Compensation Management Laws

Compensation Management Saket Jeswani MBA

Sem - 3

RCET, Bhilai

[SAKET JESWANI]

Unit - IV

Compensation Laws

[2013]

Saket Jeswani, Jeswani, Associate Professor, Professor, MBA, RCET, Bhilai Page 1 Saket Associate MBA, RCET, Bhilai

THE WORKMEN’S COMPENSATION ACT, 1923

Saket Jeswani Associate Professor, MBA,RCET, Bhilai

Introduction 1. A beginning of social security in India was the passing of the workmen’s Compensation Act, 1923.

2. In 1921, the government formulated some proposals for the grant for compensation and circulated them for opinion. The proposals received general support. 3. As a result, the workman’s Compensation Act was passed in March 1923 and was put into force on July 1, 1924. Subsequently there were a number of amendments to the act. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

2

Page 2

Objective of the Act 1. The object of the Act is to impose an obligation upon employers to pay compensation to workers for accidents arising out of and in the course of employment i.e. to pay compensation for the injury sustained to him.

2. The Workmen’s Compensation Act, aims to provide workmen and/or their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen.

Saket Jeswani, Associate Professor, RCET, Bhilai

3

Employers Liability 1. The employer of any establishment covered under this Act, is required to compensate an employee Who has suffered an accident arising out of and in the course of his employment, resulting into (i) death, (ii) permanent total disablement, (iii) permanent partial disablement, or (iv) temporary disablement whether total or partial, or Who has contracted an occupational disease.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

4

Page 3

The Employer Shall Not Be Liable 1. 2.

3.

In respect of any injury which does not result in the total or partial disablement of the workmen for a period exceeding three days; In respect of any injury not resulting in death, caused by an accident which is directly attributable to the workmen having been at the time thereof under the influence or drugs, or the willful disobedience of the workman to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workmen.

Saket Jeswani, Associate Professor, RCET, Bhilai

5

Disablement 1. Disablement means any loss of capacity to work or move 2. May result in loss or reduction of his earning capacity 3. Disablement may be 1) Total {sec.2.1(g)} 2) Partial {sec 2.1(l)} 3) Temporary 4) permanent

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

6

Page 4

Disablement 1. 2.

3.

4.

Disablement, is said to be total when if Incapacitates a worker for all work he was capable of doing at the time of the accident resulting in such disablement. "Total disablement" is considered to be permanent if a workman, as a result of an accident, suffers from the injury specified in Part I of Schedule I or suffers from such combination of injuries specified in Part l of Schedule I as would be the loss of earning capacity when totaled to one hundred per cent . Disablement is said to be permanent partial when it reduces for all times, the earning capacity of a workman in every employment which he was capable of undertaking at the time of the accident. Every injury specified in Part II of Schedule I is deemed to result in permanent partial disablement. Where the disablement is of a temporary nature and reduces the earning capacity of a workman in the employment in which he was engaged at the time of the accident it is "temporary partial disablement. Saket Jeswani, Associate Professor, RCET, Bhilai

7

Distribution of Compensation • The employer will not be liable to pay compensation for any kind of disablement (except death) 1) Which does not continue for more than three days, 2) if the injury is caused when the workman was under the influence of drink or drugs or 3) willfully disobeyed a clear order or violated a rule expressly framed for the purpose of securing his safety or willfully removed or disregarded a safety device

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

8

Page 5

Claims and Appeals 1. The claim shall be filed within a period of two years of the occurrence of the accident or death.

2. An appeal by an employer against an award of compensation is incompetent unless the memorandum of appeal is accompanied by a certificate that the employer has deposited the amount of such compensation. 3. The period of limitation for an appeal under Section 30 is sixty days.

Saket Jeswani, Associate Professor, RCET, Bhilai

9

Three approaches for settling workers compensation claims

1. Direct Settlement: The employer or its insurance company begins making what it thinks are the prescribed payments. The insurer sets the period over which payments will be made. Both factors are subject to review by the designated state agency. 2. Agreement Settlement: The injured employee and the employer or its insurance company work out an agreement on how much compensation will be paid and for how long. Typically the agreement is reviewed by the designated state agency. 3. Public Hearing: An injured worker can request a hearing. The hearing commission reviews the facts surrounding the injured worker’s case and renders a judgment concerning the amount and duration of compensation. Should the employee disagree with the decision rendered, civil action through the courts is an Saket Jeswani, Associate Professor, RCET, Bhilai option. 10

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 6

The functions of the Commissioner 1. Settlement of disputed claims;

2. Disposal of cases of injuries involving death; and 3. Revision of periodical payments (Section 20).

Saket Jeswani, Associate Professor, RCET, Bhilai

11

Saket Jeswani, Associate Professor, RCET, Bhilai

12

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 7

Minimum Wages Act, 1948

Saket Jeswani Associate Professor, MBA,RCET, Bhilai

Introduction

1. Over the years, in a country like India, except certain highly organized industries, the labour as a whole was not able to put a face of collective bargaining and look after their own interests.

