arun davay. legal environment of business introduction to law

Arun Davay

Arun Davay

LEGAL ENVIRONMENT OF

BUSINESS Introduction to Law

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Law is an instrument of social justice

of the state that seeks to provide justice,

stability &

security in the society

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Law is...

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LAW

Since time immemorial every society has its own law.

Law is a social science – grows with society.

Law means different things in different times – highly dynamic concept with core values

Dharma (Hindu), Hukum (Islamic), Jus (Roman), Droit (French), Richt (German)

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SOURCES OF LAW CustomPrecedentLegislationMorals and equityOpinions of experts

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What an MBA student know in LawHe should develop a ‘legal sense’ to know his

rights and obligations as per relevant law.

Remember “Ignorance of law is no excuse”.

There are many legislations affecting the business entity today. Basic knowledge of some of the legislations, rules, notifications and clarifications under various provisions of the concerned Acts would help in carrying out the business without legal problems.

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Some of Acts may be grouped under: General Laws, Procedural Laws Commercial & Corporate Laws Environmental Laws Labor and Industrial Laws Taxation Laws

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General LawsThe Constitution of India [395 Articles divided

into 22 Parts and 12 Schedules – fundamental rights, directive principles, constituting )

The Indian Penal Code, 1860 [ general penal code contained in 511 sections divided into 23 chapters)

Family Laws /personal laws (Hindu, Muslim & Christian – governing majority, adoption, inheritance of property, marriage, divorce, guardianship etc. in different Acts)

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Procedural codes

The Code of Civil Procedure, 1908 [158 sections and 51 Orders ]

The Code of Criminal Procedure, 1973 [484 sections divided into 38 chapters with 2 schedules – 1st schedule about classification of offences and 2nd schedule contains various forms used in following the procedure.]

The Indian Evidence Act, 1872 [167 sections divided into 11 parts) deals with proving facts by evidence–oral or written or circumstantial. Facts are the basis on which the rights and liabilities are ascertained to determine the case before hand.

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Commercial & Corporate Laws

The Indian Contract Act, 1872 The Indian Partnership Act 1932 The Negotiable Instruments Act,

1881 The Companies Act, 1956 The Foreign Exchange Management

Act, 1999 The Competition Act, 2002 The Securities Exchange Board of

India Act, 1992 The Consumer Protection Act, 1986

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Environmental Laws:

The Water (Prevention and Control of Pollution) Act, 1973

The Air (Prevention and Control of Pollution) Act, 1981

The Environment (Protection) Act, 1986

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Industrial and Labor Laws The Factories Act, 1948 The Industrial Disputes Act, 1947 The Trade Unions Act, 1926 The Employees’ Provident Funds and

Miscellaneous Provisions Act, 1952 The Employees’ State Insurance Act, 1948 The Industrial Employment (Standing

Orders) Act, 1946 The Workmen’s Compensation Act, 1923 The Maternity Benefit Act, 1961 The Minimum Wages Act, 1948 The Payment of Bonus Act, 1965 Shops and Establishment Acts of concerned

States.

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Direct & Indirect Taxation Laws:

The Income Tax Act, 1961 The Customs Act, 1962 The Central Excise Act. 1944 The Central Sales Tax Act, 1956 &

concerned State General Sales Tax Acts.

Host of State Acts & Rules relating to sales, excise etc.

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THE PAYMENT OF BONUS ACT, 1965An Act to provide for the payment of Bonus to

persons in certain establishments on the basis of profits, production or productivity.

Extends to the whole of India.Applies to every establishment wherein 20 or

more are employed The Appropriate Govt. shall apply the Act to

any other establishment, including a factory to which the Factories Act, 1948 applies, wherein less than 20 workers are employed provided the number of persons employed is not less than 10.

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Eligibility to Bonusemployee whose salary/ wages does not

exceed Rs 10000 per month who has worked in the establishment for not

less than 30 days Not disqualified to claim bonus due to fraud,

theft or any other misconduct Bonus of very person drawing salary between

Rs 3500/- and Rs 10000/- per month shall be calculated as if his salary were Rs 3500 pm

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For calculating the number of working daysthe days for which the worker has been laid

off the days he has been on leave with paythe days he has been absent due to

temporary disablement caused by an employment injury

the days a woman employee has been on maternity leaveshall be taken in to account.

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Rate of Bonus

Minimum :8.33% of salary/wagesMaximum 20% of salary/wagesComputation of bonus as per Schedule I

to IV of the Act.Adjust any interim bonus paid while

making payment of the final bonus.

