Question & Answers

2018-2019

November QUESTION – One of our employees is designated as a Director of the Company but he is not nominated on the Board but only designation has been given. His services have been terminated and he has raised an industrial dispute as if he is a workman. What is the legal position? ANSWER – It is now too well settled that a designation is not the criterion to determine whether an employee is a workman or not since his duties are relevant. Reference is made to one case wherein the learned Single Judge of Bombay High Court has held that a Director of the Company sans managerial or administrative powers will not exclude him from the definition of a workman. A letter patent appeal was filed by the Management and the Division Bench held that there is finding of fact recorded that the 1st Respondent was a workman as the Petitioner could not adduce any evidence to prove the assertions made by the petitioner. Therefore, it is very difficult to accept the contention of the petitioner that the 1st Respondent was not a workman within the meaning of Section 2(s) of the Industrial Disputes Act.
November QUESTION – We come across the terms Code of Discipline in industry but I have not been able to lay my hand as to what does it mean? ANSWER – The Code of Discipline in industry was formulated by the Ministry of Labour and ratified by all Indian organisations of employers and workers and came into force from 01.06.1958, the Code of Discipline has no statutory force, it is only a gentlemen’s agreement between employers and employees to maintain a standard of discipline in dealings with each other with the main object of securing better discipline in industry and to facilitate peaceful settlement of disputes.
November QUESTION – Some of our employees are working from home whereas some work in the field for canvassing and promotion of the sake of the products of the company. Will such employees be entitled to gratuity? ANSWER – Yes. The field worker visiting customers of their houses and canvassing and doing the business by selling the insurance policies and collecting the premium amount from the customers and depositing ultimately in the office will be performing manual work and clerical work and, thus, will fall within the definition of ‘employee’ under Payment of Gratuity Act and will be entitle to gratuity. The Karnataka High Court has held that the workers covered under Beedi Cigar Workers (Conditions of Employment) Act, though not working at the establishment but at their homes will also be entitled to gratuity.
November QUESTION – We are engaged in the manufacture of readymade garments and sometimes employ some women as daily wagers when there is pressure of work. Query is whether such a daily wager would also be entitled to maternity leave? ANSWER – If an employee has completed 80 days’ service and is employed in any establishment employing 10 or more employees, she will be entitled to maternity leave. There is also a case by Madras High Court wherein it has referred to the decision of the Supreme Court in MCH, Delhi Vs. Female Workers (Muster roll), 2000(3) SSC 244 wherein it was observed that the provisions of the Maternity Benefit Act would indicate that they are only in consonance with the directive principles of state policy as set out in Articles 39 & 42 of the Constitution of India. A woman employee, at the time of advanced pregnancy cannot be compelled to undertake hard labour as it would be detrimental to her health and also to the health of the foetus.
October QUESTION – After receiving charter of demand from the union, representing the workers, we have negotiated and after several meetings, we are now at the advance stage of arriving at a settlement. Hence, we seek following clarifications: (a) Whether any format is required? (b) Whether it is to be on the non-judicial stamp paper? (c) What about the earlier settlement as superseded, will the privileges/benefits, as available, continue to apply? ANSWER – (a) In order to be a ‘settlement’ as defined under Section 2(p) of the Industrial Disputes Act, the settlement otherwise during conciliation proceedings should have been in Form H & a copy of the same should have been sent to the government and the conciliation officer jointly by the employer and the employees and the non-compliance of the statutory requirement would render such settlement unenforceable by law. (b) No stamp paper is required for a settlement under the Industrial Disputes Act. (c) The workers will continue to get the benefits of a settlement till it is replaced by the new one.
September QUESTION – Is there any fixed tenure for Internal Committee? ANSWER – The maximum tenure is 3 years. However, once reached the Committee is dissolved and can be reconstituted with same or new members depending on the availability of the requisite numbers and people having expertise in the company/organisation to serve on the Internal Committee. Details of the name of persons serving on the Internal Committee with their contact details are to be displayed conspicuously at the workplace.
September QUESTION – Worked with an establishment employing more 50 employees but I have not been paid gratuity and as such I intended to file application before the controlling authority but before that I have the following queries: (i) Is there any limitation for claiming gratuity? (ii) Can the controlling authority under the Act direct gratuity more than the prescribed limit since to some of the employees on their retirement have been paid gratuity at one month for each year? ANSWER – (i) Payment of Gratuity Act does not prescribe any limitation for claiming gratuity by an employee under the Act. Hence, the application for gratuity can be filed at any time. It is also one of the obligations of the employer to pay gratuity when an employee becomes entitled to that after retirement or leaving the service provided he has tendered 5 years of service. It has been held that the gratuity as payable to an employee by an employer is not a bounty but a valuable right hence its disbursement has to be made without any delay. The Punjab & Haryana High Court has also observed that there is no limitation for claiming gratuity by an employee since it is the obligation of the employer to give notice to the employee specifying his amount of gratuity.
September QUESTION – We want to introduce VRS. Kindly apprise as to what is the object of the VRS? Also, when can the offer of VRS become effective? ANSWER – VRS is contractual in nature and the contractual right derived by the employees concerned, could be waived by accepting a part of the benefit and as such they cannot be permitted to approbate and reprobate nor can they be permitted to resile from their earlier stand in opting for the Scheme. The Supreme Court has held that unless employee’s offer to avail voluntary retirement was accepted and acceptance is communicated, he cannot get benefits under Scheme for voluntary retirement floated by employee.
September QUESTION – (a) We are engaged in the manufacture and export of readymade garments. We have a very strong union in our industrial establishment and it has not been recognised in the absence of any legal obligation. The union has put up a flag on the gate which gives bad impression about the establishment to the buyers including foreigners. Query is whether it is permissible under the law? (b) Can trade union activities be carried on the premises of the establishment by the employees while they are on duty? ANSWER – A trade union has no right to hoist the flag at the premises of the establishment. The Kerala High Court has held that industrial peace in the industry is a necessity but it cannot be at the expense of right of the Management and Union cannot dictate terms in the name of industrial peace. (b) No. For trade union activities justified at the premises of the establishment. Trade union activities carried by a workman while on duty cannot be justified at the cost and inconvenience of the Management.
August QUESTION – Our establishment is employing more than 10 employees but the employer has not yet complied with the provisions of the Act despite our submissions to this effect. Query is as to what consequences can follow for non-compliance the provisions of the Act? ANSWER – The employer will be liable for punishment with the fine upto Rs.50,000 if they have not constituted an ICC or if the employer has not taken action on the recommendation of the ICC/LCC or has failed to make disclosure in/file its annual report or has contravened or attempted to contravene or abets contravention of other provisions of the Act or any rules made under the Act. The employer is also liable to twice the punishment (which might have been imposed on a first conviction) if after having been previously convicted of an offence punishable under the Act commits and is convicted of the same offence. However, in case a higher punishment is prescribed under any other law for the time being in force, for the offence for which the accused is being prosecuted, the court shall take due cognizance of the same while awarding the punishment. Further, there can be cancellation of licence or withdrawal or non-renewal or approval or cancellation of the registration by the government or the local authority required for carrying on the business or activity by the employer.
August QUESTION – Time and again some of the workers of our factory abstain from work in a concerted manner in support of agitation activities. We have been advised that we can make penal deductions from their wages. Can we do so? ANSWER – The Payment of Wages Act as applicable to the factories covered under the Factories Act provides that when 10 or more employed persons acting in concert absent themselves without due notice (that is to say, without giving the notice which is required under the terms of their contracts of employment) and without reasonable cause from duty, the employer can make deductions from their wages. And such deduction from any such person may include such amount as not exceeding his wages for eight days. Tool down strike also amounts for absence from duty. However, while making penal deductions from wages, a show cause notice must be issued to the employee. The Orissa High Court has also taken the same view. Be it made further clear that the Payment of Wages Act applies to those employees whose wages are less than Rs.28,000 per month as enhanced w.e.f. 16.02.2017.
August QUESTION – As and when an employee is either resigning or his service are terminated, a receipt is to be executed to the effect that he has received all his dues in full and final. Will it be sufficient or precaution be taken? ANSWER – Generally, a receipt for full and final is to be accepted as genuine and the employee will be estopped from raising any objection since it is a valid document as held by the Delhi High Court that merely a receipt for dull and final payment will not be invalid hence the industrial tribunal erred in holding that it cannot be admitted as evidence. However, it will be advisable that such a receipt should be signed by the employee by putting the date and also to be witnessed by one or two of his co-employees. When an employee is relinquishing the job, by abundant precaution, he should be preferably paid by cheque and also his signature obtained on the attendance/payment register that he has received the payment in full and final.
August QUESTION – One of our employees was caught red-handed when he was taking away valuable article from the establishment. In order to save humiliation and prosecution he has tendered his resignation which was accepted and communicated to him immediately. Can such a resignation be termed as involuntary since the union of workers is arisen objection in the procedure adopted? ANSWER – A resignation by an employee, must be with an intention to operate and unconditional. When an employee resins his office, he formally relinquishes or withdraws from his office. It implies that he has taken a mental decision to sever his relationship with his employer and thereby put an end to the contract of service. Considering your specific problems reference is made to a judgment of Bombay High Court wherein it has been held that the resignation of workman, by admitting misconduct of theft and tendering apology cannot be said to have been tendered under coercion when he has chosen to terminate the contract of service in order to save himself from police complaint and social stigma for him and his family hence the labour court has erred in directing his reinstatement by holding that the resignation was obtained by the employer under coercion.
July QUESTION - What type of accident we have to report under ESI Act? (1) In case, if an employee met with an accident, what is the maximum time in which an accident can be reported to ESIC? I suppose according to ESI Act, accident has to report within 24 hours to the branch office. (2) In case, if till now we had not reported any accident to the ESIC, can we reported now the back dated cases to them (Some are 3-4 months back)? If yes, what is the process to follow? (3) In case if an employee is not covered under ESI Act? What is the process to follow for such cases keeping in mind of other Acts? (4) What type of accident we have to report? How can be distinguishing that this accident should be reported or not? (5) Whether road accidents have to be reported to ESIC on safer side? (6) What are the forms to be submitted to the local ESIC office? ANSWER – (1) Employee covered under ESI Act if any accident taken place, its statutory liability to submit accident report by employer within 24 hours from the date of accident or you can take FIR proof from Police Dept. In case delay on justifiable grounds and submitting on back dates not encouraged by ESIC, here you can claim Medical Expenses of hospitalization but sickness benefit cannot be claimed legally. (2) Write a letter to ESIC Branch Manager/Commissioner/Asst. Regional Director stating the exact situation of delay caused to submit Accident Report and also FIR if required. If they convince then its ok then domestic enquiry takes place. In case, you want to proceed legally liability will be employer side to pay benefits to the employee, if your counter documents are not justifiable. (3) If employee is out of ESI purview but still its employer liability to pay compensation on any injury taken place. Please take women compensation policy which is offered by various insurance companies valid legally cover all employees who are not under the purview of ESI Act. You can avoid risk of liability from employer’s end and you can take group medi-claim policy and accidental policy. My advice is going for workmen policy especially employees where risk is involved for dangerous works. (4) Submit accident report Form-16 with all necessary fields are specified very clearly. (5) Road accidents can be claimed only accident occurs during course of employment , if employee coming on the way to the office (routine route) then he claim insurance at the same time FIR should be booked. (6) No need to submit any forms to the ESIC other than Form-37 Employment/Re-Employment to avail medical treatment.