2. Thus, Minimum Wages Act, 1948 was enacted in the country to provide minimum wages to workers and to prevent them from exploitation.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 8

Objective 1. To provide minimum wages to the workers working in organized sector(scheduled employment). 2. To stop exploitation of the workers. 3. To empower the government to take steps for fixing minimum wages and to revise this wages within a period of five years. 4. To provide for appointment of Advisory Committees & Advisory Boards, having equal representatives of employers and workers. Saket Jeswani, Associate Professor, RCET, Bhilai

3

Applicability of the Act 1. The Act extends to whole of India. 2. To any employment in any State if it employs 1000 employees. 3. The Act will not apply to employees in any undertaking owned by the Central Govt. or of Federal railway, except with the consent of the Central Govt. 4. Thus, the wages have to be statutorily paid.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

4

Page 9

Who is an employee? • EMPLOYEE is anyone (1) Employed for Hire or Reward (2) To do skilled or unskilled work (3) Manual or Clerical (4) Job Worker (5) Any person declared by the appropriate Government as employee but, does not include any member of armed forces.

Saket Jeswani, Associate Professor, RCET, Bhilai

5

What is wages? Section 2(h) explains Wages means all remuneration capable of being expressed in terms of money. It includes house rent allowance but does not include: 1. value of house accommodation, supply of light, water, medical attendance 2. Value of any other amenity provided, if excluded by Government order 3. Contribution to pension fund or provident fund or insurance 4. Traveling allowance 5. Special expenses incurred by he nature of employment 6. Gratuity payable on discharge.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

6

Page 10

Minimum wage fixation (section 3) 1. The appropriate government shall fix and revise the minimum wages payable to employees employed in an employment specified in part I & II of the Schedule.

2. The rate can be fixed on 1) 2) 3) 4)

time work basis piece work basis guaranteed rate basis overtime rate basis.

Saket Jeswani, Associate Professor, RCET, Bhilai

7

Minimum wage fixation (section 3) 3. Different minimum wage rates can be fixed for 1) 2) 3) 4)

different scheduled employments different class of work in the same scheduled employment adults, adolescents, children and apprentices Different localities.

4. Minimum rates can be fixed on basis of hour, day or month, or even longer period. 5. BASIS: the fixation of minimum wages depends on various factors like Socio-economic and agro-climatic conditions, prices of essential commodities, paying capacity and the local factors influencing the wage rate.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

8

Page 11

Minimum Rate of wages (section 4) Any minimum rate of wages fixed or revised by the appropriate govt. may consist of: 1. a basic rate of wages and a special allowance at a rate to be adjusted at such intervals and in such a manner as the govt. may direct OR

2. A basic rate of wages with or without allowance for cost of living allowance based on cost of living index number. OR 3. An all inclusive rate allowing for basic wage, cost of living allowance and cash value of concession, if any

Saket Jeswani, Associate Professor, RCET, Bhilai

9

Procedure for fixation of min wages(sec.5) 1. Committee method : a committee is appointed to hold enquiry and suggest minimum wages to be fixed. 2. Notification Method : notification is published in the official gazette and 2 months period is given to different parties to suggest their case. Based on the representations, the govt. will fix the minimum wages. The notification can apply from retrospective effect also.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

10

Page 12

Authorities Advisory board • Government is required to constitute Advisory Board to recommend minimum wages. The recommendations of Advisory Board are not binding on Government.

Central Advisory Board • It is constituted from persons nominated by central government. • And consist of representatives of employers, employees and independent members (up to 1/3rd of the total strength).

Saket Jeswani, Associate Professor, RCET, Bhilai

11

Can you pay wages in kind? 1. Sec. 11 of Min. Wages Act says that you can only make the payment in cash. 2. If it is a custom to make payment wholly or partly in kind, the appropriate govt. may permit it. 3. It may by notification in the Official gazette, authorize the provision of essential commodities at concessional rates.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

12

Page 13

Are working hours fixed? • Sec. 13: the govt. may fix the hours of work. It may provide for rest day and interval also.

Will there be overtime? • Sec. 14: if minimum wages is fixed by hours, then the workers will be paid overtime if he works more than the hours prescribed. The overtime rate will be as fixed in this law or other law as applicable.

if a worker works less than normal hours • He will receive minimum wages • However, he will not receive minimum wages if he is not willing to work or circumstances as may be prescribed. Saket Jeswani, Associate Professor, RCET, Bhilai

13

Employer to close the unit, if minimum wages cannot be paid… 1. If employer cannot pay minimum wages, he has to close down the undertaking. Paying capacity is not relevant consideration for rate of minimum wages. 2. Minimum wages are payable irrespective of financial position of individual employer.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

14

Page 14

If you pay more than minimum wages 1. Even if State Government notification prescribes variable dearness allowance which is linked with cost of living index, amount paid on basis of DA is not to be taken as an independent component of minimum wages, but as part and parcel of process of computing minimum wages.

