1. Several key labor laws in India require employers to provide compensation and benefits to employees. These include the Employees' Provident Fund Act, Employees State Insurance Act, Equal Remuneration Act, Payment of Wages Act, and others. 2. The laws mandate benefits such as provident funds, pension plans, health insurance, maternity leave, minimum wages, and bonus payments to help ensure job security, fair wages, and prevent exploitation of labor. 3. The acts also define rules for employer and employee contributions to funds, wage calculations, permitted deductions, and penalties for non-compliance. Ensuring compliance with these labor laws is important for the welfare of Indian workers.

1. Legally Required
Compensation & Benefits
Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)
Professor

2. Introduction
• Labour is one of the principal factors of production
in an establishment, whether
- big or small
- organized or un-organized
- industrial or commercial
• Several legislations made concerning labour:
- to ensure job security and satisfaction of labour
- to give them their due wages along with certain
employment benefits and
- to prevent exploitation of labour

3. Labour Legislations on
Compensation & Benefits
The Employee’s Provident Fund and Miscellaneous
Provisions Act, 1952
The Employee State Insurance Act, 1948
The Equal Remuneration Act, 1938
The Industrial Disputes Act, 1947
The Factory’s Act, 1948
The Minimum Wages Act, 1948
The Payment of Wages Act, 1936
The Payment of Bonus Act, 1965
The Payment of Gratuity Act, 1972

4. Employees Provident Fund Act
Objective
• For instituting a compulsory contributory fund for future of
the employee:
- Retirement of employee
- Dependents in case of early death
Scope
1. Every establishment employing more than 20 employees
2. Once an organization covered under act, it will be
applicable whether employees are 20 or less

5. Exemption from the Act
1. A newly established organization for the initial period of
3 years from the date of its set up
2. Cooperative society employing less than 50 employees

6. Eligibility of Employees
1. Every employee receiving wages upto Rs 5000/- pm, will
be eligible to be a member of Family Pension scheme
2. In case wage is more than Rs 5000/-, employee will
continue as member of Family pension scheme
3. Family pension will be limited to the amount payable on
monthly wage Rs. 5000/-
4. Employee will become member of the scheme from the
date of joining
5. Employee will cease to be member after attaining age of
60 years

7. The Schemes under the Act
1. Employee Provident Fund Scheme
Establish provident fund for the employees
2. Employees Pension/Family Pension Scheme
Provide Pension/Family pension to employees & their
family after superannuation/death/permanent disablement
3. Employees Deposit Linked Insurance Scheme
Provide life insurance benefit to the employees and their
family members

8. Terms related to Act
Contribution
- Employer’s contribution to PF & Pension Fund -12% of wages
- Employer’s contribution to EDLI Fund - 0.5% of wages
- Employee’s contribution to PF & Pension Fund -12% of wages
- Central Govt’s contribution to Pension Fund -1.16% of wages
Interest
- Accrued on PF, Pension Fund & EDLI Fund invested in
specified securities
- Rate of interest determined by the Central Govt. which is 9%
p.a. at present

9. Employees State Insurance Act
Objective:
First major legislation on Social Security
Provides protection to worker in contingences :
- illness,
- long term sickness
- any other health risk due to exposure to employment injury
or occupational hazards
Medical facilities are also made available to legal dependents
or insured person
Scheme extended to retired /permanently disabled employee
and their family

10. Employee State Insurance Act
The act applies to an organization
- employing 20 or more persons in non-seasonal organisation
- organization using power & employing 10 or more persons
Employees covered with earnings up to Rs. 6,500/- pm
Every eligible organization has to get registered under ESI
Eligible employee has to fill up declaration form

11. Employee State Insurance Act
Employer contributes 4.75% of wages, payable to
employee
Employee Contributes 1.75% of wages payable to him
If contribution is not paid in time, the rate of damages is
5% to 25% and prosecution by State Govt.

12. Equal Remuneration Act
Objective:
• Payment of equal remuneration to men & women for the
same work of regular nature
• Prevention of discrimination on the ground of sex against
women in employment and matters connected with it

13. Equal Remuneration Act
No discrimination for wages or for recruitment & selection
process
Employer required maintain register in terms of equal
remuneration act
There are penalties ranging from Rs. 500/- to Rs. 5,000/-

14. Factory’s Act
Objective:
Factory’s act provides safety measures and promotes
health and welfare of workers, employed in factories
Applicability:
Act applies to those industries which qualify the definition
of Factory under the act

15. Factory’s Act
To safeguard health and safety of workers
To provide adequate safety measures in plant, machinery
and appliances,
To provide healthy and safe environment, proper system of
working and training to workers on safety
Penalties are ranging from Rs 5000/- to Rs. 35,000/- and
Prosecution by State/Central Govt. for non-compliance

16. Factory’s Act
Act concerns
- Health
- Safety
- Hazardous processes
- Welfare
- Working hours of Adults
- Prohibition of employment of young persons
- Annual leave with wages

17. Industrial Disputes Act
Objective:
To provide amicable settlement of conflicts between
employer and employee
To make provision to solve other problems arising in an
industrial or commercial undertaking
To minimise industrial tensions
To provide mechanism for dispute resolutions
To ensure that energies of employer & employees not
wasted in counter productive battles
To ensure Industrial justice for creating congenial climate

