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Volume 34 No.9 APRIL 2017

JOURNAL OF THE INDUSTRIAL RELATIONS INSTITUTE OF INDIA
104, Prospect Chambers, Dr. D. N. Road, Fort, Mumbai - 400 001.
Tel.: 2204 4084 • Email : arbiter.irii@gmail.com
Editor : Dr. R. Krishna Murthy
Editorial Page 4

In the News Page 6

Salient Features
Labour Reform & Social Safety Net Page 12
In order to protect the lowest income groups, the young, the old and the disabled, particularly
arising out of structural adjustments, resulting in unemployment in the short term, if not in
the long run, R. K. A. Subrahmanya reminds us that while a number of developing countries
introduced unemployment insurance schemes for their labour, Indian government dragged
its feet inspite of all the tall talk by practically all concerned, and the fact remains – there is
no unemployment insurance scheme in India.
Overtime Work - Legal, Human & Social Dimensions Page 20
In this in-depth analysis of legal provisions in respect of overtime and payment in respect
thereof under the Factories Act, 1948, P. Somaraju envisages that in view of emerging
competitive global environment, the government shall take care of both, the demands of
the employers and the welfare of workers.
Maternity Benefit Page 24
Having provided extensive and minute details of the latest amendments to the Maternity
Benefit Act, SV Ramachandra Rao has advised the HR professionals have a relook at
their HR manual and also the contract of employment to comply with the amended Act.

VRS Application
Withdrawal after the Expiry Date Page 26
Referring to the problems relating to the Voluntary Retirement Schemes, particularly when
the employees decide to withdraw their consent to retire prematurely, R. N. Misra has
cited and quoted the judgments of the Supreme Court to stress that the terms and conditions
of the VRS Schemes should be specific, including the fixed period of validity of the offer.
Wellness Through Music – II Page 29
In this Part II of his article on wellness through music, Dr. S. Srinivasan tries to tell us
about the intricacies of our brain and its functions and impacts, probably on our own
behaviour, working methods, and activities.
Views expressed in the Journal are not necessarily those of the Industrial Relations Institute of India

