Article (December-2019)


Do present labour laws meet the objectives?

Anil Malik

Designation : -   Management Consultant HR & IR Strategies

Organization : -  AM HR Solutions, Indore


133190 Total View        

Almost all the labour laws have been enacted pre independence of the country therefore the relevancy of its applicability is practically not possible which ultimately leads to harassment to the employers through various inspections and subsequent prosecutions. Despite of different online portal still demand of physical documents/records/ registers /and personal presence is there. As per Factoryact, all safety and health related provisions are still based on old technology and law does not recognize new technological innovations. Like shot blasting is still in today's time is hazardous procesess. In almost all the labour laws occupier has been treated as criminal. Even there is no universal definition of workman in all the labour laws. Right of 8 hours wages is well-defined. But nothing is linked with work/accountability/ productivity etc. Even the amalgamations of laws into four codes are not going to resolve the issues. Because attempts are there to reduce, the numbers of laws not review the laws in the light of today's global competition. The recently enacted wage code is the live example, which indicates that only focus, have been made in enhancing the penal clauses against the employer. The involvement of legal and litigating proceses are too much for the employer and employee both. The applicability of most of the labour laws are based on number of people employed not based on turnover of the unit. So as such, there is no differentiations between small/medium or large size of industry as far as applicability of labour laws or is concerned.

Factories Act 1948 :

Criminal proceedings against employers in case of Accident

"In case of accidents resulting into death on the factory floor, prosecution under the Factories Act, 1948 becomes inevitable and the Occupier is prosecuted under Section 92 of the Factories Act, 1948. However, there have been instances of simultaneous prosecution under the Factories Act as well as Section 304-A of the IPC.

Section 304-A of the IPC is attracted when there is a death caused to someone due to rash and negligent Act of a person. Therefore, upon the death of a worker, the local police station will register an FIR and will also file a Charge Sheet u/s 304-A of the IPC.

Points to consider :
  • The Criminal proceedings should not be initiated under two sets of laws of Factories act and IPC.
  • The distinction & prosecution overriding effect of special & General Law in particular to FA & IPC to be seen.
  • The trial should be run in labour court as per the previous practice and not in criminal court. This relief can be given by withdrawing the SLP 16994/2008 by the state Government in Supreme Court.
Employees Provident Fund

1. It is difficult to update KYC in the system. Employers are not trained but department  keep on maintaining pressure. It has been difficult for the employers and employees to bring the symmetry of name, date of birth, and place of birth in PAN CARD, Adhar card and PF portal. Every government department has its own set of norms. Someone takes surname first, other keeps name first.

2. PF department should set its own norms for UNI no. instead of connecting with pan card or Adhar card.

3. In pension cases and the claim settlement issues, cases are returned in totality with entire set of documents on small small issues, whereas such queries can be sorted out on phone only.

4. Portal speed is slow and often does not work on peak days and  delayed payment are blamed on employer.

5. Still wage definition is not decided by the court but department keep on registering cases under 7A for the recovery treating minimum wages as Basic and DA.

6. The department issues every day new circular. Employers are confused and unable to track and follow.

7. By mistake if any contribution is deposited in portal in wrong head, there is no provision of corrective action for reverting in the system.  In addition, employers are forced to repay the same amount again.

8. It is difficult to get the pension cases resolved.

9. The survival certificate are not issued by bank .Every year employee has to go on window of PF Department. There is no mode of making it easy. The solution is the data of Pensioners should be linked with data of Municipal corporation. And the moment death of a person is registered, the pension at PF is stopped or auto shift to the nominee.

10. Its portal only works on old version of Fire fox. Does not operate in latest system.

11. Alert SMS are also not regular and suddenly stopped.

12. The Department should communicate its schemes/ amendment/and changes to each member employee also to create awareness.

13. It is a social security act, should support employers and employee and organize training and awareness sessions.

14. Despite of having online portal, documents are demanded in hard copy and only five documents are accepted in a day. If anyone has six documents, he will be returned back with remaining one documents.

15. One side department is sending the mails to employers for completing the KYC at the earliest, other side the invert section is refusing to accept the documents and returning people that let individual employee should come with the documents and details. This direction of PF commissioner is creating unnecessary absentisem in industry and hampering the business activities..

16. In case by mistake if PF is deposited in other head, then it is not corrected in system and department, initiate the enquiry under 7A and recovery under 14 B for the same deposited amount as the authorities of such adjustment lies at central level.

17. PF is a social Securty act. Department should drive for the recovery of dues instead of inclining for punishing the employer by initiating unending  enquiries. Unnecessary employer has to be involved in litigation.

