Essential employment laws for entrepreneurs

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This material is for PGPSE / CSE students of AFTERSCHOOOL. PGPSE / CSE are free online programme - open for all - free for all - to promote entrepreneurship and social entrepreneurship PGPSE is for those who want to transform the world. It is different from MBA, BBA, CFA, CA,CS,ICWA and other traditional programmes. It is based on self certification and based on self learning and guidance by mentors. It is for those who want to be entrepreneurs and social changers. Let us work together. Our basic idea is that KNOWLEDGE IS FREE & AND SHARE IT WITH THE WORLD

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Essential employment laws for entrepreneurs

  1. 1. ESSENTIAL EMPLOYMENT LAWS FOR ENTREPRENEURS by : DR. T.K. JAIN AFTERSCHO ☺ OL centre for social entrepreneurship sivakamu veterinary hospital road bikaner 334001 rajasthan, india FOR – PGPSE PARTICIPANTS mobile : 91+9414430763
  2. 2. About factories act .... Click on the following link http://www.scribd.com/doc/13065872/Factories-Act http://www.scribd.com/doc/11629083/Factories-Act-1948
  3. 3. About Industrial disputes act Click on the following link : http://www.scribd.com/doc/11629531/Industrial-Disputes-Act-1947
  4. 4. About ESI ACT Click on the links http://www.scribd.com/doc/11784811/The-Employees-State-Insurance-Act-ESI-Act http://www.scribd.com/doc/11953668/The-Employees-State-Insurance-Act-ESI-Act http://www.scribd.com/doc/29859609/Esi-Act-for-Entrepreneurs
  5. 5. About PF http://www.scribd.com/doc/11628930/Employees-Provident-Funds-Act-1952
  6. 6. About workmen's compensation act Click this link : http://www.scribd.com/doc/11761837/Workmens-Compensation-Act-1923
  7. 7. About (standing orders) act http://www.scribd.com/doc/11629618/Industrial-Employment-Standing-Orders-Act-1946
  8. 8. On workmen's compensation act Click the link : http://www.scribd.com/doc/11692538/Workmens-Compensation-Act-1923
  9. 9. If you employ worker through a contractor, should you get registered under contract labour act ? Yes if you want to engage twenty or more persons through a contractor you have to get itself registered. Section 7 of the Act lays down that every principal employer of an establishment to which the Act applies shall make an application to the registering officer in the prescribed manner for registration of the establishment within the prescribed time limit. A registration fee varying from Rs. 20 to Rs. 500 which is related to the number of workmen employed as contract labour
  10. 10. Can Govt. Abolish contract labour? Yes, it has abolished in many industries like coal mine, gypsym mining etc. Before abolishing the govt. Will consult board and other authorities. You can also apply to govt to abolish contract labour (if they are being exploited). If the govt. Refuses, it will give reason. If the government doesnt give you reason for refusing to abolish contract labour, it amounts to non-application of mind to the requirements of Section 10(2) and the court can order abolition of contract labour (GEA v. Union of India, 1997 Lab IC 1701 Bom.)
  11. 11. Can industrial tribunal abolish contract labour ? Vegolis Private Ltd. v. The Workmen, (1971)II-LLJ p. 567: No after enforcement of the Contract Labour (Regulation and Abolition) Act, 1970, the sole jurisdiction for abolition of contract labour in any particular operation vested with the appropriate Government and thereafter the Tribunals have no jurisdiction to abolish contract labour. Supreme Court cannot under Article 32 of the Constitution order for abolition of Contract Labour System in any establishment (1985 1 SCC 630) (so we have to approach govt. For this) .
  12. 12. Can court order for regularisation of contract labour ? In some cases yes (it is debatable matter) Air India Statutory Corporation v. United Labour Union, AIR 1997 SC 645 : Supreme court held that a High Court in exercise of its jurisdiction under Article 226 of the Constitution, can ask a principal employer to absorb the workman concerned after abolition of the contract labour. However, the court overrules this judgement in Steel Authority of India v. National Union of Water Front Workers and others, AIR 2001 SC 3527
  13. 13. Is it necessary for a contractor to get registered under the act before employing contract labour ? Yes Sec 12 : no contractor to whom the Act applies can undertake or execute any work though contract labour except under and in accordance with the license issued in that behalf by the licensing officer.
