NOTES ON LABOUR LAW - Il For the Students of LL.B 3YDC) II Year (IV- Semester) LL.B (SYDC) IV Year (VIM Semester) Hanamkonda, Warangal.eee DSR SD eat ee eeWAGE: One of the main factor of production is labour, which a workman or labourer offers in consideration for wages. ‘Wages’ means ‘All remuneration including house tent paid to the workers for work done as per the terms of the contract of service’, Wage is a rewaid for the services rendered or remuneration for the work done and it is as old as the society itself. In the Primitive days wages were paid in kind, most common of them was grains and the food. But with the advent of industrialization wages form a complex problem and in. almost all industrialized countri¢s it became a sensitive area of public p ORIGIN OF CONCEPT OF WAGES The committee on Fair Wage under Minimum Wages Act classified wages into three levels, namely, minimum wages, fair wage and living wage, the origin of these concepts can be traced back to the year 1907 when for the first time Justice’ Higgins, the president of Commonwealth conciliation and Arbitration Court, Australia, in the famous Harvester's case. “This ruling held that a living wage was a first charge upon industry, and it set a basic wage for unskilled labour at a level substantially high than existing rates an approach to wage determination that Unions could certainly live with” CONCEPT OF MINIMUM WAGE Justice Higgin indicated three important considerations of wages namely, 1) that minimum wage is an irreducible level which cannot be further reduced, 2) secondly, it is paid to an unskilled worker who has not undergone any expensive training to acquire skill, 3) thirdly, the worker is to be considered a “human being living in a civilized society and therefore he is entitled to some basic heeds of food, clothing and shelter which any other human being requires, ‘WHITELY COMMISSION’S RECOMMENDATIONS Whitely coimmission, commonly-called as Royal commission on Labour was appointed during 1931 -33 which examined various issues relating to wage levels and reported on minimum ‘wages, standardization of wages, wage incentive and suggested for collection of relevant wage data to resolve the wage determination. It is also recommended a*minimum wage fixation machinery for industries where workers are not well organised. The whitely commission also invited the attention of the Govt, towards certain unfair deductions made by the employers from the wages and emphasized the need to prevent them by recourse to necessary legislation. ‘Thus the payment of wages act, 1936 was enacted to incorporate the recommendations of the Whitley commission. PROVISION FOR PAYMENT OF WAGES ACT, 1936 Proposals for removal of the evils and their control were formulated in the year 1928 and were placed before the Royal Commission on Labour, appointed in the year 1929. The Royal Wotei on Labour Lawld Tedaraha Law College 7Commission on Labour, commonly called whitely commission, collected further information and strongly recommended to the Govt. of India, who re-examined the proposals and introduced a Bill in 1933 in the L lature. The bill was circulated for eliciting opinions and it was referred to a selection committee, but before the selection committee could examine it the bill lapsed. In 1935, a new bill on the same principles but thoroughly revised in view of the criticism and opinions received was introduced in the Legislature and ultimately passed as the Payment of Wages Act, 1936, APPLCATION OF THE PAYMENT OF WAGES ACT, 1936: The Act extends to the whole of India, It applies in the first instance to the payment of ‘wages to person employed in eny factory and to persons employed upon any railway either directly by the railway administration or through a sub contractor. The state Govt. after giving 3 months notice by notification in the official Gazette, may extend the provisions of this Act to any establishment or class of establishments or to payment of wages to any class of persons employed in any establishment as the state or central Govt., may specify in accordance with sub-clause’(h) of clause (ii) of section.2 Lastly this Act docs not apply to wages payable for a wage-period exceeding Rs.6,500/-.or more by amendment in 2005. ‘TIME OF PAYMENT OF WAGES The Act prescribes to different time limits for payment of wages depending upon the number of persons employed. It is laid down in section 5 that in the case of any railway factory or industrial or other establishment, if the number of persons employed is less than one thousand, the ‘wages shall be paid before the expiry of the seventh day in any other case where such number of persons employed exceeds one thousand, the wages should be paid before the expiry of the twenty day, While the above mentioned time limit pertains to the usual and normal wage periods, in case of the termination of the employment of any person by the employer, the wages eared by the employed person shall be paid before the expity of the second working day from the day on which his services have been terminated. It is further provided that where the termination is due to the closure of the establishment for any reasons other than a weekly or other recognized holiday, the wages earned by the employed person shall be paid before the expiry of the second day from the day on which his employmént is so terminated. The difference between the above mentioned two ‘cases is that in the first case wages aré payable on the expiry of second ‘working day’, whereas in the second case where termination is due to the closure of establishment wages are payable before the expiry of second day itself. Lastly it is laid-down that all payments of wages shall be made on a working day. Thus the ‘employer is prohibited from requiring any worker to come on a holiday to receive wages and put him to inconvenience AUTORISED DEDUCTIONS AND THE PROCEDURE FOR DEDUCTIONS: One of the objects of the payment of wages Act is to prevent employer from making any deduction other than those in respect of which he is authorized under this Act, Further the Wotes on Labour Lavell ‘Tsecha Caw College zemployer is also required to follow the procedure prescribed for making such deductions and other conditions as are laid down in this Act. Section 7 enumerates the list of deductions which the employer is duthorized to make. However while effecting such authorized deductions, the employer has to follow the procedure and conditions as are incorporated in sections 8 to 13 of the payment of Wages Act. WHAT THE TERM “DEDUCTION” MEANS (OR) WHAT SHALL BE “DEDUCTION”: The word Deduction may be defined as “Every payment’ made by employee to the ‘employer or to his agent shall be deemed to be deduction”. It is to be noted that what the tmployer-recovers or deducts from the wages of his employee, must be for “good and sufficient” cause only. Thus employer cannot deduct or recover any amount from the wages of the employees under one pretext or other, as all such payments made by the employed person are considered as “deduction” and as such controlled by such conditions as are prescribed in the Act. Authorized Deduct ns Subsection 2 of section 7 authorizes the employer to make the following deduction from the wages of his workman, (a) Fines : Sec.7 (2) (2) Of the Act permits the employer to deduct fines from wages and Sec.8 imposes certain restriction upon the employer such as: > A notice of penal acts has to be displayed in prescribed manner in the premises on which employment is carried on and in case of railway, at the prescribed place or premises under. > A show cause notice calling upon the employee to explain as to why Fine should not be imposed has to be given before any fine is imposed. » Total fine in one wage period shall not exceed 3% of wage of that period. > No fine can be imposed upon employed person under the age of 15 years, > Fine cannot be recovered from the employed person in installments or after the expiry of 60 days on which the fine was imposed, > All fines and all regulations on account of fines shall be recorded in a register to be maintained in prescribed manner. > All such amount recovered by way of fines from the employed persons, shall be utilized only for such purposes beneficial to the employed persons and is approved by the prescribed authority, (b) Deductions for absence from duty: F Deduction on account of absence from duty is an authorized deduction under clause (b) of sub - section (2) section 7, The procedure for effecting such deduction is laid down in seo.9 as: Wotes on Labour Lawl “Adarsha Law College 31. ‘Ths amount of deduction on account of absence from duty shall not exceed the wages payable in respect of such duration of absence and should be exactly equal to the wages for the actual period of absence (i.e., pro-rate if an employee is absent for a day, his wages will be deducted for that day strike), 2. If 10 or more employed persons, acting in concert absent themselves without notice, then the employer can, subject to any rules made by the State Government, in this regard deduct an amount not exceeding 8 days wages payable to the workers. (Q Deductions for Damages or Loss: Sec.7(2)(c) provides that deduction from the wages of an employed person shall be made for damages to or loss of goods entrusted to the employed person for custody or for loss of money which he is required to account, where such damage or loss is directly attributable to him by neglect or default, Itis to be noted that while Section 7 permits deduction for damages to goods or loss of money, sec.10 lays down the condition under which the deduction for the said damages or loss can be made. The conditions are; (a) Deduction shall not exceed the amount of damages or loss caused to the employers, (b) Deduction shall be made only after issuing show cause notice calling upon him to explain as to why deduction shall not be effected. (©) Employer has to maintain a register to record deductions made by the employer in the said register. (& Deduction of the appropriate sums for House Accommodation, Amenities, Service ete Sec.7 (2) (d) & (€) authorizes the employer'to deduct appropriate sums provided by him towards house accommodation, amenities, service etc.... However, Sec,11 prescribes the procedure for making such deduction and lays down that such deduction shall not be effected unless the house accommodation, amenities or service has been accepted by the worker as a term of employment or otherwise and such deduction shall nol exceed an umount equivalent to the value of house accommodation, amenities or service. (¢) Deductions for recovery of advances: Clause (f) of subsection (2) of see.7 authorizes employer to deduct amount for recovery of advances given to employed person, For this purpose, Sec.12 Prescribes procedure to be followed for the recovery of advanced money, which is as follows; V. The recovery of an advance of money given before the commencement of employment shall be made from the first payment of wages in respect of a complete wage period. V The recovery of advances given after the employment began should be subject to such conditions as are prescribed by the State Government. V If any-advance is given towards wages which are not already earned shall be deducted subject to any rules, extent and installments as may be prescribed by State Government. (9 Deduction for Recovery of Loans: See.7 (2) (ff) empowers the employer to deduct for recovery of loans made from any fund constituted for the welfare of labour in accordance with the rules approved by Govt. The employer Woies on Labour Lawl = ‘TRéarsha Law College a ree ataane &is empowered to make deduction for recovery of loans granted for house building or any other purpose, (g) Deductions for payments to co-operative societies and insurance scheme: Sec.7 (2) Gj) provides that the employer may make dedudtion for payments to co-operative societies approved by the state Govt or to a scheme of insurance maintained by Indian post office. ‘The employer may make deductions for payments to any’ premium on the employee's life insurance policy to the LLC. However, it imposes restriction that there must be a written authorization of the employee to deduct such amount. (h) Some other self- regulated Deduction (Sub ~ Section 2 of Section.7): ‘© Income Tax See.7(2) (g): Deductions of Income tax is declared as an authorized deduction in clause(g) and the procedure for effecting such deductions should be in accordance with the Income Tax Act. © Court Order Sec.7 (2) (hi): Deduction required to be made by order of a court is authorized in clause (h) and it shall be recovered as per the direction of the concerned court 0 Provident Fund Loan Clause (1) of Sub-Sec (2) of Sec (7): Deduction towards payment of subscription or payment of loans from provident fund and Provident fund recognized under Income Tax. Act or State Government is legal. (@ Deductions may be subject to the written authorization of the employed person: ‘The below mentioned deduction may be made by employer only with written authorization from the concerned employee. J. Welfare Fund:. Deduction towards payment of contribution to any fund constituted by the employer or azegistered Trade Union for the welfare of the workers. 2. Membership: It provides that the employer may make deduction for the payment of employee's contribution to any fund constituted by employer or Trade Union registered under the Trade Union Act, 1926. 