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COMPLIANCES UNDER LABOUR LAW 
By: 
Amrik Singh 
Sr. Officer (HR) 
GAIL (India) Limited
Registering 
& Licensing 
of Existing 
and New 
Compliance 
of Labour 
Laws 
Display of 
Abstract 
and Notices 
Statutory ...
WHY COMPLIANCE 
MANAGEMENT? 
Compliance Management 
Framework 
• Policies & Procedure 
• Risk Assessment 
• Training & Com...
CLAUSE 49 OF THE LISTING AGREEMENT 
Provision Purpose 
Compliance of all the 
applicable legal provisions, 
rules & regula...
COMPLIANCE UNDER LABOUR LAWS 
Statutory compliance under various labour laws has to be 
ensured by establishments. 
It is ...
Major Compliances
 “Principal Employer” has the statutory 
responsibility on behalf of company to ensure 
compliances under Contract Labour...
THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970 
& 
THE MAHARASHTRA CONTRACT LABOUR (REGULATION AND 
ABOLITION) C...
Compliance to be ensured by the contractor under 
The Contract Labour (Regulation And Abolition) Act, 1970 
Apply in Form-...
CONTRACT LABOUR (REGULATION AND 
ABOLITION) ACT, 1970 
Sec 29: Maintenance of registers and other records 
Form-VIII - At ...
OBLIGATION OF PRINCIPAL EMPLOYER 
Register of contractors Form-VIII 
Certificate by Principal Employer Form-V 
Annual retu...
OBLIGATION OF CONTRACTOR 
Application for License Form-IV 
License Form-VI 
Notice of Commencement /Completion Form VI A 
...
Building and Other Construction 
Workers Act 1996 
 Applies to every establishment which employs or had employed ten or 
...
The BUILDING & OTHER CONSTRUCTION 
WORKERS WELFARE CESS ACT , 1996 
 The purpose is - To collect the Cess on Cost of cons...
Documents required for obtaining BOCW Registration 
 Form-I (Triplicate) i.e. application 
 Registration fee 
 PF Chall...
Payment of Minimum Wages 
A minimum wage is the lowest hourly, daily or monthly 
remuneration that employers may legally p...
Compliances for the Minimum Wages Act, 1948 
Sec 12: Payment of minimum rates of wages 
 Every contractor must pay minimu...
Fixation of Minimum Wages 
The appropriate government to fix minimum rates of wages in 
Scheduled Employment as the provis...
Payment of minimum rate of wages 
Minimum Wages are revised half yearly and notified for 
a period from Apr-to-Sep and fro...
Maintenance of registers and records 
Under Sec 18 of the Minimum Wages Act, 1948 and Rule 26 of 
the Minimum Wages (Centr...
RESPONSIBILITY FOR PAYMENT OF WAGES 
Under Section-12 of Contract Labour (Regulation And Abolition) Act, 1970 
(1) A contr...
COMPLIANCES UNDER 
PAYMENT OF WAGES ACT, 1936 
Sec 4 Fixation of wage-periods: wage periods shall not exceeding one month....
Comparison of Wages under diff. Acts 
Click here 
• Wages under The Minimum Wages Act, 1948 
• Wages under The Payment of ...
Social Security in India 
• Article 43 of the Constitution speaks of state's responsibility to 
provide social security to...
Employees’ Provident Fund and 
Miscellaneous Provisions Act, 1952 
Details information please visit http://www.epfindia.co...
Compliance Management 
Employees’ Provident Fund and 
Miscellaneous Provisions Act, 
1952 
EMPLOYEES’ PROVIDENT FUND 
SCHE...
Rates of Contribution 
SCHEME EMPLOYEE’S EMPLOYER’S CENTRAL 
GOVT’S 
Provident Fund 
Scheme 
12% (12-8.33) % Nil 
Insuranc...
Payment of Contribution 
• The employer shall pay the contribution payable to the 
EPF, and Employees’ Pension Fund in res...
PF Compliance 
Ensure the compliance of 36-B of The Employees’ Provident Fund 
Scheme, 1952. 
36-B. Duties of contractors ...
Role & Responsibility of Contractor 
Monthly Returns 
• Online Filing monthly PF returns with the EPFO within 15 days of 
...
Damages 
Plus Penal interest on P.F. Dues @ 12%
Penal Provision 
• Liable to be arrested without warrant being a cognizable 
offence. 
• Defaults by employer in paying co...
Employees’ 
State Insurance Act, 1948 
Details information please visit 
http://esic.nic.in
Coverage under the ESI Act, 1948 
►APPLICABILITY 
Under Section 2(12) the Act is applicable to non-seasonal factories empl...
ESI Scheme 
• All employees to insured under the ESI Scheme and provisions of 
the Employees' State Insurance Act, 1948 
•...
Employees – Benefits under 
Employees’ State Insurance Corporation 
Under ESI Scheme, the comprehensive and need based 
pa...
Principal Employer Vs Immediate Employer 
• Principal Employer e.g. GAIL 
• Immediate Employer e.g. Contractor providing s...
