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Violation of EPF Act

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Details of number of cases under Section 7A of Employees™ Provident Funds & Miscellaneous Provisions Act, 1952, initiated against the defaulting establishments during the last three years are as under:

2010-2011

2011-2012

2012-2013

26568 19615 17147

Details of Action taken during the said period is as under:

(i) Number of prosecution cases filed under Section 14 of the Act

2010-2011

2011-2012

2012-2013

59761 64225 62286

(ii) Number of cases filed before police authorities under Section 406/409 of IPC

2010-2011

2011-2012

2012-2013

6614 6709 6899

Section 7A of Employees™ Provident Funds & Miscellaneous Provisions Act, 1952 provides for quantification of amount due from any employer under any provision of this Act and Schemes framed thereunder. The amount so quantified is recovered in accordance with the procedure prescribed under various provisions of the Act.

The following steps have been taken for recovery of dues against the defaulting establishments as per the provisions of the Act:-

1.    Action under Section 7A of Employees™ Provident Funds & Miscellaneous Provisions Act, 1952 for assessment of dues.

2.    Action as provided under Section 8B to 8G of the Act for recovery of dues.

3.    Action under Section 14 of the Act is taken for filing prosecution against defaulters before the appropriate court of law.

4. Action under Section 406 /409 of IPC for non-payment of employees™ share of contribution deducted from the wages / salary of the employees but not deposited to the Fund.

This information was given by Minister of State for Labour & Employment Shri  Kodikunnil Suresh in the Lok  Sabhatoday in reply to a written question.


Journalists from Electronic Media are not covered under the Wage Board for journalists

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The journalists from electronic media are not covered under the Wage Board for journalists.

There is no proposal at present to include all journalists in electronic media under the Wage Board.

The Ministry of Labour and Employment administers the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 for the purpose of fixing/revising rates of wages and for regulating service conditions of Working Journalists and Non-Journalist Newspaper Employees only.

This information was given by Minister of State for Labour & Employment Shri Kodikunnil Suresh in the Lok Sabha today in reply to a written question.

Government of India has decided to prepare a new series of Consumer Price Index for Industrial Workers

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Ministry of Labour and Employment, Government of India has decided to prepare a new series of Consumer Price Index for Industrial Workers. For this purpose, Government has set up a Standing Tripartite Committee (STC) to advise the Government on issues pertaining to the Consumer Price Index for Industrial Workers (New Series). The STC will go into details of various parameters that are taken into consideration for updation of the base year such as the weighting diagram, consumption basket, selection of centres, sample size of establishments for price collection etc.

Government has no specific information about the skilled/semi-skilled worker outsourced by the Central Government /State Governments through contractors not being paid as per the CPI. However, the Contract Labour Act, 1970 inter-alia, contains provisions for payment of wages to these category of workers. The contract workers are also entitled to receive minimum wages as notified by the appropriate Governments from time to time.

This information was given by Minister of State for Labour & Employment Shri Kodikunnil Suresh in the Lok Sabha today in reply to a written question.

Coverage of ESI

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Employees State Insurance (ESI) Act, 1948 is applicable to employees working in the organized sector i.e. factories and establishment which are situated in implemented area only with a threshold of coverage of 10 employees.  Extension of scheme to all units is not viable due to issues relating to enforcement of the Act and feasibility of setting of necessary infrastructure viz. dispensaries and hospitals.

The State-wise details of Employees under ESI Medical Benefit Scheme as on 31.03.2012 is annexed.

S.No.

State/ Region/ Area

Number of Employees  benefited as on  31-3-2012

1

ANDHRA PRADESH

1361616

        2 ASSAM & MEGHALYA & NAGALAND &TRIPURA

92218

3

BIHAR

80761

4

CHANDIGARH

82714

5

CHATTISGARH

146408

6

DELHI

1062113

7

GOA

153842

8

GUJARAT

711103

9

HARYANA

1098128

10

HIMACHAL PRADESH

161303

11

JAMMU  & KASHMIR

56297

12

JHARKHAND

234999

13

KARNATAKA

1770522

14

KERALA

595658

15

MADHYA PRADESH

394332

16

MAHARASHTRA

2224963

17

ORISSA

236995

18

PUDUCHERRY

95746

19

PUNJAB

713144

20

RAJASTHAN

527704

21

TAMIL NADU

2316533

22

UTTAR PRADESH

906556

23

UTTARAKHAND

257839

24

WEST BENGAL

1067414

`

Total

16348908

Under the ESI Act, 1948 the Employees drawing wages uptoRs. 15000/- per month are eligible to avail ESI facilities subject to the applicable contributory conditions. The ceiling of wages for persons with disability is Rs.25,000/- per month.  There is no minimum wage limit for availing ESI facilities.

This information was given by Minister of State for Labour & Employment Shri  Kodikunnil Suresh in the Lok  Sabha today in reply to a written question.