3. Prime Minister's National Relief Pund: Provides that employer may deduct sums for contribution to prime minister National Relief Fund. 4. Insurance Scheme: It empowers the employers to make deductions for contribution to any insurance scheme framed by the Central Government for the benefits of its employces is also an authorized deduction. Maximum Limit of Deduction [Sub-Sec.3 of Sec.7 The entire amount of wages cannot be appropriated towards the authorized deductions because something must be left for the employed person to live on as such, sub section(3) clearly leys down that; : a) the maximum deductions towards co-operative society can be only up to 75% of wages and b) in any other case total amount of deduction shall not exceed 50% of such wage. ection 15 Under this section, the state government is empowered to appoint the authority to hear and decide all claims arising out of deductions from the wages or delay in the payment of wages of persons employed in the area specified within the jurisdiction of such authority. Claim: ‘Woves on Labow Lawl ‘irs Law College‘The person who can be appointed by notification in the official Gazette to be such authority may be any person from the following: a) A presiding officer of any Labour coust / Industrial Tribunal / National Tribunal b) Any commissioner for workmen's compensation , or c) Any other person with experiences as a Judge of a Civil Court , or d) A Stipendiary Magistrate Any application relating to wrongful deductions, or delay in payment of wages can be made to the authority by the following persons, namely, a) Aggrieved person himself, or b) any legal practitiones, or ©) Any official of a registered trade union with written authorization of the employed person, or 4) Any Inspector under this Act, or ©) Any other person with the permission of the authority The time limit for making such application is prescribed as twelve months from the date of violation of the Act, However such time limit can be condoned for the sufficient reasons by the authority subject to his satisfaction. Procedure for disposal of claim The authority to settle the claim is required to hear the arguments of the applicant, the ‘employer or any other person responsible for the payment of wages under section 3 of the Act and after giving them an opportunity of being heard and conduct such further inquiry as he may think necessary direct refund to the employed person, of the amount deducted or the payment of delayed wages. : Tt is further laid down that no such compensation is payable in case of delay in the payment of wages, if such delay was due to bonafide error or dispute as to the amount payable to the employed person or such delay was caused due to any emergency or exceptional circumstances that such person responsible for payment of wages was unable to make prompt payment, though he exercised reasonable diligence. No such compensation is payable in the case of failure of employed person to apply for or to accept payment of wages. APPEAL Under section 17 the provision for an appeal against the order of the claim settlement authority passed in accordance with section 15, is provided. It is laid down that an appeal against an order dismissing, either wholly or partly, an application made under sub section (2) of section 15 relating to wrong deduction in contravention to the provision of this act or delay in payment of wages or appeal against an order passed by the authority under sub section 3 of section of 15 relating to award of compensate in or imposition of penalty under sub section 4 of section 15, may be preferred within 30 days from the date on which such order or direction was made. Such appeal shall lie to the court of small causes in a presidency town and elsewhere it would lic to the District Court. It is further laid down that no appeal shall be entertained unless it is accompanied by a cextificate by the authority that the appellant ahs deposited the amount payable under his direction ‘against which appeal is being preferred. The order of the appellate authority shall be final, except as provided in sub section (1). Notes oa Labour Lavell - ‘Raaasha Vaw College amnaraer} é‘THE MINIMUM WAG! ACT, 1948 Origin ‘The Industrial Policy Resolution 1948*had declared its intentions to provide for statutory minimum wages in the sweated industry where the bargaining power of the industrial workers or their ade union is very poor and they are not well organised, Thus the Minimum Wages Act, 1948 provides for a full-fledged machinery to determine the minimum rates of wages in the industries, “The Act is undoubtedly a welfare legislation in, favour of workers and more than that an essential measure for the economic upliftment of the workers in the sweated industries. “The very puxpose of the enactment is to proteet the interest of the industrial workers in the unorganised inclusries where they are not properly organised to successfully bargain with thete employers and in view of this disadvantageous position the law had to interfere to secure at least bare nainiroum wages for such poor class of society who are compelled tb line in below poverty line and therefore exploited by their strong employers. SOME IMPORTANT DEFINITIONS OF THE ACT ing index nimber", in relation to employees in any scheduled employment in 2 (a) “cost of Ii : respect of which minimum rates of wages have been fixed, means the index number ascertained Gazette to be the cost of ‘and declared by the competent authority by notification in the Offi living index number applicable to employecs’in such employment; 2 (b) "wages" means all remuncration, capable of being expressed in terms of money, which ‘vould, f the terms of the contract of employment, express or implied, were fulfilled, be payable to fa person employed in respect of his employment or ‘of work done in such employment, and includes house rent allowance, but does not Include-- (The value of G)any house-accommodation, supply of light, water, medical attendance, &e (b) any other amenity or any service excluded by ‘general or special order of the appropriate Government; (ii) Any contribution paid by the employer to any Pension Fund or Provident Fund or under any scheme of social insurance; Gi) Any travelling allowance or the value of any travelling concession; {iv) Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or () Any gratuity payable on discharge; - 2.() "employee" means any person who is employed for hire or reward fo 49 any work, skilled or ie led” manual or cleticl, ina sebeduled employment in respect of which minimum tales of wages have been fixed; and includes an out-worker to whom any articles or materials are given out by another person to be made vp, cleaned, washed, altered, ornamented, Gnished, repaired, adapted oy otherwise processed forsale for the purposes ofthe trade or business ofthat other person where the process is to be carried out either in the home of the out-worker oF in some other premises not and also includes an being premises under the control and management of that other persons i mnplojes declazed to be an employee by the approptiate Government; but does not include any member of the Armed Forces of the Union. Woies on Labour Lawl Tdarsha Law College 7TYPES OF ‘The concept of minimum wage does not mean a wage that enables the worker to cover his bare physical need and keep himself just above starvation. The capacity of the employer to pay is irrelevant in fixing minimum wage. Express Newspapers vs. Union of India, (AIR 1958, SC 576) classified the concept of wages into three categories namely. a. Mininuun wages:- The expression “minimum wages” is not defined in the Act presumably because it would not be possible to lay down @ uniform minimum wages for all industries throughout the country on account of different and varying conditions prevailing form industry to industry and form one part of the country to another. Minimum wage is the lowest wage in the scale below which the efficiency of a worker is likely to be impaired. The minimum wage includes not only the bare physical necessities but also a modicum of comfort otherwise known as conventional necessities. The minimum wage must therefore, provide not merely for bare subsistence of life but also for the preservation of the efficiency of worker. Therefore the employer who is enable to pay this minimum wage to workers has no right to exist b. Pair wages:- Pai wage is a mean between the living wage and minimum wage. Any amount in excess of minimum wage can be regarded as fair.wage and it continues to remain fair until it is merged into the living wage. The committee on fair wage (CFW) recognized that the determination of Fair wage would depend not only on the present economic position of the industry but on its future prospects also, the CFW observed that in between these two limits the actual wage would depend on 1) The productivity of labour 2) The prevailing sates of wages 3) The level of national income and its distribution and 4) The place of industry in the economy of the country. ¢. Living wage:- Justice Higgins developed the concept of living wage which should not only provide for food, clothing and shelter but for some frugal comfort of life, good education to children, some amusement and provision for sickness and old age including some measure of social security. Living Wage is one appropriate for the normal needs of the average employee, regarded as a human being living in a civilized society. Itis pertinent to note that the above concept of living wage, as described by Justice Higgins is also endorsed by the Supreme Court in the Express Newspaper (P) Ltd V Union of India 1961 ()LLISC 339, ‘The committee on Fair Wage, appointed by Govt. of India described living wage as; “the living wege should enable the mile eamer to provide for himself and his family not merely the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for children, protection against ill health, requirements of essential social needs, and a measure of insurance against the more important misfortunes including old age” Woies Ga Labour Lawl “Adassha Law College v ¢ CORREO Re éThe concept of Minimum Wages the procedure for fixing or re The concept of minimum wages, fair wages and living wages were elaborately discussed by the Supreme Court in Standard Vacuum Oil Company Vs Its Workmen (1961) ILLJ 227 and observed that at the bottom of the ladder, there wages (which satisfies basic necessities), which the employer of any industrial labour must pay in order to be allowed. to continue an industry. Above there is the fair wage(the wage which is equal to the rate current for similar workmen in the same trade and neighbourhood), which may roughly be to cover the normal needs for the average employee regarded as a human being in the civilized society, Above the fair wage is the living wage. It is a wage which will maintain the workmen in the highest state of industrial efficiency which will enable him to provide his family with all the material things which are needed for their health and physical well being and wil} be enough to him to qualify to discharge his dutics as a citizen. minimus be Fixing and revising minimum wages: Fixing of minimum rates of wages: Sec.3(1)(a) provides that the appropriate Government shel! fix the minimum rates of wage payable to employees employed in an employment, specified in part ~I & part ~ If of the schedule and in an employment added to the either part by notification ws.27. Review and Revise: Government shall review at such intervals as it may think fit, however such interval shall not exceed 5 years under. Thus at least once in 5 years wages need to be revised. However Government may refiain from fixing minimum rates of wages in respect of any schedule employment in which there are less than 1,000 employees. But at any time the appropriate Government may after making such inquiry and finding that the number of employees in such employment has raised to 1,000 or more it shall fix the mninimum wag, Fixation of minimum rate of wage: See, 3(2) of this Act provides that the appropriate Government may fix: (@) Minimum rate of wages for time- work (minimum time rate) (b) Minimum rates of wages for piece ~ work (minimum piece rate). (©) A minimum rate of wages payable to an employee employed on piece work to seciwe 2 minimum rate of wages on a time work basis, called a guaranteed time rate. (@) An overtime rate payable to employees in respect of overtime work done by them. Of course, the Government is prevented from fixing minimum sates of wages if any dispute is pending before Labour Court / Industrial Tribunal / National Tribunal relating to the rates of wages payable to the employees employed in the scheduled employment or where any such award of LC/ IT / NT is in operation relating to the rates of wage. According to Seo. 3(3) (a), the appropriate government may fix minimum rates of wages for:- (1) Different schedule employment (2) Different class of work in the same schiedule employment 3) Adults, Adolescent, children & children etc. (4) Different localities Government may fix minimum rates of wages by one or more of the following wage periods namely; (1),Hourly wage (2) Daily wage (3) Monthly wage. ‘Noison Laboor awl “dass Taw Calege 5mt Procedure for fixing ana revising wages: ‘The appropriate Government shall appoint as may committee and subcommittee as it considers necessary hold inquiries and advise it in respect of such fixation or revision as the case may be. It is an obligation on the appropriate Government to issue notification in the ‘official gezette, publishing’ the proposals for the information of persons likely to be affected there by and specify, a date not less than two months from the date of notification, on which the proposals will be taken into consideration under. It is imperative on the part of Govt. that the Principals of Natural Justice shall strictly be adhered while fixing or revising the minimum rates. After considering the advice of the committee or sub committees appointed or by taking into consideration the proposals of the persons likely to be affected by such fixation, the Government shall finally fix the minimum rates of wages and notify the same in the official gazette. Such notification relating to finally determined minimum rates of wages shall come into force on the expiry of three (3) months from the date of issue. It is to be noted that committees and sub-committees established under Sec.5 shall consist of persons to be nominated by the appropriate Government representing employers and employees, who shall be in equal number and independent persons, not exceeding 1/3 of its total members. ‘One of such independent person is appointed as the chairman of the committee or subcommittee by the appropriate Government. Claims (See 20). ‘The minimum wages act, 1948 provides self contained machinery consisting of such persons who are authorized to hear and decide claims of the employees relating to the payment of their wages. The purpose of providing such machinery is {© save the employees from any hardship or expenditure to claim their wages, so that with sufficient case they can invoke this machinery to remedy their grievance, ‘The appropriate Govt, may by notification in the official gazette appoint following persons to hear and decide the claims arising out of Minimum Wages Act:- a) Commissioner for Workmen's’ Compensation , or b) -Any officer of the Central Govt., functioning as Labour Commissioner, or ©) Any officer of the state Govt,, not below the rank of Labour Commissioner, or 4) Any other officer with experience as a Judge of a Civil Court, or ©) A Stipendiary Magistrate Following persons are authorized to make an application for the claim of the employees under the Act. 7 a) Employee himself; or b) Any legal practitioner; or ©) Any official of a re 4d) Any Inspector appointed under Minimum Wages Act; or ©) Any other person, with the permission of the authority appointed under sub section (1). ‘hdsraha Taw College 10 Woies on Labour Law 7 Pe € &Provided that every such application shall be presented within 6 months from the date on which minimum wages or other amount became payable. However this period of 6 months can be condoned and application may be admitted if the applicant satisfies the authority that he had sufficient cause for not making the application within the specified period of 6 months. Remedy and disposal of the claim: (Sub — See.3): The authority appointed under sub section (1) is required to conduct hearing and give an opportunity of being heard to the employer and the applicant. He is also empowered to conduct such enquiry as he thinks necessary in order to arrive at a fair and meritorious conclusion. He may without prejudice to any other penalty liable to be imposed on the employer, examine the claim arising