Registration of Employees 
1. Temporary Identification Certificate (TIC): TIC which 
is valid for 3 months and can be reva...
How to check ESI Compliance 
• Visit http://www.esic.nic.in and visit the portal for 
IP/Employer login on the left side m...
To check compliance in respect of 
Employees
To check compliance in respect of 
Contractors “User Id and Password is 
required”
The employee’s Compensation Act’ 1923 
Earlier called as 
Workmen’s Compensation Act’ 1923 
• *only if not covered under E...
OBJECTIVES 
To provide compensation for workmen in cases of industrial accidents/ 
occupational diseases resulting in disa...
Workmen's Compensation Act, 1923 or 
Employees' Compensation Act 1923 
If not covered under ESI Act 
Employer’s Liability ...
Liability Calculation: 
Employees/ Workmen's Compensation 
Act 
Maximum Liability = (60 % of Rs. 8000/-) X 
(Relevant 
Fac...
The Payment of Bonus Act, 1965 
Section 8: Eligibility for bonus- Every employee shall be 
entitled to be paid by his empl...
The Payment of Bonus Act, 1965 
Section 11: Payment of maximum bonus-a 
maximum of 20% 
Section 11: Payment of maximum bon...
Maternity Benefit Act, 1961 
 OBJECTIVES 
To provide for Maternity protection before and after 
child birth. 
 Applicabi...
The Maternity Benefit Act, 1961 
 There is no wage limit for coverage provided the woman is not 
covered by the ESI Act. ...
The Maternity Benefit Act, 1961 
 Where a woman has delivered a child and dies during her delivery 
or during the period ...
Payment of Gratuity Act, 
1972
OBJECTIVES 
►To provide for payment of gratuity on ceasing to hold office. 
►It is payable at the time of termination of h...
DEATH GRATUITY 
(1) Gratuity shall be payable to an employee on the termination of his employment after he 
has rendered c...
What minimum an HR, F&A executive 
should so? 
Take Copy of Labour License from Contractor before start 
working with con...
What minimum an HR, F&A executive 
should so? 
Take copies of PF/ESIC paid challans from Contractor & 
preserve them for ...
How to resolve such issues, avoid their 
occurrence and ensure compliances 
• HR Manager / HR Executive is responsible for...
What happens in the event of 
Non-Compliance? 
 Fines 
 Penalties 
 Lawsuit 
 Loss of credibility 
 Loss of contract ...
Concept of fair wages 
Sr. 
No. 
Component of Wages and Social Security Quantum 
1 
Basic Wages (A) = Minimum Wages as not...
Definition of Wages under The Minimum 
Wages Act, 1948 
• “wages” means all remuneration capable of being expressed in ter...
Definition of Wages under The Payment of 
Wages Act, 1936 
“wages” means all remuneration (whether by way of salary allowa...
[continued…] but does not include – 
(1) any bonus (whether under a scheme of profit sharing or otherwise) 
which does not...
Definition of Wages under Employees Provident 
Fund and Miscellaneous Provisions Act, 1952 
“basic wages” means all emolum...
Definition of Wages under ESI Act 
“ wages ” means all remuneration paid or payable in cash to an 
employee, if the terms ...
Definition of Wages under Contract 
Labour Act, 1970 
“wages” shall have the meaning assigned to it in clause (vi) 
of sec...
Payments considered as Wages under ESI Act 
WAGES NOT WAGES 
a) Suspension Allowance/Subsistence Allowance 
is wages 
a) W...
Payments considered as Wages under ESI Act 
WAGES NOT WAGES 
e) House Rent Allowance is wages. e) Inam is not wages where ...
Payments considered as Wages under ESI Act 
WAGES NOT WAGES 
h) Medical Allowance is wages when it is not re-imbursed. 
h)...
Payments considered as Wages under ESI Act 
WAGES NOT WAGES 
l) Food, Meal, Tiffin and Lunch allowance is 
wages when it a...
Payments considered as Wages under ESI Act 
WAGES NOT WAGES 
p) Attendance Bonus is wages provided the 
periodicity is not...
Payments considered as Wages under ESI Act 
WAGES NOT WAGES 
r) Short period contract for service – electrician, 
carpente...
Payments considered as Wages under ESI Act 
WAGES 
s) The following items may be considered as ‘Wages’ :- (1) Matinee allo...
THANK YOU…!