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 Editorial
Striking Doctors
The recent protest where doctors have
taken the recourse to go on strike because
of the patients relatives assaulting a doctor
has brought in untold misery for the patients,
particularly those who have come from
outstation to the metro hospitals for their
treatments. Many of them scheduled for
surgeries, life threatening ailments and for
their routine checkups were put to severe
hardships because of the strike. Even the
intervention of the High Court directing the
Doctors not to strike work has had little relief,
though there is hope that the striking doctors
who have been on strike for the last five days.
There can be no two opinions on the
need for providing better security to the
doctors at work and who are required to
treat patients, some of who are terminally
ill. Some of them have faulted on treatment,
medicines and there is very little the doctor
can do to save the patient. If the patient
dies, thrashing the doctor will not bring the
patient back to life but venting the anger
and frustration on the doctor or the hospital
is not correct. One hospital was burnt down
when a prominent politician injured in a car
accident was brought critically wounded
and passed away in the hospital. The
action of the supporters, who felt it
appropriate to blame the hospital and not
the minister’s driver, whose rash and
negligent action not only caused the
demise of the politician but in many cases,
also the lives of innocent pedestrians.
It is not that the issue and concern of the
doctors have not been addressed. There is
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now a law in place that provides serious
deterrence to individuals who indulge in such
wanton violence when there is a perceived
deficiency in service of the hospital. The
patient and the relative are not the best
placed persons to judge whether there was
a deficiency in service. The persons best
placed are peers and others in the Hospital
business, who can certainly evaluate
whether the right type of treatment was
provided to the patient when he or she was
brought in called The Maharashtra Medical
Service Persons and Medicare Services
Institutions (Prevention of Violence and
Damage or Loss of Property) Act, 2008.
The Act not only makes slapping of a
doctor a cognizable offence warranting
im mediate arrest and lockup till a
magistrate orders bail, but also a fine as
well as penalty amounting to double the
market price of the equipments or items
which were damaged in the violence.
The doctors were protesting not just
against the failure of the police to book the
miscreants under this law, but under the
IPC, where they were not subjected to
immediate arrest. It is not without a reason
the doctors are protesting against this
mindless violence against the doctors. Most
of the hospitals (government run) lack basic
amenities and facilities. In addition to this,
the number of patients in a government
hospital is huge, straining the sparse
infrastructure and space where the services
are rendered. Many of the patients are
accompanied by a huge set of relatives who
4 APRIL 2017
want to be there with the patient in case of
any eventuality. While one can understand
the grief and anguish of the relatives when
their near and dear ones depart, blaming the
doctor or the nurses or the hospital staff for
the death and taking law into one’s own hand
and assaulting the doctors, nurses or
hospital ward staff or damaging the
equipment cannot be permitted and the law
intends to do just that.
However, inspite of the law, the behaviour
of relatives and friends of the patients have
not changed. In the Indian environment,
people are used to facing lousy service and
at times even for this lousy service, they are
required to pay a bribe. They carry these
frustrations and unfortunately, in some
circumstances, they vent their spleen on
these poor unfortunate professionals, who
are already overworked, strained and
working in abysmal conditions. If one were
to visit the residential quarters of the interns,
doctors, nurses in these government
institutions, one would really be amazed at
the amount of adjustment these brilliant
minds of the Indian society put up with and
how we have never given the doctors,
nurses and the hospital staff their dues to
work in such conditions and circumstances.
One issue which the doctors have raised
is very important. They do not want more
than any two relatives to accompany the
patient. Here in India, hordes come with one
patient putting the services to other patients
as well as other critically ill patients and
persons who have come for treatment at
great inconvenience. The law provides for
severe punishment once the conviction is
made, but the process is so long and drawn
out requiring the doctor to go to court several
time to testify, spend several hours in cross
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examination where the defense lawyer will
put innumerable questions about the life
style of the doctor and other irrelevant
questions to delay a verdict, if not avert it.
But it is not just this that the doctors are
agitating. It is the rule of anarchy that is left
loose in the hospital by hooligans, who do
not care for the law and presume they are
the law makers. Listen to them or be
prepared to face the consequences of brutal
violence. These thugs, who are only in the
streets and used to ugly brawls find the
doctors, nurses and the hospital soft targets.
The degree of violence and assault will numb
the mind of the civilized.
Such mindless violence occurs
elsewhere also. In Maruti, recently the
Gurgaon Court convicted 31 persons for the
murder of the DGM HR, Avanish Kumar, but
this conviction comes after nearly four and
half years after the incident of violence.
About 117 workers were also acquitted of
the charges and were released.
Incarcerated for over four and half years for
what they consider false charges for which
they were implicated by the police at the
behest of the management. Travesty of
justice. Those convicted are challenging the
verdict on the ground that they were
implicated by false evidence.
It is not just the ordinary who take to such
extraordinary behaviour. One MP did not
mind boasting of how he thrashed an Air
India official who could not provide him
Executive Class seating in an Economy
Aircraft while travelling as he was entitled to
this privilege. He refused to disembark
thereby delaying the departure of the plane
and did not take lightly to not giving him his
(Continued on page No. 11)
5 APRIL 2017
 In the News
Maruti Violence:
31 Convicted; 117 Acquitted
Thirty one workers were convicted and
117 acquitted in a case of violence and rioting
at Maruti Suzuki plant at Manesar, 20 kms
from Gurgaon city. Thirteen accused have
been held guilty of murder whereas 18 are
convicted of rioting and other crimes under
various sections of the IPC. The quantum
of punishment will be pronounced on March
17.117 workers were acquitted by the district
and sessions Judge RP Goyal on Friday,
March 10, 2017 according to the news
report. The police took 22 accused into
custody after the verdict was announced
amid heavy police presence. Administration
had imposed section 144 in the district court
premises and within 500 meters of Maruti
Suzuki plant in Manesar. Awanish Kumar
Dev, General Manager (Human Resources)
of Maruti Suzuki, was burned to death and
several executives injured in the violence in
the car plant allegedly triggered by workers
on July 18, 2012. The police had arrested
148 workers in connection with the case,
which was under trial.
Rajender Pathak, counsel of the accused
workers, said that they would challenge the
conviction in the Punjab and Haryana High
Court. Iqbal, one of the accused, was not
present in the court whereas 147 others
were present when the verdict was
announced. Pathak said that the contention
of the prosecution that the murder was
planned has been set aside. The defence
took the plea that this was an accident and
acquittal of 117 persons has vindicated its
stand according to Pathak. The worker’s
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lawyers defence team says union leaders
were booked on the basis of planted
evidence and that they will challenge the
decision in Chandigarh High Court.
Following extensive arguments in the
case – the accused were defended by a team
of lawyers comprising Vrinda Grover,
Rebecca John and R.S. Cheema – the court
finally convicted 31 employees of Maruti
Suzuki India Limited (MSIL), including 13 for
murder. According to the news reports, the
late Awanish Kumar Dev, who hailed from
Ranchi in Jharkhand and was a resident of
Malviya Nagar in south Delhi, lost his life under
tragic circumstances. He was survived by
his wife Suparna, a deputy director in the
defence ministry in New Delhi, and a 10-year-
old son Abhyudit. In the violence at the
Manesar factory, apart from Dev over 100
other employees, including some from
foreign countries, and a large number of
police personnel sustained injuries.
The riot, as per the management, had
its origin in a disciplinary issue involving an
employee. Workers, however, claimed that
they were targeted as they raised concerns
over their rights. According to the workers,
one of the supervisors had used a caste
abuse against a worker, and he slapped the
supervisor. But the worker was suspended
but no action was taken against the
supervisor. The issue became the flash point
and subsequently, the second shift workers
also joined the first shift employees and then
violence was let loose when no decision
from the management came for the errant
supervisor. It was a trigger point that led to
the violence over many issues that were
6 APRIL 2017
pending. Following the violence, the plant
remained shut for several weeks and the
unit, which manufactured lakhs of vehicles
every year, lost nearly $500 million due to
idle production capacity.
The prosecution case before the trial
court – as observed by the Supreme Court
in an order in the case of State of Haryana
versus Ram Meher and others – was that
“on July 18, 2012 at about 7 pm, the accused
persons, being armed with door beams and
shockers, went inside M1 room of the
Manesar factory of Maruti Suzuki Limited,
smashed the glass walls of the conference
room and threw chairs and table tops
towards the management officials”. The
workers then allegedly surrounded the
conference hall from all sides, blocked both
staircases and warned that they would kill
company officials.
The court had added that “as the
allegations of the prosecution further unfurl,
the exhortation continued for quite a length
of time. All kind of attempts were made to
burn alive the officials of the management.
During this pandemonium, the entire office
was set on fire by the accused persons and
the effort by the officials to escape became
an exercise in futility as the accused persons
had blocked the staircases. The police
officials who arrived at the spot to control
the situation were assaulted by the workers
and they were obstructed from going
upstairs to save the officials. Despite the
obstruction, the officials were saved by the
police and the fire was brought under control
by the fire brigade.”
The court further observed: “In the
incident where chaos was the sovereign, Mr.
Awanish Kumar Dev, general manager,
human resources of the company was burnt
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alive. The said occurrence led to lodging of
FIR No. 184/2012 at police station Manesar.
After completion of the investigation, the
police filed charge sheet against 148
workers in respect of various offences
before the competent court which, in turn,
committed the matter to the court of session
and during trial the accused persons were
charged for the offences punishable under
Sections 147/ 148/ 149/ 452/ 302/ 307/ 436/
323/ 332/ 353/ 427/ 114/ 201/ 120B/ 34/ 325/
381 & 382 of IPC.”
According to the Union’s Counsel, Mr.
Grover, the case of the defence was that
the “accused have been falsely implicated
by the police in collusion with Maruti Suzuki
and what was important to understand of
the 13 who have been convicted of murder
was that these are largely office bearers of
the union and the leaders of the union.
According to him, if this is not just false
implication, this is targeted framing of
leaders of the workers in a criminal case in
order to crush the workers’ movement and
the management which has in a parrot-like
manner only named these people.”
The defence has all along insisted that this
was a case of very unfortunate incident of
the death of one official in a fire and there
was no evidence of who lit the fire or what lit
the fire. “The company and the management
used that unfortunate incident to specifically
name the labour leaders and frame them as
though they were the only ones responsible.
The criminal law is now a route to eliminate
from the workplace strong voices in favour
of workers’ rights,” claimed Grover.
New IR Code:
Changed Labour Law
It is reported that the ministerial panel on
labour issues headed by Finance Minister
7 APRIL 2017
ARBITER 8 APRIL 2017
Arun Jaitley has met to finalise drafts of the
new industrial relations code and the wage
code. The ministerial panel broadly agrees
on the wage code while m ore
deliberations will be held on the industrial
relations code. After ministerial panel’s
approval, the two Bills will be put up for
Cabinet approval before introducing the
same in Parliament for passage.
The Labour Minister Bandaru Dattatreya
addressing reporters on the sidelines of a
conference ‘Vision Zero’ on occupational
safety and health, stated that
in the inter-ministerial meeting, they have
cleared the wage code. There was a first
phase of discussion on the industrial
relations code. He stated that on the Code
on Wages, everybody was in agreement
and the Government would proceed in the
matter. The minister also indicated the
government’s intent to push amendments
in the Payment of Gratuity Act to enhance
the ceiling of tax-free gratuity to Rs 20 lakh
from the existing Rs 10 lakh in the ongoing
session of Parliament. He stated that the
government has cleared the amendments
in the Payment of Gratuity Act in the
tripartite meeting and it was taken it up to
the Cabinet. After clearance from the
Cabinet, it will come to Parliament.
Earlier last week, the ministerial panel
headed by the finance minister had
deliberated on the suggestions for the two
codes at a meeting. It was attended by
Labour  Bandaru Dattatreya and Power
Minister Piyush Goyal. Asked whether there
will be more discussions on the two codes,
the labour minister had said there could be
another on the two bills later this month. He
had also dropped hints that the two Bills will
be pushed for passage in Parliament during
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the second leg of the Budget Session, which
began on March 9.
The two legislations are significant as
they form part of the efforts of the
government to improve ease of doing
business. The labour ministry has plans to
condense nearly 44 labour laws into four
codes — wages, industrial relations, social
security and safety, health and working
conditions. Trade unions are opposed to
certain amendments in these codes and
have already submitted their dissent note.
The new industrial relations code
proposes to raise the ceiling on number of
workers for units that can go for closure,
retrenchment or layoff without government
approval to 300 from 100.  At present, all
units with up to 100 workers are not required
to seek government nod for closure,
retrenchment or layoff. The government has
completed tripartite discussions on these
two codes to seek view of stakeholders,
including the industry, unions and states.
The proposed code on wages will subsume
the Minimum Wages Act of 1948, the
Payment of Wages Act of 1936, the Payment
of Bonus Act of 1965 and the Equal
Remuneration Act of 1976. Similarly, the
code on industrial relations will subsume
Industrial Disputes Act, 1947, the Trade
Unions Act, 1926, and the Industrial
Employment (Standing Orders) Act, 1946.
Karnataka Government:
Retirement Age Raised to 60 Years
The Karnataka Government had a Ugadi
gift to the employees working in Private
Sector Companies by announcing that the
retirement age would be extended from 58
years to 60. After dilly-dallying on the date of
implementation, the government issued a
9 APRIL 2017
formal notification. More than 33 lakh
employees in the state are likely to benefit
from the move, which exempts Information
Technology and Bio-Technology companies
and firms that have fewer than 50 employees.
Mr. Santosh Lad, the Labour Minister stated
that his government was dreaming for long
of doing something that will improve the life
of private sector employees. “He was happy
that the government managed to
accomplish this before Ugadi,” said Lad, the
architect of the policy.
The new rule will be binding on all
companies covered under the purview of the
Karnataka Factories Act, 1948, and the
Karnataka Shops and Commercial
Establishments Act, 1961. Companies who
have the certified standing orders that
provide for the retirement age of 58 will take
the plea that the Model Standing Orders Act
does not apply to them and the Unions will
have to go to court to bring about changes
in the Standing Orders. The move to
increase the retirement age is populist as
well as considering the increasing life
expectancy. For the employer, wage costs
for the senior staff is excessive compared
to the market value for new entrants who
would do the same job for less pay.
Employers are bound to protest the move
and challenge the notification in Court.
Tata Motors Pune:
Wage Settlement
In a landmark agreement signed with
Pune plant workers Tata Motors concluded
a long-term wage settlement agreement
with its Pune workers Union that covers
6,400 workers, after 19 months of
negotiations. The wage settlement has been
signed for a period of 3 years —September
01, 2015 to August 31, 2018. The agreement
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will be effective from immediate effect. The
total wage package is bifurcated as: a fixed
rise of Rs.8,600/= (in the ratio of 72%, 15%
and 13% for a period of 3 years) and
Rs.8,700/= that would be variable and linked
to performance parameters. The Settlement
gives a wage hike of Rs.17,300/= inclusive
of the variable component.
Tata Motors has manufacturing plants in
Sanand, Jamshedpur and Lucknow too, and
there will be expectations of a similar wage
increase there. But the situations in the
different locations are not the same. For
example, in Saanand, where the Company
manufactures the Nano, the capacity
utilization is very low and the unit is already
into losses. At Pune, there are a slew of
new vehicle introduction that is expected
to bring the Company out of the red. Hence,
similar wage increase at Saanand is not
possible according to those in the know.
Further, the age profile of the employees is
very young and their market wages are
similar to those drawn by similar placed
employees in other companies in Gujarat,
which is not a high wage island. Existing
Block Closure has been increased by 6
days at Pune in the wage settlement which
is a major achievement for the Company
as it was a counter management charter
of demands on the Union.
International Worker:
Withdrawal Permitted
It is reported that the Employees’
Provident Fund Organisation (EPFO) has
issued guidelines that would allow
international workers lumpsum withdrawal
of retirement savings once their
employment in the country comes to an end.
According to the change announced the
international workers would be able to
10 APRIL 2017
withdraw their dues when they leave the
shores and would not have to wait till their
age of retirement. The earlier policy
mandated that the withdrawal would be at their
age of retirement and not at the time of leaving
the shores, which created a lot of heart burn
and problems for those working in India.
According to the circular, the EPFO has
advised employers to pay the contribution
of the retiring (leaving) worker within the first
three days of the particular month. The
employer should also submit the claim form
of such worker duly completed to the
concerned provident fund office by the 5th
of the month in which the member is leaving
service. The provident fund officer shall
ensure settlement of such retirement claims
and credit the settlement amount to the
member’s account on the date of leaving
service in India to the bank account
maintained in India.
Editorial
Striking Doctors
(Continued from page No. 5)
dues as an MP. The injured ego and pride
led to his going berserk and led to violence.
Air India and other Airlines have blacklisted
the person, and even his party did not
outright support his behaviour and conduct,
but a lot of soul searching and corrective
actions must take place to transform the
society. Banning the strikes and sacking the
doctors, cutting their stipend and other
punitive actions by the hospital
administration is hardly the right way to deal
with this creamy layer of society. They must
be taken into confidence and proper security
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The facility will be available only to
workers from establishments in countries
that have a social security agreement (SSA)
with India. At present, India has operational
SSAs with 17 countries, including Austria,
Canada, France and Japan. The move will
allow international workers to take back their
retirement savings accrued in India to their
country of origin or employment when they
finish their service in India. Till now, there
was no special provision for international
workers under the EPF who had to wait until
they retired at the age of 58 years to
withdraw their money. Alternatively,
withdrawal was allowed if they retired due
to a disability or if they stopped being an
employee of a covered under an operational
SSA. Under the EPF, international workers
could only make lumpsum withdrawals if
they were covered under an SSA and have
worked for less than 10 years in India.