EPFO shows much better improvement

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The number of contributing members to Employee Provident Fund Organisation (EPFO) has crossed 4.00 crore as on 17.08.2013. Similarly, number of establishments covered under EPF & MP Act, who are contributing and filing their return through electronic system has increased to 4 lakh. EPFO also distributed pension to more than 44 lakh pensioners during July, 2013. EPFO™s remittances have also increased over the years. Rs. 5,962 crore were received in the accounts of EPFO for the month of July, 2013 which is around Rs. 229 crore more than the average receipt of the preceding 3 months (April-June 2013). This has been revealed by the Central Provident Fund Commissioner Shri K.K. Jalan while reviewing the performance of the Employees™ Provident Fund Organization pertaining to July, 2013.

The performance of the Organization has also seen a marked improvement. In the year 2012-13, 88% of the claims were settled within 30 days (the mandate of EPFO) whereas in the current fiscal from April to July 2013, the settlement percentage of the claims settled within 30 days stood at 96.11%. In the month of July 2013 alone, 10.83 lakh claims were settled and out of that 10.66 lakh were settled within 30 days. As can be seen, the percentage of claims settled within 30 days is 98.43% for the month of July 2013.

It was also noted that the performance of the Organization in other functional parameters has also been encouraging. In the month of July 2013 alone, Rs. 133.00 crore was realized with reference to current demand (the amount raised by the organization from defaulting establishments in the current year). This is Rs. 13.50 crore more than the average realised from April-June 2013. Likewise arrear demand (the amount raised by the department from defaulting establishment in the past fiscals), recovery has also shown an upward trend. In the month of July 2013, Rs. 39.48 crores were realized which is around Rs. 9.00 crore more than the average for the period April-June 2013.

Customer satisfaction has also occupied the centre stage in EPFO™s transactions and 20,668 grievances were disposed in the month of July 2013 as compared to 13,414 which is the average for preceding three months. Central P.F Commissioner further stated that grievances are being accorded the top most priority and appropriate instructions are issued to all field formations. Direct monitoring of grievances from Head office of EPFO is also done. The internet enabled EPF internet Grievance Management System (EPFiGMS) has also been reactivated and as on date more that 96% of the grievances registered through the portal have been disposed.

Further, the facility of checking remittances status of an establishment, total no. of members enrolled by an establishment, the balance of EPF members through e-passbook facility, status of claim filed etc. are available on EPFO website www.epfindia.gov.in for providing transparent and effective service for employee and employer. SMS based information regarding status of member™s claims is also made available. As a part of the ongoing process of enhancing service delivery standards, EPFO is all set to unveil online transfer facility wherein employees can effect transfer of EPF account by submitting claims online. In this connection, the process of registration of digital signature has been set in motion.

CLR Snippets | Extension of EPF Scheme

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A proposal for reducing threshold limit from 20 to 10 employees for coverage under Employees™ Provident Fund & Miscellaneous Provisions Act, 1952 is under consideration of the Government.

This information was given by Minister of State for Labour & Employment Shri Kodikunnil Suresh in the Lok Sabha in reply to a written question.

Updation of EPF Accounts

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The members™ accounts of Employees™ Provident Fund (EPF) for the previous year are updated by 30th September of the following year.

The following steps have been taken for updation of members™ accounts:

(i) In order to monitor the day-to-day progress of updation of members™ accounts, web based tool has been developed which allows timely corrective steps to liquidate the pendency at the earliest.

(ii) Employers have been encouraged to file return electronically for the period upto 2011-12 to save time for updation of accounts.

As on 31.03.2013, a total of 7.43 Lakh establishments and 12.96 crore members™ accounts are covered under the Employees™ Provident Fund & Miscellaneous Provisions Act, 1952.

The para 73 of the EPF Scheme, 1952 envisages to provide annual statement of accounts to the members. The progress of updation of members™ accounts is continuously monitored by the Officers-In-charge of the field offices as well as at Head Office of Employees™ Provident Fund Organisation.

This information was given by Minister of State for Labour & Employment Shri Kodikunnil Suresh in the Lok Sabha in reply to a written question.

Violation of ESI Act

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The aims and objective of Employees State Insurance (ESI) Act, 1948 is to provide certain benefits to the employees in the organised sector in case of employment injury, sickness, maternityand to make provision for certain matters in relation thereto.

The number of violation of ESI Act, 1948 during last three years and current year is as under:-

2010-2011 1126
2011-2012 899
2012-2013 864
2013-2014(upto June) 139

The number of convictions made during last three years and current year is as under:-

 

2010-2011 486
2011-2012 282
2012-2013 732
2013-2014 (upto June) 97

A total number of 15499 (upto June, 2013) cases are pending in the court under ESI Act, 1948.

To ensure speedy disposal of cases, instructions have been issued to the field units from time to time for taking following measures:-

i) Advocates not having any junior should not be empanelled.

ii) ESI Advocates should not, as far as possible, seek adjournment on their own.

iii) The Regional Directors should call on Judges atleast once in six month, to apprise him of the pendency with a request for speedy disposal.

