourers are equally protected through the enactments of various labour laws. These labour laws are intended to protect the interests of laboures and thereby ensure their satisfaction and their active   participation in nation building. The existing labour laws in India are applicable to all sectors but unfortunately the majority of our population unaware about their rights. The malice of unfair labour practices and victimization of workers are at large. Compliance of labour legislation is neglected and nobody treats it as a heinous act. Here I wish to list out some of the important legal compliances which are required to be complied with by companies under various labour laws.

Employees Provident Funds Act, 1952

Coverage: Establishments employing 20 or more persons and engaged in any of the 180 industries / Classes of Businesses specified. Co-operative Societies, employing 50 or more persons & working without the aid of power. Establishments not coverable statutorily can come under the coverage of the Act statutorily. An establishment continues to be covered under the Act, irrespective of the fall in the employment strength. Since the Act applies of its own force to the establishments, the employers are required to file the particulars in the specified format for registration and allotment of business number. Contributions: The statutory rate of contribution is 12% of emoluments (basic wages, dearness allowance, cash value of food concession and retaining allowance if any,) in the case of 175 establishments. The rate of contribution shall be 10% in the case of the following: Brick, beedi, jute, guar gum factories, coir industry other than spinning  sector. Establishments declared as sick undertakings by BIFR. A matching contribution is to be collected from the emoluments of the employees. Out of 12% (or 10% as the case may be) of the employer’s share of contribution, 8.33% is to be remitted towards pension fund. The employer is also required to pay a contribution of 0.5% of the emoluments towards EDLIS’1976. Administrative Charges: An employer is required to pay administrative charges at 1.10% of emoluments towards provident fund charges and 0.01% towards EDLI Scheme 1976.  No separate administrative charges for pension scheme Inspection Charges: In respect of exempted establishment under P.F. Scheme employer is liable to pay only inspection charges at the rate of 0.18% of emoluments. In the case of establishment exempted from EDLI  Scheme, the employer is required to pay only inspection charges at the rate of 0.005%  of emoluments. Interest Liability: For belated remittances of contributions, administrative / inspection charge interest at the rate of 12% on such remittances for the period of delay is to be remitted. Damages: For all the belated remittances of contribution and administration/inspection charges damages are also payable as penalty ranging from 17% to 37% p.a. depending upon delay. Duties of Employer: Enroll in all categories of employees including the employees engaged by or through contractors and also piece rated, hourly rated employees. Remit the contributions and administrative charges before the 15th of the following month. File the initial returns of Form 9, Form 3 (P.S.), form 5A. File the monthly returns in Form 12A, Form 5, Form 10 and Challans for remitting the dues. Maintain the contribution card in respect of each employee in Form 3A and submit the annual returns in Form 3A and 6A after reconciliation with Challans and form 12A. The employer has to ensure that statutory dues in respect of contractors’ employees are remitted and returns filed. The employer should attest the form  No.2 and  the claims forms submitted by the member/ legal heirs/ nominees. Make available all relevant records for inspection to the visiting officials with due authorisation.

Recent EPF Initiatives:

Like any other Government initiatives, the Provident fund organization also entered online through www.epfindia.com. The website provides so many online facilities to both employers and members. http://members.epfoservices.in/, allows members to register with EPF website and enjoy lots of benefits such as View your EPF Account Passbook online etc.

One can know the balance in his account at http://www.epfindia.com/MembBal.html

For employers, they can submit returns online and make online payments.

The Payment of gratuity Act, 1972. An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines, oil fields, 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 Republic of India A gratuity is a lump sum payment to the employee when he retires or leaves the service. It is basically a retirement benefit to an employee so that he can live life comfortably after retirement. However, under the Gratuity Act, gratuity is payable even to an employee who resigns after completing at least 5 years of service. The Act is applicable to all employees, irrespective of the salary. Maximum gratuity payable – Maximum gratuity payable is Rs 3.50 lakhs. [Section 4 (3)]. [Of course, employers can pay more. The employee has also right to get more if obtained under an award or contract with the employer, as made clear in section 4 (5)]. Income-tax exemption –  Gratuity received upto Rs. 3.50 lakhs is exempt from Income Tax. Gratuity paid above that limit is taxable. [Section 10 (10) of Income Tax Act]. - - However, employees can claim relief u/s 89 in respect of the excess amount. Gratuity cannot be attached –  Gratuity payable cannot be attached in execution of any decree or order of any civil, revenue or criminal court, as per section 13 of the Act. Compliances required. 1. Nomination form (section 6) Obtain a nomination form from workers who have completed one year service. 2. Payment of gratuity (section 4). The employer is liable to pay gratuity to employees on termination of employment after five years continuous service. It will be paid on his superannuation or retirement or resignation or death or disability. This amount shall be fifteen day's wages for every completed year of service. 3. Compulsory insurance (section 4A). Every employer is required to obtain insurance for his liability for the payment towards the gratuity under this Act from Life Insurance Corporation of India.

The payment of Bonus Act, 1965 The bonus is really a reward for good work or share of profit of the unit where the employee is working. Often there were disputes between employer and employees about bonus to be paid. It was thought that legislation will solve the problem and hence Bonus Act was passed. Unfortunately, in the process, bonus has become almost as deferred wages due to the provision of payment of minimum 8.33% and maximum 20% bonus. Bonus Act has not in any way reduced the disputes. Who are eligible for bonus – Employees drawing salary or wages up to Rs 3,500 per month are entitled to a bonus, if he has worked for at least 30 working days in an accounting year. Even a worker working in a seasonal factory is eligible if he has worked for at least 30 working days. Apprentices are not eligible for bonus. Salary above Rs. 2,500 is not considered for calculation of Bonus. [Section 12]. Employee drawing a salary / wage exceeding Rs 3,500 is not entitled to any bonus under the Act. Establishments to which the Act is applicable –  The Act applies to— (a) every factory; and (b) every other establishment in which twenty or more persons are employed on any day during an accounting year. [Section 1 (3)]. Eligibility for the bonus if worked for minimum 30 days – Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year. [Section 8] Minimum bonus –  Every employer shall be bound to pay for every employee in respect of any accounting year, a minimum bonus which shall be 8.33 per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year. Where an employee has not completed fifteen years of age at the beginning of the accounting year, the minimum bonus payable is 8.33% or Rs 60 whichever is higher. [Section 10]. Offenses by companies.-  (1) If the person committing an offense under this Act is a company, every person who, at the time the offense was committed, was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offense and shall be liable to be proceeded against and punished accordingly:        Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offense was committed without his knowledge or that he exercised all; due diligence to prevent the commission of such offense. (2) Notwithstanding anything contained in sub-section (1), where an offense under this Act has been committed by a company and it is proved that the offense has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager,  secretary or other officer shall also be deemed to be guilty of that offense and shall be liable to be proceeded against and punished accordingly.