out of payment of less than the minimum rates of wages and direct the payment of the difference of the amount which is determined as payable by the employer to the employee together with the compensation as payable by the employer to the employee as the authority may think fit, not exceeding ten times of the difference of wages actually paid and the minimum wages payable under this Act to the employee. In disposing of other cases, the authority may direct the payment of amount duc to the employee together with such compensation as the authority may think fit, not exceeding ten rupees. ‘Notes on Labour Law-lt ~~ Adarsha Law GoliegeUNIT- I Payment of Bonus Act 1965 Concept of Bonus: Etymologically speaking, the dictionary meaning of the word “bonus” is gift, tip or bounty gratuitously paid. ‘The word bonus, thus contained in its meaning itself the element of gratitude to pay bonus. In Industrial relations field in India, the practice of payment of bonus started in July 1917 itself, when for the first time textile industries of Bombay and Ahmadabad paid bonus to their employees which were termed as “war bonus” owing (0 the situation created by the First World War. Realising the increase of the prices of the market due to the war, the Bombay Mill Owners appointed a committee in October, 1920 which recommended paying bonus equal to one month, salary to the workers as interim relief. Thus bonus was declared for the year 1921 and 1922: However in the subsequent years the mill owners could not pay bonus due to the deteriorating conditions in the textile industry. The workers, who by that time have become habitual to the payment of bonus, raised a dispute and declared strike. The employers contended that they have paid bonus gratuitously on their own wish as exgratia and that workers do not have any right to claim it. Right To Claim Bonus Conferred: In the year 1958, the supreme court had an another occasion to examine the right of the workers to claim bonus as matter of right, this time , the supreme court gave the justification for rendering such right and held, in SREE MEENAKSHI MILLS V. THEIR WORKMEN 1958 AIR (SC) 153. Thus, 1) That bonus was not a gratuitous payment nor it is a deferred wages; fat where wages fall short of the living standards and the industry makes profits h is due to the contribution of the workers, the latter possesses a legitimate claim FULL, The Labour Appellate Tribunal in the famous case of Ranshtriya mill Mazdoor sngh v. mills owners association, Bombay'1950 (1) CR 1164 held that the employees do have a right to claim bonus and that it is not paid gratuitously by the employer. In this case, the L.A.T worked out a formula for the calculation of available surplus after deducting prior charges from the gross profit. ‘This formula is commonly known as full bench formula or L.A.T. formula. According to this, following four deductions were allowed (o be deducted-as prior charges from the gross profit to arrive at the available surplus. These prior charges are:~ 1) Provision for depreciation as permissible under the Income Tax Act 2) Reserve for rehabilitation 3) Return on paid up capital at the rate of 6 percent 4) Return on working capital at any rate but less than 6 percent ‘Afier deducting the above prior charges from the gross profit the figure arrived at was called as ‘available surplus’ and a reasonable share from the available surplus was actually payable to the employees as bonus. IN ASSOCIATION CEMENT COMPANIES LTD, V,. ITS WORKMEN AIR 1959 SC 967- The employees challenged the Full Bench Formula as unconstitutional and arbitrary on the ground that while the three deductions as prior charges were allowed subject to certain maximum limit, the Wate on Labour baw Haaaaw Cae a q c PPR €deduction relating to reserve for rehabilitation did not carry any upper limit and because of this the employers have became “rehabilitation ~ conscious” and therefore allowing such tall claims towards the deduction that afier working out the remaining foimula, nothing is being available as surphis that could be given as bonus. Thus the payment of bonus was defeated on that account, The Supreme Court agreed the objection but refrained from striking it out. The supreme court, therefore, recommended to the government that the revision of the L.A.T formula be referred to a High Power Commission to consider all the technicalities etc., As a consequence to this recommendation of the supreme court, the Govt. appointed a High Power Bonus Commission consisting of the following members, namely ‘Two representatives of Employers ‘Two representatives of Employees Two representative of Consumers One Chairman with high judicial experience ‘On the basis of the recommendations of the Bonus Commission the Govt. of India promulgated the Payment of Bonus Ordinance which was adopted by the Parliament and enacted as Payment of Bonus Act, 1965. The Bonus Commission deleted the reserve for rehabilitation reserve, but worked out a detailed scheme by which the interest of the employers was protected in the form of development rebate as permissible under the Income Tax Act, In the Grst instance the act applies to every factory and e¥ery other establishment in which twenty or more persons are employed on any day during an accounting year. However the appropriate 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 with effect from such accounting year as may be specified in the notification, to any establishment or class of establishment including an establishment being a factory within the meaning of sub- clause (ji) of clause (m) of section 2 of the Factories Act, 1948 (63 of 1948) employing such number of persons less than twenty as may be specified in the notification; so, however, that the number of persons 30 specificd shall in no casc be less than ten. Provided further that when the provisions of this Act have been’made applicable to any establishment or class of establishments by the issue of a notification under the proviso to sub- section (3), the reference to the accounting year commencing on any day in the year 1964 and every subsequent accounting year or, as the case may be the reference fo the accounting year commencing on any day in the year 1968 and every subsequent accounting year, shall, in relation to such establishment or class of establishments, be construed as a reference to the accounting year specified in such notification and every subsequent accounting year. An establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of person employed therein falls below twenty or, as the case may be, the number specified in the notification issued under the proviso to sub-section (3). Salient features of payment of Bonus Act IN JALAN TRADING CO V. MILL MAZDOOR SABHA AIR 1967 SC 691, The Court observed that the payment of Bonus Act has four salient features, namely ‘Notes on Labour Lavell ‘Adarsha Law College B0 rye: covered by this Act to pay bonus to his 2) It defines the procedure for payment of bonus according to the prescribed formula 3) It provides:for payment of statutory minimum and maximum bonus as per t he scheme linked with the principle of set on and set off 4) Itprovides machinery for enforcement of the obligations created under the Act, Important terms: Allocable Surplus: Allocable surplus is an amount calculated out of the available surplus for the purpose of distributing the bonus to the employees of an establishment. Sec.2 (4) lays down that if the employer has made arrangements prescribed under the Income Tax Act for the declaration of dividends payable out of its profits in accordance with sec.194 of the Income Tax Act, the allocable surplus shall be 67% of the available surplus. In any other case where such arrangements Ws.194 of LT.Act is not made, 60% of the available surplus shall be allocable surplus. Therefore it is necessary to know as to how the available surplus is calculated. Available Surplus: Available Surplus” means the available surplus coniputed under See.5, according to Sec.2 (6). That is to say sectionS explains about the computation of the available surplus, To calculate the available surplus under section 5, the first step is that the calculation of Gross-profits as mentioned under section 4. Computation of Gross Profit: The calculation of gross-profits is the first step for computation of available surplus and to calculate the bonus. For the calculation of gross-profits the profit and loss account is the basis, The method of calculating gross profits is explained in the First and Second Schedule. According to the Sec.4 gross profits in respect of an accounting year has to be derived and computed; (a) In the case of a banking company, In the manner specified in the 1" schedule, (b) In any other case, in the manner specified in 2 schedule. After computing gross profit as per the procedure specified in sec.4, the available surplus has to be calculated. Sec.5 of the Act specifies the procedure for the computing of available surplus. : Computation of available Surplus: According to the Sec.5 of the Act, the available surplus in respect of any accounting year shall be the gross profits for that year after deducting there from the sums referred to in sec.6 Tt means’ that for the calculation of available surplus, the prior charges mentioned w/s.6 have to be deducted from the gross profit in order to arrive at available surplus. i,e., Gross profit (sec.4) — prior charges (sec.6) = available surplus (see.5). Gross profit — prior charges = available surplus-67% or 60% of available surplus Sums deductible from gross profits (prior charges): Sec. 6 of the Act provides that the following sums shall be deducted from gross profits; (Q) Depreciation: The estimation of sum of loss incurred by wear and tear of asset. (2) Development Rebate or development allowance: Sec.33 and 33-A of the Income Tex Act provided exemption these toe items from the gross profits and Sec.6(b) of Bonus Act also exempts these two items from gross profits. Woies on Labour Lawit ‘Adassha Law College 4(3) Direct Taxes: Sec. 6(¢) and Sec.? (it enumerate the ceriain direct taxes and other sums to be exempted from gross profits) provides that any direct tax which the employer is liable to pay for the accounting year in respect if-his income, profits and gains during the year shall be deducted from the gross profits. Gross profit ~ prior charges = available surplus - 67% or 60% of available surplus = Allocable surplus Set on and Set off of allocable surplus: Sec.15 and 16 explain about Set — on and set ~ off of allocable surplus. Fourth Schedule provides a example so as to understand set-on and set-off of allocable surplus Sec.15 (1): It lays down that where in an accounting yeer the allocable surplus is a huge amount, the employer shall not pay more than 20% of the wage as bonus any amount of such allocable surplus is excess of 20% shall be carried forward, subject to another 20% for the purpose of set ~ on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilized for the purpose of payment of bonus in the manner illustrated in 4" scheduled. Sec.15 (2); It lays down that where there is no available surplus of allocable surplus in respect of an accounting year falls short of the amount required to pay minimum bonus 8.33% w/s.10, and there is either no amount at all or it is not sufficient to pay 8.33% bonus, then such amount which fell short or such deficiency, as the case may be, shall be carried forward for being set — off in the succeeding year. This can be done for 4 years. Sec.15 (3): The set- on or set ~ off should be done in the manner prescribed in the 4" schedule attached to the Act. Sec.15(4): Where in any accounting year, any amount has been carried forward and set ~ on or set ~ off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set — on or set — off carried forward from the earliest accounting year shall first be taken in to account Special provision with respect to certain (newly set up) establishments: Sec.16 lays down that in the first 5 years following the accounting year in which the employer, new in business sells bis goods produced or render services, as the case may be, the bonus shall be payable only from the year in which the employer earns profit. It means that up to a 5 years, a new employer is exempted from the liability of paying bonus under this Act subject to the condition that during this period of 5 years if he earns profits in any year, he is obliged to pay bonus from thet accounting year in which he so earned profit, Further, if once the Act applies it continues to apply there after irrespective of any loss in the subsequent yea The provisions of sec.15 relating to set ~ on and set — off would not apply to such newly established establishment during the period of 5 years (sub ~ section I~ A). Howeyer provisions of set — on and set ~ off would apply to such new establishment for the 6" and 7 year following accountng year in. which the employer sells his goods, in the mone presrbed in 4” schedule, ‘subject to the conditions laid down in clause (1) & (2) of sub section (1 — But from the 8 accounting year sec.15 would apply in the same manner as it is applicable to any other establishment (sub —sec | ~C) It is also clarified that for the purpose of the sec.16, an establishment shall not be deemed to be newly set — up merely by reason of a change in its location, management, name or ownership (explanation I) Notes on Labour Lawl ‘Aéarsha Law College 5Eligibility and disqualification for Bonus: Every employee who has worked in the establishment for not less than 30 days in an accounting year shall be ‘qualified to receive bonus from the employer ws 8. However, Sec. 9 cenunciates that an employee shall be disqualified from receiving bonus, if he is dismissed from service for fraud or on the ground of violent behavior on the premises of the establishment or on ground of theft, misappropriation or sabotage of any property of the establishment. And further Sc.12 lays down that where the salary or wage of an employee exceeds Rs.2, 500/- p.m., the bonus payable to him ws.10 or as the case may be, ws.11 shall be calculated as if his salary is Rs.2, 500/- pan. Scetion 10, Payment of minimum bonus.—Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 per cent of the salary or wage eared 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: Provided that where an employee hi the accounting year, the provisions of this section shall have effecting relation to s if for the words “one hundred napees”, the words “sixty rupees” were substituted. not completed fifteen years of age at the beginning of ch employee as Section 11, Payruent of maximum bonus.