Compliance under labour laws in india
Compliance under labour laws in india
Compliance under labour laws in india
Compliance under labour laws in india
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Compliance under labour laws in india

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guidelines and major compliance under labour laws in india and contract manpower legal compliance

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Compliance under labour laws in india

  1. 1. COMPLIANCES UNDER LABOUR LAW By: Amrik Singh Sr. Officer (HR) GAIL (India) Limited
  2. 2. Registering & Licensing of Existing and New Compliance of Labour Laws Display of Abstract and Notices Statutory Challans and Remittances Maintaining Statutory Registers and Records In a Nutshell Contractor / Compliances Timely filling of Statutory Returns Audit of Vendor Statutory obligations & Responsibil ities
  3. 3. WHY COMPLIANCE MANAGEMENT? Compliance Management Framework • Policies & Procedure • Risk Assessment • Training & Commitment Prevent • Monitoring • Audit • Ombudsperson Detect • Investigation • Communication • Improvements Respond
  4. 4. CLAUSE 49 OF THE LISTING AGREEMENT Provision Purpose Compliance of all the applicable legal provisions, rules & regulation Ethical conduct of affairs Part of Wealth Management All Directors and Officers shall take utmost care and pay attention to comply with all applicable laws, regulations, rules and regulatory orders in letter and in spirit. They are also expected to acquire appropriate knowledge of the requirements relating to their duties sufficient to enable them to recognize potential dangers and to report to the Board or management the possible violation of laws and regulations or code of conduct.
  5. 5. COMPLIANCE UNDER LABOUR LAWS Statutory compliance under various labour laws has to be ensured by establishments. It is not just limited to the statutory deposits, returns and records to be maintained by the employer under various labour laws, but also to represent them in case of prosecution under various statutes.
  6. 6. Major Compliances
  7. 7.  “Principal Employer” has the statutory responsibility on behalf of company to ensure compliances under Contract Labour (Regulation & Abolition) Act, 1970 and and Rules framed thereunder.  “Employer” has the statutory responsibility on behalf of company to ensure compliances under the Shops & Commercial Establishment Act, 1962 and Rules framed thereunder.
  8. 8. THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970 & THE MAHARASHTRA CONTRACT LABOUR (REGULATION AND ABOLITION) CENTRAL RULES, 1971 Sec 7: Registration & Rule 17: Manner of making application for registration: Apply in Form-I [see rule 17(1)] for registration in triplicate copy along with prescribed fees Form-II [see rule 18(1)] : Certificate of Registration Rule 20: Amendment of Certificate of Registration [see rule 18(3)] establishment has to intimate changes, if any, within 15 days to the Registering Officer about changes in particulars specified in the certificate of registration Penalty: to P.E. or his representative i.e. EIC Imprisonment of 3 months + fine of Rs. 1000/- + fine of Rs. 100/- per day (For continuing offence)
  9. 9. Compliance to be ensured by the contractor under The Contract Labour (Regulation And Abolition) Act, 1970 Apply in Form-IV [see rule 21] for license in triplicate copy along with license fee [see rule 26] & security [see rule 24] (Refundable) Application should encloses Form-V which is given by Principal employer to contractor. Grant/renewal of license in Form-VI [rule 23&25/29] After obtaining a License the contractor should submit a copy to P.E. Intimation of Commencement/Completion of Contract Work in Form-VI-A by Contractor [see rule 25(2)-viii] Legal Penalty to Contractor: Imprisonment of 3 months + fine of Rs. 1000/- + fine of Rs. 100/- per day (For continuing offence
  10. 10. CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970 Sec 29: Maintenance of registers and other records Form-VIII - At All times a register of particulars of contract labour and other records in Form-VIII [see rule 55] as prescribed Form-XXI [rule 63(2)] : Annual return in of PE the Registering Officer before 15th February Penalty to P.E./His representative on Non Compliance : Imprisonment of 3 months + fine up to Rs. 1000/-
  11. 11. OBLIGATION OF PRINCIPAL EMPLOYER Register of contractors Form-VIII Certificate by Principal Employer Form-V Annual return Form XXV (on or before 15th Feb-consolidated return) Notice of Commencement /Completion Form VI B of Work (within 15 days of actual commencement or completion of work) Notice under Rule 81(1) showing the rates of wages, wage period, date of payment of wages, date of payment of unpaid wages and name and address of Inspectors having jurisdiction have been displayed in English, in Hindi, or in Marathi in conspicuous places. Penalty of Non-Compliance: Imprisonment of 3 months + fine of Rs. 1000/- (or Both) + fine of Rs. 100/- per day (For continuing offence)
  12. 12. OBLIGATION OF CONTRACTOR Application for License Form-IV License Form-VI Notice of Commencement /Completion Form VI A of Work (within 15 days of actual commencement or completion of work) Renewal of license Form VII Identity Card Form X Display of Act and Rules under rule 60 Muster Roll, Register of Wages, Registers of Overtime, Advances, Deduction, Fines to be maintained by the Contract under the Payment of Wages Act and Rules made thereunder or the Minimum Wages Act and Rules made thereunder if covered under those Act. Otherwise contractor has to maintain Muster-cum-wage register, attendance-cum-wage slip under the Maharashtra Minimum Wages Rules, 1963 Penalty of Non-Compliance: Imprisonment of 3 months + fine of Rs. 1000/- (or Both) + fine of Rs. 100/- per day (For continuing offence)
  13. 13. Building and Other Construction Workers Act 1996  Applies to every establishment which employs or had employed ten or more workers directly or through a Contractor / Subcontractor In any Building or Construction work  Not applicable to building or construction work to which Factories Act, 1948 or Mines Act, 1952 applies S. No. Particulars Schedule of submission / maintenance 1 Valid BOCW Registration Within 60 days from the commencement of the project 2 Registration of Workers Worker has an exposure of more than 90 days… age limit 18-60 years 3 Maintenance of BOCW Beneficiary Register Daily basis
  14. 14. The BUILDING & OTHER CONSTRUCTION WORKERS WELFARE CESS ACT , 1996  The purpose is - To collect the Cess on Cost of construction incurred , for use of the Welfare of Construction workers who are registered with the respective act.  Cess act prescribes payment of Cess @ 1 %
  15. 15. Documents required for obtaining BOCW Registration  Form-I (Triplicate) i.e. application  Registration fee  PF Challan  Work Order LOI  List of Director  MOA  Pan Card Copy
  16. 16. Payment of Minimum Wages A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Minimum wage is the wage that is able to provide not only for bare physical needs but also for preservation of efficiency of worker plus some measure of education, health and other things. The minimum wage must be paid irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen at lower wages. The minimum wage gives employers a guideline as to the legal minimum amount paid to employees.