The Regional Directors have also been advised to review pending cases on monthly basis.

Further, Employees™ State Insurance Corporation has come out with two AMNESTY SCHEMES, in which incentives were given to the employers for out of court settlement.  Total 857 and 1544 cases were settled during the Amnesty Scheme 2008 and 2010 respectively.

This information was given by Minister of State for Labour & Employment Shri  Kodikunnil Suresh in theLok  Sabha in reply to a written question.


Expert Recommendations on Employees™ Pension Scheme

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An Expert Committee constituted by the Government to review the Employees™ Pension Scheme (EPS), 1995, has, inter alia recommended either of the two options below:

(i) Introduction of Provident Fund-cum-Pension Annuity Scheme wherein pension is linked to accumulations of members in the Fund
or (ii) Modifications in the existing EPS, 95 such as:

  •  increase in wage ceiling from Rs. 6500/- to Rs. 10,000/-;
  • provision of annual relief of 3%;
  • a minimum pension of Rs. 1000/- to all categories of pensioners;
  • Following modifications in EPS, 1995 to offset the cost of above benefits as much as possible:
    • Pensionable Salary to be calculated as an average of last 3 years of service.
    • Withdrawal option to be deleted.
    • Bonus of 2 years to be disallowed
    • The age of superannuation to be raised to 60 years; and
    • The age for early pension to be raised to 55 years
    • Nominee pension to be disallowed.

The report of the Expert Committee was forwarded by the Government for consideration of Central Board of Trustees (CBT), Employees™ Provident Fund (EPF). The CBT, EPF considered this report in its 190th meeting held on 15.09.2010 and decided that the report be first considered by Pension Implementation Committee (PIC), a sub-Committee of Central Board of Trustees (CBT), Employees™ Provident Fund (EPF). The recommendation of the Expert Committee was considered by PIC, which inter-alia recommended that a minimum monthly pension under Employees™ Pension Scheme, 1995 be increased to Rs. 1000/- per month as an interim measure. The recommendation of the PIC was considered by CBT, EPF. However, the discussion remained inconclusive. A proposal for providing minimum pension of Rs. 1000/- under EPS, 1995 is under consideration of the Government.

This information was given by Minister of State for Labour & Employment Shri Kodikunnil Suresh in the Lok Sabha in reply to a written question.

Policy for Wage Negotiations for the Workmen in Central Public Sector Enterprises

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Recently, Government has formulated policy for the 7th Round (2nd part) of wage negotiations for workmen in Central Public Sector Enterprises (CPSEs) based on consultations among various central ministries/ departments and other organisations. Giving this information in written reply to a question in the Rajya Sabha today, Shri Praful Patel, Minister of Heavy Industries & Public Enterprises, said that wage negotiations lead to upward wage revision, thereby benefiting the workmen of CPSEs. As per Central Public Enterprises Survey 2011-12, there were 997,039 workers/workmen on the rolls of the CPSEs as on 31.03.2012.

Lok Sabha Passes Pension Fund Regulatory and Development Authority Bill, 2011 with official amendments

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Subscribers Seeking Minimum Assured Returns Allowed to OPT for Investing their Funds in such Scheme Providing Minimum Assured Returns

The Pension Fund Regulatory and Development Authority Bill (PFRDA), 2011 was passed by the Lok Sabha today with official amendments. It was earlier introduced in Lok Sabha on the 24th March, 2011 to provide for a statutory regulatory body the Pension Fund Regulatory and Development Authority (PFRDA) under the provisions of the Bill. The legislation seeks to empower PFRDA to regulate the New Pension System (NPS).

The PFRDA Bill, 2011 was referred to the Standing Committee on Finance on the 29th March, 2011 for examination and report thereon. The Standing Committee on Finance gave its Report on 30th August, 2011. Some of the key amendments incorporated in the Bill based on the recommendations of the Standing Committee on Finance are as follows:

a) That the subscriber seeking minimum assured returns shall be allowed to opt for investing his funds in such scheme providing minimum assured returns as may be notified by the Authority;

b) Withdrawals will be permitted from the individual pension account subject to the conditions, such as, purpose, frequency and limits, as may be specified by the regulations;

c) The foreign investment in the pension sector at 26% or such percentage as may be approved for the Insurance Sector, whichever is higher;

d) At least one of the pension fund managers shall be from the public sector;

e) To establish a vibrant Pension Advisory Committee with representation from all major stakeholders to advise PFRDA on important matters of framing of regulations under the PFRDA Act.

Beside above, the Bill would make the Pension Fund Regulatory and Development Authority a statutory authority. Presently, it has non-statutory status. The NPS is based on the principle that ˜you save while you earn™ especially for retirement and is mainly for those who have a regular income.

This Bill would also provide subscribers a wide choice to invest their funds including for assured returns by opting for Government Bonds etc. as well as in other funds depending on their capacity to take risk.