  14. 14. What are the important health and safety provisions ? Canteen : (sec. 16) : if there are 100 or more workers first aid, rest room, drinking water, latrines, urinals, washing facilities etc. Should be provided to the workers
  15. 15. What are the punishments under the contract labour act ? Sec. 24 : 3 month imprisonment / 1000/- penalty
  16. 16. Registers / returns under contract labour act ... “ small establishments” (establishments employing not less than 10 persons and not more than 19 persons) are required to furnish a core Return in Form A and maintain Registers Form B, Form C, and Form D and “very small establishments” (establishments employing not more than 9 persons) are required to furnish return in Form A and maintain Register in Form E under this Act
  17. 18. Which is the main law regulating working conditions of contract labour ? CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970
  18. 19. Where does the contract labour act apply ? Sec 1(4): 1. every establishment which employes 20 or more contract labour 2. every contractor which employes 20 or more contract labour
  19. 20. Who is a contractor ? a person who undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor. [Section 2(1)(c)]
  20. 21. What is the meaning of establishment in contract labour act ? any office or department of the Government or local authority, any place where any industry, trade, business, manufacture or occupation is carried on. [Section 2(1)(e)]
  21. 22. Who is a workman in contract labour act ? “Workman” means any person employed in or in connection with the work of any establishment to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, but doesnt include manager. (sec. 2(1)(i)
  22. 23. What is the role of boards under contract labout act ? Central Advisory Contract Labour Board to advise the Central Government & State Advisory Contract Labour Board to advise state government on matters relating to contract labour regulation.
  23. 24. When will the govt. Ban contract labour in an industry ? When it is a regular work and regular workers are required through out the year. When it is done ordinarily through regular workmen in that establishment similar thereto; when it is sufficient to employ considerable number of wholetime workmen. (Section 10)
  24. 26. Who will ensure that standing orders are fair for employees? The Industrial employment (standing Orders) Act 1946 has imposed a duty on the Certifying Officer, to consider the reasonableness and fairness of the Standing Orders before certifying the same.
  25. 27. Where does the The Industrial employment (standing Orders) Act 1946 apply? It applies to every industrial establishment wherein 100 or more workmen are employed or were employed on any day during the preceding twelve months.
  26. 28. How does the certifying officer proceeed with the draft standing order received from the employer? On receipt of the draft Standing Order from the employer, the Certifying Officer forwards its copy to the trade union of the workmen or where there is no trade union, then to the workmen in the prescribed manner together with a notice requiring objection (the objections have to be raised in 15 days), and later modies it as per the objections / clarifications.
  27. 29. When does the standing order become enforceable ? It becomes enforceable on the expiry of 30 days from the date on which the authenticated copies are sent to employer and workers representatives (these copies are sent within 7 days of the certification).
  28. 30. Where any workman is suspended by the employer pending investigation or inquiry into complaints or charges of misconduct against him, the employer shall pay to such a workman the subsistence allowance
  29. 31. What is the notice period for retrenchment ? One month notice or one months pay in lieu of notice should be given in smaller (employing less than 100 employees) establishments [Sec. 25F(a)] Three months notice or three months pay should be given in larger (employing more than 100 employees) establishments. [Sec.25N (1)(a).]
  30. 32. What is layoff compensation payable ? Fifty percent of Basic+ DA.[Sec.25( c)] In case permission is not obtained/refused full wages. [Sec 25 (M) (8). If the employee refuse to accept alternative employment under the same employer within a radius of 5 Miles the worker is not eligible for any compensation.[Sec.25(E)(1). If not reported for attendance no compensation. [Sec.25(E)(2). If lay off is due to strike or go slow by another section of the unit, No compensation [Sec.25(E)(3).]
  31. 33. Can we retrench employees randomly ? No Retrench the last worker appointed under a particular category first For re-employment, retrenched worker shall have preference over other persons
  32. 34. What is illegal strike / lock out ? In Public Utility Service [Sn.22(1)and(2),23,30,19] Without giving 14 days notice. Commenced after 42 days of notice. Prior to the date indicated in the notice. During the pendency of proceedings During the period when a settlement or award is in operation on same matters. In non PUSs a) in breach of contract ,b) during the pendency of proceedings, c) during the settlement or award is in operation.[Sn.23,20,19] In both the strike / lockout will be illegal if continued after Govt. ban [Sec.10(4A),24]
  33. 35. What is the difference between strike and lockout? Strike:by workmen Refusal to work or accept employment. Under common understanding or acting in concert. [Section 2q] lockout : By employer - Temporary closure Refusal to continue to employ the persons employed. [Section 2(l).
