PRESENTATION

ON
LABOUR ACCOUNTING
IN
ORDNANCE FACTORIES

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Structure of the Presentation

1.Industrial Employees of Ordnance Factories – its

classification, categorization etc.

2.Payment to Industrial Employees - Financial

Accounting.

3.Formulas different entitlements and distribution

of profit.

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Semi Skilled : Tradesmen and Labours
• Semi-Skilled workers in Ordnance/Ordnance Equipment
Factories are of two types viz. Semi-Skilled Tradesmen
and Semi-Skilled Labours.

• The tradesmen who are having adequate trade training are

recruited in the semi skilled grade on probation against
the available vacancies in skilled grade and after
successful completion of probation period and passing of
the requisite trade test they are placed as skilled
workers.

• Such placement in the skilled grade after putting in the

specific length of service in the Semi-Skilled grade should
not be treated as promotion/up-gradation for the purpose
of their future financial up-gradations.

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Semi Skilled : Tradesmen and Labours

• The semi skilled labours are basically unskilled and do

not have any trade training.

• Such semi-skilled labours must pass necessary trade

test for the Semi-skilled grade to be entitled for
appearing the trade test of the skilled grade and
further advancement in the hierarchy of the artisan
cadre.

• These Semiskilled labours are mainly the erstwhile

Group "D" unskilled labours and NIEs transferred /
redesignated as IEs.

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Master Craftsman

• Industrial workers have been classified w.e.f. 01-01-2006

into four grades viz, Skilled, Highly Skilled Grade II,
Highly Skilled grade I and Master Craftsman.

• With the issue of the above order of the Ministry of

Defence the post of Master Craftsman which was
previously within the strength of Highly Skilled grade, has
become part of the hierarchy of the artisan cadre w.e.f.
01-01-2006 .

• The movement of Highly Skilled Grade I to the grade of

Master Craftsman has become a promotional movement.

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• On Cadre restructuring Industrial Employees in
Ordnance Factories (commonly referred to as I.Es)
are classified into following categories: -

Grade Percentage of Sanctioned Posts

less Sanction for Labours

Master Craftsman 13.75%

Highly Skilled Grade I 20.625%

Highly Skilled Grade II 20.625%

Skilled 45%

Unlike previous restructuring on 20.05.2003 the movement from Skd

to HS – II, HS-II to HS-I and HS-I to MCM are all treated as
promotion. As such Master Craftsman is now a promotional post.
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• For the purpose of Payment and Cost Accounting,
Industrial Employees are further classified into
following categories: -
For Purpose of Payment For Costing Purpose

PIECE WORKERS DIRECT I.Es

DAY WORKERS INDIRECT I.Es

Piece Workers – I.Es engaged in standard jobs which can be estimated in terms of
standard time are paid on the basis of Piece Rate system.

Day Workers: - All other I.Es are paid on time basis.

Direct I.Es – I.Es engaged in Direct outturn Work orders. Mostly Piece Workers,. A
few Day Workers may also be engaged in Direct Outturn Work orders.

Indirect I.Es – Those engaged in Indirect Work Orders. All Indirect I.Es are Day
Workers.

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Piece work system – History in Ordnance Factories
• Concept of career progression in respect of IEs – 1st introduced
with implementation of Expert Classification Committee (ECC)’s
recommendation in 1981.
• Evolution of norms for career progression of IEs in Ordnance
Factories: -
Expert classification For 6 - 15 I.Es – 1 HS I//HS II
Committee: 16/10/81 16 - 25 I.Es – 2 HS I/HS II
26 – 35 I.Es – 3 HS I/HS II
36 - 45 I.Es – 4 HS I/HS II
46 – 55 I.Es – 5 HS I/HS II
each Addl 10 I.Es – 1 Addl HS I/HS II

GOI, MOD letter No HS Gr I 15%

3808/DS (O&M)/Civ-I/84 dt HS GR II 20%
15/10/84 Skilled 65%
Present Master Craftsman (placement) 13.75%
Highly Skilled Gr I 20.625%
Highly Skilled Gr II 20.625%
12/17/2018 Skilled 45% 8
 Piece work system – History in Ord. Fys
Evolution of pay scales of I.E’s in Ordnance Factories: -
1st CPC 2nd CPC 3rd CPC ECC 4th CPC 5th CPC 6th CPC
PB +GP
1947 1959 1973 1981 1986 1996 2006
HS Gr-I 80-220 130-300 330-560 380-560 1320-2040 4000-6000 1+ 2800