  17. 17. Compliances for the Minimum Wages Act, 1948 Sec 12: Payment of minimum rates of wages  Every contractor must pay minimum rates of wages to every contract employee/worker employed by him in the scheduled employment Sec 14: Overtime  @ twice the minimum rates of wages for every working hour in excess the normal working hours Penalty  Imprisonment for a term upto 6 months or fine which may extend to Rs.500 or both. Plus under Contract Labour Act  Imprisonment which may extend to 3 months or fine of Rs. 1000/- (or Both)  fine of Rs. 100/- per day (For continuing offence)
  18. 18. Fixation of Minimum Wages The appropriate government to fix minimum rates of wages in Scheduled Employment as the provision of The Minimum Wages Act, 1948 In case of Industry where Central Government is Appropriate Government, the Minimum wages are fixed by Central Government. In case of Industry where State Government is Appropriate Government, the Minimum wages are fixed by State Government. Ministry Of labour and Employment, Govt. of India vide its Gazette notification, dated September 18,2008 ‘Employment in Watch and Ward i.e. Security Services’ has been declared as Scheduled Employment.
  19. 19. Payment of minimum rate of wages Minimum Wages are revised half yearly and notified for a period from Apr-to-Sep and from Oct-to-Mar. In case rate of Minimum Wages is Different for Sate and Central, the rate whichever is higher as notified from time to time as per the city classification should be paid. Accordingly, We have to revise the rate of Payment to Contract Workers/Employees. It’s the overall responsibility Principal Employer.
  20. 20. Maintenance of registers and records Under Sec 18 of the Minimum Wages Act, 1948 and Rule 26 of the Minimum Wages (Central) Rules, 1950 • Muster Roll in Form V • Wage register in Form X • Wage slip to issued in Form XI to the employees Penalty • Fine which may extend to Rs.500
  21. 21. RESPONSIBILITY FOR PAYMENT OF WAGES Under Section-12 of Contract Labour (Regulation And Abolition) Act, 1970 (1) A contractor shall be responsible for payment of wages to each worker employed by him as contract labour and such wages shall be paid before the expiry of such period as may be prescribed. (2) Every principal employer shall nominate a representative duly authorized by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amounts paid as wages in such manner as may be prescribed. (3) It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorized representative of the principal employer. (4) In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the contract labour employed by the contractor and recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.
  22. 22. COMPLIANCES UNDER PAYMENT OF WAGES ACT, 1936 Sec 4 Fixation of wage-periods: wage periods shall not exceeding one month. Sec 5 Time of Payment of Wages: Before the 7th day after the last day of the wage period where less than 1000 employees and before 10th day in other cases. Sec13-A: Maintenance of registers and records Details of persons employed, the work performed, wages paid as prescribed and has not destroyed the same before a period of three years after the date of last entry made therein. Bills of the contractor to be passed on the basis of these records EIC must stamps the register & signs on it. Legal Penalty: fine between Rs200-1,000 and on subsequent conviction with imprisonment of not be less than 1 month but which may extend to 6 months and with fine not be less than Rs.500 but which may extend to Rs.3000.
  23. 23. Comparison of Wages under diff. Acts Click here • Wages under The Minimum Wages Act, 1948 • Wages under The Payment of Wages Act, 1936 • Wages under Employees Provident Fund and Miscellaneous Provisions Act, 1952 • Wages under The Minimum Wages Act, 1948 • Wages under Contract Labour Act, 1970 • Payments considered as Wages under ESI Act – [Click here]
  24. 24. Social Security in India • Article 43 of the Constitution speaks of state's responsibility to provide social security to the citizens of this country. • Principal Social Security Laws of India Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 Employees’ State Insurance Act, 1948 Workmen’s Compensation Act, 1923 Maternity Benefit Act, 1961 Payment Gratuity Act, 1972
  25. 25. Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 Details information please visit http://www.epfindia.com The Act aims at providing social security and timely monetary assistance to industrial employees and their families when they are in distress and/or unable to meet family and social obligations and to protect them in old age, disablement, early death of the bread winner and in some other contingencies.