—(1) Where in respect of any accounting year referred (o in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting; year bonus which shall be an amount in proportion to the salary or wage eamed by the employee during the accounting year subject to a maximum of twenty per cent, of such salary or wage. 2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section ICs pertinent to note’that this is also 2’special feature of the payment of Bonus Act as per the recommendations of the High Power Bonus Commission, which restricts the maximum limit of bonus payable under this Act to 20% and any amount available as the allocable surplus in excess of 20% is carried forward for the next year and set on in the gross profit of the next year, thereby, protecting the interest of the employees and also the liability of the employer to pay bonus which ‘would be secured for the next year, in fact the statutory obligations of paying a minimum of 8.33% bonus is also linked with t he scheme provided under section 15 relating to set on and set off, Section 21, Recovery of bonus due from an employer.- Where any money is due to an employee by way of bonus from his employer under a settlement or an award or agreement, the employee himself or any other person authorized by him in waiting in this behalf, or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government or such authority as the appropriate Government may specify in this bchalf is satisfied that any money is so due, it shall issuc a certificate for that amount to the Collector who shall proceed to recovér the same in the same manner as an arrears of land revenue. Woies en Labour Lawl . “Aidarsha Law College 16 COR ORE ;Provided that every such application shall be made within one year from the date on which ‘ the money became due to the employee from the employer. oO Provided further that any such application may be entertained after the expiry of the said ‘i petiod of one year, if the appropriate Government is satisfied thet the applicant had sufficient oO cause for not making the application within the said period. Explanation- In this section and in scctions 22,23, 24 and 25 “employee” includes a person who is entitled to the payment of bonus under this Act but who is no longer in employment Notes on Labour Lawl ‘Aéarsha Lanw College 17UNIT- Hi Social Security; Originally, the term "social security" referred to any program that was intended to help individuals who had little financial resources. Stich people included the poor, physically disabled, and the mentally ill. The first such financial programs were begun by the European trade guilds, with the "poor laws" sponsored by the government being formed later. Social security for employees is a concept which over time has gained importance in the industrialized countries. Broadly, it can be defined as measures providing protection to working class against contingencies like retirement, resignations, retrenchment, matemity, old age, unemployment, death, disablement and other similar conditions. With reference to India, the Constitution levies responsibility on the State to provide social security to citizens of the country. The state here discharges duty as an agent of the society in order to help those who are in adverse situations or otherwise needs protection owing to above mentioned contingencies. Drawing from the Constitution of India and ILO Convention on Social Security (ratified by India in. 1964), some of the legislations that have been enacted for social security are Employees’ State Insurance Act, 1948, Workmen Compensation Act, 1923, Employees’ Provident Fund and Miscellancous Previsions Act, 1952 ete., Social Insurance: ‘The social insurance schemes inelude several schemes launched by the central and the State Governments for the benefit of weaker sections through the Life Insurance Corporation of India for the employees of shops and commercial establishments and other weaker scctions. ‘Jayashree Bima Yojana’ is a group insurance scheme and covers natural/accidental death, partial or total permanent disability due to accident and the people below poverty line and marginally above to join the scheme, ‘Krish Sjramik Samajik Suraksha Yojana-2001’ launched in July, 2001 provides for pension and insurance besides providing money back. The contributions of the beneficiary is Re.1 per day while the Government contributes Rs.2 per day. The Government has also enacted a Central legislation for the building and other construction workers toward creation of welfare fund at the level of states. Moreover, the welfare fund models have successfully been implanted by various states for various categories of workers. ES OCIAL ASSISTANC) National Social Assistance Programme (Nsap): The national social assistance programme came into effect from 15" august 1955, represents a significant step towards the fulfillment of the directive principles in Article 41 and 42 of the Indian Constitution. It introduces a National Policy for social Assistance benefit to poor households in the casc of old age, death of primary bred- winner and Maternity. The program has three components, namely:- 1) National Old Age Pension Scheme (NOAPS); Notes on Labour Law-l ‘Aduicha Law College 18 a2) National Family Benefit Scheme(NFBS); ¢ 3) National Maternity Benefit Scheme (NMBS) z These Schemes were patially modified in 1998 based on the suggestions received from r various comers and also on the basis of the feedback received from the State Governments. z= The salient features of these schemes in their present modified form are given below: #7 E » National Old Age Pension Schem ‘Under the scheme, Central Assistance is available as per the following criteria: Ve a) Age of the applicant (male or female) is 65 years or more b) The applicant is a ‘destitute’ in the sense of having little or no regular means of subsistence c from his/her own sources of income or through financial support from family members or other source. c ©) The amount of old age pension is Rs. 75 per month for the purpose of claiming central Assistance, > National Family Benefit Scheme: Central Assistance is available under this Scheme in the form of a lump sum family benefit for households below the poverty line on the death of the primary breadwinner in the bereaved family, subject to the following conditions: a) The ‘primary breadwinner’ is the member of the houseliold male or female whose ¢ earning contribute substantially to the total household income b) The death of such a primary breadwinner occurs while he or she is more than 18 years ‘ and less than 65 years of age ©) The bereaved houschold qualifies as one below the poverty line according to the criteria ‘ prescribed by the Government of India. ( d) The amount of benefit is Rs. 10,000/- irrespective of the cause of death natural or : accidental, of the primary breadwinner. The family benefit is paid to such surviving ‘ member of the-household-of the deceased who after local enquiry, is determined to be the head of the household. > National Maternity Benefit Scheme: Under this scheme, benefit is provided in the form ‘ of a Jump sum cash assistance to pregnant women of households below the poverty line N subject to the following conditions: oO a) The benefit is restticted to pregnant women for up to the first two live births provided they are of 19 years of age and above oo b) The beneficiary belongs to a household below the poverty line as per the criteria prescribed by the government of India ©) The amount of benefit is Rs.500 a d) The matemity benefit is disbursed in one installment 12-8 weeks prior to the delivery. i Timely disbursement-of maternity. benefit shall be ensured. In case of delay, it can be ‘ disbursed to the beneficiary even after the birth of the child, ‘The program i., NSAP aims at ensuring minimum national standard of social assistance f addition to the benefit that-the states are currently providing or might provide in future. The ' intention-in providing: 100-percent Central Assistance is to ensure that social protection to the beneficiaries everywhere in the country is uniformly, available without interruption. Accordingly, it : is ensured that the central assistance docs not displace states own expenditure on social security schemes and that the states may expand their own coverage of social assistance independently wherever they like to:do so, The NSAP provides opportunities for linking social assistance packages to the Schemes for poverty alleviation and provision of basic needs. Specifically, old age { ‘Notes on Labour Lawl ‘Adacsie Law College 19pension can be linked (0 medical care and other benefits for the old and the poor. Assistance under SGSY, etc. may be provided in addition (o the benefit under NFBS to the families of poor households who suffer the loss of the breadwinner, Maternity assistance can be linked to matemal and child eare prograrames, SOCIAL SECURITY LEGISLATIONS THE WORKMEN'S COMPENSATION ACT, 1923 ‘The advent of industrial revaluation as a necessary consequence resulted in the speedy expansion of the industrial establishments and factories and technological inventions were mostly deployed to increase the production in such industries and factories. The sophisticated innovation and automatic machines operated by unskilled or semi-skilled workers created an atmosphere in Which the workers were exposed to various risks to their health and life. It was not certain as to who should be responsible in case any accident resulted in causing a serious injury to the worker or even caused his death, The passing of the Workmen's Compensation Act, 1923 was the first step towards social security of workmen. It aims at providing financial protection to workmen and their dependants in case of accidental injury by means of payment of compensating by the employers. Employer’s liability: Under the common law an employer was held liable for any injury due to industrial accident if it was directly attributable to his negligence. Thus the employers’ Liability ‘Act was passed in England imposing liability on employer for any accidental injury caused to the workers employed by them. But the common defenses were still available to the employer on the ground where the accident was caused due to the contributory negligence on part of the employees ‘or when they were under thc influence of drink or drug at the time of accident. The growing demand for legislature: protection to workers for social security and the realization on part'of the Govt., also that it cannot remain-a silent spectator of such a dangerous situation in the industries made the British: Parliament (o lake necessary steps in the direction of legislation and achieve its‘ object of welfare state. Thus. the workmen’s Compensation Act was enacted in the year 1897 by then British Govt, Important Terms Disablement: The Act does not define the word Disablement. It can be defined as loss of eaming capacity by an injury which depending upon the nature of injury and percentage of loss of camming capacity will be partial or fotal. Partial Disablement: partial disablement can be classified as temporary partial disablement and permanent partial disablement. {1). Temporary partial disablement; If the eaming capacity of a workman is reduced by the disablement merely in the particular employment in which he was engaged at the time of his accident, itis known as a partial disablement of temporary nature. (2). Permanent partial disablement: If the eaming capacity of a workman is reduced as a result of disablement in every employment which he was capable of undertaking at the time of the accident, it is known as partial disablement. of permanent nature. Any injury specified in part — TI of schedule I shall be deemed to result in permanent partial disablement. There are 48 injuries ‘Notes on Labour Law-I “Adarsha Law College 20specified in part ~ II of schedule I such as loss of one eye (without complications & other being normal), loss of thumb etc. Thus, the distinguishing feature between the two is that in temporary partial disablement, the caming capacity of a workman is reduced in particular employment in which he was engaged when the accident took place but in permanent partial disablement the eaming capecity of a workman is reduced in every employment which he was capable to undertake at the time of the accident. According to S.N.Mishra, to determine whether the injury is permanent or temporary the courts have to seé whether the injury has incapacitated the workmen from every employment which he was capable of undertaking at the time of accident or merely from the particular employment in which he was at the time of the accident resulting in disablement. In the forme case the disablement in partial but permanent, in the latter case itis temporary. Caleutta Electric Supply Corporation Vs High Court.Das1968 (Q) LLJ 169: It is held that no compensation can be granted for any physical disability unless there was Joss of earning capacity. It is only in the case of a scheduled injury that such loss presumed, ‘Where the injury is not a scheduled injury the loss of earning eapacity must be proved by evidence, Calcutta Licensed measures Bengal Chamber of Commerce Vs Md.Hossian AIR 1969 Cal 378: Loss of eaming capacity or the extent of it is question of fact, It has to be determined by taking into account the diminution (decrease) or destruction would reasonably be taken to have disabled the effected workman from performing the duties which a workman of his lass ordinarily performs, Total Disablement: Sec.2 (1) (d) of the Act defines the total disablement, according to this section total disablement may be divided in to two kinds; (1) Temporary Total_disablement: When the disablement is of temporary nature which ineapacitates a workman for all work which he was capable of performing at the time of accident (resulting in such disablement),then it is called temporary total disablement, (2). Permanent Total disablement:Here in this case, the earning capacity of a workman is lost for all time or for over. It has been expressly provided that in a total disablement, the 100% earning capacity is lost as a result of one injury or as a result of two or mote injuries, It is further provided in the Act that permanent {otal disablement shall be deemed to result from every injury specified in part ~ I of schedule I (or) from any combination of injuries specified in part — II of schedule 1, where the aggregate percentage of the loss of earning capacity, as specified in the part- If against those injuries amounts t6 one hundred percent or more, Pratap Narain Singh Deo Vs Srinivas Sab ete 1976 (1) SCC 289: Where a carpenter fell down during the course of his employment and suffered injuries resulting in amputation of his left arm. Supreme Court held that the injury was of such a nature as to cause permanent disablement and it incapacitated him from performing all work which he was capable of performing viz., that of carpenter work since carpenter cannot work with one hand. Section 3: Employer’s liability for compensation: The liability of an-employer 10 pay compensation is limited and is subject to the provision mentioned under sub-section (1) of section 3 of W.C. Act, which provides the liability of the ‘employer to pay compensation is dependent on the following four conditions. (2) The workman must have sustained personal injury Notes on Labour Lavell “Aaarsha Law College 2(2) The personal iajury imus: heve been cavsed by an accident. (3) The zecident may have arisen out of and in the course of his employment. (4) The personal injury caused to the workman must have resulted either in the total or partial disablement of the Workman for a period exceeding 3 days or it must have resulted in death of the workman, 1, The workman must have sustained personal injury: The expression “personal injury” had not been defined. Personal injury is a bodily injury or a physical injury which would also include abnormal mental conditions, Personal injury includes any harmful change in the body. It need not involve physical trauma, but may include such injuries as disease, sunstroke, nervous collapse, traumatic neurosis, hysterical paralysis and neurasthenia, Lipton (India) Ltd Vs Gokul Chandra Mandal 1982 I LL 225 (cal): It was held that injury caused to his personality which may affect his eaming capacity is personal injury and it does not only mean physical injury because personality does not only mean physical appearance or bodily appearance but personality means the sum total of trails of his behaviour including mental and psychological traits. Thus, an injury which reduces his capacity to ‘earn is personal injury whether it is physical or otherwise. Tt was further held that a workman becomes entitled to compensation if its is caused to him by an accident arising out of and in the course of employment provided he is disabled for a period of exceeding 3 days, 2. The personal injury must have been-caused by an accident: The expression “accident” has also not been defined under the Act. But it generally means any unexpected mishap, untoward event, or some unexpected event happening without design. Balishakri Vs New Manekeloure Mill Co. ATR 1961 Guj 34: There would be cases, where’a series of tiny accidents, each producing some unidentifiable results and operating cumulatively toproduce the final condition of injury constitute together an. accident within the meaning of this section. 