July QUESTION – We seek clarification as to what are the components comprising encashment of leave by a worker? ANSWER – The wages for the leave with wages is calculated at the rate equal to a worker’s his/her average of his total full time earning for the days, he has actually worked during the month immediately preceding the month in which he is paid wages for leave period, for which he/she is entitled for encashment. The amount of fulltime earnings is inclusive of DA and the cash equivalent of advantage accruing through concessional sale of food grain and other articles to workers, but it does not include wages for overtime and bonus.
July QUESTION – In order to maintain discipline in our industrial establishment we have to initiate disciplinary action and in case denial of the delinquent employee, the enquires are to be held. Kindly apprise as to what are the essential ingredients of holding of an enquiry? ANSWER – At the very outset, it is clarified that no labour enactment provides for procedure of holding of an enquiry. Hence, the enquiry is to be held in accordance with principles of natural justice and on the basis of judicial interpretations. There are three essential ingredients of a departmental enquiry, namely (1) that there are definite charges (2) that evidence is adducted during the enquiry (3) that a reasonable opportunity of being heard in respect of those charges is given to the person concerned. In one case, the Allahabad High Court has summarised the principles emerging from the judicial interpretations which are stated as under (i) the enquiries must be conducted bonafide and care must be taken to be that enquiries do not become empty formalities. (ii) if an officer is a witness to any of the incidents which is the subject matter of the enquiry or if the enquiry was initiated on a report of an officer, then in all fairness, he should not be the enquiry officer (iii) in an enquiry, the employer/department should take steps first to lead evidence against the workman/delinquent charged and give an opportunity to him to cross-examine the witness of the employer (iv) on receipt of the enquiry report, before proceedings further, it is incumbent in the part of the disciplinary/punishing authority to supply a copy of the enquiry report.
June QUESTION – Our establishment is working for 22 days instead of 26 days in a month. Since we are covered by the Payment of Gratuity Act, what will be the procedure for calculation of gratuity? ANSWER – It is immaterial whether the employees are working for 22 days or more in a month. The gratuity will be calculated as if an employee is working for 26 days in a month. Reference is made to one case, decided by Bombay High Court, wherein it has been held that the payment of gratuity to an employee working in an establishment for 22 days in a month. The Madras High Court has also followed the ratio as laid down by the Bombay High Court.
June QUESTION – Our workers as represented through a union have raised certain demands and the negotiations are going on for amicable settlement. Query is as to what is the binding effect of a settlement? ANSWER – A settlement means a settlement arrived a in the course of conciliation proceedings and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereof has been sent to an officer authorised in this behalf by the appropriate government and the conciliation officer. A settlement outside conciliation proceedings will bind only those employees who have not been a party will not be entitled to claim any benefit of the settlement.
June QUESTION – Our employees have raised certain demands which have been negotiated and we are in the final stage of arriving at an amicable settlement under Industrial Disputes Act. Kindly apprise as to whether such a settlement is to be registered with the Registrar under Indian Registration Act and, if so, of how much denomination the stamp paper is required? ANSWER – Under Industrial Disputes Act, 1947 an agreement between employer and the workmen either directly or through the trade union is termed as settlement which is defined by Section 2(p) of the Act. It is nowhere provided that a settlement should be on a non-judicial stamp paper and it appears to be the main reason that it is not termed as an ‘Agreement’ but only a ‘Settlement’. However, it is pertinent to state here that in order to be a settlement as defined u/s 2(p) of the Act, the settlement should be in Form-H and a copy of the same should be sent to the government and to the conciliation officer jointly by the employer and the employees and the non-compliance of the statutory requirements would render the above settlement unenforceable by law, as clarified by the Kerala High Court.
June QUESTION – Our industrial establishment are located in Haryana & UP. The service conditions of the workers are governed by the certified standing orders. Queries are a) Will it be obligatory to get the certified standing order amended to incorporate the category of fixed term workman? b) Whether the amendment made in Haryana in the certified standing orders will be applicable in UP? ANSWER – a) Yes. It would be obligatory to get the above clause incorporated in the caption ‘classification of workers’ in certified standing orders. In this context, reference is made to a judgment of Madras High Court wherein it has been held that engaging of contract labour will not be legal when the certified standing orders did not provide. b) The amended standing orders by the appropriate authority in the Haryana State will not be applicable in UP State. Even otherwise unless the Govt. of UP amends its state rules under Standing Orders Act, the amendment as made in the Industrial Employment (Standing Order) Central (Amendment) Rules will not be applicable.
May QUESTION – In the capacity of HR Manager, seek following clarifications: a) Under what conditions an employer has to constitute an Internal Complaints Committee? b) I fail to understand whether it is ICC or Internal Committee? ANSWER – a) Every employer of a workplace employing more than ten workers shall constitute, by an order in writing, a Committee to be known as Internal Complaints Committee. (It is, however, not stated whether any woman employee is necessary amongst 10 workers). b) The substitution of the words ‘Local Complaints Committee’ and ‘Internal Complaints Committee to ‘Local Committee’ and ‘Internal Committee’ in the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, GOI, Extraordinary Part-II, Section 1 dated 09.05.2016.
May QUESTION – Under labour laws we frequently come across the concept of natural justice. What does if imply? ANSWER – The term ‘natural justice’ cannot be imprisoned in a straight-jacket of a rigid formula as its scope depends upon the circumstances of the case, nature of enquiry, rules, scheme, character of rights of persons affected and policy of the statutes under with the Tribunal has to deal with the matter etc. In another case, the Supreme Court has observed that ‘we are of the considered opinion that natural justice has many facets. Sometimes, the said doctrine applied in a broad was, sometimes in a limited or narrow manner.
May QUESTION – Our establishment is employing over 50 employees including some of the women. The appointment letter as issued as well as the service rules does not provide that the women employees will be entitled to maternity benefit. Are we justified to deny the maternity benefit under the given circumstances? ANSWER – No. Be it made clear that the provisions of statutory act and state policy as per Constitution of India would prevail over the terms and conditions of contractual employment. It has also been held that where the terms and conditions of appointment or rules and regulations regulating the maternity benefits are absent, the provisions of Maternity Benefit Act, being a statutory provision, and that of public or state policy will automatically apply.
May QUESTION – Under labour laws like EPF & Gratuity etc. an employee has to appoint a nominee. Does it mean that the amount of gratuity or PF will be exclusive right or entitlement of the nominee after the death of the deceased employee? ANSWER – Not invariably. If an employee ceases to be in the employment then the engagement of nominee becomes redundant. However, if the employee does during course of his employment then the amount of accumulated PF and gratuity is to be received by the nominee. It is, however, pertinent to state that the legal position is abundantly clear that the amount under any head can be received by the nominee, can be claimed by the heirs of the deceased in accordance with the law of succession governing them. In one case the Supreme Court has also held that nomination does not confer any beneficial interest on the nominee, whereas in the instant case the amounts so received are to be distributed according to the Hindu Succession Act, 1956.
April QUESTION – Since maternity leave has now been increased to 26 weeks, seek clarification a) whether we should deduct and deposit PF contribution? b) If PF contributions are payable but will be the position when such a female employee is covered under ESI and the payment for such leave is made by the ESI and not by us. ANSWER – a) Yes, as the EPF contribution is payable on wages earned and/or payable during leave period and that the employer has been made liable for payment of the EPF Contribution thereon as per specific provisions in these regard as contained in Section 2(b) & 6 of the EPF Act read with para-30 of the EPF Scheme, the ‘Employee’ will have the obligation in this regard in out humble view. b) The ESIC is not pay the ‘wages’ but prescribed benefit payable only under the statutory provision of the ESIC Scheme against prescribed contribution paid/payable, which may not be termed as ‘wages’ as defined in Section 2(b) of the EPF Act.
April QUESTION – I am HR Executive in a company and also managing people at work. I have started reading the Industrial Dispute Act and relevant labour laws but have not been able to be clear as to what is the significance of continuous service? ANSWER – ‘Continuous service’ for not less than one year, as defined in Section 25B of the Industrial Disputes Act, is to be interpreted that if a workman has put in 240 days in service during a period of 12 calendar months, he shall be deemed to have completed one year’s service with the employer. In another case, it has been held that for computation of 240 days working, the twelve calendar months mean beginning from any day of any month of a year and ending in the next year. Unpaid Sundays and Holidays cannot be taken for calculating actual working days of a workman. For reckoning of continuous service of 240 days in 12 months, it is to be moved backward from the date of termination. 240 days continuous service, it not rebutted will be deemed to be correct. No relief will be granted if the workman has worked for 239 days. If has also been held that even daily wagers having worked for more than 240 days are entitled to job security under the Industrial Disputes Act.
April QUESTION – One of our employees has been habitually absenting and not reporting for duty for a long time. Can we strike off his name presuming that he has abandoned the job of his own accord? ANSWER – At the very outset, it is made clear that abandonment of employment depends upon employee’s intention as to whether he wants to work or relinquish the job. The Supreme Court has held that even when an employee is absenting from duty and also it is provided in the conditions of service – either in the appointment letter or even in the certified standing orders, an employer is required to hold an enquiry. The Bombay High Court has held the reinstatement with full back-wages of a workman, as awarded by the labour court, will not be interfered by the High Court when the findings of the labour court are based on the record and also drawing presumption by the employer that the workman has abandoned the job of his own record was based on actual facts and circumstances.
April QUESTION – Our establishment is covered under the Payment of Gratuity Act, but we make payment of gratuity only to those employees who are engaged on regular basis and not to the employees engaged through contractors. None of the contractual employee has made a claim for gratuity and we believe that it is not tenable. Kindly apprise as to what is the legal position? ANSWER – The contractual employees are not excluded from the definition of ‘employee’ under the Payment of Gratuity Act. Reference is made to a case where the High Court has held that the contractual employees are entitled to gratuity.

2017-2018

March QUESTION – One of our employees who are covered under ESI Act is insisting that the date of birth as given in the ESI ID should be taken as conclusive proof in determining the dispute pertaining to correct date of birth. Is he justified? ANSWER – No. the Supreme Court has held that the ESI ID will not be conclusive proof to determine the correct date of birth of an employee and as such other relevant material pertaining to his date of birth is to be taken into consideration.
March QUESTION – We are engaged in the manufacturing of electronic items and have a strong union and the leaders carry on union activities during working hours. Our queries are a) Can union activities be carried on during office hours and at the working place? b) Can the union put its flag at the premises of our industrial establishments? ANSWER – a) No. in one case it has been held that though trade unionism is recognised all over the world, it did not mean that an office bearer of a union can claim as a matter of right to carry on trade union activities during office hours. To allow one to claim as of right to do trade union activity during office hours without attending to his office duties would be an anachronism since it would amount to fleecing the tax payer in order to encourage the trade union activities. Similarly the Supreme Court has also held that the union activities cannot be carried on at the work premises.