  26. 26. Compliance Management Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 EMPLOYEES’ PROVIDENT FUND SCHEME EMPLOYEES’ PENSION SCHEME EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME
  27. 27. Rates of Contribution SCHEME EMPLOYEE’S EMPLOYER’S CENTRAL GOVT’S Provident Fund Scheme 12% (12-8.33) % Nil Insurance Scheme EDLI NIL 0.5% Nil Pension Scheme NIL 8.33% of Max. of Rs. 15000/- 1.16% Additional 1.11% as Administrative Charges by the Employer
  28. 28. Payment of Contribution • The employer shall pay the contribution payable to the EPF, and Employees’ Pension Fund in respect of the member of the Employees’ Pension Fund employed by him directly by or through a contractor. • If a contractor defaults on payment of contributions then the Principal Employers shall deposit the amount of contribution alongwith the damage charges and penal interest for the period of default and recover the same from the contractor.
  29. 29. PF Compliance Ensure the compliance of 36-B of The Employees’ Provident Fund Scheme, 1952. 36-B. Duties of contractors • Every contractor shall, within 7 days of the close of every month, submit to the principal employer a statement showing the recoveries of contributions in respect of employees employed by or through him along with the copy of challan. • EPFO had Launched an online application for receipt of Electronic Challan cum Return (ECR) [Clicke here] • EPFO has made it mandatory to submit online return and challan using e-sewa and eReturn Tool for Employers. • ECR and Online Challan will be accepted as a proof of submission of contribution by contractors for contract workers employed by him
  30. 30. Role & Responsibility of Contractor Monthly Returns • Online Filing monthly PF returns with the EPFO within 15 days of the close of each month, Submit a copy of ECR and Online challan with Bill 1. Provide list of new employees joined in the establishment during the preceding month & are qualified to become member in fund (Form-5) 2. Provide list of employees leaving service during the preceding month (Form-10) 3. Employer should file 'Nil' returns if there is no new employee or no employee leaving the service during the preceding month 4. Provide the total no. of members last month, new members joined and existing members resigned in the preceding month & total no. of present subscribers to be fund (Form-12A) • ECR serves the purpose of All four Points mentioned above.
  31. 31. Damages Plus Penal interest on P.F. Dues @ 12%
  32. 32. Penal Provision • Liable to be arrested without warrant being a cognizable offence. • Defaults by employer in paying contributions or inspection/administrative attracts damages • charges attract imprisonment upto 3 years and fines upto Rs.10,000 (S.14). • For any retrospective application, all dues have to be paid by employer with damages upto 100% of arrears (plus with penal interest on amount due). • Example: 7-A
  33. 33. Employees’ State Insurance Act, 1948 Details information please visit http://esic.nic.in
  34. 34. Coverage under the ESI Act, 1948 ►APPLICABILITY Under Section 2(12) the Act is applicable to non-seasonal factories employing 10 or more persons. Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 20* or more persons. Further under section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational institutions employing 20* or more persons in certain States/UTs. *Note: 14 State Govts. / UTs have reduced the threshold limit for coverage of shops and other establishments from 20 to 10 or more persons. Remaining State Governments/UTs are in the process of reducing the same. The existing wage limit for coverage under the Act is Rs. 15,000/- per month (w.e.f. 01/05/2010).
  35. 35. ESI Scheme • All employees to insured under the ESI Scheme and provisions of the Employees' State Insurance Act, 1948 • Contribution & Benefit Period … 1. Employees’ Contribution – 1.75% of the Wages 2. Employers’ Contribution – 4.75% of the Wages Contribution towards the scheme on a monthly basis. Contribution Period Benefit Period 1st April to 30th September 1st January to 30th June 1st October to 31st March 1st July to 31st Dec. Half Yearly Return in Form-6 Form-3 Declaration to be submitted in 7 Days of Joining
  36. 36. Employees – Benefits under Employees’ State Insurance Corporation Under ESI Scheme, the comprehensive and need based package of Social Security Benefits in Cash and kind include the following: 1) Medical Benefit 2) Sickness Benefit 3) Maternity Benefit 4) Disablement Benefit 5) Dependent Benefit 6) Funeral Benefit ( Upto Rs.10000/-)
  37. 37. Principal Employer Vs Immediate Employer • Principal Employer e.g. GAIL • Immediate Employer e.g. Contractor providing security services Registration of Employers [Section 2A of the ESI Act] The first step in the process is the obtaining of particulars about each coverable factory/shop/establishment, and its identification by allotment of a number i.e. Code No. by the R. O. Subsequent step is the registration of employees of covered factories by the R. O/L. O. and identifying them by allotment of a number i.e., insurance number, and setting up of necessary records for recording the benefits for which the insured employee may be entitled under the Scheme according to eligibility.