2. Hence, in cases where employer is paying total sum which is higher than minimum rates of wages fixed under the Act including the cost of living index (VDA), he is not required to pay VDA separately.

Saket Jeswani, Associate Professor, RCET, Bhilai

15

Minimum Wages Paid Internationally 1.

2. 3. 4. 5. 6.

7.

Minimum wages in Delhi (per day) 1. Skilled Rs. 142.10 2. Semi-skilled Rs. 132.20 3. Unskilled Rs. 125.80 In Australia its 543.78 Australian dollars per week; NEPAL- 4,600 Nepalese rupees a month for unskilled labor (3,050 rupees as a basic salary, and 1,550 rupees as an allowance); 4,650 NRS for semiskilled labor; 4,760 NRS for skilled labor; 4,950 NRS for highly skilled labor PAKISTAN- 6,000 Pakistani rupees per month, applying only to industrial and commercial establishments employing 50 or more workers THAILAND-ranges from 148 Thai baht to 203 baht per day, depending on the cost of living in various provinces; set by provincial tripartite wage committees that sometimes include only employer representatives UNITED KINGDOM- £ 5.80 per hour (aged 22 and older), £4.83 per hour (aged 18-21) or £3.57 per hour (under 18 and finished compulsory education) USA-the federal minimum wage is US$7.25 per hour; states may also set a minimum, in which case the higher of the two is controlling

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

16

Page 15

Saket Jeswani, Associate Professor, RCET, Bhilai

17

Payment of Wages Act, 1936 Saket Jeswani Associate Professor, MBA,RCET, Bhilai Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 16

Objective of the Act 1. To ensure regular and prompt payment of wages and to prevent the exploitation of a wage earner by prohibiting arbitrary fines and deductions from his wages. 2. To regulate the payment of wages to certain classes of persons employed in industry in a particular form and at regular intervals; and to prevent unauthorised deductions from the wages. The Act is concerned merely with the fixation of wage periods and not with the fixation of wages.

Saket Jeswani, Associate Professor, RCET, Bhilai

2

Scope and coverage 1. Application for payment of wages to persons employed in any factory.

2. Not applicable to wages which average Rs 1600/- per month or more. 3. Wages include all remuneration, bonus, or sums payable for termination of service, but do not include house rent reimbursement, light vehicle charges, medical expenses, TA, etc.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

3

Page 17

Applicability 1. The Act is applicable to persons employed in any factory, railway, and to such other establishments to which the State Government may, by notification, extend the provisions of the Act after giving three months’ notice to that effect 2. Employees whose average wage is less than rupees 1,600 a month are covered under the Act. The Payment of Wages (Amendment) Bill, 2002 provides for the enhancement of the wage ceiling to rupees 6,500 per month. 3. Section 3, Sub section (ii), dated 20th September, 2012.Ministry of Labour and Employment, Government of India, has revised the wage ceiling from Rs. 10,000 to Rs. 18,000 under the payment of wages act, with effect from 12th September 2012. Saket Jeswani, Associate Professor, RCET, Bhilai

4

Definitions • “Wages” means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which, if the terms of employment express or implied were fulfilled, would be payable to a person employed in respect of his employment or of work done in such employment. It includes: 1) Any remuneration payable under any award or settlement between the parties or order of a court; 2) Any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; 3) Any sum which by reason of the termination of employment of the person employed is capable under any law, contract or instrument which provides for the payment of such sum, whether with or without deduction but does not provide for the time within which the payment is to be made. 4) Any sum to which the person employed is entitled under any scheme framed under any law for the time being in force.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

5

Page 18

The Wage does not include: 1) Any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a court; 2) The value of any house accommodation or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the state government; 3) Any contribution paid by the employer to any pension or provident fund and the interest which may have accrued thereon; 4) Any travelling concession; 5) Any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or 6) Any gratuity payable on the termination of employment

Saket Jeswani, Associate Professor, RCET, Bhilai

6

Definitions • “establishment” includes: 1) tramway service or motor transport engaged in carrying passengers and goods or both by road for hire or reward; 2) air transport service other than such service belonging to, or exclusively employed in the military, naval or air force of the Union, or the Civil Aviation Department of the Govt. of India; 3) dock, wharf, or jetty; 4) inland vessel mechanically propelled; 5) mine, quarry or oil field; 6) plantation; 7) workshop, or other establishments in which articles are produced, adapted, or manufactured, with a view to their use, transport or sale; 8) establishment in which any work relating to the construction, development or maintenance of building, roads, bridges or canals or relating to transmission, or distribution of electricity, or any other form of power is being carried on; 9) any other establishment, or class of establishments, which the Central or a State Government may notify in the Official Gazette. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

7

Page 19

Wage Payment 1. The responsibility for the payment of wages under the ACT is of the employer or his representative. 2. Wages may be payable daily, weekly, fortnightly and monthly. Should not extend a period longer than one month 3. If there are 1000 person employed in a company there the wage shall be paid before the 7th day 4. If there are more than 1,000 employed the wage shall be paid before the 10th day.

