As defined under Code on Wages Act 2019, whether the contract labour comes under the definition of the Employee or worker?
Code on Wages Act 2019 contains many definitions under Sec. 2. Employee is defined under sub clause (k), contract labour is defined under sub clause (g) and worker is defined under sub clause (z). All the three definitions are distinct in its character. Apparently the definition of employee covers any person except apprentice engaged under Apprentices Act employed on wages to do work of almost every category. Contract labour falls under the definition of worker and not Employee. Contract labour is defined as a person employed by or through contractor in or in connection with the work of establishment. Worker is separately defined as any person excluding apprentice and person employed in establishment for doing supervisory or managerial functions. The contract labour is not employed by establishment but by the contractor in connection with the work of establishment. So employee definition does not cover contract labour.
Whether the Rights of Persons with Disability Act 2016 casting obligations to provide certain quota of employment to such persons also applicable on private industries? What compliances employer has to make in this respect?
The provisions of the Rights of Persons with Disabilities Act 2016 which has been made effective from 15.06.2017 are applicable to Private sector industries also. The term private establishment provided in Section 2(v) of the Act includes company, firm, co-operative society, association, trust, agency, institution, organization, union, factory etc. So, every private establishment in any form shall be subjected to compliance with the provisions provided in the Act. Illegitimate discrimination against disabled persons within the workplace is prohibited. Central Act talks of 5% job reservation for public sector organizations and Govt. establishments but there is no reservation for private establishments in the central Act. However, with a view to recruit more persons with disabilities, the appropriate government and the local authority shall provide incentives to private employers who ensure that at least five percent of their workforce is composed of persons with disabilities. Establishment employing 20 persons or more is required to formulate and publish an equal opportunity policy for disabled persons and such policy has to be displayed on their official website or at a place that is clearly visible to all employees working at their premises. Also, the establishment is bound to register a copy of the said Policy with the Chief Commissioner or the State Commissioner for Persons with Disabilities. Establishments having more than 20 employees are under obligation to appoint a Liaison Officer to oversee the recruitment of disabled persons and special facilities provided for them.
On what value BOCW cess is chargeable? Does it includes supply of material, parts, machinery etc or only value of construction labor charges?
There has been a long controversy on whether the Building and Other Construction Workers Welfare Cess (BOCWW Cess) under the Building and Other Construction Workers Welfare Cess Act, 1996 (BOCWW Cess Act) and the rules there under, applies only to the cost of construction portion or the whole value of the contract. When computing BOCW Cess, there existed a constant confusion surrounding the amplitude of the phrase cost of construction. Does it include the ancillary costs incurred in order to give effect to construction viz. engineering, design, supply, erection, installation, commissioning, testing etc.? Or is cost of construction to be understood as per its plain meaning i.e. civil works only? SC in the case of Uttar Pradesh Power Transmission Corporation Ltd. vs. CG Power And Industrial Solutions Limited & Anr., SLP(C) No. 8630 of 2020 decided on 12.5.21 has held that: 1. BOCWW Cess was payable only on the Contract, which covered the civil works. Other Contracts did not contemplate any civil works or construction works and thus did not attract levy of BOCW Cess. 2. The BOCW Cess could only be imposed upon the construction, repair, demolition, or maintenance or any other work of construction. Mere supply, installation and/or erection activities which did not involve construction work were not amenable to BOCWW Cess. 3. There could be no realisation of BOCW Cess prior to an assessment by the concerned authorities. In the absence of any adjudication by the concerned department and in the absence of contractual right, it was not permissible for the Owner to deduct the BOCWW Cess from the contractors bills. In addition to the above, the SC also clarified that having an arbitration clause in an agreement did not preclude a concerned party from pursuing its writ remedy under Article 226 of the Constitution of India. It is to be seen at what will happen with those single contracts where lumpsum contract is awarded including supply of parts, machinery, equipments, and civil work construction also.
Can establishment reduce the suspension allowance of the workman where disciplinary proceedings are delayed due to grant of stay by court on such proceedings on the application of the workman under MRTU & PULP Act?
No! Suspension allowance cannot be reduced on such account. Sec. 10 of Industrial Employment (S.O.) Act will prevail in such circumstances. It is clear from Section 10-A, that the employer is required to pay subsistence allowance to a workman suspended pending inquiry at the rate of 50% of wages for the first 90 days and at the rate of 75% of wages for the remaining period of suspension, if delay in completion of disciplinary proceedings is not directly attributable to the conduct of the workman concerned. If a workman is entitled to more beneficial provisions regarding subsistence allowance under any other law in force in any State, then the provisions of such other law shall prevail. However, as an exception a workman can be denied payment of subsistence allowance at the rate of 75% after expiry of 90 days of suspension, if the delay in the completion of disciplinary proceedings is directly attributable to the conduct of such workman. S.C. in the case of B.D. Shetty & Ors. vs. Ms. Ceat Ltd. & Anr. 2002 LLR 2 has examined the issue that whether delay of any kind is covered by mischief of Section 10-A(1)(b) of the Act? Court observed that If under Section 10-A(1)(b) of the Act only the words attributable to were used, the position would have been different but the words used directly attributable to prefixing the word directly to the words attributable to makes a drastic difference to emphasis that in order to deny a workman subsistence allowance at the rate of 75%, the delay should be directly attributable to the conduct of such workman in completion of disciplinary proceedings and not that every kind of delay is covered by the said provision. If that was the intention of the legislature there was no need for emphasis by adding the word directly and instead they would have simply used the words attributable to. When a workman approaches a competent court bonafidely to protect himself from prejudice likely to be caused by continuing proceedings simultaneously in domestic inquiry as also in the criminal case grounded on the same set of facts and succeeds in getting order from a competent judicial authority staying further proceedings in the disciplinary proceedings till the disposal of the criminal case, it cannot be said that delay on that account in completion of disciplinary proceedings is directly attributable to the conduct of such workman. It appears, reference to the delay directly attributable to the conduct of the workman in the said provision is obviously to the one where the workman unjustifiably, deliberately or designedly drags on or prolongs the domestic inquiry. To put it in other way, a workman cannot be permitted to take advantage of delay caused by himself in the absence of any order passed by a court. If such a delay is also to be taken as covered by Section 10- A(1)(b) it may amount to in a way putting restraint or clog on the exercise of legal right of a workman to approach a court of law out of fear of losing subsistence allowance at the rate of 75%. Merely because legal proceedings will be pending in a court or before other authority and they take some time for disposal, may be inevitably, that itself cannot be the ground to deny subsistence allowance to a workman against a statutory obligation created on the employer under Section 10-A(1)(b). Bombay High Court in the case of May & Baker Ltd. vs. Kishore Jaikishandas Icchaporia (1991) Lab. I.C. 2066 has held that the Model Standing Orders, as also Certified Standing Orders, are laws no doubt, but they are laws made under the provisions of the Act. They are not provisions under any other law. Therefore, the provisions of Section 10-A supervene in relation to the payment of subsistence allowance over the provisions of the Model Standing Orders.
Can employer have two set of leaves in office where higher leaves are given to officers in comparison to junior staff who are given as per shops and commercial Establishments Act of the State.
Yes! It can be. But care is to taken that no employee should get leave less than what is prescribed in the Act. Higher leaves van be given to senior officers. SC in the case of Dalmia Cement (Bharat) Ltd. vs. Workmen AIR 1967 SC 209 has held that where clerks were 12 days casual and 12 days sick leaves and subordinate staff were given only 12 days sick and casual leaves, tribunal awarding sick and casual leaves to subordinate staff equal to clerks was not justified in going beyond the limit as prescribed of 12 casual or sick leaves in Delhi Shops Act.
What are the kind of leaves in various states Shops and Establishment Acts?
Generally in most of the States Shops and Commercial Establishment Acts, there are three kind of leaves- Earned/privilege, sick and casual. For example in Delhi, earned leaves are 15 while casual and sick leaves are 12in a year. In UP, earned leaves are 15, while casual leaves are 10 and sick leaves are 15 in a year. In Haryana & Punjab earned leaves one @ of 20 working days while casual leaves are 7 and sick leaves are 7 in a year. In Uttrakhand, earned leaves are one @ twenty working days while casual leaves are 8 in a year. There is no provision for sick leaves. In Himachal Pradesh earned leaves are @ 1 for every 12 working days, casual leaves are 7 and sick leaves are 7 in a year. In Gujarat earned leaves are @ 1 for every 20 working days, casual leaves are 7 and sick leaves are 7 in a year. In Maharashtra, earned leaves are @ 1 for every 20 working days, casual leaves are 8 and festival holidays are 8 in a year. In Rajasthan there is only provision for earned leaves @ 1 for every 20 working days. There is no provision for casual and sick leaves. In MP, earned leaves are 30 after 12 months of continuous service and casual leaves are 14 in a year. There is no provision for sick leave. In Karnataka earned leaves are @ 1 for every 20 working days. Sick leaves are 12 in a year. In Tamil Nadu earned, casual and sick leaves are 12 each in a year. In Telangana, earned leaves are 15, casual and sick leaves are 12 each in a year. In Kerala earned, casual and sick leaves are 12 each in a year. In Andhra Pradesh earned leaves are 15, casual and sick leaves are 12 each in a year. In west Bengal earned Leaves are 14,casual leaves are 10 and sick leaves are 14 in a year. In Bihar, earned leaves are 1@ twenty working days, while casual and sick leaves are 12 each in a year. In Jharkhand earned leaves are 1@ twenty working days, while casual and sick leaves are 12 each in a year. In Orissa earned leaves are 1@ twenty working days while sick leaves are 15 each year. There is no provision for casual leaves. In Assam earned leaves are 16, casual and sick leaves are 12 each in a year.
Is management bound to grant leave to workman if he remained absent because he was arrested for some offence and later on apply for leave for such period of absence?
No! Management is not bound to grant leave to such workman who remained in police custody or in jail for some offence and later reports for duty and applies. S.C. in the case of Indian Iron & Steel Co. vs. workmen 1958 SCR 667 has held that it is not justified to hold that if a workman is arrested, then company management is always required to grant him leave. Establishing of charge has no relevance with grant of leaves.
What action can be taken when employee overstays the granted leaves?
There may be many situations and circumstances for which employee cannot be blamed for overstay on the happening of any such contingency like illness, death in family etc. Absence of the workman from work if due to any cause beyond his control, it would not be reasonable for you to refuse leave to the extent required. In such cases termination on account of absenting without leave will be held illegal as held by Delhi High Court in the case of Delhi Cloth and General Mills Ltd. vs. Piaralal 1976 Lab IC 21. In this case workman was detained under Defence of India Rules and he requested for leave for an indefinite period of about 6 months. Court said that the circumstances were beyond the control of the workman. So you have to closely analyse and examine the circumstances under which workman overstays leave and decide whether the circumstances were beyond his control or not.
Taking regular money from co-workers to carry union activities by the terminated office bearer be considered as gainful employment to avoid interim relief?
No! Payment towards union activities and fighting for co-workers cases cannot be termed as gainful employment. Such income of the union leader will not be a remuneration for the purpose of section 17-B of the I.D. Act. This has been so decided by Gujarat High Court in the case of M.J. Patel vs. Tata Chemicals Ltd. (2008 1 CLR 588).
What is the basis of deciding/determining the permanent strength of workmen in the Industry?
There is no law which makes it obligatory for the employer to determine the permanent strength. It is the management prerogative to plan for man power subject to the provisions of laws requiring to observe work conditions. The nature job categorized as permanent will be based on the definition of workman under Certified Standing Orders. Since rationalization of manpower is a matter of dispute which can be espoused by the Unions, the subject matter of permanent strength will arise and the employer has to substantiate his stand with industrial engineering studies made to establish scientific method of determining the manpower requirement.
At what age we can retire a person in the industry?
There is no such uniform law regarding age of retirement in related employment regulations in India. However, it is either governed/decided through certified standing orders of the establishment or model standing orders if applicable, services rules formulated by company and agreed by employee or terms of appointment. Though model standing orders under rules of state carry a retirement age but it will be of no use unless it is incorporated in establishment certified standing orders. It will not apply automatically as held by Karnataka HC in the case of Raju (MC) vs. Karnataka Vidyut Karkhane Ltd., Bangalore 1983(1) LLN 198. It is general practice to retire an employee at the age of 58 years but it is necessary that it must be mentioned in either of the above mentioned documents. Simply looking at the physical sate of a person he cannot be retired. Calcutta High Court in the case of Indian Aluminium Co. Ltd. case 2003 (99) FLR 694 has held that retirement of a worker on attaining the age of 58 years will neither be legal nor proper on attaining the age of 58 years in the absence of any such condition of employment.
