FEB2015

The Compliance Calendar for the month of February 2015 includes remittances for Professional Tax, Labour Welfare Fund and ESI Central.

In Important judgements, the Honourable Supreme Court of India has held that Contractual Appointment amounts to unfair labour practice. The Honourable Jharkhand High Court has ruled that gratuity is not a charity, but is payable for the service rendered by employee and gratuity has to be paid within 30 days of cessation of employment. The Honourable Kerala High Court Performance has held that allowances will be wages under ESI account. The Honourable Madras High Court has ruled that any shortfall of notice pay would violate section 33(2)(b) of the industrial disputes act to justify reinstatement. The Honourable Delhi High Court has pronounced that any act of a director without authority can be ratified by the board of directors. The Honourable Supreme Court has held that a club maintaining kitchen with refrigerator, geyser, etc. is covered by ESI Act. The Honourable Kerala High Court has held that testing of cylinders by third party would be construed as principal to principal basis.

In news to note, the Inspector Raj is declining in labour laws. The new labour law will free small factories from giving separate returns. A Bill to amend Apprentices Act has been passed by Rajya Sabha. Inspections have dropped for violation of Minimum Wages Act. Transfer of office bearers of unions is not prohibited. Some officials of the Employees' Provident Fund Organisation have been asking for records going back 10-15 years to be produced in person for organisations registering online. The Union Government of India has invited Comments/ Suggestions to repeal of The Industrial Dispute Act, 1956. India enters into Social Security Agreement with Kingdom of Norway and enhances the list to thirteen

We hope you find the contents of this newsletter relevant and useful. We welcome your suggestions and inputs for enriching the content of this newsletter. Please write to contactadp@adp.com

Hello Readers,

Important Judgments

Compliance Calendar for Feb 2015 02

PAGES

News to note

Contractual appointment amounts tounfair Labour Practice. 03

Any shortfall of notice pay wouldviolate Section 33(2)(b) of the IndustrialDisputes Act to justify reinstatement

04

Gratuity is not a charity, but is payablefor the service rendered by employeeand Gratuity has to be paid within 30days of cessation of employment

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Performance Allowance will bewages under ESI Act 04

Any act of Director without authority canbe ratified by the Board of Directors 05A club maintaining kitchen withrefrigerator, geyser, etc. is coveredby ESI Act

05Testing of cylinders by third party wouldbe construed as principal to principal basis 06

India Enters into Social Security Agreementwith Kingdom of Norway and enhancesthe list to thirteen

09

Union Government of India has invitedcomments/ suggestions to repeal ofthe Industrial Dispute Act, 1956

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Some Employees' Provident FundOrganisation officers asking forrecords going back 15-20 Years

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Transfer of Union Office Bearersnot prohibited 08

Inspections have dropped for violationof Minimum Wages Act 08

Bill to amend Apprentices Act passedby Rajya Sabha 08

New Labour Law to free small factoriesfrom giving separate returns 07

'Inspector Raj' declining in Labour Laws 07

PAGE 02

15th Feb 15 Remittance of Contribution EPF & MP Act 1952 By Challan

15th Feb 15International worker with wages and Nationality EPF & MP Act 1952 Statement in IW 1

PF Central

20th Feb 15 Kerala By Challan

Labour Welfare Fund Remittances

State Labour Welfare Fund Kerala

Compliance Calendar for the month of Feb 2015

21st Feb 15Remittance of Contribution(Main code and Sub Codes) ESIC Act 1948 By Challan

ESI Central

Due Date Activity Due Under Mode

Professional Tax - States - Remittances

10 Feb15th

15th 15 Feb

20th Feb 15

21st Feb 15

Andhra Pradesh & Madhya Pradesh

Gujarat & Tamil Nadu

By Challan

By Challan

Online

By Challan

Karnataka

West Bengal

State wise regulations

Gujarat PT regulations

28th Feb 15 By Challan

West BengalPT regulations

Kerala, Assam & Orissa State wise regulations

Karnataka PT regulations

28th Feb 15 Online MaharashtraMaharashtraPT Regulation

In a case of Sudarshan Rajpoot Vs. U.P state road Transport Corporation, the Honourable Supreme Court of India through its bench consisting Honourable Justices Mr. V Gopala Gowda and Mr. C Nagappan pronounced that

Termination of a bus driver, engaged on contractual basis but having worked for more than 240 days, without any retrenchment compensation or holding of enquiry for alleged negligence has been rightly held to be illegal by the labour court, as such, the high court erred in setting aside award of the labour court by substituting with damages/Compensation equivalent to retrenchment compensation for the service rendered by such workman hence the supreme court in appeal of the workman, restored the award of the labour court in holding that the workman will be entitled to reinstatement with 50% back-wages from the date of termination till the date of award and cent per cent back-wages till the date of reinstatement.