measures put in place that guarantees them
that they will not have to think of ways to
save their lives when they are saving
patients lives. The Health Minister who
invited them for talks announced that they
have withdrawn their agitation, when the
press conference of the doctors, stated
otherwise. This is the big disconnect
between the administration and the doctors
and no meeting of minds. The government
must engage with the doctors and inspire
in them confidence that their problems are
in safe hands and will be redressed. That
assurance and assuaging comes with the
relationship and not with dictats. The sooner
it ends, the better it is for all.

11 APRIL 2017
 Labour Reform and Social Safety Net
R. K. A. SUBRAHMANYA

Social Safety Net is a term, which has
come into vogue recently to mean social
assistance, a form of social security.
Social safety nets are intended for a dual
purpose. According to the UNDP Human
Development Report 1993, every country
needs to establish effective social safety
nets to catch the victims of the competitive
struggle – such as the temporarily
unemployed – and to protect the lowest
income groups, the young, the old and the
disabled. In the context of labour reforms,
social safety net is required for catching
the victims of the competitive struggle.
It is well known that labour reforms
leading to structural adjustment will result
in unemployment in the short term, if not
in the long run. There is at present no
scheme to protect the workers against
such involuntary unemployment, and that
is coming in the way of any movement
towards labour reforms. This was
recognized as soon as the new economic
policy was introduced in 1991, but there
has been no progress in that direction. In
this connection what the columnist, Prem
Shanker Jha wrote in November, 1991 is
highly relevant. I quote:
“The obstacles to an exit policy,
whether for sick enterprises or inefficient
or redundant workers is the same: in a
country with an already alarming level of
unemployment, where will the retrenched
worker or government employee go? How
long will he take to find another job? And
what will happen to him and his family, if
he does not? Small wonder then that trade
unions stop at nothing to prevent
retrenchment and political leaders eternally
shy away from closing the 225,000 sick
units that litter the industrial landscape. This
is not politics but simple humanity.”
The solution to the problem must
therefore also be a humane one. It lies in
the creation of a comprehensive system
of unemployment insurance. The scheme
must first cover the entire organized sector
of industry and government and, when its
managers have acquired sufficient
experience, it be extended to cover the
self-employed in the unorganized sector.
The proposal is by no means new. At the
1990 Annual Meeting of the Federation
of Indian Chambers of Commerce and
Industry (FICCI), the outgoing President
urged the V. P. Singh Government to
consider setting up an unemployment
insurance scheme to which employers
and employees would contribute one
percent of their gross salaries.
Such a scheme is long overdue.
Despite every effort of the Government
and the trade unions to make
retrenchment as difficult as possible,

Mr. R. K. A. Subrahmanya was Additional Secretary in the Union Ministry of Labour.