We have many employees in our company who are marked LWP ( Leave without pay) when they remain absent. They do it habitually. In such situation can we take disciplinary action against such employees on the ground of unauthorized absence?
Yes. You can do . Absence from duty shows negligence towards duty and disinterest in work. The Supreme Court in the case of Delhi Transport Corporation v. Sardar Singh, 2004 LLR 953 has clarified that when an employee habitually absents himself from duty without sanctioned leave for a very long period and his past record was not satisfactory, it prima facie shows negligence and lack of interest in work.It was further held that merely because the absence of a workman was treated as leave without pay for the purpose of maintaining correct record by the management, it does not absolve a workman from the misconduct of his habitual absence from duty. It makes no difference if workman moves an application after enjoying absence and he is marked as leave without pay. Actually leave is to be sanctioned before proceeding on leave.
Can a stay order be granted against a tripartite settlement?
Civil Court has no jurisdiction to entertain any matter covered under Industrial Law. Operation of settlement cannot be stayed by any civil court. Conciliation settlement under section 12(3) entered between management and the sole worker union would be binding on all workmen. Settlement should be considered as a whole. As far as collective issues are concerned, individual workmen are not allowed to dispute the validity of the settlement. The terms of settlement by collective bargaining get incorporated into the individual contract of service and become conditions of service. It has to be considered prima facie to be in the best interest of employees in the absence of attribution of oblique motives based on concrete materials.
We have a security guard who is not able to stand and take rounds while on duty since last six months. He sits frequently on chair. Can we treat such physical deficiency as continued ill health?
Though the term Continuous ill health has not been defined under Industrial disputes Act, certified standing orders must have defined it. The courts have on different occasions defined this term. S.C. in the case of Anand Bihari vs. RSRTC (1991) 1 SCC 731 has held that any disorder in health which incapacitates an individual from discharging the duties entrusted to him or affects his work adversely or fall in the way of his normal and effective functioning can be covered by the phrase continuous ill health . Bombay H.C. in the case of Ramaswamy Murugesh vs. S.G. Bhonsale 2006 I LLJ 281 has also held that the expression has to be given contextual meaning. It should mean the condition of the health of an employee that consistently affects the functioning of the duties of the post. It is not the gravity of the disease that would alone fall within the meaning of the expression but its affection on the due discharge of the normal duties. The Punjab & Haryana H.C. in the case of Groz-Beckert Asia Pvt. Ltd. 2009 Lab IC 3692 also held that the touch stone for applicability of Sec. 2(OO) (C) is the effect of such continued ill health in due discharge of normal duties assigned to the workman. It is the disordered physical condition which would pass the test of continued ill health as contained in Sec. 2(OO) (C) of I.D. Act. Madras H.C. in the case of P. Muthukrishnan 1992 LLR 443 has also held that where the gatekeeper of a cinema hall sustained injury in the course of employment resulting in amputation of left leg not allowed to work when reported for duty, his termination will not amount to retrenchment but will cover under the expression Continued ill health. Delhi HC in the case of Munna Prasad vs. The Mgt. of M/S. Sawhney Rubber 2012 LLR 1255 has held that when the workman despite amputation of both hands in an accident was allowed to work for ten years, his termination on the ground of continued ill health would be illegal.
Whether an employee is entitled to annual increment during the period of suspension?
No! He is not. S.C. in the case of SBI vs. Central Government Labour Court, (1972) 3 SCC 595, has held that Increment has a definite concept in service law jurisprudence. It is an increase or addition on a fixed scale; it is a regular increase in salary on such a scale. Under the labour and industrial laws, an increment is when in a timescale of pay an employee advances from the lower point of scale to the higher by periodic additions. In other words, it is addition in the same scale and not to a higher scale. An increment is an incidence of employment and an employee gets an increment by working the full year and drawing full salary. During the period of suspension, the contract of service remains suspended. The order of suspension by the departmental enquiry has the effect of temporarily suspending the relations between the master and servant with the consequence that the servant is not bound to render service and, therefore, an employee is not entitled to increments during this period which is taken as period not spent on duty. Delhi H.C. in the case of Government of NCT of Delhi vs. Ram Nath in Civil Writ Petition No. 12109 of 2015 decided on 08-12-2016 has also held in the same direction.
Whether employer is legally bound to pay transport facility/allowance to workers merely because other industries are also giving such allowance/facility?
No! Simply because the neighbouring industries are providing transport facility/ conveyance allowance to its employees does not create a legal obligation on you to also provide such facility or pay such allowance unless it has been agreed as term of employment or a part of settlement. However, if such demand is raised and referred for adjudication, then Tribunal has jurisdiction to adjudicate and grant such relief based on the practice followed by other industries having principle of industry cum region basis. S.C. in the case of Atic Industries Ltd. vs. Workmen, 1972 Lab IC 642 (SC); 24 FLR 196 has held that the principle that in a proper case the Industrial Tribunal can impose new obligation on the employer in the interest of social justice and can also involve the parties in a new contract has been accepted by this Court. There can be no doubt that an Industrial Tribunal has jurisdiction to make a proper and reasonable order in an industrial dispute. The Tribunal was justified in having regard to the practice obtaining in the region on the principle of region-cum industry when considering the claim of the workmen for payment of transport allowance. The foundation of the principle of region-cum-industry is that as far as possible there should be uniformity of conditions of service in comparable concerns in the industry in the region as that there is no balance, in the conditions of service between workmen in one establishment and those in the rest. The danger otherwise would be migration of labour to the one where there are more favourable conditions from those where conditions are less favourable. In this case the dispute was regarding dearness allowance, transport allowance and other demands between the company and its workers. In regard to transport allowance the Tribunal in its award directed the employers to pay 15 paise per day to workmen who lived more than five miles away from the place of work except on days when a workman was on leave. in doing so the Tribunal took into account the fact that in the same region a pharma company was paying transport allowance to its workmen and SC upheld the tribunal award.
We have two drivers and one cook for guest house. Their salaries are being paid by managers who have been given co. cars and drivers drive their cars. Cook salary is paid by another manager who regularly stays in guest house. These salaries are reimbursed by Co. to managers as part of their CTC. Drivers and cook have been removed recently due to certain undesirable acts. They have challenged their termination against the company. Can company be liable in such circumstances?
Yes! Co. can be liable. It all depends on the facts of each case but as has been narrated, it seems that all the three (drivers and cook) will be deemed as employees of the company and it may be declared as illegal termination. Delhi HC in the case of Union Bank of India vs. Mujahid Qasim 2021 I CLR 386 by applying the law laid down by SC in the case of Bank of Baroda vs. Ghemar Bhai 2005(2)LLN 671 has held that where drivers also performed the other duties like picking up parcels, computers, sundry jobs and also claiming reimbursements, log book maintained to supervise their day to day duties, drivers required to wear the bank uniform for which payment was also made by the bank indicate that functions performed by drivers was integral part of day to day working of the bank will establish employer-employee relationship and entitled to reinstatement. They were not mere personal drivers of the bank executives. It will not make any difference that their salary was routed through managers. By applying the above principles, it appears that in your case too if your drivers and cook are able to establish they were doing other duties of the company also and cook was making food for other Co. Guests also who stayed in guest house, it may go against you since employer employee relationship between co and drivers/ cook may be established.
While structuring components of salary, is it necessary to include DA as a part of it. Is there any law on grade fixation? Is it legally compulsory to give LTA & Medical on DA?
DA is not compulsory in salary fixation. It is organisations internal compensation package policy which determines about components of salary. There is no law on grade structure. It is regulated either by your service rules, agreements, terms & conditions of appointment or any other local law applicable to your establishment. Again, giving benefit of LTA & Medical on DA is a matter to be decided according to the policy of the company. There is no law which direct payment of LTA & Medical on DA. The normal practice in industry is about keeping 50% of basic and rest is divided in various allowances.
In many cases it happens that a after submitting resignation and taking full payment, employee raises dispute that he was forced to resign and his resignation was involuntary. What precautions, you suggest, should be taken by company management to ensure that it does not backfire?
In such conditions where after getting all dues on resignation, when challenged its genuineness, it is for the workman to establish that resignation was not voluntary and was obtained under pressure. It is so held by the M.P. HC in the case of Hira Mills, Ujjain vs. Babu 1998 LLR 524. All. HC in the case of Delta Engineering Co. (Pvt.) Ltd. Meerut vs. Industrial Tribunal-V 1998 LLR 622 has also held that burden of proof will lie upon the employees alleging that their signatures on blank papers were used as their resignations. However, Delhi HC in the case of Prabhu Verma vs. D.P. Industries 2019 LLR 711 took different view. Court held that when workman alleged that his resignation was obtained forcefully, It is for the employer to establish that it was not and he left the services of his own. Madhya Pradesh HC in the case of AVTEC Ltd. Vs. Naresh 2019 LLR 254 and Delhi HC in the case of Kay International vs. Raghubir Singh 2019 LLR 361 have held that when workman after submitting resignation receives and accepts full and final payment, such resignation cannot be said to have obtained by force. You can also take following precautions; 1-The resignation should be in the handwriting of the employee with date and if possible with one signature of co worker as witness. 2-There should not be any haste in accepting the resignation by management and should be accepted in writing with date and in terms of employment. 3-The full and final dues in terms of settlement should be in writing and worker should sign the acceptance letter as well as full and final dues details in token of having accepted the correctness of dues. 4- The payment should be made through cheque as far as possible. 5- The workers signature should also be obtained on experience/ relieving certificate. 6- Bipartite settlement should also be signed by the worker and management to the effect and same should be registered under Sec. 18(1) of I.D. Act with the labour authorities. If this process is adopted, there are less chances of challenging the genuineness of the resignation and even if it is challenged, same will not stand in the court of law. Genuineness has to be proved by facts and circumstances.
Exemption from PF if employee after adopting for reduced pension joins after 50 years of age? Any exemption for employee opting for VRS?
No! Such person will not be exempted from EPF Act. He has to be enrolled as a member but he will not be entitled for any pension benefits. All his contribution will be in PF account only. There is no exemption clause in EPF act for any person who has opted for VRS. He will not be entitled for any exemption under EPF act. PF benefits are to be extended to him when he joins the service.
Can you brief about the key highlights of amendments made in Apprenticeship Rules in 2019?
The new rules of 2019 are focused to increase the skilled manpower in the country and increase the remuneration for the apprentices. The Rules have now raised the engagement limit to 15 percent of the total employee strength in an organization with a revised stipend up to INR 9000. The Rules have been made effective from September 25, 2019. The minimum amount of stipend prescribed ranges from INR 5,000 per month - for school pass outs between Class 5th and 9th - to INR 9,000 per month to graduate or degree apprentices in any stream. Key highlights are : 1. The minimum stipend amount that will be paid to trade apprentices will be based on qualification which will be between INR 5000 per month to INR 9000 per month now. 2. As per new Amendments in Rules, the size-limit of an establishment with a mandatory obligation to engage apprentices on an optional basis has been reduced from 40 to 30. It has also reduced the size-limit of an establishment intending to engage apprentices from 6 to 4. This will allow smaller companies to engage more trainees. 3. The employers having four or more workers shall only be eligible to engage apprentices and engagement of apprentices by establishment having thirty or more number of workers shall be obligatory. 4. The period of apprenticeship training for optional trade shall be a minimum of six months to a maximum of three years. 5. Every apprentice undergoing apprenticeship training in an establishment shall be a trainee and not a worker. The provisions of any law with respect to labour shall not apply to or in relation to such an apprentice. 6. Within a financial year, each establishment shall engage apprentices in a band of 2.5 per cent. to 15 per cent. of the total strength of the establishment including contractual staff, subject to a minimum of 5 per cent. of the total to be reserved for fresher apprentices and skill certificate holder apprentices. 7. In no month, number of apprentices should be less than 2 per cent. of the total strength of the establishment and more than 18 per cent. of the total strength of the establishment. 8. The minimum rate of stipend payable to apprentices per month shall be as per the qualifications stipulated in the curriculum. An establishment can engage apprentices of age eighteen and above in normal working hours of the establishment. Apprentices under the age of eighteen shall be engaged in such training between the hours of 8.00 am and 6.00 pm. Any relaxation in the same shall be approved by the Apprenticeship Adviser.
In case of daily wages workman, when he is terminated illegally, can there be any reasons where he can be compensated only in lieu of reinstatement?