March QUESTION – We are paying wages which are more than minimum wages which are either fixed and/or revised by the appropriate authorities under the Minimum Wages Act. As and when there is increase in VDA, or employees claim the same. Are we liable to pay the VDA to our workers more particularly when the wages being paid by us are more than minimum rate of wages? ANSWER – The Supreme Court has held that an employer paying wages higher than the minimum wages as fixed under Minimum Wages Act is required to pay VDA separately to the employees. The other High Courts have followed the judgment of the Supreme Court by holding the VDA or DA forms part of minimum wages as held by the Karnataka High Court. The sum of total minimum wages and the DA should not be less than the minimum wages as notified.
March QUESTION – Our query pertains as to whether it is permissible for an employer not to pay gratuity to an employee when in a particular year he has absented himself and not even completed 240 days service? In order to remove the confusion, it is not always open to the employer to deprive an employee his right to gratuity even when in a particular year he has not worked for 240 days. ANSWER – Break in service for entitlement to gratuity is not too simple as it is understood. The employer has to notify the employee about his absence by passing an order to this effect. In this context reference is made to a judgment where it has been held that the break in service due to absence of an employee during a particular year will not deprive him for entitlement to gratuity since the break in service cannot be construed only by showing the register since an employer has to pass an order to the knowledge of the employee in compliance with the principles of natural justice.
February QUESTION – a) What is the protection available to the employees who are declared as ‘protected workmen’? b) When a workman is deemed to be a ‘protected workman’? ANSWER – a) Dismissal of a protected workman without prior permission of the concerned Court u/s 33(3) of the Industrial Disputes Act, after the date of receipt of such communication from the Union and before the date of order of the Asst. Labour Commissioner, would not be sustainable as the effective date would be the date on which the Management had received the intimation from the Union as per Rule 61(1) of the Industrial Disputes Rules. b) In this regard a reference is made to a case decided by the Delhi High Court wherein it has been held that if no objection is taken by the Management within 15 days from the communication of the Union as per Rule 61(1) of the Industrial Disputes (Central) Rules, the workmen mentioned in that communication, would automatically become entitled to the status of ‘protected workmen’ and the appropriate authority is empowered to declare the ‘protected workman’ after hearing the parties.
February QUESTION – Due to pressure of work we have to detain some workers beyond duty hours. We do pay overtime for the additional work but would appreciate if you enlighten about the calculation payment of overtime. ANSWER – whenever payment has to be made for overtime work under the provisions of the Factories Act or under the Minimum Wages (Central) Rules framed under the Minimum Wages Act, it is to be computed with reference to the ‘ordinary rate of wages’ which, in both cases, have been defined as the basic wage plus such allowance including the cash equivalent to the advantage accruing through the concessional sale to workers of food-grains and other articles as the worker is for the time being entitled to, but not including a bonus, in both cases, compensatory HRA & DA are to be taken into account in computing compensation for overtime work. There is no uniformity in the period of employment with reference to which overtime is calculated. Where weekly working hours have been prescribed, overtime work is normally computed on weekly basis. Under the Factories Act, overtime allowance has to be paid on daily or weekly basis, i.e. for work in excess of hours in a day or for more than 48 hours in a week. It is pertinent to refer that the Supreme Court has held that HRA will be excluded for calculation of overtime payment, if accommodation is given to the worker. In one case, it has been held that when an employer has fixed the normal working hours less than the prescribed working hours and subsequently when he unilaterally increase them, then he shall be liable to pay overtime.
February QUESTION – As and when any labour dispute is raised, irrespective of salary or status of an employee, an objection is taken by the Management that he or she is not a workman u/s Section 2(s) of the Industrial Disputes Act. What should be the criteria for determination as to whether the employee is a workman or not? ANSWER – While deciding if an employee is a workman or not, the decisive factor is the nature of duties and the powers vested in an officer, irrespective of managerial designation or handsome salary. Even an employee having designation of district manager, discharging functions of sales promotion, having authority only to recommend leave application of other employees, not having authority to sanction the leaves., to appoint, promote or taking disciplinary action or exercising an independent decision making power, has been held to be a workman. The final determination factor will be that if a particular decision taken by the employee binds his employer, such an employee/officer should not be a workman. For instance if an employee/officer is sanctioning leave of his subordinate(s), such an officer should not be a ‘workman’ as held by Calcutta High Court.
February QUESTION – Our query pertains as to how far an employer is liable for expenditure incurred for medical treatment injuries as received in an accident? ANSWER – Prior to amendment of 22.12.2009 there was no such provision under the Employees’ Compensation Act, but by addition of sub-section (2A) to the Section 4 it provided that the concerned employees shall be reimbursed the actual medical expenditure incurred by him for treatment of injuries caused during the course of employment. Also in one case the Delhi High Court has held that any amount paid by the employer to the injured or his dependents for his treatment or otherwise would not be recognisable by the Employees’ Compensation Commissioner.
January QUESTION – We are paying wages which are more than the minimum rates of wages but at time, the VDA is revised and declared by the appropriate authorities under the Minimum Wages Act. Our query pertains as to whether we ae liable to pay additional VDA, as and when it is declared, to those employees who, inclusive of allowance, have been drawing more than the minimum wages? ANSWER – Not necessarily, particularly when the wages inclusive of DA or other permissible allowances happen to be more than the minimum wages of the employees. In one case, the Bombay High Court has held that when the total remuneration is more than the minimum wages plus DA, it will not amount to unfair labour practice. In another case, the Supreme Court has also clarified that an establishment will be excluded from the applicability of Minimum Wages Act when the wages of the employees are more than the prescribed or revised rates of minimum wages as declared by the prescribed authorities. It has also been held that an employer paying higher than the minimum wages, is not required to pay VDA should not be less than the minimum wages as notified. If the consolidated amount comprising of the wages and the VDA is less than the notified minimum wages, the employee would be entitled to recover the differential amount. Also the VDA forms a part of the minimum wages.
January QUESTION - Our Company is engaged in marketing of products and rendering after sales service through our field representatives. We don’t have any control or supervision over their working outside establishment. We seek clarification as to whether such employees can claim overtime payment on the plea that they have worked for more than 9 hours a day or 48 hours in a week. ANSWER – Such employees cannot claim overtime wages for work done outside the factory premises of the employer. Where on employee is on tour duty does not amount to overtime work and, therefore, he is not entitled to extra wages u/s 59 of the Factories Act.
December QUESTION – Ours is private limited company and for a few years we have been subjected to heavy financial crunch and could not pay bonus to our employees for two years. The authority under the Payment of Bonus Act has launched prosecution on all the Directors of the Company. Will it be tenable and what relief we can seek? ANSWER – All the Directors should not be prosecuted. It is settled that where the default pertains to a Company, it is mandatory that the company be prosecuted. Without prosecuting the company itself as employer, no prosecution of Director is permissible. It is, therefore, necessary to allege in the complaint that the person prosecuted was in charge and responsible to the company for conduct of its business. If such an omission is made by the prosecution then it is fatal to the complaint. A Director of a Company cannot be equated with a Company. If the clarification suit to your convenience you can file a petition under Section 482 of the CrPC in the High Court for quashing of prosecution of all the Directors.
December QUESTION – In order to maintain discipline sometimes we are compelled to suspend the delinquent employee. Since our establishment is covered under Payment of Bonus Act, query is as to whether bonus has to be paid on suspension allowance? ANSWER – Bonus is not payable on subsistence allowance as employee does not actually work during suspension period and subsistence allowance is not salary or wages.
December QUESTION – While studying labour related laws, frequently come across the term ‘continuous service’. However, not been able to understand as to how the continuous service is interpreted? ANSWER – The word ‘continuous service’ for not less than one year as defined in Section 25B of the Industrial Disputes Act is to be interpreted that if a workman has put in 240 days in service during a period of 12 calendar months, he shall be deemed to have completed one year’s service with the employer. It has been held that for computation of 240 days working, the 12 calendar months mean beginning from any day at any month of a year and ending in the next year. Unpaid Sundays and Holidays cannot be taken for calculating actual working days of a workman. The 240 days continuous service, if not rebutted will be deemed to be correct. It has held that no relief will be granted if the workman has worked for 239 days. It has also been held that even daily-wagers having worked for more than 240 days are entitled to job security under the Industrial Disputes Act. The Supreme Court has held that when a casual workman is employed in different establishments of a corporation, the concept of ‘continuous service’ can’t be applied. To prove 240 days working days continuously in the preceding on the basis of appointment letter, pay wages/salary, sanctioning of leave, taking disciplinary action by the employer etc. As per provisions of Sections 25 B(2) of the Industrial Dispute Act, the basis of counting 240 days continuous service is to be taken by counting backward from the date of retrenchment during the past 12 months.
December QUESTION – Query pertains that if any of our employees meets with an accident while on duty, how much liability can be fastened upon the employer? The specific query pertains as to what will be the quantum of salary/pay to be taken into consideration for calculation of accident compensation? ANSWER – Employees’ Compensation Act as amended (w.e.f. 31.05.2010) has laid down that every employee or his dependants as the case may be will be entitled to compensation on the schedules. In case the wages or salary of such an employee will be more than Rs.8000 per month his wages or salary for computation of compensation will be treated as if he was drawing Rs.8000 per month.
November QUESTION – Initially we engage every employee on probation. Query is whether we are required to held an enquiry to terminating the services of a probationer? ANSWER – Probation period entitles the Management to assess the efficiency, regularity, sincerity of the probationer, gauge his propensity, involvement in criminal or disciplinary misconduct while deciding his suitability for continuation in service or discontinuation from services. The Management for being not satisfied with the performance of the probationer cannot be asked to provide its jurisdiction. Domestic enquiry is not required where the termination of services of the probationer is not stigmatic.
November QUESTION – We are paying wages to our employees which are in accordance with an in some case more than the minimum rates of wages. As and when VDA is declared pay to those employees who are getting minimum wages. However, even though who are getting more than minimum wages they also claim such increase. Are we liable to pay VDA to such employees who are getting above the minimum rates of wages? ANSWER – No. The Supreme Court has held that no VDA will be payable to those employees who are getting above the minimum rates of wages inclusive of the amount towards VDA as held by the Supreme Court in the case of Airfreight India Ltd Vs. State of Karnataka & Ors, 1999 (2) LLJ 705 : AIR 1999 SC 2459 : 1999 LLR 1008. Relying upon the above judgment the Karnataka High Court has held that when the wages of the workmen are more than the minimum rates of wages either fixed and/or revised, the declaration of VDA under the Minimum Wages Act hence on declaration by the authorities under the Act, if the employer is paying more than the total minimum wages, then there will be no obligation to pay VDA separately.