  38. 38. Registration of Employees 1. Temporary Identification Certificate (TIC): TIC which is valid for 3 months and can be revalidated till a permanent Identity Card is issued 2. Permanent Identity Card for Insured Persons (IPs) and a separate Family Identity Card for families [past practice now discontinued] 3. Combined Identity Cards (form 4) in place of separate card for IPs and families [made within 3 months ] 4. Certificate of Employment - If an IP or a member of his family requires medical care before his TIC is received back from Ro / SRO / LO, he can obtain a Certificate of employment from his employer on Form ESIC-86
  39. 39. How to check ESI Compliance • Visit http://www.esic.nic.in and visit the portal for IP/Employer login on the left side menu
  40. 40. To check compliance in respect of Employees
  41. 41. To check compliance in respect of Contractors “User Id and Password is required”
  42. 42. The employee’s Compensation Act’ 1923 Earlier called as Workmen’s Compensation Act’ 1923 • *only if not covered under ESI Act
  43. 43. OBJECTIVES To provide compensation for workmen in cases of industrial accidents/ occupational diseases resulting in disablement or death. COVERAGE ►Persons employed in factories, mines, plantations, railways and other establishments mentioned in Schedule II of the Act. ►It does not include those in clerical capacity, in railways factories, mines, plantations, mechanically propelled vehicles, loading and unloading work on a ship, construction, maintenance and repairs of roads and bridges, electricity generation, cinemas, catching or trading of wild elephants, circus, and other hazardous occupations ELIGIBLITY The benefits are payable in respect of work-related injuries to the workers’ dependents not covered by the ESI Act.
  44. 44. Workmen's Compensation Act, 1923 or Employees' Compensation Act 1923 If not covered under ESI Act Employer’s Liability : To pay compensation to the employee on death or personal injury, resulting into total or partial disablement or occupational disease, caused to an employee arising out of and during the course of employment. All Employees to be Ensured Amount of Compensation In case of Death = 50% of the monthly wages of the deceased workman multiplied by the relevant factor or an amount of Rs. 1,20,000/-, whichever is more. In case of permanent total disablement = 60% of the monthly wages of the injured workman multiplied by the relevant factor or an amount of Rs. 1,40,000/-, whichever is more.
  45. 45. Liability Calculation: Employees/ Workmen's Compensation Act Maximum Liability = (60 % of Rs. 8000/-) X (Relevant Factor 226.38) at 18 Years of Age = Rs. 10,86,624.00/- The Contractor must have to obtain Employees/Workmen Compensation Insurance Policy with the above value as sum assured for extending legitimate social security benefits in case of miss-happening during the tenure of contract.
  46. 46. The Payment of Bonus Act, 1965 Section 8: Eligibility for bonus- Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year. Section10: Payment of minimum bonus- a minimum bonus which shall be 8.33% of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year
  47. 47. The Payment of Bonus Act, 1965 Section 11: Payment of maximum bonus-a maximum of 20% Section 11: Payment of maximum bonus- All amounts payable to an employee by way of bonus under this Act shall be paid in cash by the employer. (a) Where there is a dispute regarding payment of bonus pending before any authority under Sec.22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute; (b) In any other case, within a period of eight months from the close of the accounting year
  48. 48. Maternity Benefit Act, 1961  OBJECTIVES To provide for Maternity protection before and after child birth.  Applicability to every factory or establishment in which 10 or more persons are or were employed on any day of the preceding twelve months.  Eligibility for Maternity Benefit: Has to work for 80 days in the preceding 12 months immediately preceding the date of her expected delivery.
  49. 49. The Maternity Benefit Act, 1961  There is no wage limit for coverage provided the woman is not covered by the ESI Act.  Eligible for 12 weeks maternity benefit of which not more than six weeks shall precede the date of her expected delivery.  Maternity benefit is paid at the rate of the average daily wage for the period of her actual absence. The average daily wage means the average of the woman’s wages payable to her for the days on which she has worked during the period of three calendar months immediately preceding the date from which she absents herself.
  50. 50. The Maternity Benefit Act, 1961  Where a woman has delivered a child and dies during her delivery or during the period immediately following the date of her delivery for which she is entitled for the maternity benefit, leaving behind in either case the child, the employer shall be liable for the maternity benefit for that entire period but if the child also dies during the said period, then for the days upto and including the date of the death of the Child.  6 weeks leave with wages for tubectomy and two weks immediately following the day of an tubectomy.  Nursing breaks – Two times in the course of daily work till the child attains 15 months.  Prohibition from dismissal for absence during pregnancy. However, for Misconducts, forfeiting of Maternity Benefit and Medical bonus permissible.
  51. 51. Payment of Gratuity Act, 1972
  52. 52. OBJECTIVES ►To provide for payment of gratuity on ceasing to hold office. ►It is payable at the time of termination of his services either – on superannuation – on retirement or resignation – on death or disablement due to accident or disease – retrenchment. COVERAGE: Factories, mines, oil-fields, plantations, railway companies, shops and establishments and also to other establishments to which the law is extended ELIGIBLITY : Five year continuous service is required for entitlement of gratuity. BENEFITS ►15 days wages for every completed year of service or part thereof in excess of 6 months subject to a maximum of Rs.10,00,000/-. ►The seasonal employees are entitled to gratuity at a rate of 7 days wage for each season.