Yes! Supreme Court in Haryana Tourism Corporation Ltd. vs. Fakir Chand 2003 (99) FLR 821 has laid many relevant facts to be considered before awarding retrenchment compensation viz., daily wager, not recruited through the employment exchange or any other accepted mode of selection, not regularized and nature work. Raj. HC in the case of Resident Engineer, Housing Board, Kota vs. Lokhpat and Ors. 2003 (99) FLR 105 has held that where a workman has remained not in touch with job for long period of time (in this case it was 12 years) , it may not be expedient to order reinstatement while setting aside the termination. In such a case compensation in lieu of reinstatement should be ordered. SC in the case of Rattan Singh vs. Union of India (1997) 11 SCC 396 has also ordered compensation because of long period 20 years lapsed in litigation. SC in the case of Surendra Kumar Verma vs. The Central Government Industrial Tribunal 1980 (41) FLR 351 has also cited that in case where industry might have closed down or might be in severe financial doldrums, or the workman secured better or other employment elsewhere, the compensation in lieu of reinstatement may be granted. Raj. HC in the case of Zonal Manager, UCO Bank vs. Ram Prakash Prajapati 2007 (114) FLR 314, has laid down certain circumstances when compensation in lieu of reinstatement may be granted and these are (1) When takes plea of lack of trust in the employee (2) worker being a daily rated worker and long time have elapsed since his retrenchment (3) Non availability of work or post (4) workman not having been recruited through any accepted mode of selection.
There is a general perception that in case court reaches to conclusion that the termination done by employer is illegal,it awards reinstatement with full back wages. What is the current trends in court decisions? Is still reinstatement with back wages are normally granted in majority of cases?
No! in case of illegal termination , now automatic reinstatement with back wages in no more a rule. S.C. in the case of Raj kumar vs.jalgaon Minicipal Corporation 2013 LLR305 has held that reinstatement is not must for every sacked worker. Calcutta Hc in the case of Bata India Ltd. Vs.Fourth I.T West Bengal 2011 LLR 68 has held that even in the case of illegal termination reinstatement with back wages is no longer a rule.When the termination of a workman is set aside, his reinstatement either with or without back wages is not a rule of thumb and can be deviated by the courts depending upon the merits of each case. There are some of the cases where High Courts have set aside the reinstatement of a workman as awarded by the Labour Court or the Industrial Tribunal. Madras HC in the case of M.V. Sivaji vs. Godrej and Boyce Manufacturing Co. Ltd., Madras and another, 1998 LLR 483 has held that reinstatement of a typewriter mechanic dismissed for forging signatures of the customers is liable to be quashed. In another case Kerala HC, S. Raveendranath Kamoth vs. Presiding Officer, Labour Court and another, 1998 LLR 632 had held that reinstatement will not be appropriate relief to a workman who has been guilty of late coming, neglecting his duties and abusing the Director of the Company. Also reinstatement of a workman guilty of stoppage of work and assaulting the Asstt. Manager and Canteen Contractor has been set aside by the Madras HC even when his past record has been satisfactory. In another case, the Delhi HC, India Tourism Development Centre vs. Presiding Officer, Labour Court and others, 2000 (85) LLR 62 has held that the reinstatement of a workman guilty of habitual absence from duties will not be justified. In addition to above, there are many other judgments oft he Supreme Court and the High Courts where by the reinstatement has been held not to be justified. More over, Now the courts have started awarding lump sum compensation in place of reinstatement and back wages.
What steps management should take while serving a charge sheet and if refused, how to go about it further?
Generally service rules/certified or model standing orders/HR policy/Manual applicable in the organization carry such procedure of communication. Even if it is not there, first, it should be served personally. One more person should be there at the spot while making service as witness. If refused to take delivery, make a note of such refusal, with signature of person who attempted to deliver with date and time and one witness. Send the photocopy of such charge sheet with refusal endorsement along with cover letter at his last available address. If the employee is not available, send by regd. post at his last available address and put a copy on the notice board of the organisation. If employee avoids to take delivery, the same can be published in newspaper also. The purpose is to make employee aware of the charges against him. Sending charge sheet by ordinary post has no legal sanctity. Procedure provided in the service rules has to be adhered. Deviation from that will make the service invalid. A.P. HC in the case of Principal Chief Conservator of Forests vs. T. Bhaskar Rao 2006 LLR 768 has held that when rules provide the service of charge sheet either by registered post or by publication in newspaper, pasting of charge sheet at the residence of employee will not make service legal. As far as publication in news paper is concerned, it should be ensured that the newspaper should be popular in the area in which charge sheet is published, failing which, such service will be bad in law. S.C. in the case of Union of India vs. Dinanath Shantaram Karcher 1998 LLR 1097; 1998 FLR (80) 446 has held like this. You should take special care in case of female employee. Do not serve the charge sheet alone or in the presence of other male employee. At least one female employee should be present while serving the document to avoid any unpleasant happening.
If tasks are allotted one day prior to work day through email, & the work done by an employee is 40-60% only. Can we mark absent or half day based on task completed or to mark full day present?
Your terms of employment will indicate about your proposed action. Is he employed on task basis? Has he been paid proportionately earlier also? What is his mode of payment? Finding out these facts will answer your question. If he is present full day, he cannot be marked absent. Yes disciplinary action can be taken against him for negligence and not doing the work as instructed or refusal to work.
Can woman employee who did not inform company about her pregnancy and apply for maternity leave, challenge her termination on this ground?
No! Because she has not served any notice of maternity leave. Termination if done after adopting procedural formalities should be held valid by the court in all probabilities. Delhi High Court in the case of Sunita Baliyan vs. Director Social Welfare Department, Government of NCT of Delhi, 2008 LLR 130 has held that maternity benefit will not be available even on delivery by a female employee since she has not given any notice either about her pregnancy or delivery and even the letter that too after 5 months did not mention about delivery. In the absence of any express termination by the management of the employee alleging that she has gone on maternity leave and was orally refused duties has been rightly rejected by the Labour Court.
One of the employees has challenged his termination before labour court on the ground that he has completed more than 240 days of working in last 6 months before termination becasue he was doing double duty for three months regularly. Is it legally correct to count two days for single day for counting 240 days of working?
No! Section 25B of the ID Act does not contemplate any such basis of calculation where double duty in single day is to be counted as two days for the purpose of calculation of 240 days working of continuous service. Madras High Court in the case of Tamil Nadu State Transport Corporation vs. N. John Henri Raj 2008 LLR 1208 has held that while calculating 240 days in preceeding calendar year, the double working of a workman on a day will not be taken into consideration since it is only for the purpose of overtime payment and not for reckoning of continuous service. So in your case you appears to be legally sound but it may be your responsibility to produce evidence in the court that the workman has not completed 240 days of continuous service.
When an additional unit is acquired, Is management under legal obligation to seek consent of workers for transfer to such new acquired unit when continuity of service and same pay/perks are ensured?
No! Management is not required to seek consent for transfers. Such transfers are governed by section 25-FF of the Industrial Disputes Act. There are three conditions: (a) The service of the workman has not been interrupted by such transfer. (b) The terms and conditions of service applicable to the workman after such transfer are not, in any way, less favourable to the workman than those applicable to him immediately before the transfer. (c) The new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer. The objective of legislature behind enacting this provision seems to ensure that there should not be any break in service by joining new establishment and adverse impact on salary/wages/perks of the workman. If all these are ensured then pre- requisite of consent of workmen is not there.
What is the difference between Resignation and retirement where the end result of both is the end of employer- employee relationship ?
Supreme Court in the case of UCO Bank and Others vs. Sanwar Mal 2004 (101) FLR 437 and in the case of Syndicate Bank, Bangalore vs. Satya Srinath 2007 (114) FLR 977 has made distinction between resignation and retirement. In case of resignation, Employee can exercise his right to leave the service at any point of time and it is his action whereas in case of retirement or voluntary retirement, he retires on qualifying certain conditions of his employment terms or/and age. The resignation and voluntary retirement are deliberate actions leading to abandonment of job. Retirement can also be compulsory as a punishment. Premature retirement or compulsory retirement cannot be voluntary in nature. It has an element of imposition by management.
Can employer replace the existing permanent workers into Fixed term sort of employment in view of the definition of fixed term employment provided in the codes?
The definition of fixed term contract has been provided in Industrial Relations Code and OSH Code. It is same. What is interesting to note is that when the definition of fixed term employment was introduced in Industrial Employment Standing Orders Act and Rules were amended vide notification no. G.S.R. 235 (E) dated 16.3.2018. New rule 3(A) was inserted according to which No employer of an industrial establishment shall convert the posts of the permanent workmen existing in his industrial establishment on the date of commencement of the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 as fixed term employment thereafter. But now there is no such mention/bar/prohibition either in the definition or in chapter of standing orders. Draft Central Rules also do not say anything about it. Legally as such there is no prohibition for employer to convert the existing permanent workers into fixed term contractual workers but it would be unfair and sufficient to trigger the labour unrest in the industrial establishment. Employer should stay away from going to such extent because industrial relations can never be smooth or harmonious solely on the legal approach. There has be an element of mutual trust and transparency.
What would be the legality of engaging group of workers for a fixed period and then rotate them after some time? Since such employment would be on fixed term, so cannot be challenged also.
It sounds good and also can be practicable on ground also but it would be illegal if challenged. It will amount to unfair labour practice. On the surface of it appears that since you are engaging the workmen temporarily for a short period and even if re engaging them after some time, there should not be any problem. But it is illegal. Recently Bombay High Court Single judge bench while disposing group of petitions filed by the temporary workers of Bajaj Auto held that keeping engaged workers as temporary for seven months and then re engaging them on rotational patterns for years together to keep them deprived of permanent status is illegal and unfair labour practice. Court announced the judgment in the case of Shri Sunil Pralhad Khomane & Others vs. Bajaj Auto Limited in WP. 4502 of 2006 on 02. Feb. 2021. Court found in the present case that the work performed by these workers was of perennial nature. It was no different from what is performed by the permanent workmen of the company, for which these temporary workforce was engaged. This system of engagement of workers on rotational basis continues as long as for 13 years. Court also found that the employment of the workmen in the present case was neither for any particular work or project nor was brought to an end after a fixed period due to wanting of work upon expiry of the period of contract. So such termination also does not fall under Sec. 2(oo) (bb) of I.D. Act. The engagements of temporaries workers were brought to an end purportedly at the expiry of the stipulated period of contract only to ensure that they get an artificial break (during which others from the waiting list were employed) only to be re-employed and this went on - again and again. High Court held that the above pattern appeared to have been designed with a view to avoiding any legitimate claim of permanency of tenure on the part of workmen concerned.
Upon certain misconducts, how employer should decide whether the employee is to be dismissed or awarded lesser punishment? What are those guiding factors?
The punishment on finding guilt of employee is generally guided by service rules or the standing orders of the company. These documents/policy papers should define the punishment in respect of misconduct. However, even after following the rules/ standings orders, it is open to the court to interfere with the punishment if it is felt by the court that it is disproportionate to the gravity of the misconduct or shockingly disproportionate. Bombay H.C. in the case of J.J. Mody vs. State of Bombay AIR 1962 Guj. 197 has categorised the following misconducts where employer is entitled to dismiss his employee: (i) Where the act or conduct of the servant is prejudicial or likely to be prejudicial to the interests of the master or to the reputation of the master; (ii) Where the act or conduct of the servant is inconsistent or incompatible with the due or peaceful discharge of his duty to his master; (iii) Where the act or conduct of a servant makes it unsafe for the employer to retain him in service; (iv) Where the act or conduct of the servant is so grossly immoral that all reasonable men will say that the employee cannot be trusted; (v) Where the act or conduct of the employee is such that the master cannot rely on the faithfulness of his employee; (vi) Where the act or conduct of the employee is such as to open before him temptations for not discharging his duties properly; (vii) Where the servant is abusive or if he disturbs the peace at the place of his employment; (viii) Where the servant is insulting and insubordinate to such a degree as to be incompatible with the continuance of the relation of master and servant; (ix) Where the servant is habitually negligent in respect of the duties for which he is engaged; and Where the neglect of the servant though isolated, tends to cause serious consequences.
In case where the complainant withdraws his complaint made by him before the management, Can inquiry proceedings in such situation become in fructuous and invalid?