The NPS has been made mandatory for all the central Government employees (except armed forces) entering service with effect from 1.1.2004. Twenty six (26) States have already notified NPS for their employees. NPS has been launched for all citizens of the country including un-orgnised sector workers, on voluntary basis, with effect from 1st May, 2009. Further, to encourage the people from the un-organised sector to voluntarily save for their retirement, the Government has launched the co-contributory pension scheme titled Swavalamban Scheme in the Budget of 2010-11. As on 14th August, 2013, the number of subscribers under NPS is 52.83 Lakh with a corpus of Rs.34, 965 crore. In order to effectively invest and manage huge funds belonging to a large number of subscribers and to ensure the integrity of NPS, creation of a statutory PFRDA with well defined powers, duties and responsibilities is considered absolutely necessary and would benefit all NPS subscribers.

The PFRDA Bill authorizes the PFRDA to establish a Pension Advisory Committee by notification under Clause 44 of the PFRDA Bill, 2011. The object of the Pension Advisory Committee shall be to advise the Authority on matters relating to the making of the regulations under the PFRDA Act.

Market based returns and wide coverage based on several investment options in the pension sector will build up the confidence in the subscribers, whereas withdrawals for limited purposes from Tier-I pension account will be an incentive for them to join NPS.

FAQs on Street Vendors (Protection of Livelihood and Regulation of Street Vending) Bill, 2012

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1.Q:      Why the need for a Street Vendors (Protection of Livelihood and Regulation of Street Vending) Bill, 2012 , which has been passed by the Lok Sabha in the recently concluded  session. ?

Ans:  Street vendors constitute an integral part of our urban economy. Street vending is not only a source of self-employment to the poor in cities and towns but also a means to provide ˜affordable™ as well as ˜convenient™ services to a majority of the urban population, especially the common man. Street vendors are often those who are unable to get regular jobs in the remunerative formal sector and they try to solve their livelihood issues through their own meagre financial resources and sweat equity.

Considering the significant contribution made by street vendors to the urban society as a whole, more specifically to the comparatively poorer sections, and to enable them to earn a decent livelihood through creation of conditions for decent work, the Government of India proposed a Bill, which provides for protection of livelihood rights and provision for social security of street vendors in the country.

2.Q:    What are main  provisions of the Bill?

Ans: The Bill provides for a survey of all existing street vendors, and subsequent survey at-least once in every five years, and provides that no street vendor shall be evicted or relocated, till the survey is completed and a certificate of vending issued to all street vendors. Thus the mechanism is to provide universal coverage, by protecting the street vendors from harassment and promoting their livelihoods.

3.Q:  Does the Bill protect the street vendors from the harassment by police and municipal authorities?

Ans: Yes the Bill provides for a specific section protecting the street vendors from harassment by police and other authorities. A clause in the Bill specifically provides for the following:

Notwithstanding anything contained in any other law for the time being in force, no street vendor who carries on the street vending activities in accordance with the terms and conditions of his certificate of vending shall be prevented from exercising such rights by any person or police or any other authority exercising powers under any other law for the time being in force

4.Q: The implementing Authority is the Town Vending Committee. Is there a grievance redressal mechanism to hear appeals from the decisions of the Town Vending Committee, for e.g. if a street vendor is denied a certificate of vending, where does he go?

Ans:  The Bill provides for a non-judicial grievance redressal mechanism. In respect of decisions of the Town Vending Committee refusing to issue a certificate of vending to a street vendor or resorts to cancellation or suspension under the provisions of the law, the aggrieved street vendor may prefer an appeal to the local authority. 

5.Q:  The Bill is titled Street Vendors (Protection of Livelihood and Regulation) of Street Vending Bill. Does the Bill provide for responsibilities of street vendors towards the city?

Ans:  Yes, the Bill provides for specific responsibilities and duties street vendors.

Street Vendors are required to maintain cleanliness and public hygiene in the vending zones and the adjoining areas, to maintain civic amenities and public property in the vending zone in good condition and not damage or destroy or cause any damage or destruction to the same, pay maintenance charges, not to vend in no-vending zones etc.

The Bill along with protecting the livelihood rights of street vendors also provides for suitable planning measures to ensure the right of commuters to move freely and use the roads without any impediment.

6.Q:  Does the Bill protect the street vendors wares and belonging from damage, as many a times it is seen that the authorities just collect their belongings and the street vendors have to run around placed to ensure their release.

In case of perishable goods, if not returned in time they are destroyed and the street vendors suffers irreparable damage.

Ans: Ministry of Housing and Urban Poverty Alleviation has been conscious of this difficulty faced by the street vendors. In fact in various representations that we received from the street vending community, they highlighted and express the need for specific provisions in regard to seizure and reclaiming of goods.

Seizure of goods has been provided as a last resort action by the local authorities, more so only after complying with a 30 days™ notice period to be issued by the local authority to the street vendor.