5. Terminated employee is entitled to receive the wage earned by him before the expiry of the 2nd working day from the day on which his service has been terminated (Section 5(2) ). Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

9

Page 20

Saket Jeswani, Associate Professor, RCET, Bhilai

10

Saket Jeswani, Associate Professor, RCET, Bhilai

11

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 21

Conditions and limits subject to which fines may be imposed 1) 2)

3) 4) 5) 6)

7)

A fine can be imposed only for such acts or omissions as are specified by the employer and previously approved by the State Government; A notice specifying such acts or omissions must be exhibited on the premises in which employment is carried on; A person involved must be informed in writing the reasons for imposing fine; No fine shall be imposed on an employed person who is under the age of 15 years. No fine shall be recovered from an employed person by installments after the expiry of 60 days from the day on which it was imposed; The total amount of fine in one wage period shall not exceed an amount equal to 3 per cent for that wage period; All realisations by way of fine have to be recorded in a register and must be applied only for such purpose as are beneficial to the persons employed in the factory or establishment as are approved by the prescribed authority. Saket Jeswani, Associate Professor, RCET, Bhilai

12

List of Authorised or Permissible Deductions 1) Deductions for fines. 2) Deductions for absence from duty. 3) Deductions for damage or loss. 4) Deductions for house accommodation. 5) Deductions for amenities and services. 6) Deductions for recovery of advances or for adjustment of over payment of wages. 7) Deductions for recovery of loans made for the welfare of labour. 8) Deductions for recovery of loans granted for house building. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

13

Page 22

List of Authorised or Permissible Deductions 9) Deductions for payment to co-operative societies and insurance schemes. 10) Deductions of income tax. 11) Deductions made under orders of court. 12) Deductions for contributions to provident fund. 13) Deductions for the welfare of the employed persons. 14) Deductions in respect of fees payable for the membership of trade union. 15) Deductions for payment of insurance premium on fidelity guarantee bonds. 16) Deductions for recovery of losses sustained by railway administration. 17) Deductions for contribution to the Prime Minister’s National Relief Fund. 18) Deductions for contributions to any insurance scheme. Saket Jeswani, Associate Professor, RCET, Bhilai

14

Obligations of Employers 1) To fix the wage-period not exceeding one month. 2) To pay wages in cash or by cheque after taking written authorisation of the employed person. 3) To pay wages on any working day. 4) To make deductions permissible from the wages of the employed person. 5) To ensure that deductions do not exceed 75% where payment to a cooperative society is to be made, and in other cases, deductions do not exceed 50%. 6) To seek, before imposing fines approval of list of acts and omissions from the prescribed authority.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

15

Page 23

Obligations of Employers 7) Not to impose fines exceeding 3% of the wages on the employee. 8) To give show-cause notice to the employed person before imposing fines. 9) To recover fines within 60 days of the date of offence. 10) To afford facilities to Inspectors for entry, inspection, supervision, examination or inquiry under the Act. 11) To display abstract of the Act and the Rules in English and in a language understood by the majority of workmen. 12) To maintain following register in the prescribed forms: i) Register of wages; ii) Register of fines; iii) Register of deductions for damage or loss; iv) Register of advances.

Saket Jeswani, Associate Professor, RCET, Bhilai

16

Obligations of Employees • Every employee is entitled: 1) To receive his wages in the prescribed wage period in cash or by cheque or by credit to his bank account.

2) To refuse to agree to any deductions and fines other than those authorised under the Act. 3) To approach within six months the prescribed authority to claim unpaid or delayed wages, unauthorised deductions and fines along with compensation.

4) To appeal against the direction made by the authority if the amount of wages claimed exceeds rupees one hundred. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

17

Page 24

Saket Jeswani, Associate Professor, RCET, Bhilai

18

THE PAYMENT OF BONUS ACT, 1965

Saket Jeswani Associate Professor, MBA,RCET, Bhilai Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 25

Objective of the Act • The object of the Act is to maintain peace and harmony between labour and capital by allowing the employees to share in the prosperity of the establishment reflected by the profits earned by the contributions made by capital, management and labour.