No! Mad. H.C. in the case of Sri Ganapathi Mills Co. Ltd. vs. Presiding Officer, Labour Court and Another. 2003 LLR 88 has held that the mere fact that the complainant/victim had chosen to withdraw the complaint in respect of assault on him by other workers, cannot result in preventing the management from taking appropriate action for the misconduct against such workers who assaulted him.
We are conducting domestic enquiry against a workman for some charges of misconduct alleged to have been commited by him. During process enquiry officer has refused to allow the representation through advocate to which he has challenged in the High Court. I want to know whether the domestic enquiry can be stayed by court in between and the order of the enquiry officer can be challenged also?
No! Domestic enquiry process cannot be challenged in between before the court of law. Also the order of the enquiry officer is not open for challenge during the pendency of enquiry. Karnataka High Court in the case of Kulla Venkata Shetty vs. The Managing Director, Karnataka State Road Transport Corporation 2008 LLR 1043 has also held that it is neither proper nor desirable for the high court to invoke its jurisdiction under article 226 of the constitution of India to interfere with any or every decision taken by the enquiry officer in the disciplinary proceedings. Such interference will only delay the enquiry proceedings and result in miscarriage of justice. Even if any order passed or decision taken by the enquiry officer is wrong or illegal and is capable of vitiating the report of the enquiry or the decision of the disciplinary authority, the workman should wait till the disciplinary proceedings are completed and challenge the final order passed in the disciplinary proceedings before the appropriate forum.
I am office bearer of a small scale industries association of our area. One of the clerk appointed some time back has been removed on the complaints of members of the association. He has raised a dispute before Labour Authority about his illegal termination. Where we legally stand in the matter?
I presume that your association of small scale industries is a platform to provide guidance on different matters to your members industry and represent collectively on the issues that affect you before the Government. Your members govern their inidividual industries and you as association have no control over them. Normally in India industries associations work like this and in this situation your terminated employee cannot seek any relief under the Industrial Disputes Act as you as a body of small scale industries cannot be held to be a industry under the ID Act. Formation of the association of members itself cannot be an industry. Karnataka High Court in the case of Prema Govinda vs. Karnataka Small Scale Industries Association 2008 LLR 54 has also held in the same direction.
We have suspended an employee on charges of some misconducts and enquiry is still pending. Can some authority or the court direct us to provide work to the suspended employee ?
No! Principal employer cannot be directed to provide work to the suspended employee by any authority or court. This has so been held by Jharkhand High Court in the case of Aparup Kumar Chaterjee vs. Bharat Coking Coal Ltd. 2008 LLR 1278. However, court can direct you to conclude the enquiry in a time bound frame manner if it is delayed.
We are a Pvt. Ltd. Co. Are we as Principal employer responsible to pay retrenchment compensation to contract labour when he is terminated by Contractor in view of renowned Uma Devi case Judgment?
The case of State of Karnataka vs. Uma Devi which has been referred to in the question has different context. This judgment does make private sector employer responsible to pay retrenchment compensation in case of termination of contract labour by contractor. The judgment of Uma Devi case is about right of regularisation of casual or daily wager or adhoc or temp. employee engaged in PSUs/Govt. Dept. or Instrumentality of the State. The judgment does not give casual worker or contract worker a right to get him regularised against sanctioned post in public sector merely because he has worked for more than required days. If it is a contractual appointment, the appointment comes to an end at the end of the contract, if it were an engagement or appointment on daily wages or casual basis, the same would come to an end when it is discontinued. Similarly, a temporary employee could not claim to be made permanent on the expiry of his term of appointment. Regularisation rests with the court. Since your organisation being incorporated under Companies Act is not a state instrumentality and hence falls under private sector. The contract labour engaged by contractor and placed at principal employer site will be governed by the terms of employment between contractor and him and of course provisions of Industrial Disputes Act and Contract Labour (R&A) Act will also apply. It makes no difference for principal employer if any contract labour completes 240 days because on that basis only such contract labour cannot demand/claim permanency from principal employer, unless the court declares that thex contract between contractor and principal employer was sham and bogus and employer employee relationship exists between contract labour and principal employer. It is the liability of the contractor and not the principal employer to pay retrenchment compensation to such workman engaged by contractor at the time of termination if he completes 240 days in preceding 12 months before the date of termination and he was not appointed on fixed term basis. If the contract labour so engaged by contractor is employed on fixed term basis, and he is discharged as per terms of his employment or his contract comes to an end because of expiry of contract period then even the contractor is also not liable to pay any retrenchment compensation because any such termination falls under Sec.2 (oo) (bb) of I.D. Act. Moreover, the retrenchment compensation is not defined as wage under related Acts and since the principal employer is responsible to pay only wages to contract labour in case of default committed by contractor, principal employer is not liable for payment of retrenchment compensation to contract labour engaged by contractor. What you as principal employer need to ensure that the documentation between principal employer and contractor and terms of employment between contract labour and contractor are correct, genuine, legal and valid.
One female employee was on maternity leave from the date before lockdown announced. She has consumed 26 weeks, now she has said that since during lockdown govt. ordered to treat employee as on duty, her maternity period falling in between lockdown should be excluded and proportionate period of 54 days should be extended as maternity leave. She has also produced a medical certificate where she has been advised to take bed for three months. Are we liable to pay for three months more?
No! Maternity leave period started before lockdown was announce, will continue for 26 weeks and any maternity period falling in between lockdown has no link with Covid induced lockdown. Such maternity period cannot be neutralized against lockdown period and further extended proportionately after lockdown is lifted. She is only entitled to 26 weeks paid leave from the date she opted. However, If she suffers from any illness arising out of delivery after baby is born she is entitled to get paid leave of one more month as per Sec. 8 of Maternity Benefit Act. So in total she is entitled to maximum period 26 weeks plus one month paid leave. Beyond that if she is advised to take bed rest medically, either she has to get this period adjusted against her credited earned leaves or sick leaves as may be available in accordance with co. policy or remain unpaid.
In case employer contravenes the provisions of Sec. 33 and changes the conditions of service of workman pending proceedings, Sec. 33A is a provision providing adjudication to decide whether employer affected any changes in service conditions. When and under which conditions Sec. 33 A gets attracted?
Section 33A of the I.D. Act is attracted when the following conditions exist: Firstly, that there should have been a contravention by the employer of the provisions of Sec. 33 of the Act and secondly, that the contravention should have been during the pendency of the proceedings before the conciliation officer, Board, arbitrator, labor court, tribunal or national tribunal. Thirdly, that the complainant should have been aggrieved by the contravention and lastly, that the application should have been made to the forum before which the original proceedings are pending. Sec. 33A authorizes the conciliation officer to take such complaint of the workman in into account in bringing about settlement of the complained dispute. Conciliation officer is not empowered to adjudicate upon the dispute, which is the jurisdiction of the adjudicating authority. His role is limited to mediate or promote the settlement of the dispute. The Sec. 33A gets attracted only when a workman is discharged or punished or otherwise for a misconduct connected with the pending dispute without obtaining prior permission of the authority before whom the dispute is pending. SC in the case of NEI Ltd. vs. Hanuman 1967 II LLJ 883, Air India Corporation vs. V.A. Rebellow 1972 I LLJ 501, have held that discharge simpliciter not connected with the pending dispute will not amount to contravention of Sec. 33 thus will not attract Sec. 33A. SC in the case of Central Bank of India vs. K R Meenakshi 1959 I LLJ 446 has held that if a workman abandons his job, it will not constitute discharge within Sec. 33 (I) of I.D. Act. Madras H.C. in the case of M S Manikam vs. Cheran Transport Corporation 1982 I LLJ 396 has held that termination simpliciter under conditions of service or standing orders will be outside the scope of Sec. 33. Punjab & Haryana H.C. in the case of Ram Sanjeevan & Ors. vs. PO, Labour Court 2009 II LLJ 630 has held that application under Sec. 33A can only be filed before the conciliation officer where the main dispute was pending and not before the Industrial Tribunal cum Labour Court. The workman is not free to choose any forum for dealing with an application under Sec. 33A.
What can be those circumstances, where not granting permission to employee to defend himself in enquiry through advocate may lead to invalidity of enquiry?
It is the matter of reasonableness and prejudice which is to be looked into and it is also based on facts and circumstances of each case. It is also to be guided by the relevant services/regulations/certified standing of the establishment. Core point is to be seen whether in the facts and circumstances of the case, denial of lawyer representation in disciplinary enquiry from workman has really caused prejudice to him. Though the employee has no right to be represented by lawyer in the absence of any such service rule as held by SC in the case of Bharat Petroleum Corporation Ltd. vs. Maharashtra General Kamgar Union and Others 1999 LLR 180; 1999 (81) FLR 358. But Karnataka HC in the case of G.V. Aswathanarayana vs. The Central Bank of India, 1993 LLR 535; 1993 (66) FLR 670 has held that when the charges against the employee run into 25 pages and several hundred documents are involved in the enquiry, the employee who is not legally trained to put up his case effectively in the enquiry without the help of a lawyer, the representation by a lawyer in the enquiry must be permitted. Karnataka HC in another case of Sri S. Jayarajan vs. Reserve Bank of India and Others, 1996 LLR 1055 has held that employee facing criminal trial should be permitted to be represented by a lawyer in the enquiry if there is likelihood of his dismissal from service. Yet in another case of N. Balasubramanian vs. Canara Bank Financial Services Ltd. 1996 LLR 995; 1996 (74) FLR 2047 Karnataka HC has again held that denial of representation by a lawyer in enquiry will not be justified when the charges are of serious consequences.
Labour Court/ Tribunal to grant relief of reinstatement and/or back wages usually declare the punishment imposed by employer as shockingly disproportionate. Can you explain what is it all about and what can be factors to be taken in to consideration by court/ Tribunal when reaching to conclusion about the punishment as shockingly disproportionate?
It is established that normally Court /Tribunal is not required to consider the proprietary or adequacy of the punishment or whether it is excessive or too severe. Court may treat the punishment as victimization or unfair labour practice after considering the nature of misconduct, past record and length of service like circumstances being shockingly disproportionate as no reasonable employer would ever impose in like circumstances. This has so been observed by SC in the case of Hind Construction and Engineering Co. Ltd. vs. Their Workmen AIR 1965 SC 917. SC in another case of Union of India vs. G Anayutham 2000 II LLJ 648 has held that to judge the validity of any administrative order normally the wednesbury test is to be applied and in India courts will apply the principle of Proportionality to find out if the decision was illegal or suffered or one which no sensible decision maker could have arrived at. Court has to examine all relevant factors like nature of charges proved, past conduct, penalty imposed earlier, the nature of duties assigned having due regard to their sensitiveness, exactness expected and discipline required to be maintained in the establishment /department in which the person works. This has been observed by SC in the case of Director General RPF vs. Ch. Sai Babu 2003 1 SCR 729. AP HC in the case of G.V. Triveni Prasad vs. Syndicate Bank 2007 II LLJ 685 has held that Courts have to constantly remain guard against adopting populist approach in such matters and refrain from interfering with the punishment imposed by employer on employee. The power of review in cases should be exercised with great care and circumspection. The court has to keep in mind the paramount requirement of maintaining discipline in the services and the larger public interest. SC in the case of State of Gujrat vs. Anand Acharya Alias Bharat Kumar Sadhu 2007 9 SCC 310 has held that court sitting in judicial review against the quantum of punishment imposed in disciplinary proceedings will not normally substitute its own conclusion is not in dispute. If the punishment shocks the conscience of the court, then the court would appropriately mould the relief either by directing the disciplinary authority to reconsider the penalty imposed or may, make an exception in rare case and impose appropriate punishment with cogent reasons in support thereof.
What are the functions and duties of works committee constituted under I.D. Act?
Works committee constituted under Sec.3 is to promote measures for securing and preserving good relations between the management of the organisation and its workmen and to compose any material difference of opinion in respect of such matters. The works committee is normally concerned with the problems arising in the routine working of the establishment and function is to ascertain the grievances of employees and when the occasion arises to arrive at some agreement also. But it cannot go beyond recommendations. Decision rests with the concerned parties i.e. employer and employee. The comments of committee may be of much value but are not conclusive and binding in nature. The decisions of the committee would not be binding on their workmen or union. Works committee is not intended to replace or supersede the union. Works committee cannot take up the matters of employment or non employment of workmen.
Under Industrial disputes Act, the apprentice has been included as workman whereas Apprentices Act excludes the apprentice from workman category? Is it not self contradictory? How it should be understood correctly?
