Labour Law Updates 2015-16

1. Sikkim Promotion of Local Employment Bill, 2008: The President has also refused to give assent to the Sikkim Promotion of Local Employment Bill, 2008 on September 26, 2015, which proposed 80 per cent employment in the private sector for people carrying the Sikkim Subject Certificate. It violated Article 14 (Equality before law), 15 (Prohibition of discrimination on the grounds of religion, race, caste, sex or place of birth) and 19 (Protection of certain rights regarding freedom of speech etc.) of the Constitution. Please note that all State laws do not sent Bills for Presidential assent.

2.   Labour Law Amendment Bill, 2015 of Gujarat: President Pranab Mukherjee has given assent to the Labour Laws Gujarat Amendment Bill, 2015 which has provisions to ban strikes in public utility services for up to one year. Labour concerns under the Bill as reported in various newspapers include:

  • It will allow employers to change the nature of job of employees without notice.
  • The government can ban strikes in public utility service upto one year and the same cane be extended up to two years and repeated number of times.
  • The Bill allows out of court settlement between laborers and employers with payment of penalty to the government. Under this new system of compounding of offenses, workers can arrive at compromise with the employer without approaching court. For this, government will charge up to Rs 21,000 as penalty from the employer and give 75 per cent of that penalty money to the affected employee or employees.
  • The law amended the definition of ‘Contractor’, which in certain cases would be government itself.
  • The Bill proposes to lift sacking of workers and payment of compensation for units located in special investment regions and National Investment and Manufacturing zones.

3. The Employees’ Provident Fund Organization (EPFO) has been taking various steps to make EPF accounts more users friendly. The latest step is doing away with the need for employer’s approval at the time of EPF withdrawal. The process so far required you to route your withdrawal request through the employer, as employer attestation was needed causing unwanted delays. According to EPFO, if details, such as Aadhaar and bank account number are linked to your Universal Account Number (UAN) and Know-Your-Customer (KYC) verification is done by the employer, then an employee can directly approach EPFO for withdrawal using UAN (this is a unified EPF account under which you can park all your EPF money even when you change jobs, thereby ensuring portability of EPF money from one organization to another). Forms for withdrawal are brief one-page forms requiring only 5-6 types of information to be submitted. The government had launched UAN last year and all active EPF subscribers have been allotted this number. The employer verifies the KYC details through a digital signature, but for withdrawal, you need to seed this number with Aadhaar and bank account number. In older process as provided in news reports state that you need to know that EPF doesn’t allow you to withdraw money before a cooling period of two months. So every time you change jobs, you need to transfer that money. With UAN, doing this has become easier. The PF office allows full withdrawal for medical reasons, on voluntary retirement, and a few other situations. PF account has two components: EPF and Employees’ Pension Scheme (EPS). The employer’s contribution goes into both. To withdraw the pension money, you need to fill up Forms 19 and 10C. If you do not want to withdraw the pension money, you can get a scheme certificate using the same forms. Doing so will continue your pension account even if you encash EPF. You can submit the scheme certificate with the next organization that you join and carry forward your pension account. If you want a loan or want to make a partial withdrawal, use form-31. The employer sends these forms to EPFO, which then processes the request. Depending on the type of request, it takes 10-15 days from EPFO receiving the forms for the money to get credited to your bank account.