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However employees of L.I.C., Universities and Educational institutions, Hospitals, Chamber of Commerce, R.B.I., IFCI, U.T.I. Social Welfare institutions are not entitled to bonus under this Act.

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The Payment of Gratuity Act, 1972 extends to the whole of India.

Applies to every factory, mine, plantation and other establishment wherein 10 or more workers are employed.

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Gratuity is payable to an employee on termination of his employment after he has rendered continuous service for not less than five years

on his superannuationon his resignationon his death or disablement due to

employment injury or disease

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The payment of gratuity shall be forfeited to the extent of the damage or loss

caused by the employee to the property of the employer

where the service of the employee is terminated due to misconduct

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Salary ceiling The Amendment Act of 1994 removed the salary ceiling of an employee, but the maximum gratuity payable shall be Rs 3.5 lakh.

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THE INDUSTRIAL DISPUTES THE INDUSTRIAL DISPUTES ACT, 1947ACT, 1947

An Act to make provision for the An Act to make provision for the investigation and settlement of investigation and settlement of industrial disputes, and for industrial disputes, and for certain other purposes.certain other purposes.

It extends to the whole of IndiaIt extends to the whole of India

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Industrial disputeIndustrial dispute

Any dispute or Any dispute or differencedifference between between employers and employers, or employers and employers, or between employers and between employers and workmen, or between workmen workmen, or between workmen and workmenand workmen, which is connected , which is connected with the employment or non-with the employment or non-employment or the terms of employment or the terms of employment or with the conditions of employment or with the conditions of labour, of any person.labour, of any person.

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AUTHORITIES UNDER THIS AUTHORITIES UNDER THIS ACTACT

Works CommitteeWorks Committee Conciliation officersConciliation officers Boards of ConciliationBoards of Conciliation Courts of InquiryCourts of Inquiry Labour CourtsLabour Courts TribunalsTribunals National TribunalsNational Tribunals

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Works Committee

Where?: Establishments with 100 or more workers

Members: Equal number of representatives of the Employer and Employees

Objective: promotion of good relationship between employer and employee(s)


Conciliation officersConciliation officers• Appointed by the appropriate

Government• Duty: Settlement of industrial disputes.• Nature : Appointed for a specified area

or for specified industries in a specified area or for one or more specified industries and either permanently or for a limited period.

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Boards of Conciliation

• Appointed by the appropriate Government as occasion arises for settlement of disputes.

• Board shall consist of an independent Chairman and two or four other members in equal numbers to represent the parties to the dispute

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Labour Courts

• Labour Courts are constituted by the appropriate Govt. for the adjudication of industrial disputes relating to any matter specified in the Second Schedule and for performing such other functions as may be assigned to them under this Act.

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Tribunals

Tribunals are constituted by the appropriate Govt. for the adjudication of industrial disputes relating to any matter specified in the Second Schedule or the Third Schedule and for performing such other functions as may be assigned to them under this Act.

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National Tribunals

National Tribunals are constituted by the Central Government for the adjudication of industrial disputes which, in the opinion of the Central Government, involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by such disputes.


Matters within the Jurisdiction of Matters within the Jurisdiction of Labour CourtsLabour Courts (the II Schedule) (the II Schedule)

1.The propriety or legality of an order 1.The propriety or legality of an order passed by an employer under the standing passed by an employer under the standing orders;orders;

2.The application and interpretation of 2.The application and interpretation of standing order;standing order;

3.Discharge or dismissal of workmen 3.Discharge or dismissal of workmen including re-instatement of, or grant of including re-instatement of, or grant of relief to, workmen wrongfully dismissed;relief to, workmen wrongfully dismissed;

4.Withdrawal of any customary concession 4.Withdrawal of any customary concession or privilege;or privilege;

5.Illegality or otherwise of a strike or lock-5.Illegality or otherwise of a strike or lock-out; andout; and

6.All matters other than those specified in 6.All matters other than those specified in the Third Schedule.the Third Schedule.


Matters within the Jurisdiction of Matters within the Jurisdiction of Industrial TribunalsIndustrial Tribunals (the III schedule) (the III schedule)

1.Wages, including the period and mode of 1.Wages, including the period and mode of payment;payment;2.Compensatory and other allowances;2.Compensatory and other allowances;3.Hours of work and rest intervals;3.Hours of work and rest intervals;4.Leave with wages and holidays;4.Leave with wages and holidays;5.Bonus, profit sharing, provident fund and 5.Bonus, profit sharing, provident fund and gratuity;gratuity;6.Shift working otherwise than in 6.Shift working otherwise than in accordance with standing ordersaccordance with standing orders;;

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III schedule (contd.)