The Bill specifically provides that where seizure is carried out, a list of goods seized shall be prepared, and a copy thereof duly signed by the person authorized to seize the goods, shall be issued to the street vendor.

The street vendor thereafter has the right to reclaim him goods, after paying due fine.

It also provides that in case of non-perishable goods, the local authority shall release the goods within two working days of the claim being made by the street vendor, and in case of perishable goods the local authority shall release the goods on the same day of the claim being made by the street vendor.

The Bill thus adequately protects the street vendors in case of seizure of goods.

Achievements of EPFO During August 2013

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During the current fiscal, till the month the Organisation settled more than 50 lakh claims out of which 97% was settled within 30 days as mandated by the scheme. In the month of August alone, 10.98 lakh claims were settled and the percentage of claims settled within the above said mandated time-limit was 98.90%. Importantly, as a result of constant up-gradation in the standards of service delivery, 39% of the settled claims were settled in a mere 3 days while more than 73% were settled within 3 days. Reduction of the time period in settling claims has always been a priority area for the Organisation and commendable progress has been made in the recent past.

It was also noted that the number of establishments registered on the ECR portal (electronic challan cum return) has crossed 4.76 lakhs and the number of active members has touched 4.11 crores. It is estimated that more than 4000 establishments registered themselves on the ECR portal in the month of August. In August 2013, the Organisation saw Rs. 5961 crores coming in as remittances into its accounts.

As a part of ongoing process for revamping its services, the organisation has focused on online transfer application and it is expected that the same would be launched very soon. The application makes use of digital signatures of employer to authenticate the claims submitted online by the employees. To this end, the process of registration of digital signature has been initiated and till August 2013, more than 9000 number of digital signatures were registered by the establishments from across the country.

Customer satisfaction has been a constant focus area in the recent months and a special drive for redress of grievances had been initiated. As a result of these concentrated efforts which included direct monitoring by the Central PF Commissioner, the Organisation was able to redress 27056 number of complaints in the month of August 2013 alone. In comparison, the total no. of grievances received in the month was only 16160. The total no. of grievances pending by August end for the entire organisation was 8791 compared to 19788 pending at July end. It is noteworthy that a record number of 47722 grievances were settled in the last two months. Equally so is the fact that 104 field offices out of a total of 120 field offices of the Organisation have not even a single case of grievance pending for more than 30 days.

Regarding the issue of avoidance of payment of Social Security contributions in the case of Indian employees covered under the Act and posted abroad, Sh.K.K.Jalan, Central Provident Fund Commissioner (CPFC) noted that Social Security agreements have been signed with 17 countries and 9 of them have been operationalised.In a move that would have an impact on such workers, it has been decided that the process of issue of Certificate of Coverage(CoC) necessary for availing the benefits have been decentralised. Hence forth, the CoCs can be obtained from the Field Office concerned instead of Head Office as was the case earlier. It was noted that 21566 CoCs were issued till the month of August. Out of this,770 CoCs were issued in the month itself.

The Pension Fund Regulatory and Development Authority bill, 2013

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The Pension Fund Regulatory and Development Authority Bill, 2013 has received the assent of the President of India. It has now been published in the Gazette of India, Extraordinary, Part-II, Section-1, dated the 19th September 2013 as Act No. 23 of 2013.

Doctrine Of Notional Extension: A Comparative Analysis between India, U.S and U.K

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There is a fundamental question which has influenced the history and present position of work claims: can the preferential treatment given to workers compared to other injury victims be justified? The industrial injuries scheme privileges workers by making available benefit which cannot be claimed by those not injured in the course of employment.

Position in India:

The principal behind compensation to the injured worker under the Employee™s State Insurance Act 1948 and Workmen™s Compensation Act, 1923 is considered according to the Doctrine of Notional Extension.

Section 3(1) Workmen™s Compensation Act, 1923 provides that the injury must be caused to workman by an accident arising out of and in the course of employment. Employment does not necessarily ends when the tool down signal is given or when the workman leaves the actual workshop. There is a notional extension at both the entry and exit time and space. As employment may end or may begin not only when the employee begins to work or leaves his tools but also when he used the means of access and egress to and from the place of employment.

As a rule, the employment of a workman does not commence until he has reached the place of employment and does not continue when he has left the place of employment, the journey to and from the place of employment being excluded. It is now well-settled, however, that this is subject to the theory of notional extension of the employer™s premises so as to include an area which the workman passes and repasses in going to and in leaving the actual place of work. There may be some reasonable extension in both time and place and a workman may be regarded as in the course of his employment even though he had not reached or had left his employer™s premises. The facts and circumstances of each case will have to be examined very carefully in order to determine whether the accident arose out of and in the course of the employment of a workman, keeping in view at all times this theory of notional extension.[1]

Various judgments of Supreme court and different high Courts have considered the concept of notional employment and said that if the employee dies due to accident while going to work place from residence or while returning from work place to residence, as an accident arising out of and during the course of employment and as such entitled for compensation in accordance with provisions of the Workmen™s Compensation Act, 1923.