4. Fundamental Right of Regularization: In ONGC Ltd. Vs. Petroleum Coal Labour Union [2015 II LLJ 257 (SC)] Corporation had questioned the correctness of the judgment and order passed by the High Court of Judicature at Madras caused dismissal of their writ challenging the award passed by the Industrial Tribunal, Tamil Nadu, in wherein, it was held that non-regularization of the concerned workmen in the dispute is not justified. The apex court held that when workmen appointed by issuing memorandum of appointment to work in Corporation cannot be arbitrarily denied legitimate, statutory and fundamental right to be regularized. The procedure of appointments adopted by the Corporation with respect to the concerned workmen initially  were appointed through contractors, subsequently through the Co-operative Society, and then vide memorandum of appointment issued to each one of the concerned workmen in the year 1988 and thereafter, continuing them in their services in the posts by the Corporation without following any procedure. Their appointment can be said as irregular appointments but not as illegal as the same was not objected to by any other Authority of the Corporation at any point of time.  Therefore, the Certified Standing Orders of the Corporation by all means apply to the concerned workmen. The legal contention urged on behalf of the Corporation that the statutory right claimed by the concerned workmen under Clause 2(ii) of the Certified Standing Orders of the Corporation for regularizing them in their posts as regular employees after rendering 240 days of service in a calendar is not an absolute right conferred upon them and their right is only to consider their claim. This plea of the learned senior counsel cannot again be accepted by for the reason that the Corporation is bound by law to take its decision to regularise the services of the concerned workmen as regular employees as provided under Clause 2(ii) of the Certified Standing Orders after their completion of 240 days of service in a calendar year as they have acquired valid statutory right. This should have been positively considered by the Corporation and granted the status of regular employees of the Corporation for the reason that it cannot act arbitrarily and unreasonably deny the same especially it being a Corporate Body owned by the Central Government and an instrumentality of the State in terms of Article 12 of the Indian Constitution and therefore, it is governed by Part III of the Constitution. The Corporation should exercise its power fairly and reasonably in accordance with law.

5. Premises separate from Factory is a ‘Factory’ under the Factories Act: In Mohan Singh vs. Chairman Railway Board [2015 III LLJ513 (SC)] The legal nodus that arose in the present Appeals was whether the existing canteen at Moradabad Division of the Northern Railway i.e. the subject Canteen, is located in a ‘Factory’ within the meaning of Section 46 of the Factories Act, 1948 (“Act”) and consequently, whether the services of the staff employed in the subject canteen ought to be regularized. These Appeals have been preferred against the Judgment passed by the Division Bench of the High Court of New Delhi in LPA wherein it has been held that the subject Canteen is a ‘Non Recognized and Non Statutory’ canteen. It was held by the apex court that the Factory Act, 1948 clearly states that the word ‘premises’ can refer to an entire area, which may have several separate building, within it or may correspond to several separate building within it or may correspond to an open yard. Definition of manufacturing process does not mandate carrying of manufacturing process under one roof alone. The following observations below to arrive at the ratio:

  • Definition of Premises: It has perforce to be inferred that manufacturing process is being carried out at the Moradabad Division. The question that arises is whether the said manufacturing activities are carried on within the premises of DRM Office, Moradabad. Black’s Law Dictionary, 5th Edition defines ‘Premises’, so far as estates and property are concerned, as lands and tenements. With regard to the Worker’s Compensation Act, ‘premises of employer’ is not restricted to permanent site of the employer’s business nor to property owned or leased by him but contemplates any place under the exclusive control of the statutory employer where his normal business is conducted or carried out.” In Kamla Devi V. Laxmi Devi [(2000) 5 SCC 646], in the context of Delhi Rent Control Act, 1995 this Court has held that even an open plot of land so long as it has some structures on it, will fall within the meaning of ‘premises’. Extrapolating from these decisions, the apex court held that there is no room for doubt that the DRM Office of Moradabad Division along with all the appurtenant lands, yards, etc. are ‘premises’ within the contemplation of the Factories Act.
  • Premises mean Precincts: In Ardeshir H. Bhiwandiwala vs The State Of Bombay [1962 AIR 29, 1962 SCR (3) 592], the Constitution Bench explained that “premises including precincts” does not necessarily mean that the premises must always have precincts. Even buildings need not have any precincts. The word “including” is not a term restricting the meaning of the word “premises” but is a term which enlarges the scope of the word “premises”. A comprehensive reading of the Act clearly shows that the word “premises” can refer to an entire area, which may have several separate buildings, within it, or which may correspond to an open yard.
  • Definition of Manufacturing Process: The definition of “manufacturing process” does not mandate that the manufacturing activities should be carried on in one building alone. What this definition really deals with is the nature of the work done and not with where that work is to be done. It must, therefore, be held that all the requirements of the term “factory” as defined under Section 2(m) of the Act are satisfied on the facts of the present case. Thus, the premises of DRM, Moradabad must be also treated as a factory under the Factories Act, 1948 in which case Moradabad Canteen shall ipso facto corresponded to a ‘Statutory Canteen’ within the meaning of section 46 of the Act.