7.Classification by grades;8.Rules of discipline;9.Rationalisation;10.Retrenchment of workmen and

closure of establishment; and11.Any other matter that may be

prescribed.

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Prohibition of strikes and lock outs

• Not to strike without giving six weeks notice of strike and during the pendency of any conciliation proceedings

• Not to declare lock-out without giving to the employees six weeks notice of lock out and during the pendency of any conciliation proceedings

• A strike or lock-out shall be illegal if it is commenced or declared in contravention of the above.

• Not to support of any illegal strike or lock-out

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LAY-OFF AND LAY-OFF AND RETRENCHMENTRETRENCHMENT

►No workman (other than a badli No workman (other than a badli workman or a casual workman) whose workman or a casual workman) whose name is borne on the muster-rolls of name is borne on the muster-rolls of an industrial establishment wherein an industrial establishment wherein 50 50 or more workers are employedor more workers are employed shall be laid-off by his employer shall be laid-off by his employer except with the prior permission of the except with the prior permission of the appropriate Government.appropriate Government.

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Lay off compensation

a workman (other than a badli workman or a casual workman) who has completed one year of continuous service under an employer shall be paid Lay off compensation

Lay off compensation shall be equal to fifty per cent of the wages (Basic + DA)

Lay off compensation need not be paid for the weekly holidays which may intervene

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Retrenchment of workmen

No workman who has been in continuous service for not less than one year shall be retrenched without giving one month’s notice (three months notice wherein not less than 50 workers are employed) in writing indicating the reasons for retrenchment or

if no notice is given, wages in lieu of such notice.

Retrenchment of workmen employed in an establishment wherein not less than 50 workers are employed requires permission from the appropriate Govt.

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Compensation to workmen in case of closing down of undertakings

Compensation be paid as if workmen are retrenched

However no compensation is payable if the establishment is closed down on account of unavoidable circumstances beyond the control of the employer

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These These shall notshall not constitute constitute circumstances beyond the circumstances beyond the

control…control…• financial difficulties (including financial difficulties (including

financial losses); or financial losses); or • accumulation of undisputed off accumulation of undisputed off

stocks; orstocks; or• the expiry of the period of the lease or the expiry of the period of the lease or

license granted to it; orlicense granted to it; or• in case where the undertaking is in case where the undertaking is

engaged in mining operations, engaged in mining operations, exhaustion of the minerals in the area exhaustion of the minerals in the area in which operations are carried onin which operations are carried on

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Procedure for retrenchment and re employment

Retrench the last worker to be appointed under a particular category first

For re-employment, retrenched worker shall have preference over other persons


UNFAIR LABOUR PRACTICESUNFAIR LABOUR PRACTICESOn the part of employersOn the part of employers

threatening workmen with discharge or dismissal, threatening workmen with discharge or dismissal, if they join a trade unionif they join a trade union

threatening a lock-out or closure, if a trade union threatening a lock-out or closure, if a trade union is organised is organised

granting wage increase to workmen at crucial granting wage increase to workmen at crucial periods of trade union organisation, with a view to periods of trade union organisation, with a view to undermining the efforts of the trade union at undermining the efforts of the trade union at organisation organisation

an employer taking an active interest in an employer taking an active interest in organising a trade, union of his workmen organising a trade, union of his workmen

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Unfair-employer Unfair-employer (contd.)(contd.)►To establish employer-sponsored trade To establish employer-sponsored trade

unions of workmen unions of workmen ►discharging or punishing a workman, discharging or punishing a workman,

because he urged other workmen to join because he urged other workmen to join or organise a trade unionor organise a trade union

► discharging or dismissing a workman for discharging or dismissing a workman for taking part in any strike (not being a taking part in any strike (not being a strike which it deemed to be an illegal strike which it deemed to be an illegal strike under this Act)strike under this Act)

► changing seniority rating of workmen changing seniority rating of workmen because of trade union activities because of trade union activities


Unfair-employer Unfair-employer (contd.)(contd.)

refusing to promote workmen to higher refusing to promote workmen to higher posts on account of their trade union posts on account of their trade union activitiesactivities

giving unmerited promotions to certain giving unmerited promotions to certain workmen with a view to creating workmen with a view to creating friction amongst other workmen, or to friction amongst other workmen, or to undermine the strength of their trade undermine the strength of their trade union union

discharging office bearers or active discharging office bearers or active members of the trade union on account members of the trade union on account of their trade union activities of their trade union activities