The concept of notional extension under the Workmen’s Compensation Act for granting compensation will be applicable when there has been unrebutted evidence to show that the death of the deceased has occurred due to stress and strain resulting in cardiac arrest on his way while he was returning after duty.[2]

Although this doctrine is not specifically enshrined under the Employees™ State Insurance Act 1948 or Workmen™s Compensation Act. Notional extension is yet to be amended either in ESI Act orWorkmen™s Compensation Act. Under ESI, if any accident happens outside the premises within one kilometer radius from the work premises during reasonable office related hours it will be considered as employment injury. Same logic will be applicable forWorkmen™s Compensation Act also.

If accident happens in the company provided vehicle, irrespective of the location and time it is employment injury for consideration under ESI and WC.

The employee cannot claim wages for the loss of pay period. The employee can claim (or company can give) compensation under Workmen™s Compensation Act registering a case with Labor Commissioner. Any payment made by the employer directly to the employee under any outside settlement will not be considered as a legal compensation. The payment has to be made before the labor commissioner and its mandatory. If the employee is covered under ESI, the employee has to approach ESI for benefit employer should have given accident notification to ESI. However, there is no proper test for application of this doctrine. The scope of such extension depends on the facts and circumstances of each case.

Position in U.S: The Premises Rule:

An injured worker is entitled to workers’ compensation benefits only if the injury arose out of and in the course of employment. The first part of this requirement, “arising out of employment,” ensures that there is a causal connection between the work and the injury. Usually the employee has the burden of proving that the injury was caused by exposure to an increased risk from employment.

The requirement that an injury arise out of employment, the employee seeking workers’ compensation also must show that the injury arose “in the course of employment.” To arise in the course of employment, the injury must take place within the employment period, in a location where it is reasonable for the employee to be, and while the employee is fulfilling work duties. This does not mean that the employee must actually be doing his job, or doing it within the precise work hours, when the injury occurs for it to be compensable. Distinguishing between injuries that do or do not arise out of the course of employment is often a difficult and confusing task.[3]

One common issue arises when an employee is injured going to or from work. Clearly, employment necessitates that an employee travel to work and home again. Yet it is not the purpose of workers’ compensation to protect the employee from the risk of travel. Courts have, through the years, reached a compromise: an employee with fixed hours and work locale going to or coming from work generally is covered by workers’ compensation if the injury occurs on the employer’s premises.

This rule can lead to rather harsh results, as in Heim v. Longview Fibre Co.[4] There, the claimant was driving his motorcycle through the usual exit from his employer’s premises when a coworker turning into the premises hit the claimant, killing him. The precise location of the crash was fewer than five feet from the employer’s property, on a public access road to the plant used by company personnel. Nevertheless, the court held that the injury did not arise in the course of employment and denied death benefits. Employees injured off work premises may still recover damages in tort against any persons whose negligence caused them harm.

Some courts, recognizing the harshness of the premises rule, have attempted to extend the premises rule to include injuries that occur within a reasonable distance of the employer’s premises. And most courts recognize the compensability of an injury that occurs off the employer’s premises when an employee is going to or coming from work, where the trip itself is a substantial part of the employee’s service to the employer. In Urban v. Industrial Commission[5], , the employee, a traveling salesperson, was killed in a car accident while driving in the direction of his home, although the evidence was not clear that he was actually returning home. The court ruled the death to be compensable.

Position in U.K

Workers compensation in the United Kingdom helps workers and their families to claim for compensation in the case of injuries, illness or death that occurs due to carelessness, negligence or inadequate training in any workplace. In the workplace, accidents can occur very unexpectedly and consequently, they can affect the life of the workers and disrupt the work. Carelessness is the prime cause of accidents, which could result in injury or even death.

There are many rules and regulations that are put in place at work to protect and ensure the safety of their employees, especially in hazardous and accident prone areas. In the case of an accident or injury at the workplace, a solicitor will assess and review the extent of the injury in terms of out-of-work-pay and compensation will be provided accordingly.

There are two basic routes to gaining entitlement to benefit. A claimant must show that the injury is either a prescribed disease or a ˜personal injury caused by accident arising out of and in the course of employment. These last words, first used in the Workmen™s Compensation Act 1897, have been adopted by English speaking jurisdictions throughout the world. It has been suggested that the phrase has given rise to more litigation than any other in the English language. It™s uncertain scope is not the result of poor legislative drafting, but is inherent in the phrase; it is caused by the very attempt to distinguish work injuries from others.[6]

Usually the relationship between the accident and the work is obvious. However, difficulties can arise in a significant number of cases because of the varied nature of employment; there may be uncertainty as to what exactly the claimant was employed to do, or the discretion that he may have had to do it. The boundaries of when work begins and ends, or is interrupted, can be difficult to draw. The scheme attempts to do so by requiring that accidents arise ˜in the course of employment™.