It is not self contradictory. Both Acts are independent and separate and have its own coverage and application. When Apprentices Act provision (Sec.18) says that (a) every apprentice undergoing apprenticeship training in a designated trade in an establishment shall be a trainee and not a worker; and (b) the provisions of any law with respect to labour shall not apply to or in relation to such apprentice, it intends to talk about persons who are registered as apprentices under the provisions of the Apprentices Act and not otherwise. In the same way where Sec.2 (s) of Industrial Disputes Act includes apprentices in the definition of worker. It intends to cover those persons who may be designated as apprentices but not registered as apprentices under the Apprentices Act. Moreover the definition of the workman under I.D. Act also further clarifies that person employed in any industry should be to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work, for hire or reward, terms of employment be express or implied. It means if a person engaged as apprentice not registered under Apprentices Act but doing any work as specified in the definition will be deemed as workman. Guj. HC in case of State of Gujarat & Ors vs. Chauhan Ramjibhai Karsanbhai 2004 (102) FLR 347; 2005 LLR 155 has held that persons engaged for production purpose as apprentices but not registered under Apprentices Act would be workman. However Delhi HC in the case of Otis Elevator Company (India) Ltd. vs. The Presiding Officer, Industrial Tribunal III 2003 LLR 701; 2003 (98) FLR 53 has held that Trade Trainee when paid stipend and not wages will not be a workman under I.D. Act.
What is the role and powers of appropriate Govt. in respect of Industrial disputes?
The Industrial Disputes Act provides mechanism of investigation, settlement and adjudication of disputes. It is a tripartite mechanism where Employer, workman/union and Govt. are involved. It is the appropriate Govt. who refers the dispute for adjudication where the dispute is not settled between employer and employee through conciliation machinery after proper examination. Under Sec 10 of the Industrial Disputes Act, 1947, the appropriate government enjoys wide and discretionary powers to refer an industrial disputes to the Labour court or Tribunal. The appropriate government has been granted with the liberty to make the reference to a Labour and Industrial Tribunal if the matter of dispute falls under Schedule-II and III. Where the dispute relates to public utility services and a strike notice under Sec. 22 has been given; if the appropriate Government after examination, thinks fit, can make a reference of the dispute, to the court. Appropriate Govt. can also refer the dispute matter to Board or court in case parties to the dispute request so. Where the strike or lock-out is in existence at the time of reference of the dispute to Labour Court or Tribunal, the appropriate government may by order prohibit the continuance of any strike or lock-out in the industry. Apart from the above, if any industrial disputes exists or is apprehended, the employer and the workmen/union can enter into an agreement for reference of dispute to an arbitrator and request the Govt. for reference. In such situation, the appropriate Government has to refer the same to the arbitrator (s) chosen by employer and workmen/union. In respect of establishments/ industry/ undertakings of private sector or state public sector undertaking, State Govt. would be Appropriate Govt. in which such industry is situated. In respect of public sector undertakings where either central Govt. owns or have control over such undertakings, corporations, boards, central Govt. would be appropriate Govt. as defined in Sec. 2(a) of Industrial Disputes Act. By amendment Act of 1982, several new establishments have been added to the list under this definition. In case of a dispute between a contractor and the contract labour employed through the contractor in any industrial establishment where such dispute first arose, the appropriate Government shall be the Central Government or the State Government, as the case may be, which has control over such industrial establishment. Supreme Court in the case of Hindustan Aeronautics vs. Their Workmen, AIR 1975 SC 1737 has held that the State Government is the appropriate government in respect of a separate unit of the company within its jurisdiction, even though it may be functioning under the directions of its Head Office situated in other state. In the case of workmen of Sri Ranga Vilas Motors vs. S.R. Motors, AIR 1967 SC 1040 SC held that where the industrial dispute arising out of transfer and termination of workman arose in Bangalore branch in Mysore state, the Mysore Government was the appropriate Government to make the reference, because, the subject matter of the, dispute substantially arose within the jurisdiction of the Mysore Government. And not the Madras Govt. where the company head office was situated in Krishnagiri. (Madras State). The important factor to be seen is where did the dispute arise and not where was the dispute sponsored : that is, whether there is a nexus between the dispute and the territory of the State making the reference. Ordinarily if there is a separate establishment and the workman is working in that establishment, the dispute would arise at that place.
When an additional unit is acquired, Is management under legal obligation to seek consent of workers for transfer to such new acquired unit when continuity of service and same pay/perks are ensured?
No! Management is not required to seek consent for transfers. Such transfers are governed by section 25-FF of the Industrial Disputes Act. There are three conditions: (a) The service of the workman has not been interrupted by such transfer. (b) The terms and conditions of service applicable to the workman after such transfer are not, in any way, less favourable to the workman than those applicable to him immediately before the transfer. (c) The new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer. The objective of legislature behind enacting this provision seems to ensure that there should not be any break in service by joining new establishment and adverse impact on salary/wages/perks of the workman. If all these are ensured then pre- requisite of consent of workmen is not there.
When a workman receives his retrenchment compensation without any dispute or protest, will he still be entitled to get re-employed in future if any vacancy arises?
Yes! Industrial Disputes Act has taken care of such protection provided to workman. Sec.25H is the answer. The legislature has given this right to workman that even after taking his retrenchment compensation, employer will have to provide the opportunity of re employment to such retrenched person in future If such vacancy arises. The Sec. says Where any workmen are retrenched, and the employer proposes to take into his employment any persons, he shall, in such manner as may be prescribed, give an opportunity to the retrenched workmen who are citizens of India to offer themselves for reemployment and such retrenched workman] who offer themselves for re-employment shall have preference over other persons. Section 25H of I.D. Act applies to cases where the employer has proposed to take into their employment any person to fill up the vacancies. It is at the same time, the employer is required to give an opportunity to the retrenched workman an offer him re-employment and if such retrenched workman offers himself for re-employment, he shall have preference over another person, who has applied for employment against the vacancy advertised. The object behind enacting Section 25H of the I.D. Act is to give preference to a retrenched employee over the other persons by offering them re-employment in the services when the employer takes a decision to fill up the new vacancies. Section 25H of I.D. Act is required to be implemented as per the procedure prescribed in Rule 78 of Industrial Dispute (Central) Rules,1957 which clearly provides that Section 25H of I.D. Act is applicable only when the employer decided to fill up the vacancies in their set up by recruiting persons. It provides for the issuance of notice to retrenched employee prescribed therein in that behalf. In order to attract the provisions of Section 25H of I.D. Act, it must be proved by the workman that- (i) he was the retrenched employee; (ii) his ex-employer has decided to fill up the vacancies in their set up and therefore, he is entitled to claim preference over those persons, who have applied against such vacancies for a job while seeking re-employment in the services. AP H.C in the case of B. Ashok vs. Chairman, Food Corporation of India; 1996 Lab IC 2808 has held that merely because the employee has accepted the retrenchment compensation, cannot be a ground to deny him the re-absorption. So employer cannot deny the re-absorption on the ground that the person does not have requisite educational qualification at the time re-employment because no technical skill is required for class IV post. S.C. in the case of Management of Barara Co-operative Marketing cum Processing Society Ltd. vs. Workman Pratap Singh decided on 2.1.2019 (CIVIL APPEAL No. 7 OF 2019 [Arising out of SLP (C) No. 17975 of 2014] has held that the workman who after challenging his termination receives the compensation from the employer as per court award cannot invoke Sec. 25H merely on the ground that some other workman has been regularized in the service by Employer. Court held that the regularization of an employee already in service does not give any right to retrenched employee so as to enable him to invoke Section 25H of the I.D. Act for claiming re- employment in the services.
Our establishment is in UP. We have State ID Act. My question is whether in respect of working of 240 days by workman, it is to counted in preceding 12 months from the date of termination or if he has completed 24 days in any period during his service tenure, he will be entitled to retrenchment compensation?
The definition of continuous service as provided in Central Industrial Disputes Act in Sec. 25B and in Sec. 2 (g) of U.P. I.D. Act is different. In Central Act, Sub Sec. 2 (a) of 25B says that for a period of one year if the workman during a period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than 240 days, where as in U.P. I.D. Act Sec. 2 (g) defines.. "a workman who during a period of twelve calendar months has actually worked in an industry for not less than 240 days shall be deemed to have completed one year of continuous service". In U.P. I.D. Act the word "Preceding" is missing and that makes the whole difference. It means that a workman in order to be in continuous service may have worked continuously for a period of 240 days in any calendar year during his period of service. For example if a workman has been in employment for three years and in any year he has completed 240 days, he will be entitled to retrenchment compensation according to Sec. 6 -N of UP ID Act . It will not be necessary to for such workman to complete 240 days in last 12 months preceding the date of termination. Whereas it is required in case of Central I.D. Act. To become entitled to get retrenchment compensation under Sec. 25 F of I.D. Act, it is to be seen whether he has completed 240 days in last 12 months. It will not make any effect/benefit even if he qualifies this condition in previous/early years of his service period in UP. S.C. Court in the case of Sriram Industrial Enterprises vs. Mahak Singh 2007 CLR II 744 has held that the workman will be entitled to relief if such workman competes 240 days in any calendar year.
If an employee does double duty (16 hours) in a day, will that equals to 240 days working in six months?
No! Section 25B of the I.D. Act does not contemplate any such basis of calculation where double duty in single day is to be counted as two days for the purpose of calculation of 240 days working of continuous service. Madras High Court in the case of Tamil Nadu State Transport Corporation vs. N. John Henri Raj 2008 LLR 1208 has held that while calculating 240 days in preceding calendar year, the double working of a workman on a day will not be taken into consideration since it is only for the purpose of overtime payment and not for reckoning of continuous service.
Can formation of works committee replace union formation? Can a wage agreement be executed with works committee thereby replacing the union?
No! Works committee under I.D. Act has a different scope to function. It is obligatory on the employer to constitute works committee in case workers are more than 100 in numbers. The function of the works committee is to discuss matters of common interest and remove causes of friction in day-to-day working. The representative of works committee do not represent for all purposes. It is not intended to supplant or supersede the union for the purpose of collective bargaining. Works committee is not entitled to consider real or substantial changes in the conditions of service. The decision of the works committee is in no way binding on the workmen or their union. It has been held way back in 1955 in the case of North Brook Jute 1960 I LLJ 580 (H.C.) approving Kemp & Co. Ltd. case 1955 I LLJ 48 (LAT). The nature of the works committees finding is recommendatory or advisory and final decision rest with union and the employer. No legal obligation is imposed upon the employer to implement the decisions reached by such committee. Works committee is created with a view to the rendering recourse to the remaining machinery. Works committee cannot go beyond recommendation as they are the bodies who in first instance endeavour to compose differences and final decision rest with the parties. The works committee cannot consider matters like pay revision, employment or re-employment and rationalisation. So your objective of replacing or reducing the impact union cannot be met by making works committee.
Is it necessary for any supervisor to have disciplinary powers to remain out of workman definition of Industrial Disputes Act?
No! It is not necessary to have disciplinary powers for an officer to come out of definition of workman as defined in I.D. Act. If you look at the definition of workman as provided in Sec. 2(s) of I.D. Act, It has four exclusions. First is about the persons who are subject to Air Force, Navy and Army acts, second is about persons of police and prison, Third one is about person who is mainly employed in managerial or administrative capacity and the last fourth one is about a person who being employed in supervisory capacity draws wages more than Rs. 10,000/- per month or exercises mainly functions of managerial nature either by the nature of duties attached to the office or by the reason of the power vested in him. Gujrat HC in the case of Baroda Rayon Corporation Ltd. Vs. Jayant Kumar Maganbhai, 2018 (156) FLR 1, has held that it is not required for a person as supervisor to have disciplinary powers to get excluded from the definition of workman as defined under the definition of I.D. Act. S.C. in the case of Sh. S.K. Maini vs. M/s. Carona Sahu Company Ltd. 1994 (68) FLR 1101 has also observed that though the workman may not necessarily be employed mainly in managerial or administrative capacity, however, if he is employed in supervisory capacity and draws more than the limit specified in the exclusion (iv), he will not be a workman. While determining the categories of service as indicated by the words supervisory, managerial or administrative, it is not necessary to bring interpretation of one into the other. Once it is established that the workman was in charge of the shift and drawing wages exceeding the limit, he would fall within clause (iv) of sec. 2(s) of the Act. An employee employed in a supervisory capacity goes out of the definition of workman if he draws wages exceeding the limit even if he does not exercise functions of a managerial nature. This conclusion comes from the Gujrat HC judgment in the case of Gujrat Electricity Board vs. B.M. Shah 2001(3) GLH 36 and Bombay HC judgment in the case of Union Carbide (India) Ltd. Vs. D. Samuel 1998 (80) FLR 684.