Unfair-employer (contd.)Unfair-employer (contd.)To discharge or dismiss workmen – To discharge or dismiss workmen – by way of victimisation;by way of victimisation; by falsely implicating a workman in a criminal by falsely implicating a workman in a criminal case on false or fabricated evidence; case on false or fabricated evidence;on untrue allegations of absence without leave;on untrue allegations of absence without leave;in utter disregard of the principles of natural in utter disregard of the principles of natural justice in the conduct of domestic enquiry or justice in the conduct of domestic enquiry or with undue haste; with undue haste; for misconduct of a minor or technical for misconduct of a minor or technical character, without having any regard to the character, without having any regard to the nature of the particular misconduct or the past nature of the particular misconduct or the past record of service of the workman.record of service of the workman.


UNFAIR LABOUR PRACTICESUNFAIR LABOUR PRACTICES On the part of workmenOn the part of workmen

advise, support or instigate any strike advise, support or instigate any strike deemed to be illegal under this Act.deemed to be illegal under this Act.

coerce workmen to join a trade union or coerce workmen to join a trade union or refrain from joining any trade union, refrain from joining any trade union,

picket in such a manner that non-striking picket in such a manner that non-striking workmen are physically debarred from workmen are physically debarred from entering the work placesentering the work places

indulge in acts of force or violence or indulge in acts of force or violence or intimidation in connection with a strike intimidation in connection with a strike against non-striking workmen or against against non-striking workmen or against managerial staff managerial staff


Unfair- employee Unfair- employee (contd.)(contd.) For a recognised union to refuse to For a recognised union to refuse to

bargain collectively in good faith with the bargain collectively in good faith with the employer.employer.

To indulge in coercive activities against To indulge in coercive activities against certification of bargaining certification of bargaining representative.representative.

To stage, encourage or instigate such To stage, encourage or instigate such forms of coercive actions as willful "go forms of coercive actions as willful "go slow", squat on the work premises or slow", squat on the work premises or "gherao" of any of the members of the "gherao" of any of the members of the managerial or other staff.managerial or other staff.

To stage demonstrations at the To stage demonstrations at the residences of the employers or the residences of the employers or the managerial staff members.managerial staff members.

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FACTORIES ACT, 1948.

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Act extends to the whole of India.

Applies to every factory wherein 10 or more workers are or were employed, if run with power and 20 or more workers are or were employed, if run without power.

Application to factories with fewer workers u/s 85


PROVIDESPROVIDES for for Hours of workHours of work (adult) not to exceed 48 hours in a week or (adult) not to exceed 48 hours in a week or

9 hours in a day.9 hours in a day. Relaxation: Where an adult worker is engaged in Relaxation: Where an adult worker is engaged in

urgent repairs.urgent repairs. Payment of Overtime wages for overstay at workplace @ Payment of Overtime wages for overstay at workplace @

twice the ordinary rate of wages.twice the ordinary rate of wages. ** Provision relating to hours of work not applicable to ** Provision relating to hours of work not applicable to

supervisory staff.supervisory staff. Weekly HolidayWeekly Holiday: No work for more than 10 days without a : No work for more than 10 days without a

day of rest.day of rest. Intervals of rest:Intervals of rest: half an hour for 5 hours of work half an hour for 5 hours of work No childNo child (who has not attained the age of 15 years) (who has not attained the age of 15 years) be be

permitted to work.permitted to work. Prohibition of employment of Women:Prohibition of employment of Women: No woman shall be No woman shall be

employed in any factory for more than 9 hours in any day employed in any factory for more than 9 hours in any day or or between 7 pm and 6 am.between 7 pm and 6 am.


Leave with WagesLeave with Wages

@ 1day for every 20 days provided -----@ 1day for every 20 days provided -----

240 days of work during preceding 240 days of work during preceding year.year.

Days of lay off, paid holidays or leave days Days of lay off, paid holidays or leave days consideredconsidered

Encashment of unavailed leave: Encashable Encashment of unavailed leave: Encashable at the present rate of wages.at the present rate of wages.