There are almost as many deaths caused by the daily journey to and from work as there are at work itself. As an exception to the rules in almost all European countries, the UK does not include travelling to and from work as within employment. ˜Normally a person™s employment begins when he arrives at his place of work and ends when the person leaves .The general approach is subject to a number of wide-ranging exceptions. Clearly, for example, those with occupations requiring them to travel, such as bus or delivery drivers will be in the course of employment. Other exceptions involve those[7]

  • Travelling in transport arranged by the employer. This is a statutory
  • exception. The use of ordinary public transport will not suffice
  • Travelling on a specific journey as instructed by the employer
  •  Travelling on the employer™s property or in areas where the public are
  • denied access
  •  Travelling in the course of a peripatetic occupation. Those who are door
  • to door agents or home helps are therefore usually covered except when
  • travelling to their first call of the day, or when on the way home, or if  they deviate from their route for their own purposes
  • Employees who are still on duty because their responsibilities continue whilst travelling. Relevant although not conclusive factors in determining whether the claimant is only travelling ˜to™ duty as opposed to ˜on ˜duty include:
  • Was the claimant being paid for time spent travelling?
  • Were travel expenses to be reimbursed?
  • Was the claimant carrying equipment or tools related to the job?
  • Was the claimant on call or required to report at intervals to his employer?
  • Was the claimant travelling by a direct route?

Conclusion:

The doctrine of notional extension throws light on the course of employment, the employment doesn™t end once you are out of the work premises include an area which the workman passes and repasses in going to and in leaving the actual place of work. This is the position that has been adopted by Indian judgments and also in the Workmen Compensation Act 1923 and Employees™ State Insurance Act. The U.S follows the premises rule which means to arise in the course of employment; the injury must take place within the employment period, in a location where it is reasonable for the employee to be, and while the employee is fulfilling work duties. This does not mean that the employee must actually be doing his job, or doing it within the precise work hours, when the injury occurs for it to be compensable. But the position of premises rule is still unclear as some courts, recognizing the harshness of the premises rule, have attempted to extend the premises rule to include injuries that occur within a reasonable distance of the employer’s premises. And most courts recognize the compensability of an injury that occurs off the employer’s premises when an employee is going to or coming from work, where the trip itself is a substantial part of the employee’s service to the employer. The position in U.K also covers injury that has been caused in the course of employment but employment begins when he arrives at his place of work and ends when the person and the workmen can claim compensation for injuring caused while travelling or commuting only under the exceptions.

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[1]Sadgunaben Amrutlal And Ors. vs The Employees’ State Insurance (1981) 22 GLR 773; Rajappa vs Employees State Insurance  ILR 1992 KAR 284.

[2] United India Insurance Company Ltd. v. Susheela, 2004 LLR 425 (Kam He).

[3] Gregory P Guyton, A Brief History  of Workers™ Compensation, (1999), http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1888620/.

[4] 41 Wash. App. 745, 707 P.2d 689 (1985).

[5] 34 Ill. 2d 159, 214 N.E.2d 737 (Ill. App. Ct. 1966).

[6] Richard Lewis, Employers™ Liability and Workers™ Compensation: England and Wales, (Oct. 20, 2010), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1695088.

[7] Supra  note.6.


The Anatomy of Section 29 : A Legal Autopsy

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“The Anatomy of Section 29  : A Legal Autopsy “

by R. Sridhar

Head – India, Labour Relations, Caterpillar India Private Limited 

Section 19 (2) of the Industrial Disputes Act (hereinafter referred to as the Act) deals with the period of operation of settlement which reads as follows:

Such settlement shall be binding for such period as is agreed upon by the parties, and if  no such period is agreed upon, for a period of six months 1[from the date on which the memorandum of settlement is signed by the parries to the dispute], and shall continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement.

The purport of the provisions of Sub Section  (2)  of Section 19 are succinctly defined with mathematical precision in Life Insurance Corporation of India and others Vs D. J. Bahadur and others 1981 1 LLJ 1. The relevant portion of this judgement in this regard reads as under:

There are three stages or phases with different legal effects in the life of an Award or Settlement. There is a specific period contractually or statutorily fixed as the period of operation. Thereafter, the Award or Settlement does not become non-est, but continues to be binding. This is the second chapter of legal efficacy but qualitatively different. Then comes the last phase. If notice of intention to terminate is given under section 19(2) or 19(6), then the third stage opens where the Award or the Settlement does survive and is in force between the parties as a contract which has superseded the earlier contract and subsists until a new Award or negotiated settlement takes its place. Like nature, Law abhors a vacuum and even on the notice of termination under section 19(2) or (6), the sequence and consequence cannot be just void but a continuance of the earlier terms, but with liberty to both sides to raise disputes, negotiate settlements or seek a reference and Award. Until such a new contract or Award replaces the previous one, the former settlement or Award will regulate the relation between the parties. Industrial law frowns upon a lawless void and under general law the contract of service created by an Award or Settlement lives so long as a new lawful contract is brought into being. The precedents on the point, the principles of Industrial Law, the constitutional empathy of Part IV and the sound rules of statutory construction converge to the same point that when a notice intimating termination of an Award or Settlement is issued the legal import in merely that the stage is set for fresh negotiations or industrial adjudication and until either effort ripens into a fresh set of conditions of service the previous Award or Settlement does regulate the relations between the employer and the employees.