  34. 36. How is govt. Promoting arbitration of industrial disputes? When conciliation fails, and if the parties wish to refer the issue for arbitration, both the sides shall sign an arbitration agreement in Form C under Rule 7 and send it to Government. The Government will then appoint an arbitrator. [Sn.10(2),10A.] Arbitration award is implemented like an adjudication award. Thus arbitration is a legal process to mitigate industrial dispute
  35. 37. What is the role of labour courts under Industrial disputes act? They are constituted by the appropriate Govt. for the adjudication of industrial disputes relating to any matter specified in the Second Schedule and for performing such other functions as may be assigned to them under this Act. Second schedule covers matters like strike, lockout, standing order; Discharge or dismissal of workmen including re-instatement of, or grant of relief to, workmen wrongfully dismissed; Withdrawal of any customary concession / privilege etc.
  36. 38. What is the role of Industrial tribunals ? They are for adjudication of industrial disputes relating to any matter specified in the Second Schedule or the Third Schedule and for performing such other functions as may be assigned to them the matters covered by them are : 1.Wages, including the period and mode of payment; 2.Compensatory and other allowances; 3.Hours of work and rest intervals; 4.Leave with wages and holidays; 5.Bonus
  37. 39. What is the role of conciliation officer under Industrial dispute act ? Conciliation = agreement through negotiation / dialogue he gets the parties to sign a settlement in Form H (under rule 58 (1) and make necessary entries in the register in Form O and sent a copy to the Govt.[Sec12(3) Rules 58(1),(3)&75.] If he fails to bring about a settlement, he has to bring the fact to the attention of the Government under Sec 12(4). Conciliation process should be closed within 14 days.
  38. 40. What is the meaning of worker in Industrial Disputes act ? Sec [2(s)] –Employees doing any manual, unskilled, skilled, technical, operational, clerical work irrespective of their salary. Supervisors drawing wages less than 1600/- are workers, but Managers are excluded irrespective of their salary.
  39. 41. What is the 3 way test of industries as per Industrial disputes act? Cooperation between employer and employee. Systematic activity. Satisfy the human wants or needs.
  40. 42. What is the difference between arbitration / conciliation / adjudication? Arbitrator = a third party tries to find a solution after hearing both the party. The third party is appointed jointly by both the parties in dispute based on mutual consent Adjudication = court (labour court / industrial tribunal / national tribunal / adjudication officer) may give judgement which is binding conciliation = both the parties negotiate and find an amicable settlement
  41. 43. Can a unit be closed without permission in Industrial dispute act ? No. permission is required for permanent closure of (a) a place of employment, or (b) a part of establishment [Sec.2 (cc).] However, no permission required in smaller units [Sec.25K] Where Permission is required ,application should be submitted (in the case of factories, mines and plantations) to the Govt. with copy to the Union at least 90 days in advance. [Sec 25(O)(1)] If no reply is received within 60 days permission can be assumed [Sec.25(O)(3).]
  42. 44. What are the unfair trade practices on the part of employer under industrial disputes act ? To start employer-sponsored trade unions discharging or punishing a workman just because he urged other workmen to join or organise a trade union discharging or dismissing a workman for taking part in any strike (not being a strike which it deemed to be an illegal strike under this Act) changing seniority rating of workmen as punishment for joining union activities.
  43. 45. What is the meaning of wages in Industrial Disputes act ? [Sec 2(rr)] = Basic, D A, Value of house accommodation, traveling concession, commission and or other remuneration payable under the contract . However, Bonus, retirement benefits etc. are not wages
  44. 46. When is the national tribunal constituted ? It is constituted by the Central Government for the adjudication of industrial disputes which, in the opinion of the Central Government, involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by such disputes.