  53. 53. DEATH GRATUITY (1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, - (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease : Provided that the completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement : Provided further that in the case of death of the employee, gratuity payable to him shall be paid to his nominee or, 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. Gratuity will be payable only on the cases of death during the currency of contract and will be reimbursed to the contractor on submission of copy of proof on disbursement of gratuity.
  54. 54. What minimum an HR, F&A executive should so? Take Copy of Labour License from Contractor before start working with contract labour Obtain PF Code and Check PF Compliance on EPFO portal Obtain EIC Code, if applicable and Check ESI Compliance on ESIC portal Obtain a copy of Insurance under WC/EC Act, if ESI is not applicable. Ensure Attendance register & Salary Register with salary slip of Contract labourer available with the company (Minimum wages to be paid )
  55. 55. What minimum an HR, F&A executive should so? Take copies of PF/ESIC paid challans from Contractor & preserve them for future departmental Audit ( As a principle employer if contractor does not pay then company will be liable) Maintain Labour License Expiry register of all contractor working in the company to avoid legal obligations on organization
  56. 56. How to resolve such issues, avoid their occurrence and ensure compliances • HR Manager / HR Executive is responsible for ensuring all compliances related to Labour Laws • HR Manager/ HR Executive has to ensure compliances assigned to him and provide necessary information & assistance to EIC • Dealing Manager or Engineer In-charge has to ensure compliances related to Payment of Wages, Minimum Wages, PF Deduction, Bonus, Maternity, etc.
  57. 57. What happens in the event of Non-Compliance?  Fines  Penalties  Lawsuit  Loss of credibility  Loss of contract  Show cause notice to Directors / CMD  Closure of business  Future business
  58. 58. Concept of fair wages Sr. No. Component of Wages and Social Security Quantum 1 Basic Wages (A) = Minimum Wages as notified by the Central or State Government whichever is higher A 2 Contribution towards EPF/EPS/EDLI and Admn. Charges @13.61% of A 3 Contribution towards ESI or Policy under Employees’ Compensation Act 1923 (incase ESIC non applicable) @4.75% of A* +Rate at Sl.No.8 4 Leave with wages (8 CL + 3 Gazetted Holiday+ 4 Festival Holiday + 15 Privileged/Earned Leave) @8.33% of A 5 Uniform/ Safety Kits @6% of A 6 Annual Bonus @8.33% of A 7 Payment of Gratuity on Death @ 4.81% of A 8 Compensatory Off/ Overtime @14.4% of A 9 Displacement Allowance (ISMW ACT) 4 x [50% of A(twice)] 10 Journey Allowance [ISMW ACT] Sleeper Train Fare
  59. 59. Definition of Wages under The Minimum Wages Act, 1948 • “wages” means all remuneration capable of being expressed in terms of money which would if the terms of the contract of employment express or implied were fulfilled be payable to a person employed in respect of his employment or of work done in such employment and includes house rent allowance but does not include – • • the value of - (a) any house accommodation supply of light water medical attendance or (b) any other amenity or any service excluded by general or special order of the appropriate government; • any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance; • any traveling allowance or the value of any traveling concession; • any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or • any gratuity payable on discharge;
  60. 60. Definition of Wages under The Payment of Wages Act, 1936 “wages” means all remuneration (whether by way of salary allowances or otherwise) expressed in terms of money or capable of being so expressed which would if the terms of employment express or implied were fulfilled by payable to a person employed in respect of his employment or of work done in such employment and includes – (a) any remuneration payable under any award or settlement between the parties or order of a court; (b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; (c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name); (d) any sum which by reason of the termination of employment of the person employed is payable under any law contract or instrument which provides for the payment of such sum whether with or without deductions but does not provide for the time within which the payment is to be made; (e) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force, but does not include – [continued…]
  61. 61. [continued…] but does not include – (1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a court; (2) the value of any house-accommodation or of the supply of light water medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the State Government; (3) any contribution paid by the employer to any pension or provident fund and the interest which may have accrued thereon; (4) any travelling allowance or the value of any travelling concession; (5) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or (6) any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d).
  62. 62. Definition of Wages under Employees Provident Fund and Miscellaneous Provisions Act, 1952 “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him but does not include : (i) the cash value of any food concession; (ii) any dearness allowance (that is to say all cash payments by whatever name called paid to an employee on account of a rise in the cost of living) house-rent allowance overtime allowance bonus commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment; (iii) any presents made by the employer;
  63. 63. Definition of Wages under ESI Act “ wages ” means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff and] other additional remuneration, if any, paid at intervals not exceeding two months], but does not include — (a) any contribution paid by the employer to any pension fund or provident fund, or under this Act ; (b) any travelling allowance or the value of any travelling concession ; (c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment ; or (d) any gratuity payable on discharge ;
  64. 64. Definition of Wages under Contract Labour Act, 1970 “wages” shall have the meaning assigned to it in clause (vi) of section 2 of the Payment of Wages Act, 1936 (4 of 1936) Payments considered as Wages under ESI Act – [Click here]
  65. 65. Payments considered as Wages under ESI Act WAGES NOT WAGES a) Suspension Allowance/Subsistence Allowance is wages a) Washing allowance – if the sum is paid to defray special expenses entailed by the nature of employment is not wages. b) Overtime allowance is wages for payment of contribution only but not for determination of employee’ u/s 2(9) of the Act. b) Annual Bonus is not wages if the periodicity of the payments is more than 2 months. c) Inam is wages when it is paid for special skill or higher responsibilities or where the employer has no right to withdraw or revise it c) Incentive Bonus: Incentive Bonus is not wages if the periodicity of the payments is more than 2 months. d) 'Lay Off' pay is wages. d) Production Bonus is not wages provided periodicity of the payment is more than 2 months.
