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.
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.
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.
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.
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.
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.
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 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.