Applicability • The Act applies to all factories and establishments employing 20 or more persons on any day during an accounting year. Saket Jeswani, Associate Professor, RCET, Bhilai

2

Definitions 1. Employee: The definition of “employee” includes any person (other than an apprentice) employed on a salary or wage not exceeding rupees 3,500 per month in any industry doing any skilled or unskilled, manual, supervisory, managerial, administrative, technical, or clerical work for hire or reward. There must, however, be a contract of service between the person employed and the employer. 2. Appropriate Government: The term “appropriate government” means: 1) in relation to an establishment in respect of which appropriate government under the Industrial Disputes Act, 1947 is the Central Government; 2) in relation to any other establishment, the Government of the State in which that establishment is situated.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

3

Page 26

Definitions 1. Employer: The term “employer” includes: 1) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and the manager of the factory; 2) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment. Where the said affairs are entrusted to a manager or managing director, such manager or managing director is the employer. 2. Accounting year: The term “accounting year” means: 1) In relation to a corporation, the year ending on the day on which the books and accounts of corporation are to be closed and balanced; 2) In relation to a company, the period in respect of which profit and loss account is laid before the annual general meeting (first day of April or 31st of March). 3. Salary or Wage: The term “salary or wage” includes 1) basic pay and dearness allowance but not any other allowance. 2) It excludes the value of any house accommodation or of supply of light, water, medical attendance or amenity or any service or of any concessional supply of food grains or other articles, any travelling concession, any contribution paid or payable by the employer to any pension fund or provident fund, retrenchment compensation, and gratuity. Saket Jeswani, Associate Professor, RCET, Bhilai

4

Applicability 1. Every factory (as def. in Factories Act), & (b) Every other establishment in which 20 or more persons (less than 20 but 10 or more if appropriate Govt. notifies) are employed on any day subject to certain exemptions. 2. Employees' drawing remuneration of Rs. 3,500/- or more and those who have worked for less than 30 days are not eligible to receive bonus under the Act.

3. Bonus to be paid within eight months from the expiry of the accounting year.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

5

Page 27

Eligibility 1. Every person (other than an apprentice) drawing salary up to RS 3,500 per month. 2. Every person drawing salary between RS 2,501/- and RS 3,500/- per month. The bonus payable to him is to be calculated as if his salary were RS 2,500/- p.m. – salary means basic pay + DA only.

Saket Jeswani, Associate Professor, RCET, Bhilai

6

Benefits • Subject to other provisions :— Minimum bonus shall be 8.33% of salary/wages earned or RS 100 whichever is higher. 1) If allocable surplus exceeds the amount of minimum bonus, then bonus shall be payable at higher rate subject to a maximum 20% of salary/wages. 2) Computation of bonus is to be worked out as per Schedule I to IV of the Act.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

7

Page 28

Calculation of Bonus The method for calculation of annual bonus is as follows: • Calculate the Available Surplus. • Available Surplus = Gross Profit – ( deduct) the following : • Depreciation admissible u/s 32 of the Income tax Act. • Development allowance

Saket Jeswani, Associate Professor, RCET, Bhilai

8

Set On & Set Off

1. Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account. 2. The allocable surplus so computed is distributed amongst the employees in proportion to salary or wages received by them during the relevant accounting year.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

9

Page 29

Eligibility for Bonus 1. Every employee shall be entitled to be paid bonus by his employer in an accounting year, provided that he has worked in the establishment for not less than 30 working days in that year. 2. An employee will be disqualified from receiving bonus if he is dismissed from service for: 1) Fraud; 2) Riotous or violent behaviour while on the premises of the establishment; 3) Theft, misappropriation or sabotage of any property of the establishment. Saket Jeswani, Associate Professor, RCET, Bhilai

10

Amount of Bonus 1. The Act imposes a statutory obligation on the employer to pay bonus at the minimum rate of 8.33 per cent of the salary earned by an employee or rupees 100, whichever is higher, in an accounting year. It shall be paid irrespective of profits and loss or whether there is allocable surplus or not in an accounting year. The maximum is fixed at 20 per cent. 2. There is also a provision under the Act for proportionate reduction in bonus where the employee has not worked for all the working days in any accounting year. 3. The excess of allocable surplus, if any, after distributing the maximum bonus as provided shall be set-on and taken into account up to the fourth accounting year Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

11

Page 30

Obligations of Employers 1. Newly set-up establishments get exemption from payment of bonus for a period of six years following the accounting year in which the goods produced or manufactured are sold for the first time and, in the alternative, up to the year when the new establishment shows profits, whichever is earlier. 2. Under the Act, adjustment can be made towards payment of customary or puja bonus against bonus payable under the Act. 3. If an employee is found guilty of misconduct causing financial loss to the employer, then the employer can deduct the amount of loss from the amount of bonus payable to the employee for the year in which he was found guilty of misconduct. Saket Jeswani, Associate Professor, RCET, Bhilai

12

Obligations of Employers 1. Work out and pay annual bonus to the employees as required under the Act. 2. Maintain the following registers: 1) Register showing the computation of allocable surplus. 2) Register showing set on and set off of the allocable surplus. 3) Register showing the details of the amount of bonus due to each employee, deductions there from and the amount disbursed. 3. Submit an annual return of bonus paid during the year. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

13

Page 31

Time Limit for Payment of Bonus 1.The bonus shall be paid within a period of 8 months from the close of the accounting year. If there is a dispute, it shall be paid within one month from the date on which the award becomes enforceable. The appropriate government may extend the said period up to a maximum of 2 years.