Payment of wages act, Minimum wages act, Payment of bonus act, equal remuneration act and contract labour act

1. In all the above acts, the inspectors carry on every year inspections and they demand record and returns in physical form and do not accept digital record. In all the different laws more than 40 returns, 50 registers and records are to be maintained in different formats.  In addition there are  more than 25 forms under factories Act.

2. The online portal of labour department does not work. And there is no auto approvals. All the time applications in any law are rejected or kept pending till employer does not appear physically.

3. Employers are forced to display the briefs of different updated labour laws, which are neither available in market nor available on the portal of labour department. In consequent employer is caught with non compliance during inspection.

4. The deployment of contractor workforce is the demand of the day during the era of uncertainty of the business. Therefore, it is required that related laws should be simple and free from complexity.

Madhya Pradesh Shram kalyan nidhi adhiniyam1982 :

1. The bi annual contribution is very small amount but on the name of unpaid amount of last three years, too much harassment is done through inspections and other related activities. Whereas benefits to the employee is fully at the mercy of the welfare board,whereas in the law there is no provision of inspection.

Trade Union Act :

1. As per provions of the act any seven persons with support of 10% persons employed in the industry can form the union and get it registered.

 2. No restrictions on outside and political office bearer.

3. No restriction on no. of unions in a factory.

4. Union representatives are normally declared  protected employees under the law and it becomes very difficult to take action against them in case of their involvement in misconducts.

Employment Exchange Act :

1. Every quarter employer has to fill the return. Every vacancy needs to be notified. However, there is no support from the department.

Payment of Gratuity Act, 1972 :

1. There is no age limitation defined in the law.

2. Disposal of litigations of gratuity cases are stringent.

Necessary compliances under existing 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. Hence, it hardly needs to be emphasized that the labour related laws cast an obligation on the employer for meticulous, impeccable and timely compliances. In the event of violation or delay in complying with the statutory requirements, the consequences in terms of levy of damages, prosecution is inevitable. Further, under most of the employment laws, the top executives or the head of the institution/organization, as the case may be, is held liable and responsible and is required to personally attend such matters before the competent Authority or Court.

Summary points of new Code on wages 2019 :

1. Employee definition includes Supervisory, Administrative and Managerial employees too. Except Directors all are included.

2. 24K sealing for employee definition dissolved

3. Contractor and contract labour has been defined separately

4. Schedule Employment abolished. Thus now almost everyone will be covered under the definition of Employee

5. OT double of normal wages VS current practice of double of Basic + DA

6. Consent of Employees for OT required.

7. There will be a National Floor wage. No state to have MW less than this.

8. F&F payment within 2 days after reliving. Even in case of resignation also.

9. Inspector Vs Inspector-cum-Facilitator. Advisory role to employer and workers

10. There is no gender discrimination in this code. No discrimination among male, female and transgender employees on the grounds of sex in the matter of wages.

11. Disputes to be decided by the authority notified.

12. piece rated wages shall be approved by the Government authority and shall not be less then minimum wages

13. Related draft Rules are among public domain for suggestions/comments.Effective date of Code and final rules yet to be declared.

14. Digital compliance enhanced

15. Basic + DA must be min 50% of  gross wages

16. Wages paid in Kind cannot be more than 15% of the Gross wages.

17. Bonus shall be applicable to all even if the Basic + DA exceeds 21K. Need to wait for the rules for more clarity.

18. Even accuracy of balance sheet can be checked

19. Conviction for Sexual Harassment stands as disqualification for Bonus applicability.

20. Web based inspection process introduced

21. Employee and Worker defined separately.

22. Electronic payments encouraged

23. Penalties will increase 10x Existing 500 to 50000thousand and in second time up to one lac.

24. Now even an Employee and Trade Union can file a complaint against an organization. Earlier only the Inspector had this right.

25. Minimum Wages = Basic + DA + Retention Allow (Eg - Sugar Mills)

26. Govt. Periodical revisions of DA will continue as it is will revise Minimum Wages every 5 years.

28. The total amount of deductions, which may be made under sub-section (2) in any wage period from the wages of an employee, shall not exceed fifty per cent. Of such wages.

29. Records and register shall be maintained as it is no change and no provision of E Records

30. Central acts merged in this code, namely Minimum Wages, Payment of Wages, Bonus Act and Equal Remuneration Act

The summary points of above wage code clearly indicates how the entrepreneurs shall be further dragged into clutches of such stringent labour laws.