EMPLOYER TO KEEP THE FACTORY EMPLOYER TO KEEP THE FACTORY

PREMISES CLEANPREMISES CLEAN • white washing at least once in every 14 months• repainting or revarnishing every 5 years• ensure proper disposal of wastes and effluents• Record the dates on which white washing, painting or

varnishing done in a register in FORM 7.• Ensure provision of sufficient number of Latrines and urinals –

separate for gents and ladies• Ensure spittoons are provided at adequate places.• Ensure workplace has adequate ventilation • Avoid overcrowding – ensure 500 cubic feet of space for every

worker without reference to any space which is more than 14 feet above the level of the floor of the room.

• Ensure proper lighting- artificial or natural or both.• Ensure supply of uninterrupted supply of Drinking Water.• Where the no. of workers is more than 250, provision for

cold water in every lunch room, rest room and canteen shall be ensured.

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EMPLOYER TO LOOK AFTER THE EMPLOYER TO LOOK AFTER THE WELFARE OF EMPLOYEESWELFARE OF EMPLOYEES

► Washing facilityWashing facility separately for women and men separately for women and men► Separate Separate rooms forrooms for men and women for men and women for drying of clothesdrying of clothes► Separate Separate rest roomsrest rooms for men and women for men and women► First Aid boxesFirst Aid boxes equipped with prescribed medicines equipped with prescribed medicines► Ambulance room where 500 or more are employedAmbulance room where 500 or more are employed► CanteenCanteen for use of workers for use of workers where 250 or more are where 250 or more are

employedemployed (150 under Plantation Labour Act) (150 under Plantation Labour Act)► Lunch room where 150 or more are employedLunch room where 150 or more are employed► Crèches where 30 or more women are employedCrèches where 30 or more women are employed► Appoint Appoint WELFARE OFFICERWELFARE OFFICER (S) (S) where 500 or more are where 500 or more are

employedemployed (300 under PLA) (300 under PLA)► The duties, qualification and conditions of service of such The duties, qualification and conditions of service of such

welfare officers shall be in accordance with the rules of the welfare officers shall be in accordance with the rules of the respective State Govt.respective State Govt.

► NOTICE OF DANGEROUS OPERATIONS NOTICE OF DANGEROUS OPERATIONS

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THE INDUSTRIAL EMPLOYMENT THE INDUSTRIAL EMPLOYMENT (STANDING ORDER) ACT, 1946(STANDING ORDER) ACT, 1946

Defines the terms and conditions Defines the terms and conditions of service between the employer of service between the employer and his employeesand his employees..

Applies to every industrial Applies to every industrial establishment wherein 100 (in some establishment wherein 100 (in some States 50)or more workers are States 50)or more workers are employedemployed

The Act extends to the whole of India The Act extends to the whole of India

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Standing Order drafted shall provide for

Date on which the standing orders shall come in to force and shall remain in force

Definitions Classification of workmen as

Permanent, Probationer, Badlis, Casual and Trainees

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contd Obligations – not to carryon any other business for gain or

to take admission in educational institution without permission

to observe strict secrecy of company matters not to take photographs, drawing or

documents of the process of manufacture of the company

not to carry any lethal weapon, explosive or article dangerous to life or property

to follow safety rules in force to inform any change in the address etc


contdcontdMedical examination and aid in case of Medical examination and aid in case of accidentaccidentIdentification of workmen and issue of Identification of workmen and issue of Identity cardsIdentity cardsWorking time for different categories of Working time for different categories of workmen workmen Record of age, qualification and experience Record of age, qualification and experience Entry, exit and liability for security checkingEntry, exit and liability for security checkingShift working and weekly offShift working and weekly offAttendance and late comingAttendance and late comingMethods of applying for different kinds of Methods of applying for different kinds of leave and extension of leaveleave and extension of leaveAction for unauthorised absence Action for unauthorised absence

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THE MATERNITY BENEFIT ACT, THE MATERNITY BENEFIT ACT, 19611961

The Act extends to the whole of The Act extends to the whole of India except Jammu & KashmirIndia except Jammu & Kashmir

Applies to every factory, shop or Applies to every factory, shop or establishmentestablishment

Woman entitled to maternity Woman entitled to maternity benefit not withstanding the benefit not withstanding the application of the Employees application of the Employees State Insurance Act, 1948State Insurance Act, 1948

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Employer to ensure……•No woman works during the

six weeks immediately following the day of her delivery or her miscarriage

•No woman does any arduous work during the period of ten weeks from the expected date of delivery

•Not to discharge or dismiss a woman during her pregnancy

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Benefit

12 weeks leave of which not more than 6 weeks shall precede the date of her expected delivery

The benefit to be paid @ average rate of wages for the three months preceding her maternity leave

In case of miscarriage, 6 weeks leave with pay at the same rate as applicable to maternity benefit.