HS Gr-II 330-480 330-480 1200-1800 1+ 2400

SK 60-130 110-180 260-400 260-400 950-1500 3050-4590 1+ 1900

SSK 35-60 75-110 210-290 210-290 800-1150 2650-4000 1+ 1800

USK 30-35 70-85 196-232 196-232 750- 940 2550-3200 1 + 1300

PB-1 =
12/17/2018 5200-20200 , PB-2 = 9300-34800 9
 Piece work system – History in Ord. Fys
Evolution of pay scales of I.E’s in Ordnance Factories: -
th th
7 CPC 6 CPC
PB +GP
2016 2006
MCM Level 6 PB 2 +4200

HS Gr-I Level 5 PB1+ 2800

HS Gr-II Level 4 PB1+ 2400

SK Level 2 PB1+ 1900

SSK Level 1 PB1+ 1800

12/17/2018 PB-1 = 5200-20200 PB-2 = 9300-34800 10

Piece work system – Administration in Ord. Fys
• Piece Work System – Conducive for all standard & repetitive jobs.

• To start with, labour estimates are to be prepared [ consult Section –IV

of Chapter XXXI of OFB Procedure Manual]

– Estimates to be priced correct to two places of decimal.

– A list of production groups in a section to be maintained –

number of groups to be restricted to minimum, e.g. autos,
capstans, lathes, turrets, fitters etc.

– Grades of labour to apply to each production group.

– Standard data sheets to be prepared for use of estimating staff

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 TURRET

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 LATHES

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 CAPSTAN

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 FITTER

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Piece work system – Administration in Ord. Fys
• Standard Man hour (SMH) for a job = Preparation Time + Operation Time.
• Estimate for a Job will be prepared in terms of Total SMH required to
perform the job.
• Warrant quantity to be decided as (i) Ordered Qty + (ii) Normal unavoidable
rejection + (iii) Proof Quantity, if any. Total time required for a Warrant =
SMH as per Estimate X Warrant Quantity.
• Warrants are issued in terms of Time, i.e. Bare Standard Man Hours For
purpose of calculation of PW Profit, built in incentive factor (25%) will be
taken into account.
• For time rejected on the ground ‘bad workmanship’ – No Piece Work
Payment to be admitted.

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 Mustering system
* Daily working hours of an OF are 8 hours without
recesses & lunch break.
* The factory gate is opened half an hour before the
time fixed for commencement of work and closed at
fixed time.
* The procedure of attendance for late comers will be
made indicating late by 15 minutes, 30 minutes and up
to one hour.
* After implementation of Electronic Attendance
Recording System late is marked on minute to minute
basis instead of 15 minutes slot.
* No one is normally allowed inside the factory after
one hour

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Cont… 19
•The late attendance of workers due to late
running/cancellation of local/shuttle trains may be
condoned up to a maximum limit of three hours by the
GM of the Factory if he satisfied that late attendance
is solely due to late running of trains.

Marking of attendance in muster rolls will be done with

reference to the actual time of attendance of the
workers.

If any over time is worked by the affected personnel

on the date of late attendance, the overtime will be
reduced proportionately.

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Mustering on Saturday is distinct from other working
days

UNDER Factory Act 1948, no adult worker in a factory is

required to work more than 48 hours in a week.
The total normal working hours in a week in the Ordnance and
Ordnance Clothing Factories have however been fixed at 44¾
hours excluding intervals for recess. The difference between
48 hours and 44¾ hours i.e. 3¼ hours has been viewed as
Saturday Bonus

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 SATURDAY BONUS
Present on Saturday for Booking of Attendance
hours
0 13/32
1 17/32
2 21/32

3 25/32
4 29/32
4 ¾ (Full present) 32/32 = I
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 FOLLOWING ARE THE STAGES OF
ACCOUNTING OF WAGES: -
1. Recording of attendance to fetch input hours.
2. Booking in the DW/PW cards.
3. Posting & up gradation of Warrant.
4. Element wise workout of different scale of
entitlement.
5. Reconciliation of gross entitlement with
available budget.
6. Disbursement of pay & booking of the financial
code head.