November QUESTION – We have engaged a contractor on the basis of an agreement whereby the contractor will be liable for payment of wages as well as supervision and control of his workers. One of the workers having been dismissed has raised an industrial dispute and make us a party before the labour court. Can we as a principal employer be held liable in case any relief is granted like reinstatement or back wages? ANSWER – No. Such a question should not arise since there is privity of contract between your establishment in the capacity of principal employer. There are other factors in the determining factors are (a) application seeking appointment by the worker (b) appointment letter (c) wage register etc. Accordingly, such a claim, dispute or demand against your establishment would not be tenable. Reference is made to one case where the worker was employed by the contractor M/s. J.K.Enterprises, who was having a valid licence under the Contract Labour Act, the workman’s claim against the principal employer is not sustainable. It was also held that when the workman has not produced any independent evidence in support of his claim that he was employee of the principal employer, his claim against the principal employer is not maintainable.
November QUESTION – The harassment whether labour authorities particularly those under Minimum Wages Act can be highlighted by way of personal experience of the Directors/Officials of the Company since all of them have been made accused in a complaint file by the Inspector under the Act. We seek clarification as to who can be prosecuted for non-compliance of minimum wages as alleged in the complaint filed by an Inspector under the Act? ANSWER – Under Section 22(c) of the Minimum Wages Act only the incharge of, and who was responsible to the Company for conduct of business can be make an accused. Despite that the Inspectors implead others also who have no direct connection with the Management of the Company hence in order the quash the complaint, you can approach the High Court under Section 482 of the CPC for quashing the prosecution as launched. Reference is made to one case where a criminal complaint filed before the Chief Judicial Magistrate, under the provisions of the Act against any of the Directors, Managers or Secretaries or such the official of the Company, without arranging the Company is not maintainable as per requirement of Section 22-C of the Act. The High Court has quashed the complaint.
October QUESTION – Our industrial establishment is engaged in the manufacture and sale of washing machines. We also render after-sales service of the machines and some of our mechanics perform their duties at the customers’ places i.e. outside the factory premises. Some of the mechanics have claimed over-time payment for working beyond the duty hours. Since we do not have any supervision/control or check upon such employees, how can we make payment for the over-time to them? ANSWER – At the very outset, it is made clear that such workers cannot claim overtime wages at rates specified under Section 59 of the Factories Act for work done outside the factory premises of the employer. Where a workman is on tour duty from the headquarters, his work during tour duty does not amount to overtime work and therefore, he is not entitled to extra wages under Section 59 of the Factories Act.
October QUESTION – Our establishment is working for 22 days in a month whereas the gratuity under the Payment of Gratuity Act is payable as if a month comprises of 26 days. We are not clear as to what should be the method of calculation for gratuity of an employee under the given circumstances? ANSWER – Even if there are less than 26 working days in a month, the gratuity as payable under the Act is to be calculated as if the month comprises of 26 days. Reference is made wherein the Bombay High Court has clarified that the payment of gratuity to an employee working in an establishment for 22 days in a month will be calculated @26 days a month.
October QUESTION – Our trade union has raised a charter of demands on behalf of the workers against the management which has been referred for adjudication since no settlement could be arrived during the conciliation proceedings. In the meantime the management has transferred one of the active workers even during pendency of the proceedings for adjudication before the industrial tribunal. Should we file a complaint under Section 33-A of the Industrial Disputes Act since there is a violation of the provision of the said Act inter-alia providing that the conditions of service of the employees will remain unchanged during the pendency of the adjudication proceedings? ANSWER – Transfer of an employee from one place to another is an incident of service as per law settled by the apex court. Hence, if the employer has transferred a workman in accordance with the conditions of his employment, then such a transfer will not amount to change in conditions of services. Reference is made to one case decided by the Bombay High Court where it has been held that transfer of workmen can be effected from one unit to another in view of the said condition in the very appointment order, prima facie, it cannot be said that the members of the petitioner-union cannot be transferred from one unit to another unit of the corporation and as such the transfer even during pendency of proceedings will not be violation of Section 33 of the Act. The Bombay High Court has held that the transfer does not amount to change in the conditions of service.
October QUESTION – It is a common practice that the companies allow the reimbursement of drivers’ salary to its officers/executives. As and when the services of such drivers are terminated by such officers, the drivers claim reinstatement with the management of the establishment in the capacity of its employees and not of the officers. They approach the labour authority also. We are also facing such cases and seek your expert opinion as to what is the legal position with case law on the subject matter. ANSWER – The law is settled on this aspect to the effect that such drivers do not have any relationship of employer and employees with the establishment. However, by way of abundant precautions the management of the establishment should refrain from exercising such supervision upon such driver. Also the benefits which are available to the employees of the establishment need not be extended. As desired some of the cases with their ratios are summarised as follows: * It has been held by Delhi High Court that the driver who was orally appointed by the chairman and managing director in his personal capacity will not be the employee of the establishment. * The Rajasthan High Court has held that a driver, engaged by the chief manager and paying his salary after getting reimbursement, will not become employee of organisation. *It has been held by Madras High Court that the reimbursement of amount of wages paid to the personal driver to the executive by the company would not create relationship of employer-employee between company and the concerned employee. * It has been held that by the Punjab & Haryana High Court that a personal driver of deputy general manager to whom the salary of driver was reimbursed cannot challenge his termination by raising an industrial dispute against the company, hence the Tribunal has rightly rejected the dispute in adjudication. No interference called for. * It has been held by the Calcutta High Court that it is settled position of law that a personal driver of the head of the employer-company is not having relationship of employer-employee with that employer-company.
September QUESTION – Are there relevant factors to determine the quantum of punishment particularly when an employee is guilty of misappropriation? ANSWER – The amount misappropriated may be small or large. It is the act of misappropriation that is relevant. The quantum of amount misappropriated cannot be safe and reasonable yardstick to determine the quantum of punishment and what is material and relevant, in one case, is that the complained act of conductor reflects the propensity to the corrupt and dishonest. The Madhya Pradesh High Court has held that a dishonest person cannot be allowed to continue in the employment when he has lost the confidence of the employer. The Supreme Court has also held that once an act of misappropriation, either small or large amount is proved, the reinstatement of a dismissed will not be justified. Misappropriation of money of the Company is a gross misconduct irrespective of quantity of amount since such a misconduct destroys the trust of the employer upon the employee.
September QUESTION – One of the employees, who is a member of the union, has been illegally and unjustifiably transferred and we want to challenge the same in order to seek justice for him. Can we approach the labour authorities for stay of the transfer order and/or what it is the remedy available to us? ANSWER – So far as the civil courts are concerned, they rarely interfere with the matters relating to transfer of an employee from one place to another since the transfer of an employee is an incident of service. However, the civil courts can exercise their jurisdiction under Order 39 Rules 1&2 in granting injunction but it is only when there is a mala fide or that there is no such condition in the contract of employment i.e. appointment letter or service agreement. So far as the labour court or the industrial tribunal are concerned, they are not empowered to stay the transfer. However, it appears that only in one case it has been held that industrial tribunal can also stay the transfer of the workmen when they establish prima facie case and the balance of convenience in their favour. The courts can interfere with the transfer order is found to be in violation of service rules or contrary to provisions of law, hence in view of the legal position culled out from the various judicial pronouncements and considering the facts that the petitioner has joined the duly in compliance of the transfer order, the High Court will not interfere. The employer not the court to decide where an employee should be posted.
August QUESTION – Under the new Maternity Benefit Act for first two deliveries, 8 weeks should precede the delivery. What can be the status when there is pre-mature delivery i.e. prior to 8 weeks? Will such woman employee be entitled to maternity benefit? ANSWER – As per provisions of the Maternity Benefit Act, as amended by the Maternity Benefit (Amendment) 2017, the maximum maternity leave is for 26 weeks, out of which not more than 8 weeks should precede the expected date of delivery. But if woman is already having two or more surviving children, she is entitled to a maximum period of maternity leave of 12 weeks out of which not more than 6 weeks of maternity leave prior to expected date of delivery.
August QUESTION – Although we take every precaution is engaging contract labour but for sake of information we are anxious to know that what consequences can follow the contract labour system is held to be sham? ANSWER – When contract labour system is held to be sham than the employees of the contractor can become the employees of the principal employer. Hence, appropriate precaution is taken lest the contract labour system is held to be as sham, camouflage or ruse. Reference is made to the judgment wherein the Supreme Court has held that if the contract is found to be sham or nominal and merely a camouflage, then the so-called contract labour will have to be treated as director employees of the principal employer and the industrial adjudicator should direct the principal employer to regularise their services in the establishment subject to such conditions as it may specify for the purpose.
August QUESTION – In order to categorization of employees and payment of minimum wages, we are anxious to know as to whether an employee who is outsources certain activities will be covered under the Minimum Wages Act? ANSWER – It will mainly depend upon the nature of arrangement with the employee who is engaged. If he categorised as employee and also control and supervision are exercised by the employer such an employee can be treated an ‘employee’ to be entitled under the Act. Even though weavers after lifting cotton from employer premises weave it in their home and then return the finished product to the premises but the Act, applies even to such employees. Sub-section (i) of Section 2 defines an employee which includes such out workers.
July QUESTION – While dealing with disciplinary proceedings, I frequently come across with the term ‘natural justice’. Kindly apprise with an example as to what does it mean? ANSWER – The term ‘natural justice’ cannot be imprisoned in a strait-jacket of a rigid formula as its scope depends upon the circumstances of the case, nature of enquiry, rules, scheme, character of rights of person affected and policy of the statutes under which the Tribunal has to deal with the matter etc. The principles of natural justice are applicable for failure to give notice for the normal deduction of wages for the period of absence under Section 9(1) of the Payment of Wages Act.
July QUESTION - Ours is a public sector undertaking and we engage employees on daily wages or on casual basis since we do not get the permission for engaging on permanent basis. Some of the daily wagers complete 5 years’ service and their services are either terminated or they quit their job. The query is whether our establishment is liable to pay gratuity to such daily wagers or casual employees? ANSWER – Yes. There is no distinction between permanent or temporary or substitute employee under the Payment of Gratuity Act. Casual worker/daily wagers are entitled to payment of gratuity under the Act.
June QUESTION – Can Union activities be carried on during office hours and at the working place? ANSWER – No. In one case it has been held that though trade unionism is recognised all over the world, it did not mean that an officer bearer of a union can claim as a matter of right to carry on trade union activities during officer hour. To allow one to claim as of right to carry on trade union activity during office hours without attending to his office duties would be an anachronism since it would amount to fleecing the tax payer in order to encourage the trade union activities. Similarly the Supreme Court has also held that the union activities cannot be carried on at the work place.
June QUESTION – Whether a notice of enquiry under certificate of posting will be deemed to have been served upon the delinquent employee? ANSWER – No. The Kerala High Court has also held that notice of enquiry sent to an employee through ‘under certificate of posting’ will not be deemed to have been served upon the employee.