  45. 47. What are the unfair practices by workers under Industrial disputes act ? To undertake gherao / go slow / violent activities To motivate or indulge in willful damage to employer's property. To indulge in acts of force or violence or to hold out threats of intimidation against any workman with a view to preventing him from attending work. Etc
  46. 48. What is the period of pendency? When the matter of dispute is sent to arbitration / adjudication / conciliation, the pendency starts and continues till the judgement and its implementation. Pendcncy means the matter is in the process of legal solution – during the period of pendency – there cant be any action against workers / strikes / lockouts / dismissals etc.
  47. 49. Can a trade union leader be punished / dismissued during pendency period ? No , not without prior permission from the authority during this period [Sn.33(3) Rule 60(1) Form J] If the employer violates these provisions the aggrieved workman can file complaint before the authority in Form I. The authority shall pass orders after hearing the parties. [Sn. 33A, Rule 59] Note:- Even if the approval is granted the worker is not barred from raising dispute under section 2(k) or 2A.
  48. 50. What is the role of works committee ? It is constituted in every factory where 100 or more workers are working in a plant. Works commitee looks after day to day issue regarding plant management, shift, work schedule etc. It has 50% representatives from workers and equal number of representatives from employers. It has to be constituted as per Industrial Disputes act.
  49. 51. What is the role of Joint Management council? Whenever there are 500 or more workers working in a factory, there is a JMC. This is again a participatory forum. 50% representatives are from workers and remaining from employer it decides about managerial issues relating to factory, its supervision, overall management.
  50. 52. What is the role of conciliation officer ? He is appointed to bring about settlement between disputing parties in case of industrial disputes.
  51. 53. What is the role of labour inspectors ? They are appointed in each district. They look after implementation of important laws like factories act, industrial disputes act etc. And try to ensure well being of workers
  52. 54. What is the role of tripartite bodies in India? Most of the policies relating to labour is taken care of by tripartite bodies. ILC is one such tripartite body(indian labour conference). At the international level, we have ILO (International labour office), which is also a tripartite body. Tripartite = three parties : 1. labour 2. employer 3. government
  53. 55. What is the role of adjudication officer ? They are appointed under industrial disputes act to look into matters relating to industrial disputes. They are judicial officers.
  54. 56. What is the meaning of industry under Industrial disputes act ? “Industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling service, employment, handicraft, or industrial occupation or avocation of workmen. [Section 2(j)]
  55. 57. What are the tests of industry ? 1. it should be well organised and systematic activity 2. there should be production and distribution of goods and services to satisfy human needs 3. there should be cooperation between employer and employee Profit motive is not necessary read : Bangalore Water Supply and Sewerage Board v. A Rajiappa, AIR 1978 SC 548
  56. 58. contd.... professions, clubs, educational institutions. co-operatives, research institutes, charitable projects and other kindred adventures, if they fulfil the triple tests listed in (1), cannot be exempted from the scope of Section 2(j) Sovereign functions or functions not connected to others are not industry. So ATIRA is industry, but PRL is not an industry. Hosptial, municipality are industry, but purely voluntary services are not industry.
  57. 59. What is industrial dispute under Industrial disputes act? “Industrial Dispute” means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person. [Section 2(k)]
  58. 60. Are gardners looking after the garden attached to bungalows provided by the company to its officers and directors employees under Industrial dispute act? Yes, they are engaged in operations incidentally connected with the main industry carried on by the employer. Read : J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. L.A.T., AIR 1964 S.C. 737
  59. 61. What type of work is performed by worker in Industrial disputes act? 1. skilled or unskilled 2. clerical 3. technical 4. supervisory work
  60. 62. Is teacher a worker in Industrial disputes act. ? No Sunderambal v. Government of Goa [AIR (1988) SC 1700. (1989)
  61. 63. Is labour officer working in a textiles mill a worker ? Yes superivisor work is also included as per Industrial disputes act – so he is also a worker
  62. 64. What is the meaning of strike in Industrial disputes act? “Strike” means a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment. [Section 2(q)]
  63. 65. on the sudden death of a fellow-worker, the workmen acting in concert refuse to resume work. Is it a strike? Yes read : Textile Workers’ Union v. Shree Meenakshi Mills, (1951)
  64. 66. What are the various types of strikes? Sit down go slow hunger strike tool down work to rule stay in pen down etc.