2. Claim for Bonus: If any bonus is due to an employee under a settlement, award or agreement, the employee himself, or any other person authorised by him in writing in this behalf, or in the case of death of the employee, his assignee or heirs, may make an application for its recovery to the appropriate government. The application must be made within one year 3.Mode of Payment: Employees can enter into an agreement or a settlement with their employer for grant of bonus under a formula different from that under the Act, i.e., bonus linked with production or productivity; but subject to the provisions of the Act in respect of payment of minimum and maximum bonus. Saket Jeswani, Associate Professor, RCET, Bhilai

14

Rights of Employees 1.Right to claim bonus payable under the Act and to make an application to the Government, for the recovery of bonus due and unpaid, within one year of its becoming due. 2.Right to refer any dispute to the Labour Court/Tribunal. 3. Employees, to whom the Payment of Bonus Act does not apply, cannot raise a dispute regarding bonus under the Industrial Disputes Act. 4.Right to seek clarification and obtain information, on any item in the accounts of the establishment

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

15

Page 32

Disputes under the Bonus Act

Where any dispute arises between an employer and his employees with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industries dispute within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), or of any corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act.

Saket Jeswani, Associate Professor, RCET, Bhilai

16

Employees not eligible for Bonus Nothing in this Act shall apply to – 1. Employees employed by any insurer carrying on general insurance business and the employees employed by the Life Insurance Corporation of India; 2. Seamen 3. Employees registered or listed under any scheme made under the Dock Workers 4. Employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a Local authority

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

17

Page 33

Employees not eligible for Bonus 5. Employees employed by -1) the Indian Red Cross Society or any other institution of a like nature (including its branches); 2) universities and other educational institutions; 3) institutions (including hospitals, chambers of commerce and social welfare institutions), established not for purposes of profit; 6. Employees operations;

employed

through

contractor

on

Saket Jeswani, Associate Professor, RCET, Bhilai

building

18

Employees not eligible for Bonus 7. Employees employed by the Reserve Bank of India; 8. Employees employed by -1) the Industrial Finance Corporation of India; 2) any Financial Corporation established under section 3, 3) or any Joint Financial Corporation established under section 3A, 4) of the State Financial Corporations Act, 1951 (63 of 1951); 5) the Deposit Insurance Corporation; 6) the National Bank for Agriculture and Rural Development;] 7) the Unit Trust of India; 8) the Industrial Development Bank of India;

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

19

Page 34

Recovery of Bonus Due from an Employer (Sec-22) Where any money is due to an employee by way of bonus from his employer under a settlement or an award or agreement, the employee himself or any other person authorized by him in writing in this behalf, or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government or such authority as the appropriate Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in particular employee. Saket Jeswani, Associate Professor, RCET, Bhilai

20

Maintenance of Register, Records & Inspectors 1. Every employer shall prepare and maintain such registers, records and other documents in such form and in such manner as may prescribed.

2. The appropriate Government may, by notification on the Official Gazette, appoint such person as it think fit to be Inspectors for the purposes of this Act and may define the limits within which they shall exercise jurisdiction. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

21

Page 35

Inspectors Duties • An Inspector appointed under sub-section (1) may, for the purpose of ascertaining whether any of the provisions of this Act has been complied with – 1. Require an employer to furnish such information as he may consider necessary; 2. At any reasonable time and with such assistance, if any, as he thinks fit enter any establishment or any premises connected therewith and require any one found in charge thereof to produce before him for examination any accounts, books, registers and other documents relating to the employment of persons or the payment of salary or wage or bonus in the establishment. Saket Jeswani, Associate Professor, RCET, Bhilai

22

OFFENCES AND PENALTIES 1. For contravention of the provisions of the Act or rules the penalty is imprisonment upto 6 months, or fine up to Rs.1000, or both. 2. For failure to comply with the directions or requisitions made the penalty is imprisonment upto 6 months, or fine up to Rs.1000, or both. 3. In case of offences by companies, firms, body corporate or association of individuals, its director, partner or a principal officer responsible for the conduct of its business, shall be deemed to be guilty of that offence, unless the person concerned proves that the offence was committed without his knowledge or that he exercised all due diligence Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

23

Page 36

Saket Jeswani, Associate Professor, RCET, Bhilai

24

THE EMPLOYEES’ PROVIDENT FUNDS & MISCELLANEOUS PROVISIONS ACT 1952 (EPF& MP ACT)

Saket Jeswani Associate Professor, MBA, RCET, Bhilai Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 37

OBJECTIVE 1. The Employees’ provident Funds and Miscellaneous provisions Act, 1952 is enacted to provide a kind of social security to the industrial workers. The Act mainly provides retirement or old age benefits, such as Provident Fund, Superannuation Pension, Invalidation Pension, Family Pension and Deposit Linked Insurance. 2. The Act provides for payment of terminal benefits in various contingencies such as retrenchment, closure, retirement on reaching the age of superannuation, voluntary retirement and retirement due to incapacity to work. Saket Jeswani, Associate Professor, RCET, Bhilai

2

APPLICABILITY OF THE ACT 1. To every factory employing 20 or more persons. 2. Any establishment to which the Act applies shall continue to be governed by the Act even if the number of persons employed therein at any time falls below.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

3

Page 38

Excluded Employee 1. An employee who, having been a member of the fund, has withdrawn the full amount of his contribution in the fund 1) on retirement from service after attaining the age of 55 years 2) before migration from India for permanent settlement abroad; or for taking employment abroad.