He represented the Government of India in the International Labour Conferences in
Geneva for four years, during which he was elected as Chairman of Conference
Committees, including the one on Social Dimensions of Industrialisation for three
consecutive years.
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between 25,000 and 40,000 workers do
get laid off every year.
The then Union Finance Minister,
Dr. Manmohan Singh had also accepted
the need for developing credible
instruments of social security for the
workers in the unorganized sector as well
as the workers, who may be affected by
technical change. Inaugurating the Social
Security Association of India on December
31, 1991, he stated, inter alia:
“The need for social security is an
established reality in all civilized societies
today. A caring society, and any civilized
society must aspire to be a caring society,
cannot leave those who suffer from these
misfortunes to suffer in silence. Society
has a responsibility to its unfortunate
members to come to their assistance.
Technical change is a fact of life. We
cannot survive in a world in which
knowledge is growing at such a fast pace
without making conscious efforts to
absorb, assimilate and adapt this
knowledge for improving our living
standards. But the process of technical
change howsoever beneficial it might be
is also disruptive. When you introduce
new technologies, it hurts who are using
techniques of an earlier vintage. There is
the problem or the fear of unemployment,
loss of jobs. This cannot be wished away.
If we want our society to accept the need
for technical change, then we need to
have credible instruments of social
security to ensure that the process of
technical change will not impose undue
burden on the working classes. We must
work towards a society, which would be a
caring society, a society which would
ensure that if technical change is essential
for the country as a whole, then the costs
of technical change and the costs of
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adjustment would not be borne exclusively
by the working class and that those who
have the least capacity to bear those costs
are not asked to bear them”.
In the wake of the announcement of the
new economic policy, the Social Security
Association organized a seminar on Social
Security in the context of the New Industrial
Policy. It was inaugurated by the then Dy.
Chairman of the Planning Commission, Mr.
Pranab Mukherjee. The seminar
recommended the introduction of an
Unemployment Insurance Scheme. With
the help of Mr. S. K. Jain who had just
retired from the office of Deputy Director
General of the ILO, the Association worked
out an outline of the scheme and submitted
it to government. A delegation of the
Association met the Finance Minister and
presented the scheme. He gave a patient
hearing to the delegation and promised
to have the matter examined.
Subsequently the Ministry of Industry
appointed an official committee to go into
it. The committee too recommended the
introduction of an unemployment
insurance scheme. In the meantime the
major organizations of employers FICCI
and ASSOCHAM also submitted
memoranda to Government suggesting
the introduction of an unemployment
insurance scheme so as to enable them
to carry out structural adjustment.
In a paper prepared by FICCI for a
workshop on “Exit Policy for Sick Industrial
Units” the existing arrangements for
retrenchment of workers were described
and it was stated, “so far what has ruled
out the formulation of an exit policy is the
total absence of social security net to take
care of the retrenched workers. Therefore
a social security net broadly on the lines
of an insurance policy should be devised
13 APRIL 2017
at the earliest. A formal system of
providing unemployment benefit should
be evolved instead of the existing system
whereby individual companies have
provided such benefits on a case to case
basis. The unemployment benefit may be
provided under the umbrella of a specific
Act introduced for this purpose.” The
paper also set out the details of a scheme.
The Associated Chamber of
Commerce and Industry in a paper on
Deregulation Imperatives had indicated
the need for introducing a “privately run
industry specific contributory insurance
scheme for risks of unemployment”.
N o action was taken on these
recommendations. What was intriguing
was why the Government dragged its feet
when even the premier organizations of
the employers who naturally oppose any
scheme adding to their costs had
themselves initiated proposals for
introducing a scheme.
It must however be pointed out that
unemployment insurance schemes are
not as common as other branches of
social security. Social security
unemployment benefit schemes are to be
found mainly in industrialized countries.
Very few developing countries have such
schemes. Unemployment benefit
schemes have recently been set up in
certain transition countries and in middle-
income countries like the Republic of
Korea. It is therefore understandable that
the Government is cautious in embarking
on such untried ventures. There seems
however to be no reason to be
apprehensive about introducing an
unemployment insurance scheme.
There are different types of
unemployment, viz.,
ARBITER
(i) Persons who have just entered the job
market and have not found a job yet.
(ii) Persons who are in seasonal
employment for part of the year and
remain unemployed for the remaining
short periods.
(iii) Persons who are thrown out of
employment due to retrenchment or
closure of establishments
(iv) Persons who have lost jobs due to
nationwide or global recession.
Unemployment insurance is concerned
mainly with the last category of persons.
The best way to tackle unemployment
is to provide alternative employment. If
that is not possible the unemployed may
be given assistance for their subsistence
either through an unemployment
insurance scheme or through a social
assistance programme whereby the
unemployed may be given relief directly
by way of an allowance.
As mentioned in the World Labour
Report 2000, the first protection against
unemployment is a solid policy towards full
employment consisting of macro-economic
policies at the national and international
levels; sectoral regional and local policies;
and labor market and training policies.
Nevertheless there is an increasing need
for specific unemployment protection
policies given that full employment policies
are either not in place or take time to come
to fruition and that short term crises may
lead to unacceptable levels of
unemployment hardship.
Definition of Unemployment Benefit
Unemployment Benefit is paid to those
individuals who through no fault of their own
have become unemployed and who, as a
14 APRIL 2017
result, have lost the earning on which they
and their families depended. The principle
underlying this scheme is that if a person
for no fault of his is deprived of an income
consisting of his earning from employment
he has a right to expect income support at
least for the necessities of life while he
remains available for work. This benefit is
usually paid for a relatively short period
under the assumption that he will find
alternative employment within that period.
This benefit is usually financed by
contributions from employers and the
employees but sometimes, the
government may also share in the cost in
the form of either regular contributions or
a subsidy. According to “Social Security
throughout the World”, a biennial
publication of the US Government,
“Unemployment insurance contributions
often are shared equally between
employers and the employees;
alternatively, the entire contribution may
be made by the employer. However
Government subsidies may be quite large
amounting in some cases to as much as
two thirds of the programs expenditures.
Means tested unemployment assistance
programs are financed entirely by
government, with no contribution by the
employers or the employees”.
Position in Asia and the Pacific
Fifteen (out of 49) countries in the
region provide for unemployment benefits
but they are mostly the former USSR
republics and the developed countries of
Australia, Japan, Hong Kong and New
Zealand. In Thailand this benefit is provided
for under the 1990 Social Security Act but
implementation is still pending. In a number
of countries such as Bangladesh, India,
Iraq, Philippines, Solomon Islands and
Turkey, the Labor Laws require employers
ARBITER
to pay severance or dismissal indemnity
to their separated employees.
Position in China
China has an unemployment insurance
scheme, which covers workers in state run
enterprises and some collective
enterprises. It is a contributory scheme for
which workers contribute at the rate of 1%
and the employers at 2%. Local
governments subsidize the scheme to the
extent necessary. The rate of benefit is
determined by the local authorities at a level
higher than local public assistance benefit
but lower than local minimum wage. The
benefit is payable for 12 months if the
period of coverage is less than 5 years and
for 18 months if the period of coverage is
more than 5 years but less than 10 years
and for 2 years if the period of coverage
is ten or more years.
The Government of China has introduced
a three-tiered program for dealing with the
problem of unemployment –
(a) The unemployed persons may report
themselves to reemployment centers
for retraining and for reemployment.
(b) If they are unable to get alternative
jobs, they will be put on
unemployment subsidy.
(c) After two years they will be handed
over to the third line of urban poverty
alleviation programme.
Position in Korea
The Republic of Korea has introduced
an employer financed unemployment
allowance, which took effect in July 1995.
The scheme is financed by a contribution
equal to 0.6% of total pay roll shared
equally between employers and workers.
The Act fixed 1.5% as the maximum total
contribution that could be levied for all
15 APRIL 2017
components of the employment insurance
system (which also includes a large
number of labor market policy measures,
such as training). From March 1998,
Parliament revised this maximum
upwards to 3% of payroll. The
unemployment benefit is 50% of the
workers’ earnings during the month prior
of dismissal. In March 1998 the minimum
benefit was raised to 70% of the minimum
wage. As the minimum wage is about 25%
of non-agricultural average earnings the
minimum unemployment benefit is
equivalent to just under 18% of average
earnings. The duration of unemployment
benefit is calculated on age at dismissal
and length of the period insured. As an
incentive to job seeking, an early
reemployment allowance is payable to
unemployed workers who find a new job
within half the period for which they entitled
to unemployment benefit. The coverage of
the scheme was initially limited to
employees in firms with 30 or more workers.
It is now applicable to establishment
employment five or more persons.
Position in Brazil
Brazil has an Unemployment Insurance
Scheme, which is wholly financed by the
Government. The rate of benefit is 50%
of average earnings in the last 3 months
of employment up to 3 times the minimum
wage. Minimum benefit would be equal
to minimum wage. The benefit is payable
after 60 days waiting period for a period
of 4 months in any 16 months period.
Position in Argentina
In Argentina rate of contributions is 1%
for insured persons and 1.5% for
employers. Rate of benefit is 60% of the
highest wage the worker received in the 6
months before the date of unemployment
ARBITER
Duration of the benefit ranges from 4 to 12
months depending on the length of
coverage between 12 and 36 months.
Position in India
There is no unemployment insurance
scheme in India. Industrial Disputes Act
provides that a worker who is retrenched
should be paid compensation at the rate
of 15 days wages for every completed
year of continuous service in addition to
gratuity. It is said to be a form of
unemployment benefit meant to help the
workers who are thrown out of
employment to maintain themselves until
they are able to secure alternative jobs.
But it is more akin to a terminal benefit
than an unemployment benefit. Even this
benefit is usually not paid in cases where
industrial establishments are closed down
due to financial stringency.
In 1967, the Government of India drew
up a pilot scheme of unemployment
insurance to cover workers in coal mining
industry who were members of the Coal
Mines Provident Fund. An expert of the
ILO was invited to examine the scheme
and to make suggestions for improving it
in the light of experience in countries in
which such schemes were in operation.
The expert found it feasible and had made
certain suggestions for improving it.
In 1969, the National Commission on
Labor expressed the view that a long term
solution to the problem of retrenchment
lies in adopting a scheme of
unemployment insurance for all employed
persons. The Commission observed,
“While provisions relating to retrenchment
and lay off compensation afford some
relief and act as a deterrent to hasty
retrenchment, certain unsatisfactory
features have come to light in the course
16 APRIL 2017
of their working. A permanent remedy may
be in the form of unemployment benefit.
The Central Employers Organizations
have suggested in their evidence that
since the existing provisions relating to lay-
offs and retrenchment are adequate, there
is no justification for grant of additional
financial compensation against the job
security hazard resulting from temporary
unemployment. On the other hand, the
general feeling among workers’
organizations is that we must move
towards an all-inclusive scheme covering
all recognized contingencies including
unemployment. We feel that the present
arrangement by which layoff and
retrenchment compensation is required to
be borne by the employer at a time when
he is already in difficulties, whatever the
reasons, works somewhat harshly on him
but even more harshly on the workers who
are on many occasions deprived of the
benefits provided under the Act. On the
other hand, if its incidence is distributed
over the whole industry it might under
certain conditions imply subsidizing of
inefficient management. W ith due
safeguards against such contingency the
long term solution lies in adopting a
scheme of unemployment insurance for
all employed persons”.
Subsequently, the question of
introducing unemployment insurance has
been coming up often and several
proposals have been submitted to
Government of India.
Group Insurance Scheme
The Union Finance Minister in his
budget speech for 2001-2002 announced
that he proposed to introduce a new
scheme for groups insurance, viz,
Ashraya Bima Yojana to extend cover to
workers affected by liberalization of the
ARBITER
economy. The policy was to provide
compensation of up to 30% of last drawn
annual pay for a period of one year to
workers who lose jobs. It was proposed
that the policy would initially cover all
employees drawing a salary up to
Rs.10,000 per m onth. The four
Government-owned general insurance
companies were to administer this policy
on a no profit loss basis and were to
announce full details including premium
rates of the proposed policy. The
proposal of the Government is unusual
and unprecedented.
In the course of discussion with the
insurance companies mentioned earlier
the representative of the Employees
Provident Fund Organization stated that
the organization had proposed to
introduce an unemployment insurance
scheme for which the rate of contribution
would be 1.80% of salary or 2.20%
depending on the period for which the
benefit is to be paid. Prescription of a
high rate of contribution by workers only
is the surest way to kill the proposal at
its very birth.
Proposals of Study Group on Social
Security
The Study Group on Social Security of
the National Commission for Labour also
proposed the introduction of an
unemployment insurance scheme
conforming to the pattern envisaged in the
Convention of the ILO, brief particulars of
which were as follows:
