Current PPT Talks About Basic Of Labour Legislation In India...

1. Introduction To Labour Legislation
Presented By-Subodh Shahare

2. Labour Legislation Refers To All Laws Of The Government Enacted Social And
Economic Security To The Labours Or Workers. These Acts Are Aimed At
Reduction Of Production Losses Due To Industrial Disputes And To Ensure Timely
Payment Of Wages And Other Minimum Amenities Of The Workers.
Meaning Of Labour Legislation
2

3. Protect Workers From Profit Seeking Exploiters.
Promote Industrial Relations Between Employers & Employee
Preserve Health Safety And Welfare Of Workers
Protect Interest Of Women And Children's Working In The Factories
Objectives Of Labour Legislation
3

4. Social Justice- Ideal conditions in which all members of a company have the same
basic rights,security,opportunities,obligations,and social benefits.
Social Equity- Setting up equitable standards for all by means of legislative provisions
and obligations to do so.
National Economy- While framing the labour law the general economic situation of
the country has been keep in mind so that object may not be defeated.
International Uniformity- International organisations aims at securing minimum
standard in respect of all labour matters associated with the country were they operate.
Principle Of Labour Legislation
4

5. Individual Worker is economically very poor & is unable to bargain his terms with
the employers. Now the prior payment of wages,dismissal,retrenchments,etc,are all
governed by legislation. The economic insecurity of the workers is removed to a
great extent.
The workers may not be given amount in case of accidents,deaths.Occupational
act, Employee State Insurance Act(ESIC),provide certain benefits to workers as
per legislative provisions which the employees otherwise may not get from their
employers.
Need of Labour Legislation
5

6. In any factories working conditions employees health and safety is always in
danger. The factories Act contains a number of provisions relating to health
safety and welfare of workers. Special provisions have been made for the women.
Labour legislation is one of the most dynamic instruments for achieving socio
economic progress.
6

7. STRIKES & LOCKOUTS- Workers Have The Right To Strike, even Without
Notice Unless It Involves A Public Utility Service; Employers Have The Right To
Lockout, Subject To The Same Conditions As A Strike. The Parties May Sort Out
Their Differences Either Bilaterally, Or Through A Conciliation Officer Who Can
Facilitate But Not Compel A Settlement Which Is A Legally Binding On The Parties
Even When A Strike Or Lockout Is In Progress. But If These Methods Do Not Resolve
A Dispute, The Government May Refer The Dispute To Compulsory Adjudication
And Ban The Strike Or Lockout.
Some Important Concepts
7

8. Conciliation,Arbitration And Adjudication-
When Parties Engaging In Collective Bargaining Are Unable To
Arrive At A Settlement, Either Party Or The Government May
Commence Conciliation Proceeding By Appointing A Conciliation
Officer For Dispute Settlement. If Conciliation Fails It Is Open To
The Parties To Invoke Arbitration Or For The Appropriate
Government To Refer The Dispute To Adjudication Before
Labour Court Or A Tribunal Whose Decision May Then Be
Notified As An Award Of A Binding Nature On The Parties.
Dispute May Be Settled By Collective Bargaining, Conciliation
Or Compulsory Adjudication.
8

9. The Workmen Compensation Act 1923 Covers All Cases Of Accidents Arising Out Of
And In The Course Of Employment And The Rate Of Compensation To Be Paid In A
Lump Sum, Is Determined By A Schedule Proportionate To The Extent Of Injury
And The Loss Of Earning Capacity. The Injured Person, Or In Case Of Death The
Dependent, Can Claim The Compensation. This Law Applies To The Unorganised
Sectors And To Those In The Organised Sectors Who Are Not Covered By The
Employees State Insurance Scheme(ESIC),which Is Conceptually Considered To Be
Superior To The Workman’s Compensation Act.
Employment Injury, Health And Maternity Benefit-
9