  65. 67. If a strike is resorted to by the workers in support of their reasonable, fair and bona fide demands in peaceful manner, then can the strike be justified? Yes read : Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Majdoor Sabha, AIR 1980 SC 1896
  66. 68. What is the the doctrine of “apportionment of blame”? According to this doctrine, when the workmen and the management are equally to be blamed, the Court awards half of the wages.
  67. 69. What is lockout in Industrial disputes act? “Lock-out” means the temporary closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him. [Section 2(l)]
  68. 70. What is lay off in Industrial disputes act ? “Lay-off” means the inability of an employer to give employment due to : shortage of coal, power or raw materials, accumulation of stocks, break-down of machinery, natural calamity any other connected reason to an employee whose name appears on muster roll. [Section 2(kkk)]
  69. 71. What is retrenchment under Industrial disputes act ? “Retrenchment” means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and doesnt include VRS, superannuation, retirement due to ill health etc. (sec. 2(oo))
  70. 72. Is transfer / closure of a unit falling in Industrial disputes act? Read : sec. 25F,25F,25FFF
  71. 73. Can a company retrench its surplus employees under industrial disputes act? Yes read : Parry & Co. Ltd. v. P.C. Pal, (1970) II L.L.J. 429, the Supreme Court observed that the management has a right to determine the volume of its labour force consistent with its business or anticipated business and its organisation. If for instance a scheme of reorganisation of the business of the employer results in surplusage of employees, no employer is expected to carry the burden of these employees.
  72. 74. What is Unfair Labour Practice It means any of the practices specified in the Fifth Schedule. [Section 2(ra)] 21.
  73. 75. Can dismissal of Individual employee be called an industrial dispute? Yes read sec. 2A
  74. 76. What are the main authorities under Industrial disputes act? These are : Conciliation Officers. Boards of Conciliation. Court of Inquiry.Labour Tribunals. Industrial Tribunals National Works Committee
  75. 77. What is a hazardous process in factories act? any process or activity in relation to an industry specified in the First Schedule, which may raw material or use process which may cause harm to the health of the persons engaged in or connected therewith, or result in the pollution of the general environment; [Section 2(cb)]
  76. 78. What is a factory in factories act? “ Factory” includes any premises including the precincts thereof whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on; or whereon twenty or more workers are working, or were working on a day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.
  77. 79. What is manufacturing process in factories act? making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise, treating or adopting any article or substance with a view to its use, sale, transport, delivery or disposal pumping oil, water or sewage or any other substance; generating, transforming, transmitting power; composing types for printing, printing by letter-press, lithography, photogravure or other similar process, or book-binding; constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels preserving or storing any article in cold storage. [Section 2(k)]
  78. 80. If the labourer is to produce bidies rolled in a certain form and how the labourer carried out the work is his own concern and is not controlled by the firm. The firm is concerned only with getting bidies rolled in a particular style with certain contents. Is it a factory ? No - read Shankar Balaji Waje v. State of Maharashtra, AIR 1963 Bom. 236,
  79. 81. Is Munim in a factory a worker. Yes
  80. 82. Is a person employed by a gas manufacturing works as a coolie for excavating and digging trenches outside the factory for laying pipes for transporting gas to consumers a worker under factories act. No
  81. 83. Is a soap-works, a carpenter preparing the packing cases a worker under factories act? Yes
  82. 84. What is the test of ownership under factories act? whether a person is an owner (occupier / manager) or not is the possession or vesting in of the ultimate control of the factory. The control should be an ultimate one.
  83. 85. Is it necessary to give notice before starting a factory? Section 7 imposes an obligation on the occupier of a factory to send a written notice, containing prescribed particulars, to the Chief Inspector at least 15 days before an occupier begins to occupy or use a premises as a factory and at least 30 days before the date of resumption of work in case of seasonal factories
  84. 86. What is certificate of fitness? Under Section 69 of the Act, before a young person is employed in the factory, a Certifying Surgeon has to certify that such person is fit for that work in the factory. To get this certificate, an application to a Certifying Surgeon has to made by employer / employee / guardian of the worker.
  85. 87. Under sec. 79, how many leaves are available to a worker under factories act? – One day for every 20 days (for adults , for children it is 15) of work performed by them during the
  86. 88. Can a worker carry forward leaves to next year under factories act? Yes, If any worker does not avail any earned leave entitled to him during the calendar year, it can be carried forward to the next calendar year subject to the maximum of 30 days for an adult worker and 40 days for a child worker.