Is there any time limit prescribed for reference of industrial dispute under I.D. Act?
There are two kind of industrial disputes. One is individual and second is industrial (Collective). Sec. 2A talks of individual dispute which can be directly submitted by the aggrieved workman in labour court after 45 days of approaching conciliation officer for exploring the settlement. Here is a time limit for workman to raise his dispute within a period of three years. However, for collective dispute, the phrase at any time is used in Sec. 10 i.e. to refer any industrial dispute if such dispute is in existence or is apprehended, to the forum created under the Act, for adjudication. Normally, it is inferred that, no time limit is prescribed under the Act to refer the dispute for adjudication. In spite of the fact that limitation Act is not applicable on industrial disputes, the Govt. authority can refuse to refer the dispute if it appears that it is stale or too late or does not exist. S.C. in the case of Sapan Kumar Pandit vs. U.P. State Electricity Board 2001(90) FLR 754. has held that the phrase at any time is prima facie indicator of a period without boundary. But the Governments power to refer the dispute has thus owed limitation of time, that it can be referred only so long as the dispute exists. S.C. in the case of Western India Match Co. Ltd. vs. Western India Match Co. Workers Union 1970 (20) FLR 297 has also held that Government may also refer the industrial dispute at any time during the pendency of conciliation proceeding without waiting for failure report of the conciliation officer. So, the Govt. can very well refuse to refer such industrial dispute, which is raised beyond reasonable time having no sign of existence.
Once a point of dispute is settled between workman and management in conciliation, can it be raised again by workman and referred for adjudication in court?
No! The concept oin based Industrial Disputes Act is based on resolution of disputes and if not possible then through adjudication. Thats why sanctity of settlement has been recognized and kept beyond challenge if arrived at during conciliation. In case where the difference or dispute between the parties have been amicably settled resulting in filling of application for withdrawal of the demand notice, no dispute exists. Thus, such dispute could not be referred further for adjudication. P&H Court in the case of Haryana State Industrial Development Corporation Ltd. vs. Presiding Officer, Labour Court-Summary of Cases, 2003 (99) FLR page 5 (Sum) has held that in case such dispute is referred for adjudication, the course open to Labour Court is to conclude, that the dispute between parties has been amicably settled and nothing survive for adjudication.
Ours is a housing finance company. Due to Covid, we have asked employees to submit their resignations and take severance package of one month notice as per their appointment terms. Some have given clear resignations but some have sent emails mentioning that they are forced to resign and challenged management decision before labour authorities. They have also alleged that Co. has enough funds to donate to PM cares Fund but not for employees to pay salaries. Where we stand legally?
Your stand appears weak legally. As you narrated, it appears that since co. is in bad financial position due to Covid generated lockdown, employees were made to resign involuntarily. Involuntary resignation amounts to termination/retrenchment and can always be challenged under I.D. Act. Such employees who have mentioned in emails that they have been forced to resign, tantamount to illegal retrenchment if not complied with relevant provisions of I.D. Act. Moreover, the allegation of donating any fund from Co. towards PM cares Fund will have to be meted out by you strongly and justify the resignations as voluntary. It is suggested that the employees who have mentioned the element of force/undue influence in getting their resignations, you should not treat that as resignation and accept. Rather adopt the legal way of terminating their services by complying with retrenchment provisions. If your strength is more than 100 workmen, then you need to seek prior approval of effecting retrenchment from the appropriate Govt. In all probabilities, such dispute of resignations if referred for adjudication, final order may go against you.
Supreme Court has ordered that matter of payment of wages for the lock down period should be settled by employer and employee mutually. We have paid some amount against April and May wages but not in full. Now how we should go about?
The Supreme Court order is interim in nature. Next hearing has been fixed for last week of July. The order has provided an opportunity to settle the matter amicably by both employer and employee and whatever is decided and agreed between the two will be valid irrespective of MHA dated 29.03.2020 order in question which has been challenged by companies. In view of the order, it is suggested to talk to workers, reach out to some amount or percent of wages to be paid for the lockdown period of 50 days as mentioned in order, make an agreement in writing, get it signed by all workers and registered under Sec. 18(1) of I.D. Act. In case it is not possible for employer and employees to reach out to an agreement, labour authorities can very well be involved for conciliation. If such agreement is reached out with the intervention of conciliation officer, it should be written, signed and registered as tripartite settlement under Sec.12(3) of I.D. Act. In case there is not settlement is made out even after intervention of labour authorities, then this dispute cannot be referred for adjudication as the matter is sub-judice in Supreme Court and then employer has to wait for final order in the matter. That final order would be binding. Instead of waiting for final order of SC, employer should avail this interim opportunity and close the matter mutually from becoming a dispute.
After lockdown period, for cost reduction, can a company process Pay cut in percentage for all employees (slab wise)/lay off /LWP for different employees based on work schedule so burden can be diverted for survival of all/Week Off Day addition e.g. Sat & Sun both in place of Sunday only (Saturday with Pay Cut)? How to process legally?
After lock down, in normal working, I.D. Act would be applicable. Sec. 9-A prohibits employer to effect any change in service conditions that affects adversely to workers without giving them 21 days notice. So make out a case, rational proposal, inform affected individually with 21 days notice and implement. If your employment terms indicate that he is hired to work on all week days and five day week is introduced temporarily without any pay cut, then management can withdraw five day week working and start six day working. However, even after this, It may be an industrial dispute. Workers may challenge your pay cuts/restarting six day week. You should be ready with sounding and reasonable facts before the court/industrial tribunal to establish your genuineness and reasonability.
We have a school and a terminated teacher has raised an industrial dispute. We have asked the Conciliation Officer to close the matter as the teacher is not a workman and such dispute cannot be refered. In such situation what are the powers of the Conciliation Officer?
The Conciliation Officer has only administrative powers and not the adjudicatory powers. He cannot refuse to refer a dispute simply on the ground of decision taken by him. In your case it may be correct that teacher is not a workman but on the basis of this view Conciliation Officer has no power to refuse to refer the dispute and reject the application of the terminated teacher. You can raise this plea before the appropriate labour court. Conciliation Officer cannot assume the adjudicatory powers of the court. Allahabad High Court in the case of Riyan International School Karamchari Sangh vs. State of U.P. 2008 LLR 1261 has also held in the same direction.
In the course of disciplinary proceedings, sometimes employee tenders his confession or admission or apology letter. I want to understand the difference and impact of such document in proceedings?
Karnataka HC in the case of H.K. Lakshminarayanappa vs. The University of Agricultural Sciences, Bangalore in WRIT APPEAL NO. 5986/2011decidecd on 6.3.2015 has discussed the issue and said that Admission is the nod of the charged employee to any particular fact mentioned in the charge sheet. If it is accompanied by admission of guilt also, it becomes a confession. An apology presupposes that the accused admits the guilt and begs to be pardoned. Admission/apology to have the effect of dispensing with inquiry must be clear, concise and unconditional and made after issue of the charge-memo/charge-sheet. An apology loses its grace if it is not tendered in the beginning but only when the charge is proved and punishment is going to be imposed. Confession is based on the maxim habemus optimum testem, confitentem reum which means that confession/admission of delinquent employee is the best evidence against him. The rationale behind this principle is that an ordinary, normal sane person would not make a statement which would incriminate him unless urged by the promptings of truth and conscience. When there is admission which constitutes the delinquency then there is no necessity for further proof and a decision can be taken by the competent authority on admission. Apology tendered at the later stage when things turn against him it shorn of all grace and is an act of cringing coward. Apology is an act of contrition, the manly consciousness of a wrong done and a desire to make reparation. It should be the outcome of a real feeling of remorse. Hence, if it is not offered in the earliest and unreservedly, it is shorn of penitence. An apology tendered when the punishment is going to be imposed ceases to be an apology but an act of cringing coward.
We have re-started business activities after govt. permission and lock down was lifted with certain conditions in last week of April 20. We sent communications to workers through mob. messages and personal contacts at their local addresses in our record. Many workers did not report for duty on the pretex that they were not allowed to move out being in curfew area in their permanent home town in different state. Are we liable to pay wages to such workers for the period of absence?
No! Once Govt. allowed re opening of business activities and after reopening you have called workers to report for duty and they do not report, wages of such absence period is not payable. It appears that during lockdown such workers left for their permanent homes in different states from local residence. If they have done it without management information and approval, at their own risk, they have to be responsible for their own acts. Moreover, during lockdown, by moving from their local residences, they have also violated the Govt. guidelines of remaining at the same place where they were at pre lock down period. Since they have communicated about their inability to report due to circumstances beyond their control, it is suggested that neither their names should be struck off from rolls, nor any disciplinary action should be initiated.
When a factory is closed and closure compensation is paid to workmen, are they entitled for re employment in case factory is restarted?
No! In case of closure, Sec. 25-H cannot be invoked. If a factory is closed by complying the relevant provisions and closure compensation is paid to workmen, such workmen are not entitled for re employment when factory is restarted. It has so been held by Bombay HC in the case of Meltron Engineering Industries vs. Pune Labour Union 2021(170) FLR 344. The court held that the duration of the closure, though relevant for determining the intention and bonafides of the employer at the time of closure is not decisive. SC in the case of General Labour Union, Bombay vs. B.V. Chavan 1985 (50) FLR 16 has held that the true test to consider whether the closure was a device or pretence to terminate the services of workmen or whether it was bonafide and for reasons beyond the control of the employer at the time of closure. The court must in such case keep in view all relevant circumstances at the time of closure. Bombay H.C. in the case held that it was not the case here and only the reason of restarting the factory after few months cannot be the sole reason to question the intent of employer. Termination of workmen due to closure cannot be converted in to retrenchment in such circumstances.
Whether the owner is liable to pay compensation and prosecution for the death of a contractual workman while working outside the factory premises under contractor?
No! The owner of the factory is not liable to pay any compensation for unfortunate death of contractual workman working under other contractor outside the factory premises because the accident has not occurred inside the factory premises. Karnataka HC in the case of M.V. Nath CMD M/s. Joja Chemicals vs. State of Karnataka 2001 (89) FLR 736 has held that owner owe no duty towards the deceased as the deceased was under contractor firm and the work was not going on inside the factory premises and the most important thing is that the deceased was not the worker within the meaning of Sec.2 (l) as the deceased was not working in the manufacturing process done by the factory. Even though the worker was working on electrical repair work meant for the factory but was outside the factory premises. In this case contractor was held principal employer for the deceased. Had the accident taken in factory premises, the matter would have been different.
When an individual dispute becomes the industrial dispute and what is the difference between the two? What are those guiding factors?
Sec. 2A creates a fiction that dispute related to discharge, dismissal and retrenchment or in respect of an individual workman is deemed to be an industrial dispute. In such matter it is not required that it is espoused by the union or considerable number of workmen which means that an individual workman with union support can raise his dispute. A.P. H.C. in the case of Praga Tools Ltd. vs. Government of Andhra Pradesh 1976 Lab. IC 190 has held that except the dispute relating to discharge, dismissal retrenchment or otherwise termination of service, all other disputes relating to terms of employment or conditions of an individual like transfer, bonus, wages, promotion, increment, change in service conditions etc., will be industrial dispute which will be required espousal of union or by substantial number of fellow workmen. Such matters cannot be raised by individual workman. Cal. HC in the case of Swapan Das Gupta vs. First Labour Court 1976, Lab. IC 202 has held that matter of employer employee relationship cannot be a matter of individual dispute and will also be an industrial dispute and require valid espousal. In order that an individual dispute may become an industrial dispute, it has to be established that it had been taken up by union or appropriate number of workers. It is only a collective dispute that can become an industrial dispute. It is so held by SC in the case of Bombay Union of Journalists vs. The Hindu 1961 II LLJ 436. Where there is no union, the dispute is to be espoused by considerable number of workmen and for this there is no hard fast rule as to how many numbers will become considerable. It depends from facts of each case. SC in the case of Indian cable Co., Ltd. vs. Its Workmen 1962 I LLJ 409 has held that the number of workmen must however, be such as to lead to such inference that the dispute is one which affects the workmen as a class. SC in the case of Workmen of Indian Express Newspaper Pvt. Ltd. vs. The Management 1970 II LLJ 132 has held that about 25% of workmen of establishment would constitute requisite number for valid espousal of the dispute.