10. ESICACT-1948-
The Employee State Insurance,1948[ESIC]Act Provides A Scheme
Under Which The Employer And The Employee Must Contribute A
Certain Percentage Of The Monthly Wage To The Insurance
Corporation That Runs Dispensaries And Hospitals In Working Class
Localities. It Facilitates Both Outpatient And Inpatient Care And Freely
Dispenses Medicines And Covers Hospitalization Needs And Costs.
Leave Certificate For Health Reasons Are Forwarded To The Employer
Who Is Obliged To Honour Them. Employment Injury, Including
Occupational Disease Is Compensated According To A Schedule Of
Rates Proportionate To The Extent Of Injury And Loss Of Earning
Capacity.payment,unlike In The Workmen’s Compensation Act Is Monthly.
10

11. Maternity Benefits-Maternity Benefit Act Is Applicable To Notified
Establishments Though In Rare Cases Also Include Unorganised Sectors. A
Women Employee Is Entitled To 90 Days(3 Months) Of Paid Leave On
Delivery Or On Miscarriage. Similar Benefits, Including Hospitalization
Facilities Are Available Under The Law As That Of ESIC Act.
Retirement Benefits- 1) Gratuity
2) Provident Fund(PF)
1) Gratuity- A worker who has put in not less than 5 years of work is
entitled for a lump sum payment equal to 15 days wages for every completed
year of service. Every month the employer is expected to contribute the required
money into separate fund to enable this payment on retirement or termination
of employment or in case of illness/accident causing disability or Death.
More than 6 months service- assumed as one full year
5 years, 6 months- means 6 years
5 years, 5 months- means 5 years 11

12. Calculation Of Gratuity-
Gratuity = Last Drawn Salary × 15/26 × No. of Years of Service
15 days salary = latest basic +DA
The ratio 15/26 represents 15 days out of 26 working days in a month;
Last drawn salary = Basic Salary + Dearness Allowance
Tax Exemption- For govt employees-fully exempted
Other employees covered under the act Upto 10 lakhs[As per 2010
amendment]( 15 days salary /1 year)
Important Terms For Gratuity-
1) Applies to employees engaged in factories, mines, oilfields, plantations,
ports, railway companies, shops or other establishments with ten or more
employees.
2)Employer need to set up gratuity fund
3) The employer shall arrange to pay the amount of gratuity within 30 days
12

13. 4)No compulsion of 5 years in case of death.
5)When superannuated employee continues service, gratuity paid for the continued
service as well.
6) In case of disablement of employee for gratuity calculation, both previous
and current wage is considered.
7)Gratuity Nomination to be filed within 90 days
i)More than 1 nominee can be specified
ii)First preference to family members as nominees
iii) Modification of nomination possible with notice
iv)If nominee dies, fresh application to be filed
v)Appeal can be made within 60 days, guilty imposed with penalty and fine
13

14. Provident Fund Is A Fund Which Is Composed Of Contributions Made By
The Employee During The Time He/She Worked Along With An Equal
Contribution By His Employer”
RATE : PROVIDENT FUND IS CALCULATED AS 12% OF EMPLOYEES BASIC
SALARY & THE SAME AMOUNT IS CONTRIBUTED BY THE EMPLOYER. HOWEVER
EMPLOYEE HAVE A OPTION TO CONTRIBUTION MORE THAN 12%
WITH EFFECT FROM 1ST SEPTEMBER 2014 WHOEVER FALLS BELOW RS.15,000 OF
SALARY PER MONTH THEN THEY WILL HAVE TO CONTRIBUTE COMPULSORILY
TO EPF SCHEME. [PREVIOUSLY THE LIMIT WAS RS.6,500 ]
EMPLOYEE’S CONTRIBUTION OF 12% OF BASIC SALARY IS TOTALLY DEPOSITED
IN PROVIDENT FUND ACCOUNT WHEREAS OUT OF EMPLOYER’S CONTRIBUTION
OF 12% , 3.67% IS CONTRIBUTED TO PROVIDENT FUND & 8.33% OR RS.541
WHICHEVER IS LESS (RS.1,250 i.e. 8.33% OF RS.15,000. )IS DEPOSITED IN PENSION
SCHEME OF THE EMPLOYEE.
2) Provident Fund(PF)-
14