  87. 89. What types of safety provisions are there in factories act? Have fencing of factories check self acting machines check hoists, lifts etc. Protect eyes of workers have adequate space & working condicitions for worker have clean, neat, and safe factories
  88. 90. What types of safety provisions are there in factories act for childern and women? Dont employ during night shift dont appoint near cotton opener or other such dangerous factories Give proper leave / holidays
  89. 91. What is injury under ESI Act? 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 insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India. [Section 2(8)]
  90. 94. CAN MINIMUM WAGE BE PAID IN CASH OR KIND ? Only in Cash (read sec. 11 of minimum wages act)
  91. 95. Should casual workmen should be included for the purpose of ascertaining the strength of workmen in terms of Section 1(3) of Employee PF & MP act 1952 No, it was held by the Rajasthan High Court in Bikaner Cold Storage Co. Ltd. v. Regional P.F. Commissioner, Rajasthan, 1979 Lab. I.C. 1017, that persons employed in the normal course of the business of the establishment should be considered as the persons employed for the purposes of Section 1(3)(a) and persons employed for a short duration or on account of some urgent necessity or abnormal contingency, which was not a regular feature of the business of the establishment cannot be considered as employees for the purpose of determining the employment strength
  92. 96. Is an employee appointed through a contractor an employee within the meaning of Employee PF & MP Act 1952 YES “ Employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets his wages directly or indirectly from the employer and includes any person 1. employed by or through a contractor in or in connection with the work of the establishment; 2. engaged as an apprentice, not being an apprentice engaged under Apprentices Act, 1961 or under the standing orders of the establishment. [Section 2(f)]
  93. 97. What is manufacturing process as per Employee PF and MP act 1952? It is similar to meaning as given in Factories act. It means any process for making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal. [Section 2(i-c)]
  94. 98. Does the payment of gratuity act apply to factories also ? Yes , According to Section 1(3), the Act applies to: 1. every factory, mine, oilfield, plantation, port and railway company 2. every shop or establishment in which ten or more persons are employed, or were employed, on any day of the preceding twelve months; 3. such other establishments or class of establishments in which ten or more employees are employed, or were employed, on any day of the preceding twelve months
  95. 99. Who is an employee under payment of gratuity act? Section 2(e) defines employee as 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, semiskilled, or unskilled, manual, or 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 under the Central or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
  96. 100. What are the cases when employee is not in continuous service under payment of gratuity act? Service is not continuous, in case of legal termination of service and subsequent re-employment.
  97. 101. How is gratuity calculated under payment of gratuity act ? Gratuity is calculated on the basis of continuous service as defined above i.e. for every completed year of service or part in excess of six months, at the rate of fifteen days wages last drawn. The maximum amount of gratuity allowed under the Act is Rs. 3,50,000/-.
  98. 102. If a person dies, and his nominee is a minor, who will get gratuity ? in the case of death of the employee, it shall be paid to his nominee and if no nomination has been made, to his heirs and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority
  99. 103. What is the time limit for payment of gratuity under payment of gratuity act? Section 7(3) of the Payment of Gratuity Act says that the employer shall arrange to pay the amount of gratuity within thirty days from the date of its becoming payable to the person to whom it is payable. In case of delay, simple interest at the rate of 10 per cent per annum has to be paid alongwith.
  100. 104. After how much years of service, is an employee eligible for gratuity ? An employee is eligible for receiving gratuity payment only after he has completed five years of continuous service. This condition of five years is not necessary if the termination of the employment of an employee is due to death or disablement.
  101. 105. What is the penalty in case of false statement under payment of gratuity act? If any person makes a false statement for the purpose of avoiding any payment to be made by him under this Act, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees or with both.
  102. 106. What is the time limit for payment of bonus under payment of bonus act? the bonus should be paid within a period of eight months from the close of the accounting year.
  103. 107. Can a company adopt productivity linked bonus instead of profit linked bonus under payment of bonus act? Yes, employees and employers can develop and operate a scheme of bonus payment linked to production or productivity in lieu of bonus based on profits
  104. 108. Which types of companies are covered by Payment of Bonus Act? every factory and to every establishment where 20 or more workmen are employed on any day during an accounting year
  105. 109. Which employee can get bonus under payment of bonus act? Every employee shall be entitled to be paid by his employer in an accounting year, bonus provided he has worked in the establishment for not less than thirty working days in that year.