3: Accident arisiig-ont of-and-inethe-course-of employment: Thé most important essential. requirement is that an accident which causes personal injury to the workman mnst arise ont of and in the course of his employment. Here “arising out of” means during the course of employment or it suggests the:cause of accident. And “in the course of employment” means the place and circumstances under which the accident takes place and the time when it occurred” or the workman is employed to do is incidental to his employment, Macldnnon Mackenzie and. Company.(P)'Ltd Vs Ibrahim Mobd Istak AIR 1970-SC 906: ‘The Supreme Court held that in order to'come within the workmen’s compensation Act, the injury by accident must arise both out of and in the course of employment. ‘The expression-“in.the course of employment” means in the course of the work which the workman is employed to do and is incidental to it. The word “arising out of employment” means that during the course of the employment, injury has resulted from risk incidental to the duties of the service. Supreme Court further held that in-order to give rise to a claim for compensation, there must be a casual connection between accident and-the employment. If there is no causal relationship between the two (i, the accident and the employment) the accident cannot be called to have arisen out of and is the course of the employment. Notes on Labour Law-it Hl i ‘Adarsha Law College 2 L & & & & & & & &Doctrine of National Extension of Employer’s Premises_or Reasonable Extension: Theory of national extension of theemployer’s premises applies only in cases where the conveyance facility is provided to the workmen by the employer and the workmen are under duty to avail it in view of the terms of their contract of service. If the transport facility provided by the employee is the only means of conveyance than it may not be éxpressly provided in the contract of service because in that situation it may be the implied term of their contract of service to avail it due to necessity, General Manager, B.E.S.T undertaking Vs Mrs. Agnes AIR 1964 SC 193: ‘The Bombay Municipal Corporation carried on a public utility service in greater Bombay and for the purposes employed certain drivers to drive the buses, The transport service was managed by the Electricity Supply and Transport Committee. One of the drivers on 20" July, 1957 finished his work for the day at about 7.45 p.m. at Jageshwar Bus Depot. In order to reach his residence at Santa Cruz he boarded another bus which collided with a stationary lorry parked at an awkward angle on the road Erlabridge, Andhari. Consequently he was thrown out on the read and injured died on 26" July, 1957 due to the injuries in Hospital. The compensation was claimed by his widowed wife pleading that the accident has arisen out of and in the course of employment ultimately the case come to the Supreme Court for decision. 1 was observed by the Supreme Court that ws.3(1) of the Act injury must be caused to the workman by accident arising out of and in the course of his employment. The question, when does an employment begin and when does it cease depends upon the facts of each case. But the court bas agreed that the employment does not necessarily end when the “down tool” signal is given or when the workmen leaves the actual workshop where he is working, There is a national extension as to both the entry and exit by time and space. The scope of such extension must necessarily depend on the circumstances of a given case. Dennis Vs White (1917): On the orders of employer workman went out on bicyele to do masters business work while fhe was on public road he met with an accident thereby he sustained injuries. The workman approached the commissioner for compensation. The employer contended that the accident was oceurred on a public road, and there was no causal connect between accident and employment, But it'was held that the employer was held liable under the doctrine of national extension of ‘employment, as the employee was in the employment when the accident occurred, thus the accident was in result of arising out of and in the course of his employment. In brief the law relating to national extension of employer's premises may be summed up as follows; (1) There must be an obligation, express or implied, upon the employér to provide transport to and from the work spot and a reciprocal obligation upon the workman to avail that transport (2) The transport facility must not only be in the nature of a concession or privilege which the workman are free to avail or not. (3) In the case of an accident take place on a public road, the employer would be liable only if the employment of the workman requited him to be there, The distance of the place of accident from the place of work is immaterial in such case. : (4) Where the means of transport provided by the employer, is not only the most convenient means but also the only means to reach the place of work, there would be deemed to be an Notes on Labour Lawl — ‘aarsha Law College Bimplied obligation on employer (0 provide that transport and reciprocal obligation on the workman to await it Defenses available to an employer: Section 3 of the Act besides being provided for liability of employer, it also enunciated the defences available (o an employer. They are asunder: See.3 (1) (a): Disablement for less than 3 days: Employer is not liable for any injury which does not resuit in the total or partial disablement of workman for a period exceeding 3 days. See3 (1) (b) (i): Influence of Alcohol or Drugs: Employer is not liable to pay ‘compensation if the workman had bees’ consumed alcohol or drugs before going to assume his normal duties and having been at the time of accident under the influence of alcohol or drug. See.3 (1) (b) (ii): Willful disobedience of orders and Rules framed for the purpose of safety of workman: It provides that the employer shall not be liable if the workman acted with willful disobedience of an order expressly given or to a rule expressly framed for the purpose of securing the safety of the workmen. ‘See.3 (1) (b) (iii): Removal / disregard of safety guard: It provides that the employer shall not be fiable if the workmen disregards or removes any safety guard or other devices which he knows to have been provided for the purpose of his safety. Tt is to be noted that defences available to employer under sub-clause (H), Gi),Giijof clause(b) of Sec.3 (1) will not be applicable or invoked where the injury had resulted in death or permanent total disablement. Doctrine: of Added peril: . “The Doctrine of National Extension of Employment helps an employee or his dependants. to get compensation from the employer. On the other hand the Doctrine of added peril helps the employer to escape his liability to pay compensatiori, Where an employee is on duty, he does some more acts which he is not supposed to do, and exposes himself to danger. Under such circumstances, the employer could not be held Hiable, Executive Engineer, R.C.P Vs Heera Ram AIRI981 SC: ‘The deceased workman Was a fitter. He was going to the work spot along with some other employees in jeep. In the middie of the way, the jeep was stopped due to some repairs. ‘The driver attempted to fepair the jeep, but failed. The deceased who was fitter tried to repair, though it was not his duty and more particularly he did not know anything about jeep repait. Even then he put his hand on the car burettor to start the engine, which was misfired, resulting serious injuries to him He died with those injuries. Supreme Court held that to repair the jeep was not the primary or incidental duty of the fitter employee, The driver also not asked him to help. The deceased fitter himself involved in the risk by inviting danger. Thus, the employer wes not liable to pay any compensation. Employer's liability in cases of occu pational diseases: Sub-section (2) of section 3, deals with the payment of compensation in case of an injury resulting from occupational disease, The list ofthe occupational diseases is contained in Schedule Ml of the Act, Schedule IIL is divided into three parts, A.B and C. The disease contracted must be an occupational disease peculiar to the employment specified in Schedule IIL. In respect of every Such disease mentioned as occupational disease in Schedule III, a list of a number of employments Woes on Labour Lavell ‘Tdarsha Taw College 24‘Notes on Labour Le is given. To support any claim for compensation in case of occupational disease in part A no specified period on employment is necessary: for diseases in part B the workman must be in continuous cmployment of the same employer for a period of 6 months in the employment specified in that part: and diseases in part C period of employment wauld be such as is specified by the Central Government for each such employment whether in the service of one or more employers. The contracting of any disease specified in Schedule III shall be deemed to be an injury by accident arising out of and in the course of employment unless the contrary is proved, Part ~ A of Schedule — III; For occup: nal disease mentioned in part — A for claim no specific period of employment is necessary. However, if any disease as is mentioned in Part A of schedule Ui develops after a workman has left the employment, no compensation shall be payable to hirn. Part~B of Schedule ~ 111: Workman contracted occupational disease mentioned under part - B of schedule — III js entitled,to get compensation only if the condition contained in this sub section is fulfilled that is the workman contracti ig the disease must have been in the service of the employee concetned for a continuous period of not less than 6 months. Part- C Schedule IIT: To get compensation when workman contracted diseases mentioned in part ~ C of schedule I the workman must have been in the continuous service of one ot more employers for such period as the Central Government may specify. Sec.3 (2— A): It empowers the commissioner to fix the extent of liability of the employer in cases Where the workman has worked in establishment belonging to different employees because all the employers shall be liable to pay compensation. Sec.3 (3): provides that the State Government in the case of employment specified in part-A and part-B of schedule TH and the Central Govemment in the case of employment specified in par ~C of that schedule, after giving by notification in the official gazette not less than 3 months notice of its intention so it do, may by a like notification, add any description of employment to the employment specified in schedule UI. See. 3 (4): - The employer is liable to pay compensation only if the disease can be directly attributed to a specific injury by accident arising out of and in the course of his employment. Exceptions to this rule are the cases covered by sub-section (2), (2-A) and 3 of section 3. See3 (6): Imposes a bar on the recovery by the workman of compensation for the same injury. It is not only a success to a claim that bars a subsequent claim to compensation, but if workman has brought even an unsuccessful claim against his employer he would be debarred from making any alternative claim respect of the same injury. Nexus between the injury and employment: ;, courts have evolved a throaty of nexus between the injury and ng out of and in the course of employment. If wry and the employment, it was While deciding the cas the employment in order to interpret the phrase aris any essential nexus or connection is established between thi held to an accident within the meaning of injury. Jayantilal dhanji and co., v E.S.I. Coprporation AIR 1963 AP 210 An unskilled worker was employed to feed:the oil mill by, pouring ground nut into the crushing machine. One trained fitter was appointed to operate the crushing machine and it was his duty to disconnect the machine fromthe rest of the moving machine. In his absence, the unskilled worker, observing that the crushing machine was unnecessarily moving consuming electricity, he tried to stop the crushing machine by kicking the belt off the moving pulley and in doing so, he was pulled upon the thrown down causing his spontaneous death. The employer contented that it was not the duty of the unskilled worker to operate the-crushing machine of which a different trained operator is appointed. But the Court examined as to whether there is any “nexus” between the injury and the employment and held that the death was an employment injury arising out of and in the course it ‘Aanisha Law College 28Notes on Labour Law-li ‘Adarsha Law College of employment, as there was direct, intimate and casual conneetion between the accident and his employment. Amount of compensation: section 4 of the Act specifies the amount of compensation in respect of various injuries causes to a workman, payable under the Act, ‘Amount of compensation is payable in the event of a workman meeting with an accident resulting into temporary or permanent disability or disease as stated in Schedule II and III in the terms of Section 4 of the Act, read with schedule IV. . Schedule If contains a list of persons engaged in different employments operations specified therein who are covered by the definition of workman and entitled to compensation Eg: a person employed for loading / unloading of materials