The scheme should be financed by a
tripartite contribution to be determined
actuarially. To begin with however, the
rates of contribution may be at 0.5% to
be contributed by the employees, 1.5%
by the employers and the deficit if any
17 APRIL 2017
being met by the Central Government
from the NRF. The rate of benefit should
be 50% of last pay/wages drawn. The
benefit should be payable for a period
of one year or till reem ploym ent
whichever is shorter.
It should preferably be implemented
through the EPFO and be applicable to
all establishments and employees to
which the EPF Act was applicable, to be
extended in future with no wage ceiling
for coverage but with a ceiling of
Rs.10,000 for contributions and benefits.
There was a national consultation on
the various proposals formulated by the
Study Group to which the organizations
of employers and workers had been
invited. There was no comment on the
proposal concerning unemployment
insurance scheme. It was therefore
assumed that it was acceptable to all.
Pension Scheme
There are two ways in which income
security may be ensued to retrenched
employees: one is by way of an
unemployment benefit and the other by
way of a pension scheme. If a person is
retrenched at an advance age when the
prospects of his finding alternative
unemployment would be dim he may be
deemed to be retired and paid a pension.
In India there is no unemployment benefit
scheme but there is a pension scheme.
Under the Employees’ Pension Scheme
a person will normally be entitled to a
pension on attaining the age of 58. But
there is provision for payment of pension
at age 50 or more at a discounted rate. If
a person is retrenched between the ages
of 50 and 60 he will get a pension but at a
reduced rate. If the pension scheme is
dovetailed with an unemployment
insurance scheme the reduction in the
rate of pension may be made good from
ARBITER
the unemployment insurance scheme. If
a person is retrenched before the age of
50 he will not be entitled to any pension
and therefore he will have to be paid an
unemployment benefit.
Training & Retraining
An unemployment insurance scheme
is meant to provide to help a worker to
tide over a short period of unemployment
when he is switching over from one job to
another. In these days of changing pattern
of economic and social relations and fast
rate of scientific and technological
development it may not be easy for a
retrenched worker to find new job unless
he undergoes fresh training in new trades
and newer techniques of work. An
unemployment insurance scheme may
therefore make the right to receive a
benefit conditional upon the attendance
at a course of vocational or other
instructions. More importantly,
arrangement should be made to provide
training or retraining to such workers. The
National Renewal Fund was established
with this as one of the objectives. The
performance of the Fund in this area
has not been encouraging and needs
to be improved. Separately additional
or alternative arrangements may also
be thought of.
In this connection, it would be worth
recalling that the Employees Relations
Conferences held recently in Bangalore
had recommended the establishment of
a Skill Development Fund for improving
the skills of our workers. The NRF could
be transformed into a Fund of that kind or
a separate fund may be created. It is
however necessary that adequate steps
are taken to protect persons against
unemployment and loss of income due to
lack of demand for their skills. 
19 APRIL 2017
 Overtime Work
Legal, Human & Social Dimensions
P SOMARAJU
In a recent meeting of HR professionals
at Hyderabad, discussions did come up
on overtime work and overtime wages to
the workers. It is quite surprising that wide,
varied and divergent views were
expressed even by senior HR
professionals on this rudimentary aspect
of work and statutory provisions under the
Factories Act 1948. One of the senior
professionals also raised the issue of
overtime work as to whether it is forced
labour. It was pointed out during the
discussions that some of the social audits
by international agencies objected to a
clause in the standing orders of a
company treating worker refusal to do
overtime as misconduct. An attempt was
made to discuss many facets of this basic
and elementary concept of work with
reference to the statutory provisions under
the Factories Act 1948, and also from the
human and social perspective.
Restrictions on Working Hours
To understand and appreciate the topic
in its correct perspective, proper
understanding about regular working
hours prescribed under the law is a must.
A worker cannot be employed for more
than 9 hours a day. He cannot be
employed for more than 48 hours a week.
He must be given an interval and rest of
atleast half an hour after five hours work.
His total period of work inclusive of rest
interval must not spread over more than
Mr. P. Somaraju is Specialist in HR, IR and Labour Laws
ARBITER
10 and half hours in a day. He must be
given a holiday (Week off) for whole day
in a week. If he works for more than 9
hours a day or more than 48 hours a
week, he shall be paid for the overtime
work, at twice the ordinary rate of wages.
The above restrictions can be relaxed by
the chief inspector of factories or the
state government under certain
circumstances subject to conditions
(Sections: 51, 52, 54, 55, 56, 59, 64 and
65 of the Factories Act 1948).
Computation of Overtime Hours
Issues have been raised in the past on
computation of overtime hours, especially
in the manufacturing sector where trade
union of workmen is active. The workmen
in one case demanded that the time
recorded in punch card should be
considered as the basis for calculation of
overtime hours, The court, after
considering the rival contentions, held that
the time in and time out on punch cards
is not conclusive proof of working. They
only indicate the presence of the worker
in the premises. It is not the presence or
attendance that should be paid. It is only
the time spent actually carrying out the
assigned job or work that is to be taken to
calculate overtime hours of work for
payment of overtime wages. In another
case, working hours were initially fixed at
42 per week. Whether workers were
entitled to overtime wages between the
20 APRIL 2017
hours of 42 and 48 was examined and it
was held that section 59 prescribes
overtime wages at twice the ordinary rate
of wages over and above 48 hours a week
(1992 LIC 1171 Bombay HC). Also, in
another instance, the working hours were
increased from 7 and a half hours per day
to 8 hours, and the question arose whether
overtime wages were payable for extra
half an hour, and the answer was no. The
employer is liable to pay overtime wages
under section 59, if the worker works for
more than 9 hours a day or 48 hours a
week. (Section 51 and 54) Whether
mandatory rest interval needs to be
included.in computing overtime work or
not was answered in the negative.
Similarly, there was a big no to an overtime
claim of worker while on tour as the worker
went out of his sphere of duty (1978 LIC
390 Gujarat High Court)
Double the Rate of Wages
It is clear from section 59(1) of the
Factories Act 1948, that a worker is
entitled to wages at twice his ordinary rate
of wages if he works overtime. 59 (2) does
not define the allowances that should be
included along with basic wages to
constitute ordinary wages. The ordinary
wages referred to in the section do not
convey any special meaning to it except
literary meaning which is the pay and
allowances paid to worker. Obviously
allowance like Dearness allowance form
part of wages. In respect of other
allowances paid to a worker in the form of
compensatory allowances and allowances
in the form of incentives to include in
ordinary rate of wages or not is a matter
of interpretation. Mumbai High Court in
1998 ICLR 1260 held that house rent
allowance should be included while
computing overtime wages, whereas
ARBITER
Kerala High Court in 2011 LLR 1168 held
that house rent allowance cannot be
treated as wage for the purpose of
overtime wages. There is hardly any
unanimity and finality on this issue of
interpretation. Divergence in interpretation
apart the common view that emerges is
59 (2) of the Act does not visualize and
accept the different components of wages,
not paid uniformly to the workers, to
constitute ordinary rate of wages. In order
to have uniform rate of wages payable to
the same category of employees, the
original rate of wages ordinarily and
uniformly paid should be same, which
includes only basic salary and allowances
for the work, Allowances which are varying
for different employees and eligibility
depends on the location of employment,
will not constitute ordinary rate of wages.
Therefore every organization having its
own wage structure should decide on the
basis of this criterion as to what constitutes
ordinary rate of wages for payment of OT
wages in their respective organizations.
Who Can Claim Overtime Wages
All workers under the Factories Act
1948 are eligible to claim overtime wages
at twice the ordinary rate of wages. If it is
considered on the face of it, every person
employed in the factory irrespective of
their status, designation, nature of duties
is a worker. While granting claim of
overtime to workers in general, the statute
provides for exemptions. The Andhra
Pradesh Factories rules exempt the
persons employed in positions of
supervision and management from
section 59. The list of employees
exem pted include Managers,
Secretaries, Administrative officers,
Accountants, Personnel Officers,
Engineers, Technologists, Chemists,
21 APRIL 2017
Metallurgists, Technical and Scientific
Personnel engaged in R&D,
Stenographers, Personal Secretaries/
Assistants, Cashiers and other persons
discharging similar functions. Similarly
exemption is also granted on working
hours in respect of operations like urgent
repairs, breakdown of machinery, fire
services, Boiler operations, continuous
operations, etc. in all factories as also
exemption is granted to industry specific
operations from some provisions dealing
with working hours under Chapter –VI of
the Factories Act 1948.
Is Overtime Work Forced Labour?
International agencies conducting
social audit in industries supplying goods
to multinational clients are often objecting
to engagement of workers on overtime
work without their consent. They argue
that engaging workers on overtime without
their consent amounts to forced labour.
No worker is obliged to work for more than
his normal working hours in a day. If he is
forced to do overtime against his will, it is
forced labour. The above argument does
not find favour in the Indian context and
conditions. There is no prohibition or total
ban on engaging workers on overtime.
The Act prescribes only restrictions. It is
argued that when law allows engagement
of worker on overtime, the question of
forced labour does not arise. Judiciary
also has agreed with this view and upheld
the employers’ right to engage worker on
overtime within the statutory limits.
Judiciary on Refusal of Overtime
Work
Working overtime is a recognized
practice, and therefore unless the contract
of service or collective bargaining
agreement in force stipulates that the
ARBITER
consent of the worker is necessary to
engage him on overtime, the refusal is not
justified. Unless there is anything in the
contract to suggest that the employee is
entitled to refuse to work overtime, he is
liable to do overtime work. It is generally
held that in cases where order to work
overtime is within the statutory limits, the
worker should abide by the order, and if
he refuses to do overtime, it will be a
misconduct (AIR 1951 SC 230, 1955, ILLJ
548 LAT). Therefore a clause in the
standing orders of a company treating
refusal to work overtime as misconduct is
justified and legal to the extent the order
of employer is within the statutory
stipulation under the law.
Rationale on Restriction to Work
Overtime
According to section 64 (4) (III) of the
Factories Act 1948.the total hours of
overtime work should not exceed fifty for
any one quarter. Section 65(2) of the Act
provides for exemption by the state
government from the limits of working
hours to enable the factories to deal with
exceptional pressure of work.
Employers’ Demand for Reforms
The employers feel that the limits on
overtime working are too unreal to meet
the demand and needs of the industry.
Their view is that employers should be
permitted to resort to overtime work for
production purposes as a matter of
course. Double the rate of wages which
overtime has to be paid for is itself a
sufficient deterrent and no employer would
resort to engage workers on overtrime
except when absolutely necessary.
Workers’ Demand against Reforms
They argue that the restrictions on
22 APRIL 2017
overtime work are based on the rationale
that human capacity to work has an upper
limit. In the interests of their health and to
avoid accidents, workers should not be
allowed to work beyond a certain limit. In
fact ILO recommendation No.116 states
that measures should be taken for
progressive reduction of hours of work.
Of course the recommendation has
shown sufficient caution by hinting at
production, productivity, growth and
development of the country.
Need for Reforms
Pro-reformists argue that the limits on
working hours and overtime work have
been prescribed by the Government more
than seven decades ago. There is need
to evaluate their relevance in the context
of Globalization. Industry should respond
to global market volatility and uncertainties
and produce the goods and services as
per the market requirement failing which
the Indian industry would become a non-
player and would be left behind in the
competition. In fact during war years
(1945) the then government used to give
exemptions in respect of hours of work
and overtime to the factories connected
with war effort. Employers argue that
global market is like a war field and unless
the Indian industry competes with
competitors in the market, the game or
the war would end in failure. Exports and
foreign trade in Indian economy plays a
vital role in the development of our nation.
Almost all industries are looking for export
market to their products and services
besides making use of huge internal
market. Therefore the restrictions on
overtime have become a stumbling
block to engage workers on overtime
when needed. Employers suggest that
they should not be made to run from
ARBITER
pillar to post for exemption under 65(2)
of the Act every time they need to
engage workers on overtime beyond the
unreasonable and unrealistic restrictions
on the trade and industry. The
em ployers have been dem anding
increase in the limits prescribed on
overtime under section 64 of the Act.
The Government as a neutral and
objective agency shall consider the
demands of the stakeholders in the overall
and larger perspective and take a
balanced view protecting the interests of
employers and workmen. As a first step
in this direction, the Government has
increased the limits on overtime
engagement of workers in textiles and
garments sector which obviously have
been facing stiff competition in the global
market, from 50 hours to 100 hours in a
quarter. The Government can further
increase the limit upto 125 hours in a
quarter. The government has also
proposed amendments to the Factories
Act 1948 and incorporated the same limits
as are given to Textile and garment sector,
in section 64 and 65 of the Factories Act
and rules made thereunder.
In fact there is a lot of change in the
working conditions in the factories. Dirty,
dingy semi mechanized work places have
been changing to technology driven
automated work environment, reducing
the manual effort day by day. The
government should find a rationale in the
demand of employers for change in the
restrictions on overtime work. At the same
time, the government, without completely
removing the restrictions, has relaxed the
limits on overtime work, keeping in view
the health and safety of workers.