Therefore, the apex court was of the view that the employees in the statutory canteens of the Railways will have to be treated as Railway servants. Thus the relationship of employer and employee stands created between the Railway Administration and the canteen employees from the very inception.” Therefore, in the light of the settled principle the apex court held that the subject Canteen is a ‘Statutory Canteen’ under the Factories Act, 1948 and therefore, directed the Respondents to consider regularizing the services of the Appellants presently serving as canteen workers in consonance with the principles laid down in Secretary State of Karnataka vs. Uma Devi [AIR 2006 SC 1806] and take requisite action within six months of the receipt of this Judgment. Further, as and when the subject posts fall vacant the Respondents shall be bound to fill the posts by a regular process of selection.

5. Increase in Maternity Leave in Private Firms: The union government is set to increase the maternity leave for women employed in private firms from the existing 12 weeks to 26 weeks. (Six-and-a-half months). The Ministry of Labour is expected to amend the Maternity Benefit Act, 1961, which presently entitles women to 12 weeks of maternity benefit whereby employers are liable to pay full wages for the period of leave.

  • Six months of breast-feeding since birth is recommended to gain complete immunity and nutrition. This amendment would enable women to breast feed their child for a longer duration. It will reduce child illness occurring mainly due to lack of proper care in the initial stages
  • The International Labour Organization recommends a minimum standard maternity leave of 14 weeks or more, though it encourages member states to increase it to at least 18 weeks. At 26 weeks, India is set to join the league of 42 countries where maternity leave exceeds 18 weeks. It, however, falls behind several East European, Central Asian and Scandinavian countries, which have the most generous national legislation for paid maternity leave.
  • Women employed in government jobs in India get a six-month maternity leave as per the Central Civil Service (Leave) Rules 1972. The last circular in this regard was issued in 2008, when it was increased from four-and-a-half months. If the Ministry of Women and Child Development’s recommendations to the Cabinet Secretariat are accepted, the Department of Personal & Training will have to issue orders to enhance it to eight months. Moreover, women government employees are allowed to take childcare leave of up to two years in phases at any point till their child turns 18 years old. The Seventh Pay Commission recently recommended that only the first 365 days of leave should be granted with full pay, while the remaining 365 can be availed at 80 per cent of the salary.

6. Payment of Bonus Act Amended: The Act provides a statutory right to employees of an establishment to share the profits of his/her employer. As per the Principal Act, any employee who was drawing a salary or wage not exceeding ten thousand rupees per month was eligible to be paid a bonus. The amendment has been done in following provisions:

Section 2 (13) of the Principal Act states that, employee” means any person (other than an apprentice) employed on a salary or wage not exceeding ten thousand rupees per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied.

As per the Amendment, the words “ten thousand rupees” in Section 2 (13) have been substituted for the words “twenty one thousand rupees”.

As per Section 12 of the Principal Act which lays down the ‘Calculation of bonus with respect to certain employees’– Where the salary or wage of an employee exceeds three thousand and five hundred rupees per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were three thousand and five hundred rupees per mensem.

For the purposes of calculation of the bonus to be paid to an employee under the Principal Act, INR 3,500 (Indian Rupees Three Thousand Five Hundred) per month was the maximum amount taken even if an employee was drawing up to INR 10,000 (Indian Rupees Ten Thousand Only) per month.