Appointment as made against permanent vacancy deprives a workman from status of permanency which amounts to unfair labour practice.

Striking off the name of the work from the roll for causing of heavy loss to the transport corporation by the driver in an accident without holding of enquiry would be illegal and unjustified.

Failure of the transport corporation to prove negligence of a driver causing heavy loss due to mechanical defect in the bus would not result into denial of reinstatement to a terminated driver and, as such, the Supreme Court upheld award of the labour court granting reinstatement of the bus driver.

High court, in its writ jurisdiction, should not have reversed the award of the labour court which was based on actual facts.

When a bus driver has become disabled, the transport corporation has to provide alternative job when he has been reinstated after his termination.as an absconder resulting in termination of his service.

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CONTRACTUAL APPOINTMENT AMOUNTS TO UNFAIR LABOUR PRACTICE.

In an extraordinary case of Employers in relation to the Management of West Moodidih colliery of M/s Bharat Coking Coal Limited, the Honourable Jharkhand High Court through its bench consisting Honourable justices Mr.R Banumathi and Mr. Shree Chandrashekar pronounced that

An employer is under an obligation to pay gratuity to an employee within 30 days of cessation of employment.

Failure of the employer to pay gratuity within prescribed period would attract interest on delayed payment.

It is too well-settled that the payment of gratuity is not a charity, but it is the amount payable for the service rendered by the employee.

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GRATUITY IS NOT A CHARITY, BUT IS PAYABLE FOR THE SERVICE RENDEREDBY EMPLOYEE AND GRATUITY HAS TO BE PAID WITHIN 30 DAYS OFCESSATION OF EMPLOYMENT

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In a case of Bharat Hotel vs. employees' state insurance corporation, the Honourable Kerala High

Court through the verdict by the Honourable Justice Mr.B.Kemal Pasha pronounced that

After amendment in section 2(9) of the employees' state insurance act, 1948, effective from 20.10.1989, the

term contract of employment as given in section 22(2) of the employees' state insurance act, 1948, cannot

automatically be read as a contract of engaging a trainee or apprentice also.

Stipend being paid to a trainee or an apprentice cannot be

treated as wages within the meaning of section 2(22) of the

employees' state insurance act, 1948.

Performance allowance is nothing but an additional

remuneration coverable under the term wages under section

2(22) of the employees state insurance act, 1948.

Employees' state insurance act, 1948 being a beneficial piece

of legislation has to be constructed in its correct perspective so

as to fructify the legislative intention underlying its enactment.

When two views are possible on applicability of any provisions

of any social welfare act, that view, which furthers the

legislative intention, should be preferred to the one which

would frustrate it.

A social welfare act must receive a liberal construction so as to

promote the objects of the act.

The courts must even, if necessary, strain the languages of the

act in order to achieve the purpose, which the legislation had, in

placing this legislation on the state book.

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PERFORMANCE ALLOWANCE WILL BE WAGES UNDER ESI ACT

ANY SHORTFALL OF NOTICE PAY WOULD VIOLATE SECTION 33(2)(B)OF THE INDUSTRIAL DISPUTES ACT TO JUSTIFY REINSTATEMENTIn a case of Tamilnadu State Transport Corporation (Madurai) limited, rep. by its Managing Director vs. Joint Commissioner of Labour (conciliation), office of the Commissioner of Labour, Chennai & Anr, the Honourable Madras High Court through the verdict by its bench represented by Honourable Justices Mr. M. Jalchandren and Mr. R. Mahadevan pronounced that

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While effecting termination of services of an employee after conduction fair and proper enquiry, providing guilt

against the delinquent-employees, if payment of one month's notice pay is less paid due to any reason

including wrong calculation or under any misconception, termination of services is liable to be set aside

attracting reinstatement with back-wages.

Approval under section 33(2)(b) of the industrial disputes act, 1947, would be declined if payment of one

month's notice pay is less paid due to any reason including wrong calculation or under any misconception.

If the approval by the labour court/industrial tribunal under section 33(2) (b) of the industrial disputes act, 1947,

is liable to be set aside attracting reinstatement with back-wags.

Strict companies of provisions of section 33(2) (b) of the industrial disputes act, 1947, is mandatory in nature.

Concurrent finding of fact by the competent authority of fact by not suffering from impropriety, material

irregularity or patent illegality in the eye of law, cannot be interfered under writ jurisdiction.

PAGE 05

In a case of M/s Abaskar construction (p) ltd vs. Devi dutt & Ors, the Honourable Delhi High Court

through the verdict by Honourable Justices Mr.Vibhu Bakhru pronounced that

When the workman are given retrenchment compensation with the order of retrenchment, the retrenchment

so effected would be legally valid.