23 APRIL 2017
 Maternity Benefit
SV RAMACHANDRA RAO
The factories and establishments
employing ten or more employees are
covered under the Employees’ State
Insurance Act in the notified areas. The
employees working in such factories and
establishments with a gross monthly wage
of Rs.21,000/- and below are required to
be covered under the ESI Scheme and
they are entitled to (i) Medical Benefit, (ii)
Sickness Benefit, (iii) Maternity Benefit,
(iv) Disablement Benefit, (v) Dependents
Benefit, (vi) Funeral expenses and (vii)
other benefits.
When an employee is covered under
ESI Act and is entitled to benefits provided
by the said Act, he or she shall not be
entitled to receive any similar benefit
admissible under the provisions of any
other enactment [Section 61].
In view of the above, employees
covered under ESI Act are not covered
under The Maternity Benefit Act, 1961 and
Employee Compensation Act, 1923. The
Maternity Benefit Act is applicable to every
factory, mine or plantation and to shops
and establishments employing ten or
more employees. In such factories and
establishments, employees who are not
covered under ESI Act employed directly
or through any agency will only be covered
under the Maternity Benefit Act. To
become entitled for maternity benefit, the
employee should have worked eighty days
in the twelve months immediately
preceding the date of her expected
Mr. SV Ramachandra Rao is Managing Director, Resource Inputs Limited
ARBITER
delivery in an establishment of
t h e e m p l o y e r.
The amendments to the Maternity
Benefit Act are summarised hereunder:
1. The Act now mandates that the
employer of the establishment should
inform the woman employee all benefits
made available under the law, at the time
of her appointment. Such information
must be given in writing and electronically.
2. Every establishment employing fifty
or more employees shall provide crèche
facilities within a prescribed distance and the
woman should be allowed four visits to the
crèche in a day. However, this includes her
rest interval. However, crèche is required to
be provided and maintained only if a factory
employs more than thirty women employees
under Section 48 of the Factories Act. In view
of the amended Maternity Benefit Act, if the
factory is employing fifty or more
employees, they are required to provide
crèche facility even though the number of
women employees is thirty.
3. After completion of the statutory
maternity benefit period with wages, an
employer can permit a woman to work
from home, if the nature of work assigned
permits her to do so for a duration that is
mutually decided by the employer and the
woman employee. Though it is not
mandatory, the law made it open to the
women employee to make a request
in this regard.
24 APRIL 2017
 4. Now the Maternity Benefit Act
provides leave up to twelve weeks for a
woman who adopts a child below the age
of three months. The period of leave will
be calculated from the date the child is
handed over to the adoptive mother.
5. In surrogacy, the surrogate mother
carries a child for another person after an
agreement made before conception of the
child. The person wishing to adopt and
foster the child is called the commissioning
person/couple. The amended legislation
provides leave up to 12 weeks for
commissioning mothers also.
6. The maximum period for which
any woman shall be entitled to maternity
benefit shall be twenty six weeks of which
not more eight weeks shall precede the
date of her expected date of delivery.
Provided that the maximum period entitled
to maternity benefit by a woman having
two or more surviving children shall be
twelve weeks of which not more than six
weeks shall precede the date of her
expected delivery.
Thus women employees having two or
more children will continue to get the
maternity benefit as earlier.
It is essential to recognise that the act
has not defined ‘employee’ and extended
the benefits to ‘woman’. Thus the intent of
the legislature is to cover all categories of
personnel whether be it casual, temporary,
outsourced, contractual, full time
consultants, trainees, probationers, etc.
When a woman absents herself from
work in accordance with the provisions of
the Maternity Benefit Act, the employer is
restrained from terminating her services
during the said period. Over two decades
ago, in 1991, the Supreme Court had
ARBITER
ruled in favour of pregnant employees in
the matter of Neera Mathur Vs Life
Insurance Corporation of India. The facts
of the matter are Ms. Mathur was
appointed on September 25, 1989. She
was put on probation for six months and
during the probationary period she applied
for maternity leave on December 27, 1989.
On February 13, 1990, she was discharged
from service during her period of probation.
The reason cited for termination was that
she had deliberately withheld the fact of
being pregnant at the time of filling up a
declaration form prior to being appointed.
The court ordered her reinstatement. The
apex court judgement further reinforces the
fact that though the contract of employment
provides for termination of employment
during the probationary period, the
employer will not be in a position to
implement the same, if it is in violation of
provisions of the applicable laws.
Similarly, in accordance with the Section
73 of the ESI Act employer shall not
dismiss, discharge or reduce or otherwise
punish an employee during the period
when he/she is in receipt of sickness
benefit or maternity benefit and also during
the period in receipt of disablement benefit
for temporary disablement or is under
medical treatment for sickness or is absent
from work as a result of certified illness
arising out of pregnancy or confinement.
During the said period no notice of
dismissal or discharge or reduction shall
be served on an employee.
In view of the amended legislation, the
HR professionals are required to have a
relook at their HR manual and also the
contract of employment to comply with the
amended Maternity Benefit Act.