Further, amendment in Section 12 of the Principal Act, for the words ”three thousand and five hundred rupees” at both the places where they occur, the words ”seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher” has been substituted.

The following Explanation was inserted at the end, namely:-

‘Explanation: For the purposes of this section, the expression ”scheduled employment” shall have the same meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act, 1948 (11 of 1948).’

The amendments have come into effect from April 1, 2014. The Amendment increases the amount of bonus that would be received by the eligible employee as against the Principal Act which provided that the bonus payable to an employee will be in proportion to his or her salary or wage. However, if an employee’s salary is more than INR 3,500 per month, for the purposes of calculation of bonus, the salary will be assumed to be INR 3,500 per month. After the Amendment, this limit has been enhanced to INR 7,000 per month or the minimum wage for the scheduled employment (whichever is higher).

7. EPFO launches an Incentive Refund Scheme for employers: It is meant to encourage partnership in allotment of universal account number to their employees. In order to boost the process of seeding the Universal Account Number (UAN) with KYC (e.g PAN, bank account details, Aadhar) that enables enhanced services from EPFO, an “Incentive Refund Scheme” has been launched vide press release 11.03.2016.  The Scheme shall be in operation for one year beginning January 1, 2016 to December 31, 2016. The employers can now claim upto 10% refund of administrative charges on fulfilling certain criteria relating to UAN in respect of its contributing members.  The refund as per the scheme comes in two categories:-

(a) Incentive Refund Scheme A

Claim 10% refund of administrative charges by:-

(i) Providing member’s details as required under Form No. 11 (New) (80% or above)

(ii)  Seeding of all the three i.e AADHAR (atleast 80% of (i) above, bank account (100% of (i) above) and PAN (wherever applicable).

(iii) UAN activation (100% of (i) above)

(b) Incentive Refund Scheme B

Claim 5% refund of administrative charges by:-

(a) Providing member’s details as required under Form No. 11 (New) (60% or above).

(b) Seeding of all the three i.e AADHAR (70% of (a) above, bank account (80% of (a) above) and PAN (wherever applicable).

(c) UAN activation (60% of (a) above).

Only such establishments that have in each month of the quarter achieved the criteria for qualification can avail the incentive of 5% or 10% by way of refund at the end of every quarter starting from quarter ending March, 2016. Already 6.38 crore UAN numbers have been allotted by EPFO.  Seeding of UAN with KYC details including Aadhar, bank details is a priority area for EPFO.  This is being carried out in full swing.  More than 2.44 crore members have activated their Universal Account Number and are able to access enhanced services like downloadable dynamic UAN card, updated details of PF accounts, auto trigger of transfer request while changing employment etc.  The incentive scheme aims to improve service delivery to those who need the most.  It is now possible for employers to submit UAN based claims directly to PF offices, without attestation of the employers.

8. Start-ups have been exempted from nine labour laws for a period of three years: Ministry of Labour & Employment has issued an advisory to the States/UTs/Central Labour Enforcement Agencies for a compliance regime based on self-certification and regulating the inspections under various Labour Laws. It has been suggested that if such startups furnish self-declaration for compliance of nine labour laws for the first year from the date of starting the business, no inspection under these labour laws, wherever applicable, will take place. As per the statement, the nine labour laws, include:

  • Industrial Disputes Act, 1947,
  • Trade Unions Act, 1926,
  • Building and Other Constructions Workers’ (Regulation of Employment and Conditions of Service) Act, 1996 and
  • Industrial Employment (Standing Orders) Act, 1946.

The other such laws are Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, Payment of Gratuity Act, 1972, Contract Labour (Regulation and Abolition) Act, 1970, Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and Employees’ State Insurance Act, 1948.

From the second year onwards, up to 3 year from the setting up of the units, such startups are required to furnish self-certified returns and would be inspected only when credible and verifiable complaint of violation is filed in writing and approval has been obtained from the higher authorities.

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