in a factory or ship, persons employed in work incidental or connected with manufacturing process. Schedule III coniains a list of ‘occupational diseases which if contracted while in employment entitles a workman to compensation such as disease caused by lead, mercury, etc., Schedule IV lays down the relevant factor (a certain figure) related to the age of the workman at the time of death, injury or accident by which wages are multiplied to arrive at compensation. ‘Compensation ¢o be paid when due and penalty for default: ‘Time of payment of compensation: Section 4A of the Act provides that compensation wider section 4 shall be paid as soon as it falls due. The employer is-requited to deposit or to make provisional payment based on the extent of liability which he accepts with the Commisisoner or hand over to the workman as the-case may be even if the employer does not admit the liability for compensation to the extent claimed. ‘Where an employer is in-defailt in paying compensation, he would be liable to pay interest thereon and also a furthe# -sum-not exceeding 50% of such amount of compensation to the extent claimed. ‘Where an employer is in defaultin paying compensation, he would be liable to pay interest thereon and also a further sum not exceeding 50% of such amount of compensation as penalty. The interest and the penalty stated above is to be as penalty. The interest and the penalty stated above is to be paid to the workman or his dependent as the case may be, Method of calculating wages: Montlily wages iean'the amount of wages deemed to-be-payable for a months service ind calculated as follows: a) where the workman has, during a continuous of not less than 12 months immediately preceding the accident, been in the service of the employer who is liable to pay compensation. he monthly. wages-of the workman shall be 1/!2th of the total. wages which have fallen due -for payment to him by the employer in the last 12 months of that period b) where the whole:of such period of service was less than one month, the monithly wages of workman shall be thesaverage montlly amount which during the 12 months immediately preceding the ‘accident was being éamed by a workman employed on the name work by the same employer, or, it there was no workman so employed, by the same employer, of, if there was not workman so employed, by a workman employed on similar work in the same locality. ©) In other cases , including cases in which it is not possible to calculate the monthly ‘wages under clause (b) the monthly wages shall be 30 times the total wages eamed in CRORE Ae ¢respect of the last continuous period of service, immediately preceding the accident from the employer who is liable to pay compensation, divided by the number of days comprising such period A period of service shall be decmed to be continuous which has not been interrupted by a period of absence from work exceeding 14 days. 18A, Penalties for-default - (1) Whoever - (a) fails to maintain a notice-book which he is required to maintain under sub-section (3) of section 10, or (®) fails to send to the Commissioner a statement which ‘he is required to send under sub-section (1) of section 10, or (©) fails to send a report which he is required to send under section 10B, or (d) fails to make a return which he is required to make under section 16, shall be punishable with fine which may extend to five thousand rupees. (2) No prosecution under this section shall be instituted except by or with the previous sanction of 2 Commissioner, and no Court shall take cognizance of any offence under this section, unless complaint thereof is made within six months of the date on which the alleged commission of the offence came to the knowledge of the Commissioner. EMPLOYEES STATE INSURANCE ACT, 1948 ‘The need for social security against want, discase and occupational injury has been consistently felt from the early days of industrialization. The famous industrialist and philanthropies, Robert Owen, as early as 1840, Gad attracted the attention of the government and the public towards the. most appalling working condition and exposure of workers to danger of ocoupation injury and emphasized the need for some protective measures for the protection of the working class. ‘The concept of social security is based on the realization of the fact that in a modem and civilized society, the members of the community should be protected through ‘collective action against the social risks; hazards and deprivation, The national commission on Labour rightly explained the rationale behind such collective action thus, the underlying idea behind social security measures is.that a citizen who has contributed or is likely to contribute to his country welfare should be given protection against certain hazards, Evolution of social security in India: In India the workmen's compensation’ Act, 1923 is considered as a first step in the direction of social security to the workmen in case of personal injury arising out of and in the course of employment. ‘The Whitely Commission in 1931 observed that hé industrial worker in India is attached to his native village where joint family system, to certain extent, provided a cover to the worker in times of need and recommended that this feature of indian Industry needs to be encouraged, In 1957, the Government of India set up a ‘study Group on social security” with VLR. Menon as its chairman, ‘Wotes on Laboor Lawl “Aaasiha Law College 27Application of the Act: ‘The PSI Act extends to the whole of India and it came into force from the date as notified by the central Government through the official gazette i.c., with effect from 31- 08-1948, However different dates may be appointed for different states or for different parts of the states, The E.S.I. Act in first instance applies to all factories including the factories belonging to the Government. However the Act does not apply to factories of seasonal character where work is performed intermittently during certain seasons only. Further the act also does not apply to such factory or establishments, 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. . Employment Injury" Section 2(8) : 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 insuirable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India It was clarified in Regional Director E.S.1. Corp., v. Francis De Costa 1997 that in order to claim the benefit under the Act, the employee will have to prove that the injury he had suffered arises out of and was in the course of his employment, It may be noted that the crucial test fo examine as to whether the personal injury is liable to be compensated by the employer it is necessary to establish a nexus between the cause of injury and the employment, For this purpose the phrase “arising out of and in the course of employment” as is used in English Act is also applied in the Indian law. Benefits provided to the insured persons under the E.S,1.Act: Freedom from economic fear is'the basis of all social security legislation. The various benefits conferred by the Act attack this fear and seek to remove it. This Act provides certain benefits to the employees, working in factories including Govl. fuctories, except to factories of seasonal character where work is performed intermittently during certain season only. The section 46 of the Act makes provision for the following six benefits, they arc; (1) Sickness benefit ~ See.46(1) (a) (2) Maternity benefit Sec.46(1) (b) (3) Disablement benefit - Sec.46(1)(c) (4) Dependents benefit - See.46(1) (2) (5) Medical benefit - See.46(1) (e) (6) Funeral expenses - See.46(1) () 1. Sickness benefits (Sec.46 (1) (a)]sAccording to the section 49, sicknesses mean a condition, which requires medical treatinent, attendance and it necessitates abstention from work, thereby he is entitled to periodical payment of benefits on medical grounds. However, it excludes very short illness lasting less than 2 days for which usually no sickness benefit is paid, Thus, sickness for the purpose of this Act requires; (1) That employee must be in such a condition, which requires medical treatment, (2) He requires that someone should attend him @) Its necessary that he must abstain from doing work on medical grounds. Wes Ga aboar Lavell ‘dartba Law Callege 28 © « & & € « &Rule.S5 of the ESI Central Rules, 1950: According to this rule, the eligibility of a person to claim sickness benefit is that the contribution in his respect should have been payable for 78 days. The significance of the word “payable” is to be understood in contra - distinction to the word “paid”. It is not necessary that the contribution of 78 days (13 weeks as prescribed eatlier) should have actually been paid but it should be payable. Thus, non Payment of contribution won't affect for availing of ESI benefits by an employee Bharaqgath Engincering Vs R.Ranayaki & another 2003 LL SC] In case of the newly insured employee who is claiming sickness benefit for the first time this qualification period of contribution is reduced and shorter of 15 days is prescribed. This rule further provides that the sickness which relapses (fall back into a Previous state or become worse after improvement) within 15 days is considered as the continuation of the previous sickness. However if there is a gap of at least 2 days after the expiry of 15 days it can be treated as 4 Second spell of sickness, Itis also provided that the sickness benefit shall not be paid for more than 91 days in any 2 consecutive benefit periods. Standard Benefit Rate (Rule 54): The daily rate of benefit is called the “standard benefit rate” as specified in the following table. In the first column in the corresponding entry the amount of standard benefit rate is mention. i Group of Employees who average daily | Standard Benefit Rule in Rupees wages are column —] 1. Below Rs.28 Rs.14 or full average daily wages whichever is less. 2. Rs.28 to below Rs.32 Rs.l6 3. Rs32 10 below Rs.36 REI8 4, s.36 to below Rs.40 RE20 Rs.]25 28. Rs.236 and above Table 2. Maternity Benefit [Sec.46 (1) (b)]: Sec.46 (1) (b) and Sec.50 empowers an insured woman to claim maternity benefit and it is payable in case of, (1) Confinement, (2) Miscarriage, or (3) Even the sickness arising out of pregnancy and (4) Death 2, Maternity Benefit: Rule 56 of EST Central Rules, 1950 lays down that an insured woman shall’ be qualified to claim matemity benefit for a confinement occurring or expected ‘© occur in a benefit period, if the contribution in respect of here were payable for not less than 80 days in the immediately preceding two consecutive contribution period, Woes on Labour Lawl "Fata Law College rrThus maternity benefit is available subject to the condition of payment of contribution for a minimum of 80 days in one or two consecutive contribution period. Rate of payment of maternity benefit: Sub — rule (5) of Rule 56 prescribes for double the standard benefit rate specified in Rule 54 corresponding to her daily average wage: (ie. approximate full wage). Duration of matemity leave is 12 weeks in case of normal delivery, 6 weeks in case of mis ~ carriage and the period can be extended by 4 weeks on medical advice. If the mother dics on the date of the delivery of the child and the child survives, then maternity benefit will be paid up to 30 weeks, aud if the child also dies with mother, benefit shall be paid for the days up to the including the day of the death of the child 3. Disablement Benefit [Sce.46 (1) (c)]: The Sec.51 makes provisions for the disablement benefit in two categories. 1. Where a person sustains temporary disablement for not less than 3 days excluding the day of accident. 2, Where a'person sustains permanent disablement, whether total or partial as may be assessed for a limited period or finelly for life. Rate of Disablement Benofit(Rule'S7): As per Rule $4 the daily rate of disablement benefit payable to insured employee is fixed at 40% more than the standard benefit rate specified is rule 54, comesponding to the average daily wages of the concemed employee in the relevant contribution period corresponding to the benefit period in which the employment injury occurs. Contribution Period SS Corresponding Benefit Apiil to September January to June October to March, __| uly to December The disablement benefit calculated as. aforesaid shall be called as “Pull Rate”, The disablement benefits shall be payable an insured employee as follows; (a) For temporary disablement at the full rate (b) For permanent total disablement, at the full rate (©) For permanent partial disablement, here the percentage of earning capacity is taken as the percentage of rate of disablementbenefit. ‘The injuries specified in part ~ IL of the schedule are deemed to result into permanent partial disablement. But any combinations of injuries specified there in may result into loss of caring capacity amounting to 100%: 4, Dependants Benefit (See.46 (1) (d)]: Sec.52 provides that if an-insured person dies as a result of an employment injury sustained as an employee under this Act, dependents benefit shall be payable at such rates and for such period and subject to such. condition as may be prescribed by the Central Government to his dependents specified in section 2(6-A). Rule.58 Lays down that the dependents benefit shall be payable to the dependents of the insured person in the following manner; (1) To the widow durinig her life until remarriage and the benefit shall be 3/5 of the full rate, Notes on Labour awit ‘Téwha Law College 30(2) To each legitimate or adopted son the benefit shall be 2/5 of full rate until attainment 18 years of age. (3) To each legitimate or adopted unmarried daughter the benefit shall be 2/5 of full rate unit she. attains 18 years of age or until her marriage, (4) To the widowed mother the benefit shall be 2/5 of the full rate till her death. It is further provided that if the total amount of dependants benefits distributed among the widow, widowed mother, son and daughters as mentioned in the above exceeds the full rate, the shares of the dependents shall be proportionately reduced to the extent of full rate. In case the deceased insured person does not leave behind him a widow, widowed mother or children as mentioned above the dependants benefit shal! be payable to other dependants in the following manner; (® To parent (other than widowed mother) or grant parents [they will get amount equivalent to 3/10 of the full rate}. (b) To any other (f) mate dependant, until the age of 18 years, (li) Female dependant until the age of 18 years or marriage which ever in earlier. Note: The daily rate of dependants benefit shall be 40 % more than the “st specified in Rule 54, fandard benefit rate” 5. Medical Benefit [Sec.46 (1) (@)]: An insured person and his family members are entitled to medical benefits in the manner prescribed in Sec.56 of the Act, which is as follows; (@) out — patient treatment (b) attachment to any hospital or dispensary or clinic under the ESI scheme (©) Doctors visit to the home of the insured person, @) Inpatient treatment in a hospital or other institution, ‘The medical benefit i.c., treatment in the dispensary