June QUESTION – The Certified Standing Order of our industrial establishment provide that if an employee will remain absent for eight consecutive days, the Management will be within its rights to draw an irresistible presumption that the employee has abandoned the job of his own accord and his name will be struck off from the rolls having lost the lien of the job. Can we invoke such a clause in case any employee remains absent for eight days consecutively and also has not reported for duty despite letter sent to him calling to report for duty? ANSWER – Such a clause under Certified Standing Orders has been held to be ultra vires by the Supreme Court. In another case the Rajasthan High Court has held that termination of a workman for his wilful absence without enquiry will be unjustified. In a case the Supreme Court has followed by holding that even if a workman absents or overstays his leave, an enquiry will be imperative in order to afford an opportunity to the employee. Abandonment of employment by workman is presumed only when an enquiry is held against him. Abandonment of service can’t be presumed in absence of notice to workman without enquiry. It is pertinent to state here that the abandonment of job by an employee depends upon his intention as held by the Supreme Court.
June QUESTION – Are the employees engaged through a contractor liable to be covered under the Factories Act? ANSWER – The words ‘ including a contractor’ were added by the Factories (Amendment) Act, 94 of 1976, meaning thereby than even a worker engaged through a contractor and working in a factory is a ‘worker’ for the purpose of the Factories Act. All the beneficial provisions in the Act apply with equal force to such workers/labourers employed through a contractor.
June QUESTION - The Query pertains as to whether an employee who is detained for additional work be entitled to payment of overtime when his wages are above the minimum rates of wages? ANSWER – Admittedly, the concept of overtime is widely dealt in the Minimum Wages Act, but it does not mean that only those employees will be entitled to overtime who are getting mere minimum wages. Reference is made to one case, the Delhi High Court has held that even if the wages being paid to the employees in a scheduled employment, are higher than the minimum wages, the employees would be entitled to overtime in accordance with Rule 25 of the Minimum Wages (Central) Rules, 1950. It is further held that the Section 14 of the Minimum Wages Act, 1948 would be applicable even if the wages paid or payable are higher than the minimum wages notified.
May QUESTION – We are in the advanced state of negotiations with the union pertaining to general demands by the workers. We are in a fix as to whether the settlement should be made before the conciliation officer or directly with the union. Kindly let me know as to what are the salient features when a settlement is made before the conciliation officer? ANSWER – In a case, the Supreme Court has observed that a settlement arrived at in the course of conciliation proceeding has extended application since it is binding on all parties to the industrial dispute and to all others who were summoned to appear in the conciliation proceedings and to all persons employed in the establishment or part of the establishment, as the case may be, to which the dispute related on the date of the dispute and to all others who joined the establishment thereafter. Such a settlement will be binding on all workmen of the establishment, including even those who belong to a minority union which had objected to the same. To that extent, it departs from the ordinary law of contract, the division bench held that merely because the petitioner-union was not associated with the settlement, it cannot be said that it would not be binding on them.
May QUESTION – We understand that there is a provision of compensatory holiday. Should we take it that in case we ask an employee to work on holiday, he should be given a compensatory holiday. Kindly enlighten as to what does it mean? ANSWER – If a worker works on a weekly holiday, he is entitled to substituted holiday u/s 52 of the Factories Act by complying with the provisions of Section 52 of the Act and not a compensatory holiday. Compensatory holiday is required to be given to those workers, who have been deprived of the aforesaid weekly holiday either (i) due to exemption granted by the state government in the State Factories Rules, framed u/s 64 of the Act or (ii) as a result of an exempting order issued by the State Chief Inspector of Factories u/s 65 of the Act.
April QUESTION – We are engaging a contractor to carry on certain support activities in addition to regular employees. Since the work of the workers of the contractor is being supervised by our officers, we are anxious to know as to what precautions are to be taken in order to avoid any adverse legal action? ANSWER – As to that you should not exercise control of supervision upon the workers of the contractor. Let the contract labour system may be declared as sham, bogus or camouflage since under such a scenario the workers of the contractor can become the employees of the principal employer if they raise an industrial dispute. Reference is made to a decided case of Bombay High Court wherein it has been held that a contract between the contractor and the principal employer will be deemed as sham, bogus and a mere camouflage when the employees, as engaged through the contractor, were controlled by the officials/employees of the principal employer. None of the officers of the principal employer should sanctioned leave for the workers of the contractor, no advance should be given to such workers and no warning should be issued. Also any instruction is necessary should be given or atleast address to the contractor not the worker.
April QUESTION – Now, since the Payment of Bonus Act has now become more effective after enhancement of wages for the eligibility of bonus, we seek clarification whether maternity leave will also attract payments of bonus to the female employees since we are having large number of female employees in our BPO? ANSWER – Sub-clause (d) of Section 14 of the Payment of Bonus Act provides that for the purpose of Section 13 pertaining to proportionate reduction in bonus in certain cases, the employee who has been on maternity leave with salary, will be treated as if she is in the employment hence bonus will be payable.

2016-2017

March QUESTION – In order to attract and retain the employees, we have been paying bonus every month alongwith the wages which can be even construed as part of wages but it has different head. Query is as to whether it is permissible to pay bonus every month? ANSWER – Merely because the employer has been paying bonus every half year, it does not confer a right to the employees to have such payments half yearly under the Payment of Bonus Act. Section 17 of the Bonus Act only enables the employer to recover the payment, if any, made before the amount becomes due under the Act. No doubt it should reflect the CTC, if must be state as statutory bonus otherwise the ESI authorities can ask for ESI contributions since the definition of wages under Section 2(22) of the ESI Act is very wide. However, whether it is stated as statutory bonus or bonus as per Payment of Bonus Act. It will also be seen that Form C of the Payment of Bonus Rules also contains a column about interim of advance bonus hence there is no prohibition of making the payment of bonus every month.
March QUESTION - We are running three shifts in our factory. During night shift some our employees are found sleeping while on duty. Query is as to whether we can dispense with their services? ANSWER – Sleeping while on duty is a serious misconduct. Where sleeping is stated to be misconduct in the Standing Orders or Service rules it will not include ‘dozing’, which is separate from sleeping. Dozing is regarded as an act of negligence. It is also pertinent to state here that the gravity of misconduct differs from person to person and place to place for instance speaking loudly is necessity in a factory where there is noise of the machines but not in the library of the school or college. Similarly, sleeping by an employee may not be that serious which can be on the part of a watchman. For instance when the workman has admitted his misconduct of having slept during the shift/duty hours and property stolen (jeep) which, at the time of commencement of his shift duty was there, his dismissal from service is justified as the misconduct is of serious nature since sleeping during duty hours is a serious misconduct justifying punishment of dismissal from service.
February QUESTION – In an Internal Complaints Committee, I am appointed as member amongst NGOs. The delinquent / respondent facing the enquiry has been working as Manager but he is insisting that the enquiry should be held in Hindi language since he is not that fluent in English language in which the enquiry is proposed to be conducted by the ICC. I seek clarity as to what should be the language of enquiry as supported with case law. ANSWER – The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the Rules do not provide anywhere as to what should be the language of the proceedings of an enquiry held by ICC. In the absence of any such clarification, the enquiry should be conducted in the language which is understood by the respondent, more particularly, when he has so demanded. Analogies can be given pertaining to department enquires in the private sector. In one case, the Orissa High Court has held that enquiry should be conducted in the language which is understood by the delinquent employee. Enquiry conducted in Hindi whereas the delinquent does not have knowledge of Hindi, is liable to be set aside since it does not fulfil the requirement of principles of natural justice.
February QUESTION – Besides regular employees, we sometimes engaged petty contractors who do not have their code numbers under EPF Act whereas our establishment is having code number and covered by this Act. In order discharge our obligation we have been deducting and depositing the PF contributions of the employees of the contractor. A union has instigated these workers of contractor that by virtue of depositing the contributions under EPF Act they can become our employees by raising an industrial dispute. Kindly appraise legal position with any supporting case law? ANSWER – It is settled law that merely by depositing PF and ESI contributions for the employee of the contractor by the principal employer, they would not become the employees of the principal employer. Reference is made to the judgment of Punjab & Haryana High Court wherein it has been held that the principal employer has been depositing ESI/PF contributions, providing medical facilities, these will not be the factors for construing that the relationship of employer and employee existed between the principal employer and the workers as engaged through the contractor. In another case also the Delhi High court has held that if the principal employer has been depositing the PF contributions for the employees of the contractor, it would not mean that they have become the employees of the principal employer under the Industrial Disputes Act since the EPF Act only casts the liability of payment of the PF contributions on the principal employer. Despite above judgments, it would be appropriate to obtain a written request from the contractor that in the absence of his coverage under EPF Act, his workers be covered under employer code number and the amount so deposited be deducted from his dues as payable.
January QUESTION – The employee has served nine years and his service was terminated by simple discharge. He was paid his gratuity and not retrenchment compensation. Can the employee be denied retrenchment compensation when he was given order of simple discharge? ANSWER – Your attention is invited to Section 25-B which defines continuous service. The Section 25-B states that a workman shall be said to be in continuous service for a period if he is, for that period, in uninterrupted service, including services which may be interrupted on account of sickness of authorized leave or an accident or a strike which is not illegal, or a lock-out or a cession of work which is not due to any fault on the part of the workman i.e. during the period of 12 calendar months immediately preceding dates with reference to which the calculation is to be made as actually worked with the employer for not less than one year. That is to say in the last year the workman should put in 240 working days to become entitled to retrenchment compensation under Chapter 5-A of the Industrial Disputes Act. The Section 25-B does not contemplate continuous employment by workman for 240 days in 12 months if he has not earned salary for 240 days in order to become entitled for compensation.
January QUESTION – Criminal case was filed against the workman and the employer issues a charge sheet to him and commenced the enquiry. The enquiry proceedings and the trial of criminal case went on simultaneously. But the trial court, after hearing, acquitted the workman. But the employer does not absolve the workman and stop the enquiry. Is the Management bound to pursue the domestic enquiry although criminally acquitted? ANSWER – Mere acquittal in criminal case does not stop the domestic enquiry. Domestic enquiry is based on not only the misconduct but on several other reasons. Whereas the trail court in a criminal case will have to confide itself to the IPC. It cannot go and decide on reasonable doubt. Whereas in a domestic inquiry, the report of the enquiry officer is fundamental. The report could be based on certain other reasons which are known about linkage with the misconduct committed by the workman. The employer may take decision of punishment based on the domestic inquiry, but is not influenced by the evidence tendered before the criminal court. It is for the employer to decide about the punishment. He has to give punishment based on the report of the enquiry officer.
January QUESTION – The PF authorities have issued a notice to our establishment to verify ‘escaped amount’ from 1990 onward. The queries are: (a) What does escaped amount mean? (b) Can the PF authorities asked for production of record for such an old period when we are not maintaining the same? (c) Can we file an appeal challenging the production of record as stated above in clause (b) if no, what is the remedy? ANSWER – (a) The term ‘escaped amount’ as provided for in Section 7C of the EPF Act is to be construed as assessment of amount, if any, omitted or escaped attention and/or discovery of any new additional quantum of assessment made. (b) The question is unclear for not providing relevant details of assessment/reassessment made in the ease under question. However, the limitation period u/s 7C is provided for five years from the date of communication of the assessment/review of assessment order. (c) No response is desirable in view of (b) above.