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THE MINIMUM WAGES ACT, 1948THE MINIMUM WAGES ACT, 1948

AN ACT TO PREVENT “SWEATED LABOUR AND AN ACT TO PREVENT “SWEATED LABOUR AND EXPLOITATION OF LABOUR”EXPLOITATION OF LABOUR”

The Act extends to the whole of India The Act extends to the whole of India

Requires the Central and State Govt. to fix minimum Requires the Central and State Govt. to fix minimum rates of wages in certain scheduled employment.rates of wages in certain scheduled employment.

Minimum wages fixed REVISED from time to time Minimum wages fixed REVISED from time to time

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Responsibility of the Employer

to follow the directions and fix wages of the workers at the rate not less than the one fixed

to maintain Register of Wages in form XI showing rate of wages payable, actual amount paid, attendance & overtime, deductions for EPF, ESI and other, net amount paid, date of payment and signature of respective employee. Wages slip in form XIII showing the above details

to be given to every employee.

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PAYMENT OF WAGES ACT, 1936PAYMENT OF WAGES ACT, 1936

An Act to regulate the An Act to regulate the payment of wages to certain payment of wages to certain classes of personsclasses of persons

Extends to the whole of IndiaExtends to the whole of India Responsibility of payment wages rests Responsibility of payment wages rests

with the employerwith the employer Employer to fix Wage PeriodEmployer to fix Wage Period No wage period shall exceed one No wage period shall exceed one

month.month.

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Time of Payment of wages

7th day of wage month where less than 1000 are working

10th day where more than 1000 are working

No payment in KIND

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Permissible deduction from Wages • fines• for absence from duty• for damage caused to the property of the

employer• for the amenities provided, like house

accommodation• for recovery of advance or adjusting over

payment of wages• towards EPF, ESI, Labour Welfare Fund and

similar deductions permitted under any Act or the Standing Orders of the establishment

• for Life Insurance/ general insurance policies and Housing loan.

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THE EQUAL REMUNERATION THE EQUAL REMUNERATION ACT, 1976ACT, 1976

Act provides for the payment of equal Act provides for the payment of equal remuneration to men and womenremuneration to men and women

Extends to the whole of India Extends to the whole of India Act makes it obligatory on the part of Act makes it obligatory on the part of

employer to pay equal remuneration employer to pay equal remuneration to men and women workers for same to men and women workers for same work or work of a similar nature.work or work of a similar nature.

In order to make the wages equal, In order to make the wages equal, prevailing wages shall not be reduced prevailing wages shall not be reduced but the higher rate shall be but the higher rate shall be maintainedmaintained..


No discriminationNo discrimination

No discrimination while making No discrimination while making recruitment for the same work or recruitment for the same work or work of a similar nature, except work of a similar nature, except where the employment of women where the employment of women in such work is prohibited or in such work is prohibited or restricted by or under any law restricted by or under any law for the time being in forcefor the time being in force..

NoNo discrimination discrimination in any in any condition of service subsequent condition of service subsequent to recruitment such as to recruitment such as promotions, training or transfer.promotions, training or transfer.

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THE APPRENTICES ACT, 1961THE APPRENTICES ACT, 1961

The Act extends to the whole of The Act extends to the whole of India.India.

Applies to those apprentices who are Applies to those apprentices who are undergoing apprenticeship training in undergoing apprenticeship training in designated trades.designated trades.

From time to time, the Central Govt. From time to time, the Central Govt. has specified the designated trades. has specified the designated trades.

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Duties of the employer Make suitable arrangements for imparting

practical training Provide for basic training. Where an employer employs 500 or more

workers, the basic training shall be imparted in separate part of the workshop building or in a separate building set up by the employer.

* the employer may get easy loan from the Govt. for construction of building for conducting training classes


EMPLOYERSEMPLOYERS to to ensure ensure

Placement of Training Officer with Placement of Training Officer with suitable qualificationsuitable qualification

Payment of stipend at a rate not less Payment of stipend at a rate not less than the prescribed minimum rate than the prescribed minimum rate

Not to pay on the basis of piece workNot to pay on the basis of piece workNot toNot to require to take part in any require to take part in any

output output bonus or other incentivebonus or other incentive scheme scheme

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WORKMEN’S COMPENSATION ACT-1923

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THE WORKMEN’S THE WORKMEN’S COMPENSATION ACT, 1923COMPENSATION ACT, 1923

The Act provides for payment of The Act provides for payment of compensation to the worker compensation to the worker injured during the course of injured during the course of employment or contracted by employment or contracted by any occupational disease any occupational disease peculiar to that employmentpeculiar to that employment

Act extends to the whole of Act extends to the whole of India.India.