and hospital is.avaiJable and provided not only to the insured person but also to the family members of the insured person from the date of employment itself. However, sickness benefit is not provided to the members of the family as sickness benefits are cash benefits provided to the insured person for the loss of wage during sickness. For the purpose of obtaining medical treatment, the mainly consist of the following: (@) A sponse, (b) Minor legitimate or adopted child dependent upon the insured person. (©) Child who in wholly dependent on the eaming of insured person and who is G) Receiving education, till the he or she attains the age of 21 years ii) An un married daughter (@ An infirm child - physical, mental or accidental so long as the infirmity lasts. (© Dependent parents : 6. Funeral Expenses [See.46 (1) (): Under section 46(1) (A), the eldest surviving member of the family of the insured person who has died, shall be entitled for the payment of funeral expenses of the deccased insured person and where there is no such member available, the fimeral expenses would be paid to the person who actually incurred the expenditure on the funeral of the deceased insured person, According to Rule 59 of the ESI Central Rules, 1950, the present fixed amount is of R&.2, 500/- be paid as funcral expenses. Adjudication of Disputes and Claims: i ‘The ESI Act, 1948 provides for full fledged adjudicatory machinery under sections 74 to 83 for the settlement of disputes and a claim arising out of the Act, In view of this, the jurisdiction of civil court, in certain cases, is barred, ‘Notes on Labour Law-Ii “Adarsha Law College 31Constitution of Employees' Insurance Court (Sec 74): The State Government shall; by notification in the Official Gazette, constitute an Employees’ Insurance Court for such local area as may be specified in the notification, The Court shall consist of such number of Judges as the State Government may think fit, Any person who is or has been a judicial officer or is a legal practitioner of five years’ standing shall be qualified to be a Judge of the Employees’ Insurance Court, The State Government may appoint the same Court for two or more local areas or two or more Courts for the same local area. Where more than one Court has been appointed for the same local area, the State Government may by general or special order regulate the distribution of business between them. In Ashok leyaland Itd., ductron castings Itd, V., Deputy Tehsildar, Recovery Cell 2001 Il LLj 741 AP) It was held that all questions of applicability of the Act could be raised before the Employees’ Insurance Court in view of sections 74 and 75 of the Act. Matters to be decided by Employees" Insurance Court (See. 75) (1) If any question or dispute arises as to- (@) Whether any person is an employee within the meaning of this Act or whether he is liable to pay the employee's contribution, or (b) The rate of wages or average daily wages ofan employee for the purposes of this Act, or (©) The rate of contribution payable by a principal employer in respect of any Employee, or (@) The person who is or was the principal employer in respect of any employce, or (¢) The right of any person to any benefit and as to the amount and duration thereof, or (6c) any direction issued by the Corporation under section SSA on a review of any payment of dependants benefits, or (© Any other matter which is in dispute between a 1, principal employer and the Corporation, or, 2. aprincipal employer and an immediate employer or 3. aperson and the Corporation or 4 an-employce and a principal or immediate employer, in respect of any contribution or benefit or other dues payable or recoverable, (2) Subject to the provisions of sub-section (2A), the following claims shall be decided by the Employees Insurance Court, namely: (a) Claim for the recovery of contributions from the principal employer; (b) Claim by a principal employer to recover cont ns from any immediate Employer; (@) Claim against a principal employer undér section 68; (©) Claim under section 70 for the recovery of the value or amount of the benefits received by a person when he is not lawfully entitled thereto; and (© Any claim for the recovery of any. benefit-admissible under this Act. Institution of proceedings, ete (See 76): this section makes provisions for the institution of proceedings before the Employees Insurance Court and specifies the jurisdiction of the court and lays dowm that where the insured person was working at the time the question or dispute arose, he should institute the case in the court of that local area (2) If the Court is satisfied that any matter arising out of any proceeding, pending before it can be more conveniently dealt with by any other Employees Insurance Court in the same State, it may, Notes oa Labour Lavell ‘Adarsha Law College 7 32 ~O. FO. & OE. O EF ES ©subject to any rules made by the State Government in this behalf, order such matter to be transferred to such otber Court for disposal and shall forthwith transmit to such other Court the records connected with that matter (3) The State Government may transfer any matter pending before eny Employees’ Insurance Court in the State to any such Court in another State with the consent of the State Government of that State. (4) The Court to which any matter is transferred under sub-section(2) or sub-section (3) shall continue the proceedings as if they had been originally instituted in it Commencement of proceedings (Sec 77): (1) The proceedings before an Employees’ Insurance Coutt shall be commenced by application, (A) Every such application shall be made within a period of three years from the date on which the cause Of action arose. (2) Every such application shall be in such form and shal! contain such particulars and shall be accompanied by such fee, if any, as may be prescribed by rules made by the State Government in consultation with the Corporation. Powers of Employees’ Insurance Court (see 78): (1) The Employees Insurance Court shall have all the powers of a Civil Court for the purposes of summoning and enforeing the attendance of witnesses, compelling the discovery and production of documents and material objects, administering oath and recording evidence and such Court shall be deemed to be a Civil Court within the meaning of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973. @) The Employees’ Insurance Court shall follow such procedure as may be prescribed by rules made by the State Government. @) Ail costs incidental to any procceding before an Employees’ Insurance Court shall, subject to such rules as may be made in this behalf by the State Government, be in the discretion of the Court (4) An order of the Employees‘ Insurance Court shall be enforceable as if it were a decree passed ina suit by a Civil Court. Appearance by legal practitioners, ete (see 79): Any application, appearance or act required to bbe made or done by any person to or before an Employees" Insurance Court (other than appearance of a person required for the Purpose of his examination as a witness) may be made or done by a legal practitioner of by an officer of a registered trade, union authorized in writing by such person ‘or with the Permission of the Court, by any other person so authorized. Reference to High Court (See 81): An Employees’ Insurance Court may submit any question of law for the decision of the High Court and if it does so shall decide the question pending before it in accordance with such decision. Appeal (see 80): (1) Save as expressly provided in this section, no appeal shall lie from an order of an Employees’ Insurance Court Notes on Labour Law-it “Aaaisha Law College 33(2) An appeat shall lie to the High Cour involves substantial question of law. n Employses' Insurance Court if it (3) The period of limitation for an appeal tinder this section shall be sixty days, (4) The provisions of sections 5 and 12 of the jon Act, 1963 shall apply to appeals under this section, Stay of payment pending appeal (83); Where the Corporation has presented an appeal against an order of the Employees’ Insurance Court, that Court may, and if so directed by the High Court shall, pending the decision of the appeal, withhold the payment of any sum directed to be paid by the order appealed against. Establishment of Employces' State Insurance Corporation: ‘The Central Government may, by notification in the Official Gazette, appoint in this behalf, there shall be an establishment for the administration of the scheme of Employees’ State Insurance in accordance with the provisions of this Act a Corporation to be known as the Employees’ State Insurance Corporation (sec.3). ‘The Corporation shall be a body corporate by the name of Employees’ State Insurance. Corporation having perpetual succession and a common seal and shall by the said hame sue and be sued. Constitution, (Section d): The central Government appoints a chairman, a vice ~ chairman and other members representing, interest of employers, employees, and state government / union territories and medical profession,. Three members of the parliament and the Director General of the Corporation ate its ex-officio members. Section 5. Term of office of members of the corporation: The term of office of members of the Corporation, othér than the members referred under section and the ex officio member, shall be four years commencing ftom the date-on which their appointment or election is notified. Provided that a member of the corporation shall, notwithstanding the expiry of the said period of four years, continue to hold office until-the appointment or election of his successor is notified. Section 19. Corporation's power to promote measures for health, cte., of insured persons. The Corporation may, in addition to the'scheme of benefits specified in this Act, promote measures for the improvement of the healthy and welfare of insured persons and for the rehabilitation and re employment of insured persons who have been-disabled or injured and may ineur in respect of such measures expenditure from: the. funds.of the Corporation. within such limits as.may be prescribed by the Central Government. Section 24, Acts of corporation, etc., not invalid by reison of defect in constitution, ete: No act of the Corporation shall be deemed to be invalid by reason of any defect in the constitution of the Corporation, or on the ground that any member thereof was not entitled to hold or continue in office by reason of any disqualification or of any irregularity in his appointment or election, or by reason of such act having been done during the period of any vacancy in the office of any member of the Corporation. Notes on LabourLaweit ‘Adzesha Law College 34 P OO OO OF ©2 T9090 7 ‘THE EMPLOYEES: PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 Obiect of the Acti An Act to provide for the institution of provident funds, pension fund and eposit-linked insurance fund for employees in factories and other establishments, The principal duty is laid upon the employer to put the provident fund scheme. into operation and to meke contribution of both the employees and employer to share the fund then and there and deduct the employees share from their wages Application of the Act: - It extends to the whole of India except the State of Jammu and Kashmir and Subject to the provisions contained in section 16, it applies ~ @) (o every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or mote persons are employed and (2) 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 eny establishment employing such number of persons less than twenty as may be specified in the notification. (©) Notwithstanding anything contained in sub-section 3 of this section or-sub-section 1 of sectionl6, 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. (@) An establishment to which this Act applies shall continue to be govemed by this Act notwithstanding that the number of persons employed therein at any time falls below twenty. ‘The following three schemes have been framed under the Act by the Central Government: >. The Employees’ Provident Fund Scheme, 1952; > The employees* Pension Scheme. 1995; and » The Employees’ss Deposit-Linked Insurance Scheme 1976, The three Schemes mentioned above confer significant social Security benefits on workers and their dependents, Employees’ Provident Funds Scheme. (See 5): The Central Government may, by notification in the Official Gazette, frame a scheme to be called the Employees’ Provident Fund Scheme for the establishment of provident funds under this Act for employees or for any class of employees and specify the establishments or class of establishments to which the said Scheme shall apply and there shall be established, as soon as may ‘Notes on Labow Law “Adarsha Law College 35be after the framing of the Scheme, a Fund in accordance with the provisions of this Act and the Scheme. ‘The Fund shall vest in, and be administered by, the Central Board constituted under section SA. Subject io the provisions of this Act, a Provident Fund Scheme may provide for all or any of the matters specified in Schedule Il. Any such scheme shall take effect cither prospectively or retrospectively on such date as may be specified in the schedule, In STANDARD COTTON AND SILK WEAVING COL LITD., V REG., P.F.COMMR,, 9 F.J.R. 50 ‘Two distinct powers are conferred on the Central Government by section 5 (1) namely i) to frame a scheme, and ii) to specify to which factories the scheme shall apply. Both these powers can be exercised through the medium of a single notification, Further the factories to which the scheme shall apply may be specified in the scheme itself. Employees’ Pension Scheme (Sec 6A): ‘The Central Governiment may, by notification in the Official Gazette, frame a scheme to be called the Employees’ Pension Scheme for the purpose of providing for — (a) Superannuation pension, retiring pension or permanent total disablement pension to the employees of any establishment or class of establishments to which this Act applies; and (b) Widow or widower’s pension, children pension or orphan pension payable to the beneficiaries of such employees. Minimum 10 years contribution service is required for entitlement to pension. Normal superannuation pension is payable on attaining the age of $8 years. Pension on a discounted rate is also payable.on attaining the age of 50 years. Where pensionable service is less than 10 years, the member has an option to remain covered for pensionary benefits till 59 years of age or claim return of contribution/withdrawal benefits. ‘The scheme provided for payment of monthly pension in the following contingencies (a) Superannuation on attaining the age of'58 years (b) Retirement (c) Permanent total disablement (d) Death during service (e) Death afler retirement / Superannuation / permanent total disablement () Children Pension and (g) Orphan pension. Employees’ Deposit-tinked Insurance Scheme (Sec 6C). The Central Government may, by notification in the Official Gazette, frame a scheme to be called the Employees’ Deposit-linked Insurance Scheme for the purpose of providing life insurance benefits to the employees