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 Wage Period

• Wage paid to the workmen otherwise known

as industrial employees cater on monthly
basis starting from first of the wage month
(calendar month) to last day of the wage
month excluding off days

• Under the payment of wages Act’ 1936 the

wages for any wage period in OF’s are
payable before the expiry of 10th day
following the last day of wage period, If the
total IE’s are 1000 or more otherwise
before expiry of 7th day following.

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 DAILY RATES OF PAY
• DAY WORKERS:-
(BASIC PAY RATE)/(N-(S+H))

WHERE N = NUMBER OF DAYS IN A MONTH

S = NUMBER OF SUNDAYS IN THE MONTH
H = NUMBER OF HOLIDAYS IN THE MONTH

• PIECE WORKERS:-
(BASIC PAY RATE)/(N-S)

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 DIFFERENT ELEMENT OF WAGES ENTITLED TO
INDUSTRIAL EMPLOYEES
• Duty pay at basic monthly rate (for day workers) based on
attendance or Duty pay at basic monthly rate and an element of
profit (for piece workers) calculated on the basis of input hours.

• Other elements of pay e.g. Idle Time Pay, Over Time Pay, Leave
Pay, Holiday Pay, Injury Pay, etc.

• Certain allowances like DA, HRA, Transport allowance at the

prescribed paid down by the Govt. under different rules.
• Overtime bonus, Night Shift Allowance, Night Shift Bonus,
Incentive Bonus (for Maintenance works only) and other
remuneration payable under rules.
• Duty pay at basic monthly rate is also called time wage in
respect of D. W. This is because the day workers are to be paid
on time basis without regard to output.
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 Payments to Industrial Employees

Piece Workers: elements of Pay: -

 Basic Pay (Band Pay + Grade Pay) for attended days.
 Holiday Pay.
 Leave pay for sanctioned Leave days.
 Dearness Allowance as per prescribed rate.
 House Rent Allowance, if admissible.
 Transport Allowance
 NSB , NDA, Guarantee Pay, Idle Time Pay
 Piece Work Profit.

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 Payments to Industrial Employees
Day Workers: elements of Pay: -
 Basic Pay (Band Pay + Grade Pay) for attended
days.
 Leave pay for sanctioned Leave days.
 Dearness Allowance as per prescribed rate.
 House Rent Allowance, if admissible.
 Transport Allowance
 NDA , Idle Time Pay
 Incentive Bonus for Maintenance Workers.
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 Payments to Industrial Employees
Incentive Bonus: -
 Incentive Bonus will be paid to all maintenance workers
(other than Unskilled Workers).
 Incentive Bonus for maintenance workers attached to
Production shops = @ 50% of Piece Work Profit earned
by Piece Workers attached to the shop.
 Incentive Bonus for certain categories of maintenance
workers not attached to Production shops = @ 50% of
the average Piece Work Profit earned by Piece
Workers attached in the whole factory..

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 Payments to Industrial Employees During Strike
• The period of strike/token strike resorted to by industrial employees
is to be regarded as ‘Dies-non’. It counts neither as service nor as
break in service.
• Unless otherwise stated no pay and allowance will be admissible to
workers for the period they are on strike/token strike, etc.
• Deduction of wages on account of periods of strike for part of a day
will be made as under:
• For Day Workers:
• {Basic monthly pay+ DA+Other Allowances} x Period of Strike (Dies non Period) in hour
N-(S+H) Normal working hours per day
• For Piece Workers:
• {Basic monthly pay + DA+Other Allowances} x Period of Strike (Dies non Period) in hour
N-S Normal working hours per day

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Idle time
• When under certain conditions, as specified below, workmen neither can be
engaged in the normal production activities nor can suitable alternative
employment arrangement be made for them, in such circumstances ‘Idle Time’
payment may be made to workmen.
• Conditions for grant of Idle Time

• 1. High atmospheric humidity hindering certain operations in explosive

factories or Unfavorable weather
• conditions hindering specialized optical work depending on sun light.
• 2. Plants, furnace and transport break downs, inspection & repairs.
• 3. Temporary shortage of material.
• 4. Failure of power supply.
• 5. Temporary shortage of work in highly specialized sections such as
instrument repair and optical sections

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 Payments to Industrial Employees
Overtime Payment: -
Piece Workers: -
 For OT hrs worked upto 48 hrs a week or 9 hrs a day: - @
(P1/200) X No of OT Hrs worked upto 48 hrs a week or 9 hrs a
day. Where, P1 denotes @ correlated pay of 6th CPC
 For OT hrs worked beyond 48 hrs a week or 9 hrs a day: - @
[(2.25 P2 + 2DA)/200)] X No of OT Hrs worked beyond 48 hrs a
week or 9 hrs a day. Where, P2 denotes actual Basic Pay as per
7th CPC scale.
 Besides, for working during OT hrs, Piece Workers also get PW
Profit on OT Pay amount calculated @ correlated pay of 6th CPC