After lockdown, when we started factory, we asked every employee to give an undertaking that he has not been infected by corona virus so far, he will follow the quarantine rule of the Govt. in case so directed by co., will immediately report to management in case of any symptoms of Covid, maintain and comply with social distancing, wear the mask, maintain discipline and give full production. Few employees refused to give that undertaking. We have marked them absent, not allowed to join the duties and deducted the salary. They have now raised the dispute that they have illegally terminated. What is the legal position?
There appears no industrial dispute at this point as their names are very much on the rolls of the company and they have been marked absent and not paid wages because they did not give undertaking which was required. Undertaking does not in any way change the service conditions. Though the facts of a case are not exactly the same but similar to some extent where Industrial Tribunal, Bombay, in the case of Vishnu Tulsiram & Others vs. Metal Press India Bombay, 1977 (50) FJR 331 has held that. Keeping the workmen out of the factory premises unless they gave the required undertaking did not amount to termination of their services or punishing them. It was up to the workmen to give the undertaking and to enter the factory. If they did not give the undertaking and consequently did not work, the employer cannot be said to have wrongly marked them absent; The undertaking demanded by the employer did not amount to alteration of the rules as there were no existing rules. Marking the workmen absent and depriving them of their wages did not amount to introduction of new rules of discipline; Though the employer is entitled to proceed against the workmen on the basis of the alleged go-slow or sit-down strike and other misconducts, charge sheet them and then proceed in accordance with law, it does not mean that the employer must follow that remedy or that was the only remedy available to him or that it was not open for him to declare a lockout; and If the demand of the employer was unjustified and consequently the non-payment of wages was unjustified, it is open to the workmen to raise an industrial dispute and have it adjudicated in accordance with law.(On facts, the Tribunal found that the alleged misconduct of the workmen was proved and that the employer was justified in asking for the undertaking). The undertaking asked by the employer is legal and effective and there is no contravention of Section 9A or Section 33(2) (b) of the Industrial Disputes Act, 1947.
When we reopened the factory and office, we made out a detailed SOP and called workers initially in small groups. Workers were informed to be ready to report next day on call. Many workers could not be called for duty because there was no work for them and plant was operational only at 50% capacity. This happened in May and June also. We paid salary only to those who attended duties. Remaining workers are now also asking for their salary of the period. Are we under obligation to pay to such workers also?
Yes! In such situation where you informed workers of re-starting the plant and asked them to be ready to report on call, you as an employer is liable to wages to such workers who have not been called for duty. It is not their fault. As employer you were not able to provide employment to them and asked them to be at home. Better would have been for you to declare lay off for such workers who were not called. In that case your liability to pay wages would have reduced to 50% of basic and DA. I suggest that initiate a dialogue with such workers, make them understand the co. situation in a transparent way and also understand their position. Try to strike out a settlement which leads to win- win situation. There are many options. In such absence, you will be liable to pay full wages to such workers.
We are planning to ask some employees to do work from home till situation improves, as employees health is priority for us. What kind of changes should we make in employment contract to insulate co. interest and also employee interest so that it is in tune with employment laws also?
When you ask an employee to do work from home, it means employee home will attain a status of notional extended workplace. While drafting employment contract in respect of such employees, you need to keep in mind the nature of work he is going to perform. You can specify certain guidelines related to daily attendance by login and log out through his computer, use of social media during working time, daily scheduled meeting with team mates and leader, specific tasks and assignments, data protection, internet usage limit to be reimbursed by Co. dress code while moving out on Co. assignment, restructuring the compensation package by including certain expenses like electricity, internet and AC consumption allowance and excluding transport, food etc allowances because neither such employee would come to office nor will take food in office cafeteria. Such benefits can be accrued on actual basis. Leaves entitlement can also be restructured. There should be condition that WFH is temporary arrangement and can be withdrawn at any time and in that condition his original compensation package will become effective and WFH package will cease to effect because it is not going to work for a long time everywhere in India. It can be job and industry specific. In WFH model trust between employer and employee is the key. You cannot oversee the employee all the time and have a sort of surveillance over them.
Whether bonus will be payable to such persons who are paid only commission?
No! Section 2(21) of the Payment of Bonus Act does not include any commission payable to the employee vide clause (vii) of section 2(21). It clearly defines salary or wages. Its opening provisions includes within it all remunerations (other than the remuneration in case of overtime 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 and includes dearness allowances, yet in express terms, the definition does not include any commission payable to the employee vide clause (vii) of section 2(21).
Can employer deny the payment of legal dues of employee like wages, OT or gratuity on the ground that the company is protected under Sec.22 of SICA Act?
No! Employer cannot get any protection from provisions of SICA Act in respect of payment of legal dues of employee. The M.P.H.C. in the case of of National Textiles Corporation vs. Collector (1998 M.P.L.S.R. 469) has held that held Inter alia that though the language of Section 22 ibid is wide yet, it cannot be stretched so as to include within its sweep to stay the legitimate dues of workers. The Court held that if the R.R.C. is issued for recovery of dues of a worker, then Section 22 of SICA cannot be relied on by the employer. In another case M.P. H.C. in the case of M/s. Shri Ishwar Alloy Steels Ltd. vs. The Collector and Two Others. 2002 LLR 455 has held in the same direction. In this case the worker wages and overtime was not paid and recovery certificate was issued by competent authority under Minimum Wages Act against the employer.
Is there any limitation period prescribed for claiming the gratuity from employer?
Rule 7(1) of Payment of (Central) Gratuity Rules provides that employee shall apply for payment of gratuity to the employer within 30 days from the date it becomes due. The prescribed form is FORM I. Rule 8 Provides that employer within 15 days from the receipt of the claim application received from the employee, shall specify the amount of gratuity after verifying the claim and fix the date for payment not later than 30 days of receipt of the claim application under notice to controlling authority. If the claim is not admissible, the employer is under legal obligation to inform the employee specifying the reasons of not admitting the claim. Such information will be given to employee in form L and M respectively. However Sub Rule 5 of Rule 7 also prescribes that the application for gratuity filed after expiry of specified period shall also be entertained if the employee adduces sufficient reasons for delay in preferring the claim. No claim shall be invalid under the Act merely because it was not filed by employee in prescribed time limit. Karnataka HC in the case of General Secretary, Vokkaligara Sangha, Bangalore vs. R. Chandramouli 2002 LLR and Gujrat HC in the case of Indian Red Cross Society vs. Vidyaben H Vyas 2004 LLR 288 have also held in the same direction.
In case of absence of any nominee, who will get the gratuity of the deceased- his mother or wife?
The provision of section 6 of the Payment of Gratuity Act, 1972 read with Rule 4 of Payment of Gratuity Rules, 1972 (Central Rule) contemplates the nomination in prescribed manner. Since deceased had not declared his nominee, legal heirs of the employee are eligible for payment of gratuity amount. But in case of dispute between the claimants, the controlling authority cannot decide the entitlement of rival claimant and the only recourse is to obtain a succession certificate from appropriate civil court. Allahabad HC in the case of Asha Debi Jauhari vs. Smt. Sharda Deb 1977 (35) FLR 306 has held that for this purpose the provisions of Rule 12 of Payment of Gratuity Rules, 1972 is not relevant and the only forum is available to obtain a succession certificate from the local Civil Court or the Administrator General of the State. In another case of Nagar Palika vs. Appellate Authority 1988 (56) FLR 27 Allahabad HC has held that it is not necessary for the claimant to first obtain the succession certificate and only then apply for payment of Gratuity. It would always depend upon the facts of the case as to whether such certificate would be necessary or not. When both the wife and mother if dependant are part of family as defined in Sec. 2(h) of the Act and the nomination can only be in the name of family members. In case mother is not dependant on the deceased son, the gratuity is to be paid to his wife.
If the employee after strike do not report back to duty and leave the services, can gratuity be forfeited?
No! The gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of property belonging to the employer shall be forfeited to the extent of the damage or loss so caused. The mere intention or abandonment of job after strike cannot be said to be a situation whereby employer has the power under Sec. 4 (6) of Payment of Gratuity Act to forfeit the gratuity of such employee. The pre-condition to exercise of powers under provision stated above is that the employer has to pass a specific order terminating the services of the employee. This has so been held by P&H H.C. in the case of M/s. Hindustan Everest Tools vs. Inderjeet & Another 2020 (166) FLR 1019.
Our one employee has resigned after restarting of business activities post lockdown. His service tenure was 4.9 months before lockdown. On the date of resignation he has completed five years. Now would he be entitled to gratuity?
Yes! He will be entitled to gratuity since he has completed five of continuous service in your organization. Do not get confused with lock down period of no working. It will be deemed as on duty days as per govt. order. Employee will be entitled to all benefits on this period till 17.5.2020 when this order is withdrawn.
We have wage structure of basic, HRA, conveyance allowance and site allowance. I want to know that while paying gratuity whether it would be payable on complete salary components including conveyance and site allowance?
No! While paying gratuity under the Payment of Gratuity Act neither the conveyance allowance nor the site allowance will be taken into consideration since the definition of the wages as clarified by the Supreme Court in the case of The Straw Borad Manufacturing Company Ltd. vs. It’s Workmen (1977) 2 SCC 329 means basic wages and dearness allowance and nothing else. This corresponds to section 2(s) of the Act. So you are not liable to pay gratuity on conveyance and site allowance. Bombay High Court in the case of Voltas Ltd. vs. Chandrakant Y. Bhramhane 2008 LLR 84 has also held in the same direction.
What is the scope and dimension of the term sexual harassment as defined in POSH Law. Can the hostile circumstances created in the organization though not straight instances of seeking sexual favour against the woman employee, also can be termed as an act of sexual harassment?
Yes! The POSH Law has been enacted with objectives to provide broad view of sexual harassment against woman and provide protection to her at workplace. The workplace definition is also very much expanded and not restricted to physical designated workplace of employer and their four walls. In the same way, the definition of sexual harassment has to be interpreted and understood in broad respect and cannot have restricted meaning. M.P. H.C. in the case of Global Health Private Pvt. vs. Local Complaints Committee 2020 LLR 40 has discussed the issue in detail and held that scope and dimension of Sec. 2 (n) and 3(2) must not receive narrow and pedantic meaning. The act of sexual harassment is an act of violation of human rights, women right to live with dignity and protection against all types of discrimination. Court held that unwelcome acts or behavior, directly or by implication including circumstances if it occurs or is present in relation to or connected with any act or behavior of sexual harassment like comment of perpetrator, If she wanted to continue, she should be good to him, comments upon dress and outfits of woman, avoiding signature on her bills of reimbursement, making her sit in his cabin for hours together, creating obstruction and causing harassment in technical and operational support, talking with her in high pitch voice with contempt and offending her dignity and chastity, not allowing her to participate in marketing, marginalizing and embarrassing and subjecting to typical hostile work environment intimating with future employment etc will constitute acts of sexual harassment. When word Includes is used in definition, the legislature does not intend to restrict the definition.
What is the difference between domestic enquiry and enquiry by IC under POSH law?
1- Domestic Enquiry is not governed by any defined statute but by principles of natural justice and procedure defined in services rules/standing orders and guidelines provided by courts whereas the enquiry by IC is governed by the provisions of POSH Act. 2-In IC it is a four member committee and qualifications are provided in the POSH Act, whereas in domestic enquiry it is normally one Enquiry officer and there is no qualification of Enquiry officer provided in any law. 3-For IC the period is of three years for members to remain in the committee, whereas for enquiry officer, it comes to an end with submission of enquiry report to the disciplinary authority. 4- IC can recommend the punishment to the accused/respondent in their report whereas Enquiry officer cannot recommend any punishment. It is for the disciplinary authority to decide on the punishment. 5- The complaint of sexual harassment can be received by any member or presiding officer of the IC and initiate action whereas in domestic enquiry, Enquiry officer has no such role. Chargesheet is issued by the management and on receiving the explanation, decide whether inquiry should be conducted or not? 6- No advocate is allowed to represent any party before the IC whereas in domestic enquiry it is possible if service rules/standing orders so provide. 7-IC has powers to conciliate upon the matter on the request of the complainant and reach to a settlement without any monetary consideration but in domestic enquiry Enquiry Officer has no such powers. 8- IC members have the same powers as vested in civil court in respect of summoning of records, enforcing the attendance of any person to examine him on oath and production of documents, whereas Enquiry officer has no such powers. 9-IC has to complete the inquiry within 90 days whereas as per one SC judgment domestic enquiry should be completed within six months or one year. However, there is no such provision in any law about time frame. 10- IC can recommend interim relief to the aggrieved woman in respect of her transfer to some other place, to grant leave for a period up to 3 months in addition to already available leaves whereas Inquiry officer has no such powers. 11- IC proceedings are to be held in camera and no publication of proceedings is allowed whereas in case of domestic enquiry , no such prohibition is applicable.