of any establishment-or class of establishments to which this Act applies. ‘The employer shall:pay into the Insurance Fund such further sums of money, not exceeding one-fourth of the contribution. which he is required to make under sub-section 2, as the Central Government may, from time to time, determine to meet all the expenses in connection with the administration of the Insurance Schente other than the expenses towards the cost of any benefits provided by or under that-Scheme.The Insurance Fund shall vest in the Central Board and be administered by it in such manner as may be specified in the Insurance Scheme. The insurance ‘Scheme may provide for all or any of the matters specified in Schedule IV. ‘The Insurance Scheme Notes on Labour Lawl ‘Taareha Law Galiegs 36 O48 OF OO FG Oo co9997909000 may provide that any of its provision shall take effect cither prospectively or retrospectively on such date as may be specified in this behalf in that Scheme. Mode of recovery of money due from employers (See 8)~ any amount due - (a) from the employer in relation to an establishment to which any Scheme or the Insurance Scheme applies in respect of any contribution payable to the Fund or, as the-case may be, the Insurance Fund, damages recoverable under section 14B, accumulations required to be transferred under sub- section 2 of section 15 or under sub-section 5 of section 17 or any charges payable by him under any other provision of this Act or of any provision of the Scheme or the Insurance Scheme; or (©) from the employer in relation to an exempted establishment in respect of any damages recoverable untler section 14B or any charges payable by him the appropriate Government under any provision of this Act or under any of the conditions specified under section 17 or in respect of the contribution payable by him. towards the Pension Scheme under the said section 17,may, if the amount is in arrear, be recovered in the manner specified in section BB to 8G. CONTRIBUTION: ‘The word “CONTRIBUTION” is defined under sec.2 of the Act which means a contribution payable in respect of a member under a scheme or the contribution payable'in respect of an employee to whom the Insurance Scheme applies The contribution which shall be paid by the employer to the Fund shall be ten percent of the basic wages, dearness allowance and retaining allowance, if any, for the time being payable to each of the employees whether employed by him directly or by or through a contractor, and the employce’s contribution shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires, be an amount exceeding ten percent of his basic wages, dearness allowance and retaining allowance if any, subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section: Provided that in its application to any establishment or class of establishments which the Central Government, after making such inquiry as it deems fit, may, by notification in the Official Gazette specify, this section shall be subject to the modification that for the words “ten percent”, at both the places where they occur, the words 12 percent shall be substituted: Provided further that where the amount of any contribution payable under this Act involves a fraction of a rupee, the Scheme may provide for rounding off of such fraction to the nearest rupee, half of a rupee, or quartet of a rupee. Under this scheme member withdraw the full amouit standing to his credit in the fund in the event of: retirement from service after attaining the age of 55 years; retirement on account of permanent and total incapacity; termination ftom India for permanent settlement abroad; termination of service in the course of mass or individual retrenchment; termination of service under a voluntary scheme of retirement framed by employer and-employee under a mutual agreement. op pap otes on Labour Lawl a ‘Adaisha Law College 7 37‘The Provident Fund Scheme has made the payment of contribution mandatory and the Act provides for no exception under which a specified employer ean avoid his mandatory liability. Inyestnent: The amount received by way of provident fund contribution is invested by the Board of Trustees in accordance with the investment pattern approved by the Government of India, The members of the provident fund get interest on the money standing to their credit in their provident fund accounts, The rate of interest for each financial year is recommended by the Board of Trustees and is subject to final decision by the Government of India. Advance / Withdrawals: Advances from the provident fund can be taken for the following purposes subject to conditions laid down in the relevant paras of the Employees Provident Fund Scheme: 1. Non-refundable advance for payment of premia towards a policy or policies of Life Insurance of a member. 2. Withdrawal for purchasing a dwelling house or flat or for construction of a dwelling house including the acquiring of a suitable site for the purpose, or for completing/continuing the construction of a dwelling house, already commences by the member or the sfouse and an additional advance for additions, alteration or substantial improvement necessary to the dwelling house; 3. Non-refundable advance to members due to temporary closure: of any factory or establishment for more than’ fifteen days, for reasons other than a strike or due to non- receipt of wages for 2 months. or more, and refundable advance due to. closure of the factory or establishment for more than six months; 4, (i) Non-refundable in case oft a. hospitalization-lasting one moiith or more, or b. major surgical operation in a hospital, or ©. suffering from T.B., Leprosy, Paralysis, Cancer, Mental derangement ot heart ailment, for the treatment of which leave has been granted b the employer, Gil) Non-tefundable advance for the treatment of a member of his family, who has been hospitalized or required hospitalization, for one month or more, a. fora major surgical operation; or b. for the teeatment of T.B., Leprosy, Paralysis, Cancer, Mental derangement or heart ailment, 5. Non-refundable advance. for daughter/sons mariage, self-marriage, the marriage of sister/brother or for the post matriculation education of son or daughter; 6. Non-tefundable advance to:members-affected by cut in the supply of electricity; 7. Non-refundable advance in case property is damaged: by a calamity of exception mature such as floods, earthquakes or riots; 8. Withdrawals for repayment of loans in special eases, and 9. Non-refundable advance to physically handicapped members for purchasing equipment required to minirhize the hardship on account of handicap, Final withdrawal; Full: accumulations with interest thereon are refunded in the event of death, permanent disability, superannuation, retrenchment or migration from India for permanent settlement abroad/taking employment under Industrial Dispute Act, 1947, transfer to an establishment/factory not covered under the Act. Notes oa Labour Lawl ‘Aéarsha Law College 38 e& @& & &In other cases,. with permission of commissioner or nay subordinate officer to him, a member is allowed to draw full amount when he ceases to be in employment and has not bneen employed in any establishment to which the Act applies for a continuous period of at least 2 months. This requirement of 2 months waiting period shall not apply in eases of female members resigning ftom service for the purpose of getting married, MATERNITY BENEFIT ACT, 1961 ‘ihe object of maternity leave and benefit is to protect the dignity of motherhood by providing for the full and healthy maintenance of women and her child when she is not working, With the advent of modem age, as the number of women employees is growing, the matemity leave and other Traemity benefits are becoming increasingly common. But there was no beneficial piece of legislation in the horizon which is intended to achieve the object of doing social jus workers employed in factories, mines and plantation, An Act to regulate the employment of women in certain establishments for certain period before and afier child-birth and to provide for maternity benefit and certain other benefits, Application of Act.- It applies, in the first instance: (a) 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; (©) to 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 arc employed, or were employed, on any day of the preceding twelve months 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 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. The word establishment has a wide meaning and it generally denotes a shop, a commercial organization or a public institution, provided that they are not specifically exempted by the appropriate government from the applicability of the Act; Thomas Fapen v. Assistant Labour Officer, 1993 LLR 800 (Ker), Benefits under Maternity Benefit Act: Employment of, or work by, women prohibited during certain period (sec. 4) — (1) No employer shall knowingly employ a woman in any establishment during the six weeks immediately following the day of her delivery or her misearriage or medical termination of pregnancy (2) No woman shalt work in any establishment during the six weeks immediately following the day of her delivery or miscarriage or medical termination of pregnancy. Right to payment of maternity benefit (see 5) ~ Notes on Labour Law-it ‘Adaisba Law College wD(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, ‘NOTES. ~ The term “week” means a eyele of seven days including Sundays; Continuance of payment of maternity benefit in certain cases. (SEC 5-A). Every woman entitled to the payment of maternity benefit under this Act shall, notwithstanding. the application of the Employees’ State Insurance Act, 1948 , to the factory or other establishment in which she is employed, continue to be so entitled until she becomes qualified to claim matemity benefit under Sec. 50 of that Act, Notice of claim for maternity benefit and payment thereof. (Sec 6). ~ (J) Any woman employed in an establishment and entitled to matemity benefit under the provisions of this Act may give notice in writing in such form as may be prescribed, to her employer, stating that her maternity benefit and any other amount to which she may be entitled under this Act may be paid to her or to such person as she may nominate in the notice and that she will not work in any establishment during the period for which she receives maternity benefit (2) In the case of @ woman who is pregnant, such notice shall state the date from which she will be absent fiom work, not being a date earlier than six weeks-from the date of her expected delivery. (3) Any woman who has not given the notice when she was pregnant may give such notice as soon as possible after the delivery. (4) On receipt of the notice, the emplayer shall permit such woman to absent herself from the establishment until the expiry of six weeks after the day of her delivery. (5) The amount of maternity benefit for the period preceding the date of her expected delivery shall be paid in advance by the exupluyer to the woman on the production of such proof as may be prescribed that the ‘woman is pregnant, and the amount duo for the subsequent period shall be paid by the employer to the woman within forty-eight hours of production of such proof as may be prescribed thet the woman has been delivered of a child, : (©) The failure to give notice under this scetion shall not disentitle a woman to maternity benefit or any other amount under this Act if she is otherwiso entitled to such benefit or amount and in any such ease an Inspector may either of his own motion‘or on an application made to him by the woman, order the payment ‘of such benefit or amount within such period as may be specified in the order. Payment or maternity. benefit in ease of death of a woman, (SEC 7). ~ Ifa woman entitled to maternity benefit or any other amount under this Act, dies before receiving such maternity benefit or amount, or where the employer is liable for maternity benefit under the second proviso to sub-section (3) of section 5, the employer shall pay such benefit or amount to the person nominated by the woman in the notice given under section 6 and in case there is no such nominee, to her legal representative. Payment of medical bonus (SEC 8).— ‘Notes on Labour Law-tf “Adarsha Law College 40 ee Fe AEA |E &Every woman entitled to matemity benefit under this Act shall also be entitled to receive from her employer & medical bonus of twenty-fiverupees, if no pre-natal confinement and post-natal cate fe provided for by the employer fiee of ch Leave for miscarriage (SEC). — [p,case of misckrriage, a woman shall, on production of such proof as may be prescribed, be entitled to feave with wages atthe cate of matemity benefit for a period of si weeks immediately following the day of her miscarriage. A leave with wages for tubectomy operation in case of tubectomy operation , a woman stall, on Production of such proof as may be presecribed , be entitled to leave with wages at the rate of maternity benefit fora period of two weeks immediately following the dey of her tubectomy operation Leave for illness arising out of pregnancy (SEC 10): G oman euffering illness arising out of pregnaney, delivery, premature bith of child or miscarriage shall Pa production of such proof as may be prescribed, be entitled in addition to the period of absence allowed te fet under section 6, of, as the case may be, under section 9, o leave with wages at the rate of maternity benefit for a maximum period of one month Nursing breaks (SEC 11), — Every woman delivered of a child who returns to duty after such delivery hall in addition to the interval for rest allowed to her, be allowed in the course of her daily work tae breaks ofthe prescribed duration for nursing the child until the child attains the age of fifteen month PAYMENT OF GRATUITY ACT, 1972 An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, imines, oilfields; plantations, ports, railway companies, shops or other establishments and for matters connected therewith or incidental thereto, Application of the Act: Tt extends to the whole of India. Provided that in so far aa it relates to plantations or ports, it shall: not extend to the State of Jammu and Kashmir. It shall apply to - (@) every factory, ming, oilfield, plantation, port and railway company; (©) 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; ©) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, or, any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf, GA) A shop or establishment to which. this Act has become applicable shall continue to be Severed by this Act notwithstanding that the number of persons employed therein at any time after it has become so applicable falls below ten. Some Important Definitions: Sec 2(c) "UMPLOYEE" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are. express or implied, and whether or not such person is employed in a ‘managerial or administrative capacity, but does not include any such person who holds a post undef the Central Government or a State Government and is governed by.any other Act ér by any ‘Notes on Labour Lawl ‘Aéaisha Law College . at