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The amount of compensation • for accidents resulting in death, an amount

equal to fifty per cent of the monthly wages of the deceased workman multiplied by the relevant factor; or an amount of eighty thousand rupees, whichever is more

• * for permanent total disablement, an amount equal to sixty per cent of the monthly wages of the injured workman multiplied by the relevant factor, or an amount of ninety thousand rupees, whichever is more.

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The maximum compensation as per W.C. Amendment Act 2000

Fatal Injury - Rs.4,57,080 Permanent Total Disablement -

Rs.5,48,496 Permanent Partial Disablement -

According to incapacity caused Temporary Disablement - Rs. 2000 per

month upto a period of 5 years

THE EMPLOYEE’S

STATE INSURANCE

ACT 1948

ESI Scheme …

• ESI Scheme for India is an integrated social security scheme tailored to provide Social Production to workers and their dependents, in the organised sector, in contingencies, such as Sickness, Maternity and Death or Disablement due to an employment injury or Occupational hazard

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ESI Act * Applies to factories and

establishments functioning in the notified area and consisting of 10 or more employees.

* Provides for health care and cash benefits in cases of sickness, maternity and employment injury.

* The Act absolved the employers of their obligations under the Maternity Benefit Act, 1961 and Workmen’s Compensation Act 1923.

Finances …• The Scheme is primarily funded by contribution

raised from Insured Employees and their employers

• Payable such as 1. Employees’ Contribution – 1.75% of the Wages 2. Employers’ Contribution – 4.75% of the Wages

TOTAL - 6.5 % of the Wages

Employees in receipt of an average daily wage of Rs.40/- or Less, are exempted from Payment of their share of contribution (w.e.f 8.4.00) but are entitled to all social security benefits under the Scheme.


ContributionContribution Employees’ contribution . 1.75% of wagesEmployees’ contribution . 1.75% of wages Employers’ contribution. 4.75 % of wagesEmployers’ contribution. 4.75 % of wages Employees receiving a daily average wage Employees receiving a daily average wage

upto Rs.70/-(w.e.f 1-8-07) are exempted from upto Rs.70/-(w.e.f 1-8-07) are exempted from payment of contribution. payment of contribution. Employers will Employers will however contribute their own share in however contribute their own share in respect of these employees.respect of these employees.

pay contribution within 21 days. pay contribution within 21 days.

Benefits to Employees …

• ESI Scheme Major Social Security Benefits in Cash and Kind include …

1. Medical Benefit – for self & Family 2. Sickness Benefit – for self 3. Maternity Benefit - for self 4. Disablement Benefit a). Temporary Disablement Benefit – for self b). Permanent Disablement Benefit – for self 5. Dependents’ Benefit – for dependents in case

of death due to employment injury

• In addition, the Scheme also provides some other need based benefits to insured workers. These are:

i). Funeral Expenses – to a person who

performs the last rites of IP

ii). Rehabilitation allowances – for self

iii). Vocational Rehabilitation - for self

iv). Old age Medicare – for self and spouse

v). Medical Bonus – for insured women and

IP’s wife

Benefits to Employees …

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EMPLOYEES PROVIDENT FUND EMPLOYEES PROVIDENT FUND AND MISC. PROVISIONS ACT, AND MISC. PROVISIONS ACT,

19521952

An Act to provide for the institution of An Act to provide for the institution of provident funds, pension funds and provident funds, pension funds and deposit linked insurance fund for the deposit linked insurance fund for the employees in the factories and other employees in the factories and other establishmentsestablishments

Extends to the whole of India except Extends to the whole of India except the State of Jammu and Kashmir the State of Jammu and Kashmir


Applicability Applicability Applies to all factories and Applies to all factories and

establishments in which establishments in which 20 or 20 or more are employed more are employed

Continuity of applicationContinuity of application Exemption –Exemption – Where employees get benefits Where employees get benefits

in the nature of provident fund or in the nature of provident fund or old age pension fund from the old age pension fund from the establishment which are not less establishment which are not less favourable than the benefits favourable than the benefits under the Act.under the Act.

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Schemes under the Act

Three beneficial schemes-

1.Employees Provident Fund Scheme 1952

2.Employees Pension Scheme 1995

3.Employees Deposit Linked Insurance 1976

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membership

An employee at the time of joining the employment and getting wages up to Rs.6500/- is required to become a member.

an employee is eligible for membership of fund from the very first date of joining a covered establishment.