25 APRIL 2017
 VRS Application
Withdrawal after the Expiry Date
R N MISRA
Head HRM – ER, Tata Steel, Jamshedpur
Rightsizing of
manpower has
become a continuous
process in most of the
companies, whether
public or private sector
undertakings. As a
consequence, voluntary retirement
schemes, be it any other title, are floated by
such companies from time to time. It has
been observed that after opting for such
scheme, even may be after its acceptance,
the employees represent for withdrawal of
their applications/expression of desire to
which most of the time, the companies do
not agree and the employees challenge
such rejection before the judicial authorities.
Contradictory views have been delivered by
different courts at lower level which
ultimately have culminated in reaching the
apex court of the country seeking its
intervention by the aggrieved parties.
It is therefore pertinent to discuss the
point as to whether the employees,
having opted for such scheme, can
withdraw their application and if so, in
which situation?
The Hon. Supreme Court of India recently
delivered a judgement in the case of Madhya
Pradesh State Road Transport
Corporation and Manoj Kumar and
another; 2016 (151) FLR 60. In their
judgement the Hon. Court took into
ARBITER
consideration the decision of the same court
by the three judges’ bench in the case of
Bank of India and Others V/s OP
Swarnakar; (2003) 2 SCC 721, State Bank
of Patiala V/s Romesh Chander Kanoji
and others; 2004 (100 FLR 1078 SC),
Food Corporation of India and others V/
s Ramesh Kumar; 2007 (114 FLR 1193
(SC), New India Assurance Company
Limited V/s Raghuveer Singh Narang
and another; 2010 (125) FLR 672 (SC).
The case in brief is that the Madhya
Pradesh State Road Transport Corporation,
a public sector undertaking of the State of
Madhya Pradesh after securing permission
from the appropriate ministry floated a
scheme for VRS for its employees, which
came into force from July 1, 2015 and
remained in force upto August 1, 2015. This
scheme contained certain terms and
conditions which included that the option
once given by the employee, shall not be
permissible to change or taken back. There
was no mention in the scheme that the last
date for submission of the application can
be extended. Subsequently, the Corporation
floated almost similar scheme again with
effect from October, 12, 2006, till October,
28, 2006. This second time floating of the
scheme was intended for seeking more
applications from those employees who had
not availed the scheme in the earlier tenure.
Some employees who had earlier opted
for the scheme and it was allowed, desired
26 APRIL 2017
to withdraw their applications seeking VRS.
The applications were rejected. The
employees preferred to raise the dispute
before the Hon. High Court of Madhya
Pradesh. The Hon. Single bench of the High
Court dismissed these writ petitions holding
that the applications for withdrawal of
application could only be moved within the
validity of the scheme and in those cases
where applications for withdrawal were
submitted after August, 01, 2005, the
concerned employees should not have
submitted the same.
These employees challenged the
impugned judgement before the Hon.
Division Bench of High Court and the latter
allowed them holding that it is permissible
for an employee to withdraw the option
before it is accepted. The Hon. Division
Bench proceeded on the basis that such a
VRS scheme calling for options is an
invitation to offer. Application submitted by
an employee opting under the scheme qua
voluntary retirement amounts to an offer and
only on acceptance of the offer by such
employees, the deal gets concluded and
such an offer can, therefore, always be
withdrawn before it is accepted.
While delivering this judgement the Hon.
Division Bench relied upon the judgement of
the apex court in the case of Bank of India
and others vrs. OP Swarnakar (supra)
reiterating that employees were entitled in the
law to withdraw their option within the validity
period and as the validity period has been
extended, they have withdrawn their option
and they should be deemed to be in service.
The Corporation challenged this
impugned order before the apex court and
successfully distinguished the judgement in
the case of OP Swarnakar and relied on the
ARBITER
judgement of the apex court in the case of
State Bank of Patiala V/s Romesh Chandra
Kanoji. On that basis, it was argued that it
was not open to the respondents to
withdraw their applications after August 1,
2005, which was the last date stipulated in
the earlier scheme. The Corporation also
distinguished the judgement delivered in the
case of OP Swarnakar stating that there was
no closure of the nationalised banks
whereas in the instant case the Corporation
was winding up.
The Hon. Supreme court felt it proper to
take into consideration several legal
principles laid down by the said court in
various judgements. The said court took into
consideration as to whether an employee
opting for the scheme was precluded from
withdrawing that offer. They also
distinguished the context in the case of State
Bank of India as well as the Corporation and
hence they tried to explain as to whether the
scheme initially floated by the Corporation
was extended vide the scheme introduced
second time as like the banks. They felt the
case of State Bank of India stood slightly on
a different footing as it had not amended the
scheme and even permitted withdrawal of
applications. To support their contention they
relied upon the case of Romesh Chandra
Kanoji and observed that in case of the State
Bank of India, the right of withdrawal within
the specific period was there. They also
analysed the judgement delivered by them
in the case of Food Corporation of India and
New India Assurance Company Limited.
While coming back to the case of
Corporation, they observed that the
Corporation had floated the scheme in view
of the closure of their transport business.
Further the scheme provided that once the
option is given, the same cannot be
27 APRIL 2017
withdrawn. However, they observed that the
employees have a right to withdraw the offer
during the validity period and not thereafter.
They summed up that the initial scheme of
the Corporation was valid up to August 1,
2005. They clarified that the subsequent
which was floated is not an extension of the
earlier one. Therefore, they observed those
employees who have exercised their option
between July 01, 2005 till August 01, 2005
and they have been accepted cannot
withdraw subsequently after August 01,
2005, that is, the last date of the validity
period. However, one of the employees had
withdrawn his application within the validity
period and hence he was allowed
reinstatement with back wages since he filed
affidavit stating that he was not gainfully
employed during the intervening period.
ARBITER
This judgement of Hon. Supreme Court
could distinguish the finer aspects of the VRS
schemes and educate all with regard to
specific terms and conditions of the scheme
which includes fixed validity period and a
condition against withdrawal after expressing
desire or accepting the offer or making the
application in pursuance to the scheme.
Many a times industries float schemes
without being particular to the terms and
conditions of acceptance or withdrawal,
ambiguity of language as if extension of
earlier schemes, which create points of
challenge by the aggrieved employees
putting the Corporations into embarrassment
and subject to judicial interpretations. It is
therefore desirable to float such schemes
carefully to serve the basic purpose.