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 Payments to Industrial Employees
• Overtime Payment:
Day Workers: -
• For every hour of overtime work between 8
hours and 9 hours on any day or between 44 ¾
hours and 48 hours in a week.
 : - @ [(P2 + DA)/200]
 For each hour of overtime work beyond 9 hours a
day or 48 hours in a week. : - @ [(2 P2 + 2DA)/200)]
 Where, P2 denotes actual Basic Pay as per 7th CPC
scale.

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 Accounting of I.E’s payments
• For each section there will be two labour rates, one
each for Piece Workers and Day Workers.
• Labour rates will be worked out with reference to
actual payment made during the month.
• Calculation of labour rates for a section: -

Labour rate in respect Gross wages paid to the Piece Wkrs in

of Piece Wkrs the section during the month / Total
SMH discharged through PW Cards

Labour rate in respect of Gross wages paid to the Day Wkrs in the
Day Wkrs section during the month / Total hours
worked by Day Wkrs.
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 Accounting of I.E’s payments
• Gross Wages of the Sec (both for Piece Wkrs & Day
Wkrs) will include all elements of pay except: -
• PLB.
• Arrears of Pay & Allowances.
• Idle time beyond control.
• Re-imbursement of Med expenses.
• Direct Labour cost for each warrant under series of
outturn Work Orders for a section during a month
will be computed as ∑[(Piece Wkr’s rate of the Sec X
Card Hrs for respective warrant ) + (Day Wkr’s rate of
the sec X No of hrs shown against particular warrant
as per Day Wkrs allocation sheet)]
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 Accounting of I.E’s payments
• Similarly , Indirect Labour cost for each Indirect Work
Order for a section during a month will be computed
as (Day Wkr’s rate of the sec X No of hrs shown
against particular Indirect Work Order as per Day
Wkrs allocation sheet)]
• For purpose of estimation, labour estimates will be
priced in computer, on half yearly basis with
reference to the average Direct Labour rate based on
the actual of past six months.

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 When an worker was deployed partly on piece work basis
and partly on Day work basis, as per the existing system,

The individual is paid PW Earning (NTW+Profit) for the

period he was engaged on the piece work system and the
time wages calculated at the rate of 1/N-S for the period he
was deployed as a day worker.

To Implement the present system, other elements of pay like

DA, HRA, TA, OT, OTB, NSA, Leave Pay etc., are to be
bifurcated pro-rata of PW & DW Days and will be shown
separately for Day work and Piece work period.

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 Agreement Form of Labour
• Prepared by Accounts Office in duplicate .
• Shows the total amount passed for payment section
wise.
• Forwarded to GM Factory who returns one copy duly
completed.
• It shows amount actually paid, undisbursed wages, LF
etc recovered, IT ,PF recoveries and other deductions.
• All supporting documents and schedules are also
forwarded by 10th of the following month

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 Disbursement Certificate
• Prepared monthly by Fys for IEs who are paid out of
advances obtained from LAO .

• The payment side of DC shows the following.

i) Total Amt passed for payment
ii) Deductions made
iii) The net amount payable and actual amt disbursed.

• Arrear wages paid and also the payments made through

supplementary bills are also noted

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 Disbursement Certificate (DC)
DC is a statement furnished by factory management for
IEs Payment. The DC Shows the following information.

Payment Side Receipt Side

• Total amount passed for • Advances received from the
payment in the Muster Roll AO and sums, if any, drawn
• The Net Amount payable on Emergency Cash
and actual amount Requisition
disbursed • Any receipt for undisbursed
• Payment of arrear wages Wages remitted by money
• Payment through Supple- order.
mentary Bills.
• Undisbursed Wages
 Absentee Payment Register

Maintained separately for

each section for each month in the loose leaf form
in which all amounts remaining undisbursed on the
regular pay day are noted and
so also the payments made there- from.
When all payments have been completed from a sheet
in the Absentee Payment Register and necessary audit
check has been carried out
the sheet will be removed from the register and
attached with the last page, of the relevant
acquaintance (Muster Roll).
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