Contribution to EPFContribution to EPF Employees’ share : 12% of the Basic Employees’ share : 12% of the Basic

+ DA+ DA Employer’s contribution : 12% to be Employer’s contribution : 12% to be

deposited as :deposited as : 8.33% to be deposited in Pension 8.33% to be deposited in Pension

Fund A/C No 10 and Fund A/C No 10 and the balance, ie, 3.67% to be the balance, ie, 3.67% to be

deposited in Provident Fund A/C No 01 deposited in Provident Fund A/C No 01 along with Employees’ share of 12%along with Employees’ share of 12%


CONTRIBUTION TOWARDS EPF & PENSION FUND

Employee Employer

Provident Fund Pension Fund

12% 8.33%3.67%

Continued …

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Benefits to employees

Provident Fund Benefits Pension Benefits Death Benefits

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Provident Fund Benefits– Employer also contributes to Members’ PF @

3.67% (1.67% in case of sick industry - eg: beedi) – EPFO guarantees the Employer contribution and

Govt. gives a decent interest to PF accumulations – Member can withdraw from this accumulations to

cater financial exigencies in life - No need to refund unless misused

• On resignation, the member can settle the account. i.e., the member gets his PF contribution, Employer Contribution and Interest

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Pension Benefits Pension Benefits – Pension to Member Pension to Member – Pension to Family (on death of member) Pension to Family (on death of member) – Scheme Certificate Scheme Certificate

• This Certificate shows the service & family details of a This Certificate shows the service & family details of a member member

• This is issued if the member has not attained the age of 58 This is issued if the member has not attained the age of 58 while leaving an establishment and he applies for this while leaving an establishment and he applies for this certificate certificate

• Member can surrender this certificate while joining another Member can surrender this certificate while joining another establishment and the service stated in the certificate is establishment and the service stated in the certificate is added with the service he is gaining from the new added with the service he is gaining from the new establishment. establishment.

• After attaining the age of 50 or above, the member can After attaining the age of 50 or above, the member can apply for Pension by surrendering this scheme certificate (if apply for Pension by surrendering this scheme certificate (if total service is at least 10 years) total service is at least 10 years)

• This is a better choice than Withdrawal Benefit, that if a This is a better choice than Withdrawal Benefit, that if a member dies holding a valid scheme certificate, his family member dies holding a valid scheme certificate, his family will get pension (Death when NOT in service) will get pension (Death when NOT in service)


Death Benefits Death Benefits

• Provident Fund Amount to Family (or Provident Fund Amount to Family (or to Nominee) to Nominee)

• Pension to Family (or to Parent / Pension to Family (or to Parent / Nominee) Nominee)

• Capital Return of Pension Capital Return of Pension • Insurance (EDLI) amount to Family (or Insurance (EDLI) amount to Family (or

to Nominee) to Nominee) No amount is taken from Member for this No amount is taken from Member for this

facility. Employer contributes for this. facility. Employer contributes for this.

• Nominee is basically determined as Nominee is basically determined as per the information submitted by the per the information submitted by the member at this office through FORM-2 member at this office through FORM-2

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The Trade Unions Act, 1926The Trade Unions Act, 1926

An act to provide for the An act to provide for the registrationregistration of Trade Unions and in certain of Trade Unions and in certain respects to define the law relating to respects to define the law relating to registered Trade Unions.registered Trade Unions.

It extends to the Whole of IndiaIt extends to the Whole of India

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Registration

The minimum number of workers to form a registered Trade Union is 10% or 100 whichever is less, subject to a minimum of 7 workers.

Ensure that the number of members does not fall down the above requirement.

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THE CONTRACT LABOUR THE CONTRACT LABOUR ( REGULATION & ( REGULATION &

ABOLITION ) ACT, 1970 ABOLITION ) ACT, 1970 [Act 37 of 1970 as amended by [Act 37 of 1970 as amended by

Act of 1986Act of 198622]]

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Who is a Principal employer

In a factory, the owner or the occupier of the factory & where a person has been named as Manager under the Factories Act, 1948

Who is a Contractor

A person who undertakes to produce a given result for the establishment through contract labour or who supplies contract labour for any work of establishment & includes a sub contractor.

Who is a Contract labor

Any worker will be a contract labour when he is hired for work of establishment through a contractor, with or without the knowledge of the principal employer

arun davay. legal environment of business introduction to law

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