  66. 66. Payments considered as Wages under ESI Act WAGES NOT WAGES e) House Rent Allowance is wages. e) Inam is not wages where the employer has right to withdraw at his discretion and where there is scheme of ‘Inam’ in writing but still employer might be making payment under the head ‘Inam’ on the basis of some understanding between the parties and the periodicity of payment is beyond 2 months. f) Night Shift/Heat/Gas/Dust Allowance is wages. f) ‘Annual Commission’ is not wages. g) ‘Conveyance Allowance’ is wages which arises out of contract of employment from 1.4.02 as per Hqrs. letter dated 21.3.02 g) ‘Service Charges’ is not wages when it is collected as tips.
  67. 67. Payments considered as Wages under ESI Act WAGES NOT WAGES h) Medical Allowance is wages when it is not re-imbursed. h) Salary drawn by the proprietor/partners and contractor himself. i) Newspaper Allowance is wages when it is not re-imbursed. i) Ex-gratia payment in lieu of annual bonus j) Education Allowance’ is wages when it is not re-imbursed. j) Payment made towards “Saving Scheme” is not wage k) ‘Drivers Allowance’ is wages. k) Hamalies or collies employed at a particular time outside factory premises are not employee.
  68. 68. Payments considered as Wages under ESI Act WAGES NOT WAGES l) Food, Meal, Tiffin and Lunch allowance is wages when it arises out of contractual agreement. L) Expenditure on annual servicing of machines (contract for service), no contribution payable. m) ‘Gazetted Allowance’ is wages m) Commission to Dealers/Agents, no contribution payable n) ‘Wages’ and Dearness Allowance’ for un-substituted holidays is wages n) Payment made to institutions having separate legal entity no contribution payable o) Interim Relief is wages. o) Service Contract with organization for annual maintenance of machinery / equipments as part of service contract will not attract ESI contribution.
  69. 69. Payments considered as Wages under ESI Act WAGES NOT WAGES p) Attendance Bonus is wages provided the periodicity is not more than 2 months p) Payment made to the Lawyers, Engineers, Counselor and Chartered Accountant is not wages. q) Hamalies or collies at a particular time in the premises of the employer is ‘employee’ and contribution is payable. q) Payment made to Rickshwaw-pullers, Hathairy pullers and truck operators (including loading and unloading charges when the loaders / unloaders are the employee and truck operators are not employee’ u/s 2(9) and no contribution is payable.
  70. 70. Payments considered as Wages under ESI Act WAGES NOT WAGES r) Short period contract for service – electrician, carpenters, plumbers, repair work if the work is done within the factory premises, contribution is payable in respect of employees. r) The following items will not form part of wage either for the purposes of u/s. 2(9) or u/s 2(22) of the ESI Act. 1) Payment made on account of unavailed leave at the time of discharge (2) Commission on advertisement secured for newspaper if not paid to the regular employees (3) Fuel Allowance / Petrol Allowance (4) Entertainment Allowance (5) Shoes Allowance (6) Payment made on account of gratuity / discharge / retirement (7) Payment made on encashment of leave.
  71. 71. Payments considered as Wages under ESI Act WAGES s) The following items may be considered as ‘Wages’ :- (1) Matinee allowance paid to the cinema employee (2) Shift allowance (3) Location allowance paid in addition to D.A. to meet the high house rent (4) Compensatory allowance (5) Cash handling allowance paid to Cashier (6) Supervisory allowance (7)Additional pay paid to training staff (8) Charge allowance (9) Steno/typist allowance (10) Plant allowance (11) Computer allowance (12) Gestetner/Photo copies/printers allowance (13) Personal /special allowance (14) Machine allowance (15) Canvassing allowance (16) First aid allowance (17) Personal allowance for skill, efficiency or past good records (18) Area allowance for high cost living (19) Ex-gratia payment if payment is made within an interval of 2 months. (20) Conveyance all w.e.f. 01.04.02 (21) Food/Tiffin/Meal all w.e.f. 06.05.03 Coverage of workers engaged by the outside agencies / job contractors in connection with the work of the principal employer outside the premises. For the purpose of verification and inspection, the details in respect of these employers/ employees should be furnished by the Principal Employer in proforma prescribed in Annexure-I.
  72. 72. THANK YOU…!

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