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28 APRIL 2017
 Wellness Through Music - II
DR. S. SRINIVASAN

MBBS, MD and Lifestyle Coach on Life Skills

In the last issue,

we considered the
basic aspects of the
effect of music on
brain and bodily
functions. Let us get
a bit closer and deeper on the effects of music
on major areas of the brain that determine
behavior and personality.

senses. This center responds to both happy

and fearful signals and is correlated with
stimulation of goal directed behavior.  Signals
from higher cortical centers are mingled with
this center for hearing and direct sensory input
from the thalamus.
Nucleus Accumbens (NA)
The NA is highly correlated with pleasure
and is responsible for the chills and shivers—
skin “goose bumps”—that occur with
Amygdala
scintillating music or other emotions. It is the
The amygdala has three layers of major center responding to the pleasure of
neurons. It is the center of much of the brain food, drink, money, drugs and sex and is
activity related to emotions. The top
amygdala layer receives signals from the
smell centers, and responds to faces,
sounds and music, especially happy
music. These responses are related to
emotions connected with social contacts.
During happy music there are strong
connections from the amygdala to the
dopamine driven nucleus accumbens
(addiction center). This dopamine center is
not as involved in fearful music. A basic center
of the amygdala, the laterobasal, is the main
way sound information enters along with other
ARBITER 29 APRIL 2017
connected with activity that is motivated by
rewards. The NA is highly connected to many
other brain regions, higher (cingulate cortex,
anterior insula) and lower (thalamus – the
center of incoming sensory data). All of these
regions are involved in pleasure from music.
These centers are thought to be very old
in evolution and related to survival.
The power of music is intricately
related to the earliest survival activity.
This can be seen in music’s great
importance for cohesion in all
societies. When listening to music these
pleasure centers are connected to the
auditory cortex related to hearing.
Interestingly, research shows that the more
activity that occurs between the auditory
cortex and the NA predicts whether a song
will be purchased.
Hippocampus
What is unusual about the hippocampus
is that there is no evidence of response to
the activity that produces rewards from food,
sex and money. But, it is highly related to
music and responds in ways that do not
connect with the addictive reward system.
Previously, the hippocampus has been most
correlated to learning and memory, especially
spatial orientation. With music, it appears to
be related to all types of emotion — happy,
sad, peaceful, chills, and fearful.
In recent years the view of the
hippocampus has changed from just dealing
with learning, memory and space because it
is powerfully connected to the critical stress
ARBITER
system of the hypothalamus, the pituitary and
the adrenal—known as the HPA axis. The
stress system is a key brain center – very
connected to all types of emotional response
including the critical stress reactions that
impact the whole body and immune functions.
The hippocampus is damaged by severe
stress, with reduction of new neuron
production during depression, PTSD and
abuse. During recovery from depression and
stress, the production of new brain cells in
the hippocampus increases.
Also, attachment and tender feelings
are correlated to with the amount of new
brain cells, with less new neurons when
there are no tender feelings. These same
people with less tender feelings have less
response to music as well. Also, those who
are subjected to persistent loud sounds
that cause stress have reductions in the
hippocampus activity and cells.
In addition to cortisol receptors, the
hippocampus has oxytocin receptors and is
possibly connected to regulating the oxytocin
release in the pituitary. Through this
connection, the hippocampus affects
parent-child bonding and social attachment.
Feelings of love and joy are, in part, related
to the large connections between the
hippocampus, the HPA and other regions
near the NA and the amygdala.

30 APRIL 2017