18. Industrial Disputes Act
The Act makes provision for:
- Works committee
- Board of Conciliation
- Industrial courts/tribunals
- Arbitration
- Prohibition of lockouts and strikes
- Lay offs
- Retrenchment
- Transfer of undertakings
- Unfair labour practices &
- Closure of establishment
Penalties ranges from Rs. 1000/- to Rs. 5000/- and
imprisonment up to 6 months for violation of rules

19. Minimum Wages Act
Wages are remuneration to workers for work performed
Employers want to decrease employee/production costs
Workers want wages for better livelihood, housing,
children’s education, medical requirements, minimum
recreations, provision for old age, marriage ,etc
Govt. Wants to regulate wages through Minimum Wages
Act to protect the interest of workers

20. Minimum Wage Act
Minimum Wage
For sustenance of life
Preservation of efficiency of workers and
Providing some measure of :
- education,
- medical requirements and
- amenities

21. Minimum Wages Act
Objectives
To fix minimum wages in certain employment
To achieve objective of social justice to workers
To prevents exploitation of labour
Authorities are empowered to fix minimum wages from
based on market inflation and cost of living index

22. Minimum Wages Act
Act prescribes minimum wages of different categories of
employees
It provides basic rates of wages and special allowance , i.e.
cost of living allowance
Cash value of compensation for essential commodities
An all inclusive rates

23. Minimum Wages Act
Wages must be paid in cash
Manner & procedure of fixing and revising minimum rates
of wages,
Hours of work and holidays
Extra wages for overtime,
Rest day
Employer’s obligations and maintenance of records
Penalties & prosecution for any violation of provision
under the act.

24. Calculation of Minimum
Wages
Worker’s family with 3 members
- Earnings of women, children & adolescents disregarded
Minimum food requirements - 2,700 calories/adult
Clothing requirements- 18 yards per annum/person
Housing - minimum rent charged by Govt for houses
under subsidized housing scheme
Fuel, lighting and other miscellaneous items - 20 % total
minimum wage

25. Payment of Bonus Act
Act applies to employee of an establishment employing
not less than 20 person during an accounting year
Employee under the act means any person engaged for
hire/reward , including supervisory & managerial staff
Drawing salary/wages not exceeding Rs.3,500/- per month
For employee with salary/wages Rs, 2,500/- to Rs 3,500/-
pm, bonus will be paid on wages /salary of Rs. 2,500/- pm

26. Payment of Bonus Act
Organization covered under the act required to pay
minimum Bonus of 8.33% and maximum of 20%
Infancy benefit for new establishment is for first 5
accounting years in which the employer sells goods/services
The overtime is not wages as such no bonus on overtime
The commission paid to employee is not remuneration as
such no bonus on Commissions
The Dearness Allowance is part of wages and attract Bonus

27. Payment of Bonus Act
Bonus is calculated based on available surplus in the
accounting year as per Balance Sheet & Profit & Loss Account
Bonus can be forfeited if employee is sacked for fraud,
riotous or violent behavior in the establishment or for theft
Act provides penalties & prosecution for employer for any
violations of provisions/rules

28. Payment of Gratuity Act
Act applies to every establishment in which 10 or more
person are employed or were employed on any day of
preceding 12 months
Once covered will continue to be under coverage even if
the employee number goes down
Gratuity is payable to an employee on
- termination of his employment after he has rendered continuous
service for not less than 5 years
- reaching age of superannuation
- retirement/resignation or
- death or disablement due to accident or disease

29. Payment of Gratuity Act
Gratuity is calculated on Basic Rate plus Dearness
Allowance
Does not include any bonus, commission, house rent
allowance, overtime wages and any other allowance
15 days wages for each year of service
7 days wages per season for seasonal occupation
Maximum limit Rs 10,00,000.00
Employee with monthly wage, 15 days wages calculated by
dividing monthly wages with 26 and multiplying by 15

30. Payment of Gratuity Act
Forfeiture of Gratuity can be done
• If service of employee is terminated for riotous or
disorderly conduct
• Violence on his part
• Act of moral turpitude
• Such act is conducted during course of employment
Payment mode must be by Cheque or Bank Draft in favour
of employee or his legal heirs
Act provides penalties to employer for violation of
provisions with right to appeal
Time limit for claiming gratuity is 12 months and
60 days for filling an appeal

31. Payment of Wages Act
Regulates payment of wages to certain class of employees
Guarantees payment of wages in time and without any
deduction except those authorized under the act
Provides responsibility for
- payment of wages
- fixation of wage period
- time and mode of payment of wages
- permissible deductions
- seeking approval & permission for any fine imposed

32. Payment of Wages Act
Wage means all remuneration in term of money, including
over time, bonus, holiday or any other leave
Payment to be made before expiry of 7th day after last day
of wages period where less than 1000 workmen employed
In other case on the 10th day
Payment to made on working day and in cash and by
cheque where employee has given consent in writing

33. Payment of Wages Act
The deduction allowed for:
- Fines, fine should not exceed 3%
- deduction for actual period of absence
- willful damages to goods & property
- house accommodation
- amentias provided.
- all deduction to be made within 60 days
- total deduction not exceed 50% of total wage
- total deduction for Cooperative society not exceed 75%.
Employer to maintain register for record/evidence & required
to deposit unpaid wages/bonus with labour department