2. An employee whose pay at the time he is otherwise entitled to become a member of the Fund, exceeds Rs. 6,500/- per month. 3. A person who, is an apprentice, or who is declared to be an apprentice by the authority specified in this behalf by the appropriate Government. Saket Jeswani, Associate Professor, RCET, Bhilai

4

Rates of Contribution SCHEME Provident Fund Scheme

EMPLOYEE’S EMPLOYER’S CENTRAL GOVT’S 12%

Amount > 8.33

Nil

Insurance Scheme

NIL

0.5

Nil

Pension Scheme

NIL

8.33

1.16%

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 39

Contribution under EPF Scheme,1952 1. Employees : 12% on Basic + DA 2. Employer : (a) 3.67% on Basic + DA (b) Administrative Charges : 1.10% on Basic +DA

Saket Jeswani, Associate Professor, RCET, Bhilai

6

Purpose of the Act The purpose of the scheme is to provide for 1. superannuation pension, retiring pension or permanent total disablement pension to employees covered by the Employees’ Provident Funds and Miscellaneous Provisions Act, and 2. widow or widower’s pension, children pension or orphan pension payable to the beneficiaries of such employees. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

7

Page 40

Contribution 1. Employee: Not required 2. Employer : (a) 8.33% on Basic + DA It is to be noted that where the pay of the member exceeds Rs. 6,500/- per month, the contribution payable by the employer will be limited to the amt. payable on his pay of Rs. 6,500/- only.

Saket Jeswani, Associate Professor, RCET, Bhilai

8

Formalities under EPF Act 1.

Employees have been appointed on salary ( Basic+ DA or Consolidated ) of Rs. 6500 or less or covered under the provision of the EPF Act, right from the day of commencement of their work. Employee can contribute more behind Rs.6500. similarly employer also at his discretion can do so but not mandatory

2.

EPF Act is applicable to such of the establishments who are engaging 20 or more persons or had engaged 20 or more persons at any time during calendar year.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

9

Page 41

Formalities under EPF Act 1.

Casual workers/ Temporary workers/ Probationary, even if they had performed work even for a day, are technically taken into account for the purpose of assessments of strength of 20 for the purpose of applicability of the act and are also covered under the act. Apprentices/ Trainees are excluded from the definition of employees.

2.

Percentage of contribution to be deducted from employees contribution is 12% of his salary, namely Basic + DA , but does not include HRA, CCA, Incentive, Bonus, Washing allowance etc.

Saket Jeswani, Associate Professor, RCET, Bhilai

10

Formalities under EPF Act 

Employer contribution of 12% of the salary of employees is to be paid as under 1) 3.67% to be remitted in Account No.1 ( Employees Account) 2) 8.33% to be remitted in Account No.10 towards pension fund



In addition to 12% of the employer has to remit 1.61% paid as under 1) 1.10% Administrative charges in Account No.2 2) 0.5% EDLI in Account No.21 3) 0.01% Inspection charges in Account No.22 Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

11

Page 42

Employees’ Deposit-Linked Insurance Scheme, 1976 Purpose To provide life insurance benefits to the employees of the establishments covered by the EPF & MP Act, 1952

Saket Jeswani, Associate Professor, RCET, Bhilai

12

Contribution under EDLI Scheme,1976 1. Employees : Not required 2. Employer : (a) 0.5% on Basic + DA (b) Administrative Charges : 0.01% on Basic +DA • Where the monthly pay of an employee is more than Rs. 6,500 the contribution payable in respect of him by the employer is limited to the amts payable on a monthly pay of Rs. 6,500 only. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

13

Page 43

Benefits of EDLI scheme • The benefit provided under the scheme in the nature of life insurance as follows: 1.

On the death of an employment while in service a lump sum insurance amount is payable to his nominee or family members.

2.