15. Under new rules, to arrive at pension, salary will be average of 60
months(5years) last drawn salary instead of earlier rule of last 12
months(1year) average salary.
If a person withdraw the amount of provident fund before the end of 60 months(5
years) all the benefits he got u/s 80C against Provident fund will forfeited & such
amount is fully taxable.
Benefits under the pension fund is available only after the continuous service of
10 years & after completing the age of 58 years . continuous service of ten year
does not means to work with the same company but every time when a person
change job ,the PF account must be transferred & continuous for ten years.
Important Forms Details-
1. Form NO. 2 is required to be filled to become the member of the provident
fund. It is called a Nomination Form .
2.Form no. 13 is required for transfer of Provident fund.
3.Form no. 19 is required for withdrawal of provident fund
4. Form no. 10C is required for withdrawal of pension fund.
15

16. SECTION 10(11) AND 10(12) OF THE ACT DEAL WITH EXEMPTION ON PAYMENTS
FROM PROVIDENT FUNDS, WHILE SECTION 80C OF THE ACT DEALS WITH
ALLOWANCE OF DEDUCTIONS ON CONTRIBUTIONS TO PROVIDENT FUNDS. THE
FOLLOWING ARE THE TYPES OF PROVIDENT FUNDS.
1)RECOGNIZED PROVIDENT FUND (RPF): THIS SCHEME IS APPLICABLE TO AN
ORGANIZATION WHICH EMPLOYS 20 OR MORE EMPLOYEES. AN ORGANIZATION
CAN ALSO VOLUNTARILY OPT FOR THIS SCHEME. ALL RPF SCHEMES MUST BE
APPROVED BY THE COMMISSIONER OF INCOME TAX. HERE THE COMPANY CAN
EITHER OPT FOR GOVERNMENT APPROVED SCHEME OR THE EMPLOYER AND
EMPLOYEES CAN TOGETHER START A PF SCHEME BY FORMING A TRUST. THE TRUST
SO CREATED SHALL INVEST FUNDS IN SPECIFIED MANNER. THE INCOME OF THE
TRUST SHALL ALSO BE EXEMPT FROM INCOME TAXES.
2)UNRECOGNIZED PROVIDENT FUND (URPF): SUCH SCHEMES ARE THOSE THAT
ARE STARTED BY EMPLOYER AND EMPLOYEES IN AN ESTABLISHMENT, BUT ARE NOT
APPROVED BY THE COMMISSIONER OF INCOME TAX. SINCE THEY ARE NOT
RECOGNIZED, URPF SCHEMES HAVE A DIFFERENT TAX TREATMENT AS COMPARED
TO RPFS.
Tax treatment of Recognized Provident Fund (RPF), Unrecognized
Provident Fund (URPF), Statutory Provident Fund (SPF)
16

17. 3)Statutory Provident Fund (SPF): This Fund is mainly meant for
Government/University/Educational Institutes (affiliated to university)
employees.
4)Public Provident Fund (PPF): This is a scheme under Public Provident Fund
Act 1968. In this scheme even self-employed persons can make a contribution.
The minimum contribution is Rs.500 per annum and the maximum
contribution is Rs. 100,000 per annum. The contribution made along with interest
earned is repayable after 15 years, unless extended.
Tax treatment of Provident Fund can be discussed under two scenarios:
i)One during continuity of job, and
ii)Upon receipt of accumulated balance of provident fund at the time of retirement
or resignation
17

18. Clip On ESI ACT 1948
18

19. 19

20. THANK YOU!!!
20