Reinstatement is not justified when the retrenchment effected is not in violation of sections 25F, 25G and

25H of the industrial disputes act, 1947.

As per provisions act, 1956, particularly section 290 acts of a director of the company, shall be valid,

notwithstanding whether the director was authorized to do so or not.

Actions of a director (not being competent to do so), when ratified later on bye the board of directors of the

company, would have full force in law.

An act, done by a director without authority can be ratified by the board of directors of the company.

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ANY ACT OF DIRECTOR WITHOUT AUTHORITY CAN BE RATIFIEDBY THE BOARD OF DIRECTORS

A CLUB MAINTAINING KITCHEN WITH REFRIGERATOR,GEYSER, ETC. IS COVERED BY ESI ACTIn a case of Delhi Gymkhana club ltd Vs. Employees' State Insurance Corporation, the Honourable Supreme Court of India through the verdict by Honourable justice Ms. R. Banumathi pronounced that

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Preparation of food items in the kitchen of a club

falls within the ambit of manufacturing process.

A club, employing more than 20 employees'

maintaining kitchen having refrigerator, geyser, etc.

for preparation of foodstuffs, using power would

amount to engaged in manufacturing process

bringing it under the definition of a factory.

Profit-making or non-profit-making of any

establishment would need no concern for

applicability of the employees' state insurance act,

1948 since the act is a social welfare legislation.

The Employees' State Insurance Act being a

beneficial legislation, contention of the appellant for

covering the under the act prospective or making

the applicability of the order prospective I.e. from

the date of order of apex court cannot be

countenanced since the contributions for welfare of

employees ought to have been paid when it was

demanded by the ESI authority in 1986.

An establishment or shop engaged in manufacturing process with or without the aid of power by employing

more than 20 persons for wages, would come within the meaning of factory as defined under section 2(12) of

the employees' state insurance act, 1948.

Cooking and preparing of food items like preparation of coffee, peeling of potatoes, making bread toast, etc.

qualifies as manufacturing process as per definition given in section 2(k) of the factories act, 1948.

PAGE 06

In a case of Indian Oil Corporation limited, Kerala state office, cochin-682036 Vs Employees'

provident fund appellate tribunal, scope minar, core-II, New Delhi-110092 and others, the

Honourable Kerala High Court through the verdict by Honourable Justice Mr.K. Vinod Chandran

pronounced that

Considering the employees of the third party, doing contractual work of statutory testing of cylinders, to

be the employees of the principal employer having no relationship of employer-employee, is not

appropriate since section 2(f) of the employees' provident funds and miscellaneous provisions act,

1952 specifically includes only persons employed by or through contractor.

Employees of contractor having separate license to perform the job of the principal basis, cannot be

treated as employees of the principal employer or the principal employer cannot be burdened with the

liability of employees of the contractor.

Coverage of an establishment under the employees' provident funds and miscellaneous provisions act,

1952 is not proper if there are less than 20 employees.

Clubbing of two different establishments under the employees' provident funds and miscellaneous

provisions act, 1952 is not permissible under the statute when establishment of the contractor is having

separate license for the specific job to be completed in the premises of the principal establishment with

less than 20 employees.

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TESTING OF CYLINDERS BY THIRD PARTY WOULD BE CONSTRUEDAS PRINCIPAL TO PRINCIPAL BASIS

'INSPECTOR RAJ' DECLINING IN LABOUR LAWS

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Among key initiatives of the Narendra Modi

government has been the fast-tracking of labour law

reforms to put an end to 'Inspector Raj' and improving

the country's rank in the World Bank's ease of doing

business index.

However, when it comes to checking labour law

violations, the number of inspection in the central

sphere, which including banks, railways, defence,

insurance, mines among others, has anyway been on

the decline.

For instance, with the number of contract labourers

engaged in the central sphere estimated at about 21,

12,715 persons, the number of inspections under the

contract labour (R&A) act fell to 6990 with 4084

prosecutions launched in 2013-14, against 8146

inspections and 4671 prosecutions launched in 2012-

12, according to labour minister Bandaru Dattatreya,

in a written reply to the Lok Sabha in the last week of

Nov.2015.

NEW LABOUR LAW TO FREE SMALL FACTORIES FROM GIVING SEPARATE RETURNSAmid the tussle between the government and opposition parties, parliament, on 28.11.2014, approved a

labour law that redefines small companies from furnishing separate labour returns.

This Law will lead to four benefits

1. Lower harassment of small establishments in the hands of labour authorities.

2. Boost manufacturing.

3. Provide impetus to skill development as small business.

4. Convert unskilled workers to skilled ones and ultimately create more employment due to ease in

the process of doing business.

Approval comes two days after parliament approved amendments to the apprentices act, 1961, and sets the

ball rolling on labour reforms to ease the process of doing business in India.