The insurance amount is equal to the average balance in the account of the deceased employee in the Provident Fund during a period of 12 months immediately preceding his death. In case the average balance exceeds Rs.35,000/- the insurance amount payable is Rs. 35,000/- plus 25% of the amount in excess of Rs. 35,000/- subject to a ceiling of Rs. 60,000/-. Saket Jeswani, Associate Professor, RCET, Bhilai

14

Saket Jeswani, Associate Professor, RCET, Bhilai

15

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Page 44

THE EQUAL REMUNERATION ACT, 1976

Saket Jeswani Associate Professor, MBA, RCET, Bhilai

Intoduction 1. The principle of equal work to men and women worker has been gaining increasing acceptance all over the world. In many countries, law have been passed prohibiting discrimination between men and women in matters relating to payment of wages for similar work. 2. The State Policy article 39 of the Constitution envisages that the State shall direct its policy, among other things, towards securing that there is equal pay for equal work for both men and women. 3. The International Women’s Year, President of India promulgated the Equal Remuneration Ordinance, 1975 on 26th September, 1975 to provide for the payment of equal remuneration to men and women workers Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

2

Page 45

Intoduction 1. Article 39(a) states that the citizens, men and women, equally, have the right to an adequate means of livelihood. 2. Article 39(d) “that there is equal pay for equal work for both men and women”. 3. Article 16(2) makes a specific mention that “no citizen shall on ground only of ….sex …be ineligible for or discrimination against in respect of any employment or office under state.”

Saket Jeswani, Associate Professor, RCET, Bhilai

3

Equal Remuneration Act, 1976 1. The Equal Remuneration Act, 1976 aims to provide for the payment of equal remuneration to men and women workers and for the prevention of discrimination, on the ground of sex, against women in the matter of employment and for matters connected therewith or incidental thereto. 2. Objective of the Act 1) provide for the payment of equal remuneration to men and women workers 2) the prevention of discrimination, on ground of sex, against women in the matter of employment. 3) provide for increasing opportunities for women in the specified employments. Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

4

Page 46

Equal Remuneration Act, 1976 1. It is the duty of the employer to pay equal remuneration to men and women workers for the same work or work of a similar nature. 2. No discrimination shall be made while making recruitment for the same work or work of a similar nature between men and women workers, 3. The Act prohibits discrimination against women not only in recruitment but also in relation to the conditions of service subsequent to employment, such as promotions, training, and transfers. Saket Jeswani, Associate Professor, RCET, Bhilai

5

Duty of employer to pay equal remuneration (sec.2(h)) “Same work or work for similar nature” The act define “work in respect of which the skill, effort and responsibility required are the same, when performed under similar working conditions, by a man or a women and the difference, if any between the skill, effort and responsibility required of man and those required of a women are not of practical importance in relation to the terms and condition of employment .”

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

6

Page 47

Prohibition of discrimination in recruitment or other condition of service(sec 5) 1. This Act, no employer shall while making recruitment for the same work or work of a similar nature, or in any condition of service subsequent to recruitment such as promotions, training or transfer, make any discrimination against women except where the employment of women in such work is prohibited or restricted by or under any law for the time being in force. 2. Provided that the provisions of this section shall not affect any priority or reservation. for Scheduled Castes or Scheduled Tribes, ex-servicemen, retrenched employees or any other class or category of persons in the matter of recruitment to the posts in an establishment or employment. Saket Jeswani, Associate Professor, RCET, Bhilai

7

Advisory Committee (increasing employment opportunities for women) 1. Every Advisory Committee shall consist of not less than ten persons, to be nominated by the appropriate Government, of which one-half shall be women. 2. Every Advisory Committee shall consist of not less than ten persons, to be nominated by the appropriate Government, of which one-half shall be women. 3. The Advisory Committee shall regulate its own procedure. 4. The appropriate Government may, after considering the advice tendered to it by the Advisory Committee and after giving to the persons concerned in the establishment or employment an opportunity to make representations, issue such directions in respect of employment or women workers, as the appropriate Government may think fit.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

8

Page 48

Authorities for hearing and deciding claims and complaints • The appropriate Government may, by notification, appoint such officers, not below the rank of a Labour Officer, as it thinks fit to be the authorities for the purpose of hearing and deciding claims and complaints regarding equal remuneration act.

Maintenance of registers (Sec 8) • Every employer is required to maintain prescribed registers and documents in relation to workers employed by him

Saket Jeswani, Associate Professor, RCET, Bhilai

9

Administration 1. The appropriate government may constitute one or more Advisory Committees. 2. The appropriate government may appoint an authority, not below the rank of a Labour Officer, to hear and decide claims and complaints. 3. The authority appointed for this purpose shall have all the powers of a civil court 4. The aggrieved employer or worker may prefer appeal to the appellate authority within 30 days from the date of the order. 5. It is the duty of employers to maintain prescribed registers and other documents in relation to the workers employed by them. 6. The appropriate government may appoint inspectors for the purpose of enforcing the provisions of the Act. 7. The Act provides for penalties for violation of provisions of the Act.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

10

Page 49

Exemption 1. The terms and conditions of a workmen’s employment are, in any respect, affected by compliance with the law regulating the employment of women; 2. Any special treatment is accorded to women in connection with the birth, or expected birth, of a child.

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

11

12

Page 50