  106. 110. Can surplus profit be carried forward to next years for payment of bonus under payment of bonus act? Yes, Sec. 15 & IV schedule : if allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under Section 11, then, the excess shall, subject to a limit of twenty per cent of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year
  107. 111. What is the minimum bonus under payment of bonus act? Section 10 : 8.33 per cent of the salary
  108. 112. A person is guilty of committing fraud in a company. Can he still claim bonus under payment of bonus act? No No bonus in the case of : 1. fraud; 2. riotous or violent behaviour while on the premises or the establishment; 3. theft, misappropriation or sabotage of any property of the establishment. (Section 9)
  109. 113. How is available surplus calculated under payment of bonus act? gross profits for the accounting year after deducting therefrom the sums referred to in Section 6 & section 7 .
  110. 114. What are the sums deductible under sec. 6 of Payment of bonus act ? 1. direct tax 2. development rebate 3. depreciation applicable 4. any other sum as specified in schedule III
  111. 115. How is gross profit calculated under payment of bonus act? The process is given in schedule I & II in details.
  112. 116. How is bonus computed under payment of bonus act? First, Gross Profit is calculated as per First or Second Schedule. From this Gross Profit, the sums deductible under Section 6 are deducted. To this figure, we add the sum equal to the difference between the direct tax calculated on gross profit for the previous year and direct tax calculated on gross profit arrived at after deducting the bonus paid or payable to the employees. The figure so arrived will be the available surplus. Of this surplus, 67% in case of company (other than a banking company) and 60% in other cases, shall be the “allocable surplus” which is the amount available for payment of bonus to employees.
  113. 117. If a company opens a branch, is that a separate establishment under payment of bonus act? Yes – if there is separate balance sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch then such department, undertaking or branches shall be treated as a separate establishment for the purpose of computation of bonus ; otherwise no,
  114. 118. What is salary under payment of bonus act ? Sec. 2(21) : The “salary or wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance , it includes all cash payments but doesnt include commission, TA, retirement benefits, and reimbursements
  115. 119. Who is an employee under payment of bonus act? “Employee” means any person (other than an apprentice) employed on a salary or wages not exceeding Rs. 10,000 per month in any industry to do any skilled or unskilled, manual, supervisory, managerial, administrative, technical or clerical work of hire or reward, whether the terms of employment be express or implied. [Section 2(13)]
  116. 120. Who is employer under payment of bonus act ? 1. in relation to an establishment which is a factory, the owner or occupier of the factory/ agent of such owner /the legal representative of a deceased owner /manager of the (named as manager under Clause (f) of Sub-section 7(1) of the Factories Act, 1948) 2. in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment / manager/ managing director / managing agent [Section 2(14)]
  117. 121. Download links for basic preparation http://www.scribd.com/doc/6681094/1-August-Business-Law http://www.scribd.com/doc/23393512/11-July-Business-Law http://www.scribd.com/doc/23393829/18-July-Business-Law http://www.scribd.com/doc/6583876/4-July-Business-Law http://www.scribd.com/doc/6683819/Business-Law-12-September http://www.scribd.com/doc/14646886/Business-Law-20-Nov http://www.scribd.com/doc/18276825/Indian-Contract-Act http://www.scribd.com/doc/13132546/Indian-Contract-Act http://www.scribd.com/doc/13065925/Sale-of-Goods-Act
  118. 122. Download links... http://www.scribd.com/doc/13065899/Negotiable-Instruments-Act http://www.scribd.com/doc/25295622/Company-Law-in-India http://www.scribd.com/doc/11765249/Company-Law-and-Practice http://www.scribd.com/doc/25885860/Company-Meetings-Under-Company-Law-in-India http://www.scribd.com/doc/25950024/E-governance-of-Companies-Law
  119. 123. THANKS.... GIVE YOUR SUGGESTIONS AND JOIN AFTERSCHOOOL NETWORK / START AFTERSCHOOOL SOCIAL ENTREPRENEURSHIP NETWORK IN YOUR CITY [email_address] PGPSE – WORLD'S MOST COMPREHENSIVE PROGRAMME IN SOCIAL ENTREPRENEURSHIP

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