January QUESTION – We engage contractors who are covered by the Contract Labour Act. Since we pay bonus to our employees, the query is as to whether we will be liable to pay bonus to the workers as engaged through the contractor? ANSWER – No. The workers engaged through the contractors as covered under the Contract Labour Act will not be legally entitled to bonus from the principal employer. The Kerala High Court has held that neither Contract Labour Act not the Payment of Bonus Act provide for payment of bonus to the workers of the contractor by the principal employer. The Karnataka High Court has held that as per definition of ‘employee’ u/s 2(13) of the Payment of Bonus Act, the contract labourers are not employees of the principal employer as there is no privity of contract between the principal employer and the contract labourers.
December QUESTION – We are engaged in the marketing and not manufacturing activity. There is heavy recession in the trade and fall in the business. We want to dispense with the services of employees who have become surplus. Can we do so? ANSWER – Yes. It is well established that it is within the managerial discretion of an employer to organize and arrange his business in the manner he considers best. So long as that is done bonafide it is not competent to a Tribunal to question its propriety. If a scheme for reorganization results in surplus age of employees, no employer is expected to carry the burden of such economic dead-weight and retrenchment has to be accepted as inevitable, however unfortunate it is. The legislature realized this position and, therefore, provided by Section 25F of the Industrial Disputes Act, compensation to soften the blow of hardship resulting from an employee being retrenched. The Section 25F applies only to those workmen who have been in continuous service for not less than one year under an employer. The provision of the section would apply only if the workman had completed 240 days in the 12 months preceding his termination. No distinction is made in industrial law, between permanent and temporary employees and both fall within the definition of ‘workman’ in section 2(s) of the Act and Section 25F. The Section 25F is imperative in character. The right flowing from a beneficial provision like Section 25F cannot be withdrawn or curtailed. Be it made clear that the retrenchment compensation and notice pay in lieu of notice is being paid simultaneously with the notice of retrenchment. By way of abundant precaution a scope is made by giving 3-4 days extra wages for effective date of retrenchment lest there may be violation in making the payment of retrenchment compensation more particularly when it is settled law by the High Court and even Supreme Court and merely asking a workman to collect his dues will not amount to compliance of Section 25F of the Industrial Disputes Act, pertaining to simultaneous payment of retrenchment compensation.
December QUESTION - One of our employees is in the habit of absenting himself without obtaining prior sanction of leave or application for leave or even intimation. We have repeatedly warned him but he is absenting last two weeks. I believe that we can presume that by remaining absent continuously for a considerable period the said employees has abandoned his job on his own accord. Are we justified in this context? ANSWER – The law is very well settled that the services of an employee who is in the habit of absenting himself can be terminated but it is imperative that before termination an enquiry be held otherwise the termination will be held as illegal. Needless to reiterate that ‘abandonment of service’ by a workman is only on voluntary relinquishment. It has also seen held absence without leave is a misconduct on the basis of which services of the concerned employee may be terminated after providing him opportunity of hearing. Also abandonment of service will be presumed when no enquiry is held for unauthorised absence.
November QUESTION – In a commercial establishment, the wages payable to the employed persons do not exceed Rs.18,000 per month. An employee who is a workman remains constantly absent and the employer deducts his salary without any notice to him, he is not fined. Is not the employer bound to give notice? ANSWER – The Payment of Bonus Act says that the employer can deduct for unauthorized absence. The employer is not bound to give notice. It is axiomatic principle that the principles of natural justice can be dispensed with by a statute. Where the legislature thought fit to provide for prior notice before imposition of fine under Section 8 of the Act and before deductions for damage or loss sustained and for various acts of commission by the employees, it has not thought fit to provide for issue of prior notice for deduction of wages for absence from duty. There is no violation of the principles of natural justice. Therefore, the order, whether he is a workman or not is not relevant.
October QUESTION – The sub-judge in the district court passed an award reinstating the workman. The employer proposes to file an appeal before the district court, but advised that the district judge is not the authority to entertain the appeal. Is not the award appealable? ANSWER – It is possible that the government has given to the sub-judge additional powers of labour court judge. The sub-judge could act as a labour court judge and reinstate the workman. The award is final and it is not appealable like civil suit and is determined under the civil procedure code whereas the labour court is under the Industrial Disputes Act. So every award passed by the sub-judge in his capacity as the labour court judge is final and it is passed under the Industrial Disputes Act. On its publication by the government it becomes enforceable and final. It cannot be called in question by any court in any manner whatsoever. Any suit cannot be filed for declaring any award as void. There can be writ petition to the High Court against an award.
October QUESTION – The employer is in the habit of dismissing the workers even for minor offence committed by them. The employer has dismissed the worker and the labour court has reverted him from senior clerk to junior clerk and reinstated him in service. Is the labour court has power to reduce the punishment and reinstate the workman? ANSWER – Prior to insertion of Section 11A, in 1971, there was no provision for the labour judiciary to reduce punishment of show cause notice is given enquiry was held and the employer has acted strictly in accordance with the provisions of the Standing Orders. The labour judiciary had no jurisdiction to examine to the merits of the case. The insertion of Section 11A has resulted in enlarging the powers of the labour judiciary in going into the merits of the case and to see whether the punishment given by the employer is proportionate to the offence proved in the enquiry and if the punishment given is found harsh, the labour judiciary has the right to reduce the punishment by even reinstating the workman.
October QUESTION – In addition to regular employees, we are engaging workers through the contractors. Since we are paying bonus to our regular employees, our query is as to whether we, as principal employer, are legally liable to pay bonus to the workers of the contractors? ANSWER – The workers engaged through the contractors as covered under the Contract Labour Act will not be legally entitled to bonus from the principal employer. In one case, Kerala High Court has held that neither Contract Labour Act nor Payment of Bonus Act provide for payment of bonus to the workers of the contractor by the principal employer. In an another case, the Karnataka High Court has held that as per the definition of ‘employee’ under Section 2(13) of the Payment of Bonus Act, the contract labourers are not employees of the principal employer as there is no privity of contract between the principal employer and the contract labourers.
October QUESTION – We have started our establishment about five years back but despite our best efforts, we have not been able to make any profit. Query is as to when the liability for payment of bonus would arise on our part? ANSWER – There is a special provision under Section 16 of the Payment of Bonus Act, inter alia, provides as under: ‘where an establishment is newly setup, the employees of such establishment shall be entitled to be paid bonus under the Act in accordance with the provisions of sub-sections (1A), (1B) & (1C)’. In the first five accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment and such bonus shall be calculated in accordance with the provisions of the Act in relation to the year, but without applying the provisions of section 15 of the Payment of Bonus Act. Thus, it is made clear that for the first five accounting years, following the accounting year in which the employer sells goods/renders services, bonus is payable only in respect of the accounting year, in which profits are made but the provisions of set-on and set-off would not apply. To be more specific, if there are no profits, the liability for payment of bonus will accrue after six years i.e. the seventh year.
September QUESTION – We are paying wages to our employees which are not less than the minimum wages. Since the definition of wages under Minimum Wages Act provides that is includes HRA also hence, we are splitting the wages into house rent allowance. Since our establishment has now been covered by the Payment of Wages Act, we believe that the bonus will be payable on the basic wages and not on HRA forming part of a minimum wages. ANSWER – For payment of bonus under the Act by an employer, minimum wages, if split into HRA, will not be legal for calculation of bonus since the minimum wages though can be split into HRA under the Minimum Wages Act but not for the purpose of Payment of Bonus Act as held by the Delhi High Court. The minimum wages cannot be bifurcated for Payment of Bonus Act and the bonus has to be calculated on the total wages. The object of Payment of Bonus Act is that, if an employer has to be burdened with the liability of bonus payable, being a percentage of salary or wages, the figure of salary or wage must be such that basic salary or wage must be such that basic salary or wage figure should include all necessary ingredients thereof but salary or wage should not include variables which vary as per the nature, type, period of employment, type of employer & employee and so on as held by the Delhi High Court.
September QUESTION – Under what circumstances, the employees of two separate establishments of one company can claim bonus when separate balance sheets and profit and loss account are maintained? ANSWER – The principle contained in Section 3 of the Payment of Bonus Act, 1965 is that where an establishment consists of different branches, whether situated in the same place or at different places, all such branches shall be treated as part of the same establishment for the purposes of computation of bonus. To that principle is engrafted an exception in the form of a proviso that wherein an accounting year, a separate balance sheet is prepared for an establishment. It shall be treated as a separate establishment and for that purpose, the amount shall, subject to 20% of the total salary or wages of the employees employed during the accounting year, be carried forward for being set on in the succeeding accounting year and so on to be utilized for the purpose of payment of bonus. The Madras High Court has held that for calculation of bonus having separate balance sheets, are to be treated independently.
September QUESTION – Keeping in view the nature of products, we keep trainees before they inducted as employees. Will a trainee, having worked for 5 years be entitled to gratuity? ANSWER – Yes, it has been held that a ‘trainee’ being different from ‘apprentice’ will be included in the definition of the ‘employee’. In another case, the Madras High Court has also held that for the purpose of entitlement of gratuity, the period spent on training will be taken into consideration. However, in one case the petitioner challenged the order of Controlling Authority as well as that of the Appellate Authority to the effect that employees / respondent nos.2 to 26 are entitled to receive the amount of gratuity having considered the period during which they were trainees or badly workers. The Karnataka High Court has held that there is ample authority to support the preposition that a trainee cannot be held to be entitled to gratuity. A trainee could at best be considered as a ‘workman’ in terms of definition under section 2(s) of the Industrial Disputes Act, 1947 but in the absence of any statutory provision under the Payment of Gratuity Act, which could be pressed into service, a trainee cannot be held entitled to gratuity. Further, in view of the judgment of the Supreme Court in Lalappa Lingappa, 1981 I LLJ 308 that there can be no claim towards gratuity for the years during which the employees remains absent without leave and had actually worked for less than 240 days. Even the badly employees are not covered by the substantive part of the definition of continuous service and are not entitled to payment of gratuity for the badly period. The orders under challenge are quashed. When an employee had worked as a trainee in the same establishment prior to regular service in continuation, duration of that training period cannot be wiped out from the purview of continuous service for entitlement of gratuity.
August QUESTION – A residential building is multi-storied and the members are the owners of the flats. The building is maintained by the society formed by the members. A large number of employees are appointed by the society for the purpose of maintenance and security. The workers have formed a union and are demanding better emoluments. What is the remedy? ANSWER – The building is constructed for the members and the apartments are used only for residence. The residents have a right to engage domestic servants. In the instant case the servants are engaged by the society for the services of the residents. When personal services are rendered to the members through the society in a collective manner, such employees and the activity of the employees cannot be treated as industry. It is not comparable with the industry defined under Section 2(j) of the Industrial Disputes Act. At the most they are domestic servants. In the case of Bangalore Water Supply & Sewerage Board Vs. R.Rajappa (AIR 1978 SC 548) makes it clear that domestic servants cannot be treated as industrial workers. The union of the workmen cannot agitate and raise industrial dispute. Management of Som Vihar Apt. Owners Housing Maintenance Society Ltd Vs. Workmen (AIR 2002 SC 2530).