When work from home is becoming popular, pl. clarify whether my home will be deemed as workplace and can late night calls of boss discussing sexuality under the guise of knowing work progress and other similar virtual acts be deemed as sexual harassment?
Section 2(o) of the Act defines workplace in an inclusive and non-exhaustive manner which under its sub clause (vi) includes a dwelling place or a house. Although, the spirit of the Act refers to the domestic servants and helpers who are employed in a dwelling place or a house when it means that workplace includes a dwelling place or a house. Yet the unprecedented extraordinary times of Corona virus lockdown and on application of literal rule of interpretation, the meaning of workplace shall also encompass work from home under Section 2(o) (vi). Therefore, sexual harassment occurring through online medium while working from home falls under the scope of Prevention of Sexual Harassment at Workplace Act, 2013. The second most pertinent question that is likely to arise is that, since there is no physical element involved while working from home, what are the kinds and forms of sexual harassment that can occur while working from home? The answer to the kinds and forms of sexual harassment that can occur while working from home can be found under section 2(n) of the Act, which is yet another non-exhaustive and inclusive clause defining "sexual harassment". The relevant sub clauses here are sub clause ii, iii, iv and v of section 2(n) which deals with the expressed or implied unwelcome acts or behaviour demanding or requesting sexual favours, making sexually coloured remarks, showing pornography and any other unwelcome verbal or non-verbal conduct of sexual nature, respectively. Therefore, such are the instances of sexual harassment that are covered under the Prevention of Sexual Harassment at Workplace Act, 2013 which one can encounter online while working from home.
What is the difference between domestic enquiry and enquiry by IC under POSH Law?
1- Domestic Enquiry is not governed by any defined statute but by principles of natural justice and procedure defined in services rules/standing orders and guidelines provided by courts whereas the enquiry by IC is governed by the provisions of POSH Act. 2-In IC it is a four member committee and qualifications are provided in the POSH Act, whereas in domestic enquiry it is normally one Enquiry officer and there is no qualification of Enquiry Officer provided in any law. 3-For IC the period is of three years for members to remain in the committee, whereas for enquiry officer, it comes to an end with submission of enquiry report to the disciplinary authority. 4- IC can recommend the punishment to the accused/respondent in their report whereas Enquiry officer cannot recommend any punishment. It is for the disciplinary authority to decide on the punishment. 5- The complaint of sexual harassment can be received by any member or presiding officer of the IC and initiate action whereas in domestic enquiry, Enquiry officer has no such role. Charge-sheet is issued by the management and receiving the explanation, decide whether inquiry should be conducted or not? 6- No advocate is allowed to represent any pary before the IC whereas in domestic enquiry it is possible if service rules/standing orders so provide. 7-IC has powers to conciliate upon the matter on the request of the complainant and reach to a settlement without any monetary consideration but in domestic enquiry Enquiry Officer has no such powers. 8- IC members have the same powers as vested in civil court in respect of summoning of records, enforcing the attendance of any person to examine him on oath and production of documents, whereas Enquiry Officer has no such powers. 9-IC has to complete the inquiry within 90 days whereas as per SC judgment domestic should be completed within six months or one year. However, there is no such provision in any law about time frame. 10- IC can recommend interim relief to the aggrieved woman in respect of her transfer to some other place, to grant leave for a period up to 3 months in addition to already available leaves whereas Inquiry officer has no such powers. 11- IC proceedings are to held in camera and no publication of proceedings is allowed whereas I case of domestic enquiry, no such prohibition is applicable.
Can ESIC reject the claim of the employee on the ground that his Contribution was not deposited?
No! ESI cannot. ESI Corporation is duty bound to provide medical benefits to a member of the family of insured person whose condition requires medical treatment be it an ordinary treatment or super specialty. It is the duty of the employer to deduct employees share and then deposit it along with his own share to ESIC. The Kerala HC in the case of Smitha Rajendran vs. Employees State Insurance Corporation 2021 (169) FLR 942 has held so. In case of failure to do so by employer, ESIC is empowered to recover the amount as arrears of land revenue from the employer. The term Insured Person as defined by Sec. 2(14) of the ESI Act covers an employee in respect of which contributions were payable meaning thereby that only because of non remittance of contribution of such employee, he cannot be made disentitled to the benefit available for the insured person. Sec. 68 of ESI Act points out that even if the employer fails or neglects to pay any contribution, as a social security measure, The ESI corporation is duty bound to provide.
We have our export unit where only export of finished stone products are done. The cutting, grinding, designing, finishing and polishing are done by contractor firm who also has set up its unit separately registered under factories Act and do our work. In such arrangement can ESI be applicable on both units considering them as one?
As facts you have narrated that you split the work in to manufacturing and marketing which is done by two units-one by you as principal employer and other is done by contractor for you. Looking in to the definition of the Immediate Employer and employee as provided in ESI act and if apply in your case, in all probabilities, contractor factory will be considered as the factory of principal employer because predominant activity is being carried by contractor for principal employer business. SC in the case of Lakshmanamurthy B.M. The Employees State Insurance Corporation 1974 (28) FLR 223; 1974 I LLJ 304; 1974 (4) SCC 365 has held that work taken out by contractors in the adjoining vicinity though their factory has been subsequently registered separately under Factories Act, is preliminary or incidental to the work in the principal employers factory turning out the finished products for export. The work in two places has an intimate correlation and is a piece of integrated whole and the work of the contractors through their labour is ordinary part of the work of the principal factory. Court held that the contractors are the immediate employers within the meaning of Sec. 1(13) of the ESI Act and the workers employed with them are the employees under the Act.
Because of washing allowance and medical allowance, employees crossed wage limit of ESI. Employer still liable to pay ESI on salary?
No! It is well settled principle that washing allowance is a part of wage as per definition of wages provided in Sec 2(22) of the Act. It will be a wrong notion for ESI to treat washing allowance as a perk on one hand and on the other hand expect contribution too on that amount. Medical allowance too is a part of wage but when it is paid only to those employees who are out of ESI coverage has no relevance for the purpose of contributions. Gujarat HC in the case of Regional Director ESIC vs. Bhavnagar Vegetable Products unit, 2016 CLR I 620 has also held that washing allowance would be treated as part of wage and if by adding the amount of washing allowance, employee crosses the wage limit fixed for the purpose, unit is exempted from making payment of contribution of such employees to the ESIC.
We are into footwear industry. We outsource certain jobs on piece rate basis like finishing of straps, slitting. We pay such agencies against job works. We have no control and supervision over their employees of such agencies. ESI Authorities are asking us to pay ESI contribution on the bill amount of job work paid to such agencies. Are we liable for such payment?
No! The facts you have narrated indicate that outsource agencies are not only working for you and you have no control and supervision over them. In such situation you are not liable to pay any ESI on the bill amount paid to such agencies for job work done on piece rate basis. Jharkhand High Court in the case of Bihar Rubber Company Ltd. vs. ESIC Patna 2008 LLR 64 has also held that when the company has got no connection or control on said units/agencies and are not supervised by the company, such units doing the job work would not be covered under section 2(9) of the ESI Act. In this case the company was manufacturing rain wears and air pillows covered under ESI. They were outsourcing various jobs to other units which were neither supervised nor controlled by the company. Court held that demand as raised by the ESI Authorities on the company is misconceived and liable to be quashed.
We have a small unit employing only eight people. After inspection, ESI Authorities have sent us a notice of demand and said that unless we deposit the demanded amount they will not provide us an opportunity to file the objection. Is it legally correct ? Are we bound to deposit the amount first and then go for hearing ?
No! ESI Authorities cannot ask you to deposit the amount as demanded. It cannot be a pre-condition of hearing. You are not legally bound to deposit the amount first and then ask for hearing. ESI Authority is under legal obligation to provide you a copy of the inspection report and basis of their demand notice and give you an opportunity to file your objections to the notice of demand. Allahabad High Court in the case of Naresh Chand Bhargava vs. Chairman ESIC Kanpur 2008 LLR 1262 has also held that ESIC is not empowered to direct employer of an establishment to first deposit the amount as sought to be recovered only then hearing and objections will be allowed.
What ate the tests to conclude that multiple establishments can be clubbed as one under EPF Act?
Functional integrality and existence on one without the other are not the only absolute tests to club the two or multiple establishment to cover under EPF Act. There are other factors such as intent and objectives of the owner behind creating different firms are also to be seen. Delhi HC in the case of Regional PF Commissioner vs. Nath Traders and Ors. 2008 II CLR 124 has held that where the nature of business is same with common control and supervision, in common premises having one accountant to manage their accounts with one common telephone and employees of both the firms were intermingled will be deemed as one establishment for the purpose of EPF. In this case the owner was in business of dealership of LPG gas and other unit was having dealership of distribution of Kerosene Oil. He was sole proprietor of one unit and was partner in other unit. Other partner being his wife was sleeping partner. Merely having separate sales tax and income tax registrations shall not change the unity of the establishments.
Whether Employer is liable to pay PF contribution on Back wages when awarded in full by the Labour Court along with reinstatement and benefits?
Yes! When the Labour Court awards full back wages with all benefits along with reinstatement declaring the dismissal invalid, Employer is liable pay share of EPF contribution on basic wages of the employee for the entire period when he was kept out of service because of illegal termination. Kerala HC in the case of Manager, Wallardie Estate Harrison Malyalam Ltd. vs. Regional Provident Fund Commissioner 2020 (166) FLR 848 has held that full back wages would also include the contribution towards the EPF and other benefits to which employee was legitimately entitled. Division Bench of the Kerala HC in the case of K.Y. Varghese vs. Puthuppady Service Co-operative Bank Ltd. and others (Judgment dated 6.6.2008 in W.A. no. 881 of 2007) has also held that when a workman was reinstated in service with full benefits including back wages, he should have been deemed to be in service from the date on which he was kept under suspension till the day he was reinstated in service. SC in the case of Prantiya Vidyut Mandal Mazdoor Federation vs. Rajasthan State Electricity Board 1992 (2) SCC 723 has held that when the award gives revised pay scales the employees become entitled to the revised emoluments and when the said revision is with retrospective effect, the arrears paid to the employees as a consequence are the emoluments earned while on duty. SC in another case of Changdeo Sugar Mills vs. Union of India 2002 (SCC) 519 has held that amounts paid under a settlement between employer and employees as wages for a period when the employees were deemed to be on duty as in the case of lock out would be held as basic wages for EPF contributions. However, Gujrat HC in the case of Swastik Textile Engineers Pvt. Ltd. vs. Virjibhai Mavjibhai Rathore 2008 I CLR 953; 2008 (116) FLR 1002 has taken a different view. It has held that back wages awarded by the court are not the same as wages paid to an employee for the duties performed by him. Even if the Labour Courts order is about reinstatement with back wages depicting continuity in service, it will not carry the meaning period spent on duty. The purpose to allow continuity in service by Labour Court would be that such period would not be treated as break in service for the purpose of service benefits like pay, increments, leave, allowances, pension etc. In the absence of a specific order that such period should be treated as period on duty, such period cannot be held to be period spent on duty. Moreover, Labour Court award of only 50% back wages also intend to show that the period of absence from duty on account of illegal termination from service was not intended to be treated as period spent on duty. Court also held that amount of back wages paid to workman will not constitute basic wages because when the court awards back wages for the period the employee was kept away from duty, what the court does is to award damages assessed in terms of whole or part of the wages the workman would have earned had he been continued in service without interruption. It is not the same as payment of wages for the duties performed or for the period deemed to have been spent on duty. So the situation can be different when the back wages are granted in full and when it is granted in some percentage and not full.
According to our settlement with the workers we are paying them some amount as food allowance. PF Authorities are asking us to pay PF contribution on this food allowance amount. What is the legal position? Are we liable to pay PF on food allowance?
No! You are not liable to pay PF contribution on food allowance as it cannot be equated with the dearness allowance. Bombay High Court in the case of Tata Hydro Electric Power Supply Company Ltd. vs. The RPFC 2008 LLR 1013 has held that food allowance as given to employees by the employer of an establishment covered under the EPF Act will not be treated as dearness allowance to attract PF contributions since there being no supply of any food to the employees. Food and such allowances cannot be treated as the cash value of the food concession.