The labour laws (exemption from furnishing returns and maintaining registers by certain establishment)

amendment bill, 2014 was approved by Lok Sabha had approved the draft law after a discussion on black

money.

With this, a company employing between 10 and 40 workers will be called small establishment. Earlier a

small establishment was one with 10-19 employees. It will also allow them to furnish just one return rather

than file separate labour returns, a move that Prime Minister Narendra Modi had spoken of during a function

of the labour ministry on 16th October.

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BILL TO AMEND APPRENTICES ACT PASSED BY RAJYA SABHA

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A bill seeking to remove imprisonment as punishment for violating the provisions of the apprentices act,

1961, and allowing employers to fix the hours of work and leave as per their discretion or policy was passed

by the Rajya Sabha on 26.11.2014.

The Apprentices (Amendment) bill, 2014 was passed by a voice vote, with a majority of speakers favouring

the legislation, saying it was aimed at enhancing the skills of youth and making them employable.

TRANSFER OF UNION OFFICE BEARERS NOT PROHIBITED¡Transfer of an employee from one place to another is an incident of service. In one case Karnataka high

court has held that an office bearer of a union is first an employee then an official of the union hence it is not

open to the office-bearing of the union to contend that they are not liable to be transferred on the ground that

they are to stall transfer. The Bombay high court has held that transfer, on the ground of mala fide that the

employee is president of the union and also carrying on union activities for the last 10 years. Should not

have been stalled. Transfer should also not have been stalled because of mala fide when, all along a

decade the management has been working at a place for the last 20 years. There is no immunity to an

office-bearer (president of union here) from avoiding transfer under the industrial disputes act.

INSPECTIONS HAVE DROPPED FOR VIOLATION OF MINIMUM WAGES ACT¡

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Under the minimum wages act, the number of inspections in 2013-14 dropped to 13099 with only 5167

prosecutions launched against 15460 inspections and 5267 prosecutions launched in 2012-13.

Under the equal remuneration act, only 2881 inspections were conducted in 2013-14 against 4167 in

2012-13 with the number of prosecutions launched at 831 against 773 respectively.

SOME EMPLOYEES' PROVIDENT FUND ORGANISATION OFFICERSASKING FOR RECORDS GOING BACK 15-20 YEARS¡

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It has come to the notice of head office that in spite of instructions to the contrary field functionaries

are directing establishments who have registered online for PF code to appear personally and

produce all original records for periods beyond 15-20 years. This is against the spirit of instructions

issued on online registration of establishment.

If at the time of such post coverage inspection or from any complaint received at office it transpires

that the establishment is/are coverable from a back period show cause notices should be issued to

the establishment and appropriate action may be taken as per the provisions contained under

section 7A of the employees provident fund & miscellaneous provisions act, 1952 after giving

reasonable opportunity.

It is once again clarified that during the post coverage inspection of the establishments, the

documents mentioned by the establishment including PAN details at the time of applying for code

number online, shall only be verified with respect to their original copies.

If any complaint on calling for records than those specified in the circular dated 8.7.2014 is received

at Head office, appropriate action will be taken against the erring officers.

PAGE 09

UNION GOVERNMENT OF INDIA HAS INVITED COMMENTS/ SUGGESTIONS TOREPEAL OF THE INDUSTRIAL DISPUTE ACT, 1956

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Proposes to repeal the The Industrial Dispute Act, 1956, as recommended by the PC Jain

Commission in their report

The concept note along with the copy of the The Industrial Dispute (Amendment & Miscellaneous

Provisions) Act, 1956 has been uploaded on the web site of The Ministry of Laboy and Employment

i.e, http:/labour.nic.in for inviting Comments/ Suggestions from the general public.

The comments / Suggestions may be sent to Shri SC Sharma, Deputy Director,[IR(PL)], Ministry of

Labour and Employment, Room No. 309(A), Shram Shakthi Bhawan, Rafi Marg, New Delhi-

110001 or through e-mail id sc.sharma56@nic.in by 20th Feb 2015.

INDIA ENTERS INTO SOCIAL SECURITY AGREEMENT WITH KINGDOM OFNORWAY AND ENHANCES THE LIST TO THIRTEEN

The below are the countries that are entered in to with Social Security Agreement by the Union of India.

SOCIAL SECURITY AGREEMENTS No Country Effective from

1 Belgium 01/09/2009

2 Germany 01/10/2009

3 Switzerland 29/01/2011

4 Denmark 01/05/2011

5 Luxembourg 01/06/2011

6 France 01/07/2011

7 Korea 01/11/2011

8 Netherlands 01/12/2011

9 Hungary 01/04/2013

10 Sweden 01/08/2014

11 Finland 01/08/2014

12 Czech Republic 01/09/2014

13 Norway 01/01/2015

PAGE 10

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