August QUESTION – Is there any prescribed principle/formula for calculation of over time? ANSWER – For calculation of overtime wages, all allowances to which all workers are entitled, are required to be included with the basic wages. Only those allowances for example, in a factory, in which some workers are residing in factory accommodation and other workers are living outside the factory residential complex, the HRA which is normally given only to those workers, who are not residing in the factory accommodation, may not be included.
August QUESTION – Our establishment is engaged in manufacture of hosiery items. Our employees are working on salary basis and as such their production is much lower than those who are our competitors who have piece rate workers. We also want to get the work done on piece rate basis and our workers are also willing to work on piece rate basis which appears to be more advantageous. Are there any disadvantages for such system? ANSWER – The simplest form of incentiveis the piece ratesystem, in whicha price is set by the rate fixer, acting on behalf of the management, for every series of operations resulting in a measurable unit of the product. The more the operative produces, the more he gets and the price is so fixed that by working full factory hours of the standard time he gets rather more than he would by working on a weekly wage, or time rate. The disadvantage to this system is that no accurate time records are kept as they are not necessary, and unless specifically demanded, much information of great useis last to management. Further, since the operative is only paid for what he actually produces, there is a tendency for him to take time off or keep irregular hours whenever he feels inclined and management has very little power to correct him. Production thus may become erratic and much of the value of work measurement may be last. The quality of the product is not maintained by the piece rated worker since he is always interested in the quantity.
July QUESTION – The employer did not concede to the general demands of the workmen. After persuasion the union gave a call of strike and the strike was resorted to after three weeks of notice. The Industrial Tribunal held that the strike is legal. Is not the employer liable to pay wages to the workers when the strike was declared legal? ANSWER – The law does not recognize the strike as authorized absence. The strike is refusal on the part employees to render the normal service. The employees go on strike in order to compel the employer to yield to their demands. If the legal strike is comparable with the authorised leave then instances of employees resorting to strike very often for silly demands. Whether a strike is legal or illegal the workers are liable to lose wages for the period of strike. During the period of strike the contract of employment no doubt continues but the workers have to resort to strike at their own cost. Consequently, they cannot expect any salary to be paid. Bank of India Vs. T.S. Kelawala, 1990 CLR 748
July QUESTION – The establishment has been paying bonus to its employees for the last several years. The proprietor of the establishment sells his establishment to a new person who is entering the business for the first time. At the end of the financial year he informs the workmen that he is not bound to pay bonus as he is new employer and he has not made any profit during the year. When the ownership of the establishment is transferred, whether the establishment is not bound to pay bonus unless it makes profit? ANSWER – Attention is invited to Section 6 of the Payment of Bonus Act. The transfer of ownership does not absolve the establishment from payment of bonus. The establishment has been paying bonus to the employees for the last several years. The change in the ownership does not render the establishment any exemption. U/s 16 of the Act, it only says that where the establishment is newly set up the employees of such establishment shall be entitled to be paid bonus under law in accordance with the provisions of sub-section 1(a), 1(b) & 1(c) of the Act, even if the ownership is changed and if new owner has not made any profit, he is bound to pay the minimum bonus prescribed under the law. The Section 16 applies to the establishment and not to the owner of the establishment. Central Inland Water Transport Corporation Ltd Vs. Workmen – 1975 I LLJ 117.
July QUESTION – A person is employed as an Apprentice in the establishment. The functions of the Apprentice are to attend the periodic classes held for the Apprentices and carry out lawful orders of the employer. The work of the Apprentices is to supervise and stipend is paid to him every month. The employer does not give any other benefits to the Apprentice and no bonus is paid. The Apprentice makes an application in the labour court u/s 33-C (2) of the Industrial Disputes Act. The application is rejected. Can an Apprentice file an application u/s 33-C of the Industrial Disputes Act? ANSWER – The Section 33-C of the Industrial Disputes Act provides the remedy to workmen who are employed in the establishment, no doubt the Section 2(s) of the Act defines the workmen which include Apprentice. But the Apprentice is a student. He is in fact a learner of the trade. He is not paid wages. Wages are to be paid only to the workman who can claim bonus. Stipend paid to him is not treated as wages. The employee cannot make application u/s 33-C(2). Though the work ‘Apprentice’ is defined as workman, he is out of the provisions of the Act. As he is not employed and only appointed as learner he is not entitled to get bonus or any other benefits. Achutan Vs. Babu, 1996 II CLR 472.
July QUESTION - We are running only one shift but now we want to start another shift. Are we required to seek permission from the Inspector of Factories? ANSWER - Under the provisions of Section 61 of the Factories Act, 1948 no prior permission of the Inspectorate of Factories is required, before starting two shifts system instead of existing one shift system. As per provisions of this Act, an intimation is required to be sent to an Inspector of Factories, giving details of proposed shift timings as well as the date from which the timings are proposed to be changed. This intimation should be delivered in the office of Inspector of Factories, well in advance, so that he may examine the proposal, as to whether the proposed working hours are in accordance with the provisions of the working hours chapter of the Act or not. However, written permission of the Inspector of Factories is required for proposed change of working hours, if the last change of working hours or shift timings was less than a week, before the proposed date of change of shifts/working hours.
July QUESTION - We have made a settlement with the employees through their union by extending certain benefits/privileges for a period of three years which is since over. Can we discontinue to extend such benefits/privileges to the workers since we cannot bear the financial burden? ANSWER - No. The Supreme Court has held that Section 19(2) of the Industrial Disputes Act imposes statutory obligations upon the employer and employees even de hors. The position of law is that the benefits, as extended in the settlement, will continue to be binding even after the expiry of the settlement and as such the employer cannot withdraw the same unless a fresh settlement is substituted and the benefits/privileges are superseded.(1) In another case, the union on or around 31.03.1995 inter alia providing that the union will be consulted before entrusting the regular nature of work to the contractor besides other conditions of work. Certain violations of the settlement were pointed out by the union on or around 06.06.1999 and 20.08.1999 including withdrawal of certain facilities, but the management did not concede to the same. Hence, the union approached the labour authorities for prosecution of the concerned executives of the employer u/s 29 of the Industrial Disputes Act. The labour authorities did not take any action hence a writ petition was filed by the union. While admitting the writ petition, the High Court held that a settlement shall continue even after its expiry until replaced by another settlement of award hence the proceedings for violation of the settlement can be initiated.(2) However, in one case it has been held by the High Court that the benefits which have accrued to the workmen in a settlement could be withdrawn by the employer only after giving a notice of change u/s 9A of the Industrial Disputes Act.(3) (1) LIC Vs. JD Bahadur, 1981 (2) LLN 575 SC (2) Voltas Employees Union Vs. Govt. of NCT of Delhi & Ors., 2004 LLR 115 Del. HC (3) Thanthai Periyar Pokkuvarathu Kazhagha Oozhiyar Sangam Vs. Management of TNSTC Ltd., 2005 LLR 780 Mad.HC
July QUESTION - As and when the workers or their union have any demand of grievance they resort to staging demonstration by shouting vulgar and defamatory slogans. As a result thereto our manufacturing activity adversely affected. Can we approach the Court for obtaining stay orders? ANSWER - Yes. No doubt the workers have a right to such demonstration but it does not mean that they should do it during working hours and/or disturb the normal functioning of establishment particularly when they are employed and the employer and employee relationship exists. Under the contract of service, either express or implied, there are some employees obligations and one of them could be not to disturb the normal functioning of the establishment. Admittedly, the workers do have a right but it is not an absolute right. These are number of cases where the employers have to approach the courts for obtaining injunctions and the courts have a striking a balance. Reference is made to one case wherein it has been held that workers, as represented through the union, have no right to stage demonstration at the premises of the employers establishments, hence the trail court in an ex-parte order, has rightly restained them to hold such demonstration within a radius of 500 metres whichhas been confirmed by the Division Bench of the High Court clarifying that the right to freedom by a citizen will come to an end as soon as the right of someone to hold his property is intervened. IOC Ltd Vs. Karnataka Petroleum & Gas Workers Union, 2013 LLR 509 Kar.HC
June QUESTION – The employer has more than 100 workers five years ago. At present he has less than 50 workmen. The employer layoff the workmen every now and then and does not pay compensation. The union of workmen is demanding compensation as he had in the past more than 50 workers. Are not the workmen entitled for layoff compensation? ANSWER – U/s 25(C) to (E) of the Industrial Disputes Act in Chapter VA, the industrial establishment in which less than 50 workmen on an average have been employed in the preceding calendar month are not entitled to receive layoff compensation. The employer’s inability or failure to give employment by itself militates against the theory of conferment of power. The power to layoff for the failure or inability to give employment has to be searched somewhere else. No scheme in the Act confers with power. The number of workmen being less than 50, there were no standing orders not there any terms in the employment that when there is no work, the workmen would remain unemployed and no payment of wages made. In such situation, the conclusion seems inescapable that the workmen who were laid-off without aby authority or law or power in the management. The establishment where there is a power in the management to layoff the workmen is entitled for 50% of the wages according to the industrial law. In the absence of having 50 workmen or if there is not term in the contract of appointment having the right to layoff with 50% wages, the workmen are entitled for full wages. At the most when the reference is made to the Industrial Tribunal has power to reduce full wages, but payment shall not be less than 50% are prescribed. Firestone Tyre & Rubber Co. Vs. Workmen, 1976 I LLJ 493.
June QUESTION – The canteen in the factory is run by a contractor with his own employees and after work in canteen attend factory and do unskilled work. Their wages are paid by the contractor although the entire amount is reimbursed by the principal employer. The employees approached the commissioner of labour who referred the matter to the Industrial Tribunal. But the Tribunal does not entertain their demand and advised the union of workmen to approach, the labour commissioner for abolition of contract labour and then refer the same to the Industrial Tribunal. Has the Industrial Tribunal no power to direct the employer to reinstate the workmen with full back-wages? ANSWER – You are referred to the Contract Labour Act. There is no provision in the Act for automatic absorption of contractor labour without abolition of the contract labour by issue of notification by the appropriate government. Mere fact that the contractor has been engaged for a long time is not the ground for regularization of contract labour by the principal employer. It is only the appropriate government and not the Courts of even the High Court who can abolish the contract labour system. The Supreme Court on more than one occasion examined the various factors enumerated u/s 10(2)(1) of the Act and held that appropriate government is only the authority to abolish the contract labour. Thereafter the workman can approach the government to refer the matter to the Industrial Tribunal seeking reinstatement. The Industrial Tribunal or the Labour Court on its own cannot director the absorption of the contract labour by the principal employer. Gujarat Electricity Board Thermal Power Station Vs. HMS, 1995 I CLR 967 (SC).
June QUESTION – In view of the recent amendment enhancing the applicability of the Payment of Bonus Act, we will also become liable to pay bonus to our employees. While going through the Payment of Bonus Act, I have not been able to understand what does the available surplus and allocable surplus mean. ANSWER – Available surplus in any accounting year is computed under Section 5 of the Act in respect of any accounting year shall be the gross profit for that year after deducting therefrom those sums referred to in Section 6 of the Act hence an employer has to calculate ‘gross profits’ of his establishment in the manner specified in Section 4. Then, from ‘gross profit’ so calculated he has, to deduct the sums referred to in Section 6 as prior charges. The balance is called ‘available surplus’. ‘Allocable surplus’ means in relation to an employer, being a company other than a banking company which has not made the arrangement prescribed under the Income Tax Act for the dividends payable out of its profits accordance with the provisions of Section 194 of that Act, 67% of the available surplus in an accounting year. In any other case, 67% of such available surplus. Thus, when in respect of any year the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer must pay to every employee in respect of that year bonus in proportion to the salary or wage earned by the employee during the year subject to a maximum of 20% of such salary or wage.
June QUESTION – Due to family dispute we have to sell out industrial establishment to a transferee. Since there is considerable number of employees who may raise objection. My specific query pertains as to whether the employer is under obligation to obtain the consent of the employee to transferring an establishment? ANSWER – No. The Supreme Court has held that transfer of an establishment, no consent of the workmen is necessary. The common law rule that an employee cannot be transferred without consent, applies in master-servant relationship and not to statutory transfers. There is nothing in the wording of Section 25FF even remotely to suggest that consent is a pre-requisite for transfer. The underlying purpose of Section 25FF is to establish a continuity of service and to secure benefits otherwise not available to a workman if a break in service to another employer was accepted. Therefore, consent of the individual employee cannot be a ground to invalidate the action. Management, Mettur Beardsell Ltd Vs. Workmen of Mettur Beardsell Ltd, 2006 LLR (SN) 868: 2006 II LLJ 899 (SC).
June QUESTION – What are the general principles pertaining to resignation of an employee and its acceptance? ANSWER – In this context, it is pertinent to make reference to a judgment of Karnataka High Court wherein their lordships have summarized the law on the point declared by Supreme Court in various decisions as follows: (1) Resignation submitted by an employee of the company becomes effective and operates to terminate the services of the maker thereof only when it is accepted by the competent authority and is communicated the same in writing. (2) Till such acceptance and communication, the employee submitting the same continues to remain in service. (3) So long as resignation is not accepted, the employee of the company continues in service and resignation can be withdrawn. (4) The resignation must take effect from the date specified in resignation letter and it cannot be advanced by the employer by accepting the resignation from an earlier date. These well settled principles could be varied by providing for variations or modifications in service rules or statutory provisions governing the employee of the company.
May QUESTION – The reference of the general dispute is pending adjudication before the Industrial Tribunal. The employee had committed misconduct and the employer terminated the services of the employee had committed misconduct and the employer terminated the services of the employee by making application for permission and sending the employee one month’s notice pay. Is the employer entitled to deduct the income tax from one month’s wages sent to the employee? ANSWER – In computing the amount of one month’s wages to be paid u/s 33(2)(b) of the Industrial Disputes Act, the employer is justified in reducing the amount for statutory deductions. If the employee is drawing Rs.15,000 salary it not that he should send the entire Rs.15,000 as one month’s pay. Whatever amount statutorily to be deducted the employer has a right to deduct staturoty dues and send the notice pay. S. Ganapathy & Ors Vs. Air India & Anr., AIR 1993 SC 2430.
May QUESTION – Employee has been charge sheeted for sexual harassment and suspended from service. A domestic enquiry was held and the workman was dismissed from service. The employee challenges the dismissal order as according to him the enquiry was defective. The employee contends that without Complaint Committee enquiry has taken place and the employer has dismissed him from service simple after completing the domestic enquiry. Is it mandatory that a Complaints Committee should be constituted alongwith domestic enquiry? ANSWER – Sexual harassment is a very serious misconduct. The Model Standing Orders are amended only after 1997 to include sexual harassment as a major misconduct. The Supreme Court has in Vishaka’s case has laid down the law that a Complaints Committee has to be constituted in addition to a domestic enquiry. Mere domestic enquiry is not sufficient. The employer employing female employees should be careful in an offence relating to sexual harassment. The Complaints Committee should be headed by a woman and a domestic enquiry is also necessary to proceed against delinquent workman. The judgment of Vishaka’s case is very explanatory and under Article 141 of the Constitution of India, the law declared by the Supreme Court is binding on all Courts and citizens. Vishaka Vs. State of Rajasthan, AIR 1997 SC 311.
May QUESTION – I understand that an employee engaged on probation continues to be on probation till he is confirmed in writing. Is this rule absolute or there are any exceptions? ANSWER – No. doubt, an employee remains on probation till he is confirmed but his not an absolute rule since it depends upon the terms and conditions of employment or the service rules or standing orders. It is also made clear that an employee cannot remain or probation for indefinite period more particularly when the standing orders under the Industrial Employment (Standing Orders) Act, 1946 provide that a probationer will remain on probation for three months whereas the management can provide longer period but it cannot be a very long period. However, probationer will be automatically confirmed when he works even after the expiry of maximum period of probation as provided in appointment letter or agreement or service rule of Standing Orders.1 The Bombay High Court has also held that a probationer will be automatically confirmed on his completion of maximum period of probation.2 1. State Bank of Bikener & Jaipur Vs. Mohanlal, 1988 (57) 641 : 1989 (74) FIR 100 (SC). 2. M.K. Chubey Raj Vs. SBI, 1990 (76) FJR 43.
May QUESTION – We are engaged in the manufacture of readymade garments and engage the workers on piece rate basis. The query is as to whether we have employer-employee relationship with such piece-rated workers? If so, are they to be covered under EPF, ESI & Bonus Acts? ANSWER – Yes. It cannot be said that whenever payment is made by price-rate, there is no relationship of master and servant. If every piece-rated worker is an independent contractor, lakhs and lakhs of workmen is various industries where payment is correlated to production would be carved out of the expression, ‘workman’ as defined in the Industrial Disputes Act. Piece-rate payment is a well recognised mode of payment to industrial workman. In fact, wherever possible, that method of payment has to be encouraged so that there is utmost sincerely, efficiency and single-mind devotion to increase production which would be beneficial both to the employer, the workmen and the nation at large. The right of the employer to reject the end production, if it does not conform to his instruction coupled with the right to refuse work is established, then certainly it is proved beyond doubt that there is a relationship of employer and employee. Tailors to whom payment is made on piece-rate basis are ‘workmen’ within the meaning of the Industrial Disputes Act.1 However, in another case, it has been held by the Supreme Court that an appraiser for weighing and testing the gold engaged by the bank will not be a ‘workman’ in the absence of relationship of employer and employee.2 Such piece-rated workers are entitled to be covered under EPF, ESI & Bonus Acts providing the eligibility depending upon their earning. 1. Shining Tailors Vs. IT-II, Lucknow, U.P. & Others, AIR 1984 SC 23 : 1983 II LLJ 413 SC & Silver Jubilee Tailoring House Vs. Chief Inspector under Shops & Establishments Act II LLJ 495. 2. Management of Puri Urban Coop. Bank Vs. Madhusudan Sahu, 1992 (65) FLR 805 : 1992 LLR 574 (SC).
May QUESTION – The office of apprenticeship advisor is insisting of providing certain information for inducting apprentices in our factory. The query is it obligatory on the part of an employer to provide information as desired? ANSWER – Yes. It is obligatory to the employer to provide all the information related to the implementation of the Act to the Asst. Central Apprenticeship Adviser and refusing or neglecting to furnish such information, furnishing is false, refusing to answer or give a false answer to any question necessary for obtaining any information required to be furnished shall attract penal provisions under Section 30(2)(a)(i), 30(2)(a)(iii) of the Apprentice Act.
April QUESTION At times we have to retain the employees to work for additional hour and they have to paid overtime. My query pertains as to what should be the procedure i.e. whether hourly rate is to be taken while working of 30 days or 26 days in a month? ANSWER The rate of wages under the Payment of Wages Act, 1936 including rate for deductions due to absence of a worker, is required to be calculated by dividing ‘the monthly rate of wages’ by the ‘number of days a worker was required to work in a factory’ (after excluding the number of weekly holidays). It may be mentioned here that a per provisions of Section 52 of the Factories Act, 1948 a worker is not required to work in a factory, on a weekly holiday (which is normally Sunday). That the ‘number of days a worker was required to work in a factory’, is to be calculated after excluding the number of weekly holidays falling in a month (which may be 25 or 26 or 27 in remaining months of the year). The ordinary rate of wages for calculating overtime wages under Section 59 of the Factories Act, 1948 should be same as rate of wages under the Payment of Wages Act, mentioned in foregoing para.
April QUESTION Our establishment is covered by Payment of Bonus Act and the conditions of service are governed by our Service Rules. Kindly apprise: a) What is meant by conditions of services of an employee? b) In addition to bonus and also to the exempted employees we have been paid ex-gratia. Since the salary ceiling entitlement of bonus has increased. I am anxious to know as to what is the significance of ex-gratia by applying anvil of judicial analysis? ANSWER a) the expression ‘conditions of service’ means all those conditions which regulate the holding of a post by a person right from the time of his appointment till his retirement and even beyond retirement in the matters like pension.1 b) ex-gratia means ‘as an act of grace’, usually refers to a payment made by an employer to an employee as a ‘discretionary’ free gift. Often ex-gratia payments are made to avoid a payment becoming recognized as a normal payment of precedent. The Supreme Court has held that when ex-gratia payment made was neither in the nature of production bonus nor incentive bonus nor customary not any statutory bonus, it cannot be regarded as part of the contract ‘employment’, therefore, the ex-gratia payment made by the bank cannot be regarded as remuneration paid or payable to the employees in fulfillment of the terms of the contract of employment within the meaning of definition under Section 2(22) of the Industrial Disputes Act, 1947.2 1. Manoj Kumar Purohit & Ors. Vs. State of M.P. & Ors., 2016 (1) M.P.L.J. 449 M.P. HC 2. Ghaziabad Zilla Sahakari Bank Ltd Vs. Addl. Labour Commissioner, 2007 LLR (SN) 447 (SC)
April QUESTION. As HR Executive I have not been able to understand as to what are the factors to determine the relationship of employer and employee? ANSWER You are right. Since there are various aspects which are to be taken into consideration for arriving a conclusion as to whether the relationship of employer and employee exists between a person claiming to be an employee and employer. The Karnataka High Court has given the tests to be applied for determining the existence of master and servant relationship and as to when it can be termed as a sham contract. a) Who pays? b) For whose benefit the workmen work? c) Under whose supervision? d) Whether disciplinary action can be taken? e) If so, by whom? f) Has the employer the right to reject the end products? Management of VISL Vs. P.O., 1994 (69) FLR 536 (Kar.HC)
April QUESTION If an employee avails leave for Saturday & Monday, will the total leave will calculated two or three days since the Sunday being off day falls within two days i.e. Saturday & Monday? ANSWER If a worker avails leave on Saturday & Monday, with Sunday as a weekly holiday, leave with wages, for 2 days shall be counted. In this context, it is stated that the leave admissible under sub-section (1) of Section 79 of the Factories Act, 1948 shall be exclusive of all holidays, whether occurring during or at the end of the leave period, as specifically mentioned in the ‘explanation 2’, before sub-section (2) of this section.

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