The authority to the above proposition was drawn from the earliest case : The South Indian Bank Vs A R Chacko 1964 1 LLJ 19 wherein the law pertaining to the period of operation of the settlement or award has been explained in clear terms which reads as follows:

¦¦¦. there is difference between an award being in operation and an award being binding on the parties. The different provisions made by the legislature in s. 19(3) and s. 19(6) illustrate this distinction. Under s. 19(3) the award remains in operation for a period of one year. Section 19(6) is in these words :-

Notwithstanding the expiry of the period of operation under sub-section (3), the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award.”

This makes it clear that after the period of operation of an award has expired, the award does not cease to be effective. For, it continues to be binding thereafter on the parties until notice has been given by one of the parties of the intention to terminate it and two months have elapsed from the date of such notice.

¦¦¦¦¦¦¦¦¦even if an award has ceased to be in operation or in force and has ceased to be binding on the parties under the provisions of Section 19(6) , it will continue to have its effect as a contract between the parties that has been made by industrial adjudication in place of the old contract. So long as the award remains in operation under Section 19(3), Section 23(c) stands in the way of any strike by the workmen and lock-out by the employer in respect of any matter covered by the award. Again, so long as the award is binding on a party, breach of any of its terms will make the party liable to penalty under Section 29 of the Act, to imprisonment which may extend to six months or with fine or with both

Taking the cue from the ratio laid down by the Hon™ble Supreme Court  in A R Chacko (vide supra), the law pertaining to the period of operation of the Award or Settlement under Section 19(2) . (3) and (6) has been made clear by the Supreme Court in D.J.Bahadur , by proper dissection of the provisions of Section 19 with an eagle eye. Against this legal position, the question is when can the provisions of Section 29 be invoked for breach of any term of any settlement or award.

Section 29 of the Industrial disputes Act, 1947 reads as under:

Any person who commits a breach of any term of any settlement or award, which is binding on him under this Act, shall be punishable with imprisonment for a term which may extend to six months, or with fine, or with both, 2[ and where the breach is a continuing one, with a further fine which may extend to two hundred rupees for every day during which the breach continues after the conviction for the first] and the Court trying the offence, if it fines the offender, may direct that the whole or any part of the fine realised from him shall be paid, by way of compensation, to any person who, in its opinion, has been injured by such breach. (emphasis supplied by me ).

There is an authority from the decision of the Constitutional Bench of the Supreme Court reported in State of Madras Vs C P Sarathy 1953 1 LLJ Page 174 which held that an offence under Section 29 of the Act would arise only when the alleged breach of some of the terms of the award have taken place at the time when the award was in force. ( emphasis supplied by me )

In a Textile Mill at Ahmedabad , bonus was paid on industry wise basis for a specified period and even after that period was over, the workmen demanded that the mill should continue to pay bonus as per the industry wide settlement. However, the mill took the stand that industry wide settlement was applicable only for the specific period and beyond and when once that period was over, the workmen were not entitled to demand bonus as per the industry wise settlement. This stand of the Mill was accepted by the Supreme Court in New Maneck Chowk Spinning and weaving Company Limited, Ahmedabad and others Vs The Textile Labour Association, Ahmedabad reported in 1961 (1) LLJ 521.

The Lordships in the South Indian Bank Vs A R Chacko 1964 1 LLJ 19 further stated that 

Quite apart from this, however, it appears to us that even if an award has ceased to be in operation or in force and has ceased to be binding on the parties under the provisions of S.19(6), it will continue to have its effect as a contract between the parties that has been made by industrial adjudication in place of the old contract. So long as the award remains in operation under Section 19(3), Section 23 (c ) stands in the way of any strike by the workmen and lock out by the employer in respect of any matter covered by the award. Again, so long as the award is binding on a party, breach of any of its terms will make the party liable to penalty under Section 29 of the Act, to imprisonment which may extend to six months or with fine or with both. After the period of its operation and also the period for which the award is binding have elapsed, Section 23 and 29 can have no operation. (emphasis supplied by us).

Even in the ruling of the Supreme Court in Bahadur™s case, Justice Pathak concurring with Iyer J clarified further that the phraseology employed in the settlement should be given due consideration while dealing with question pertaining to the operation of the settlement . The relevant portion of his observation is reproduced below:

It is desirable to appreciate what is a settlement as understood in the Industrial Disputes Act. In essence, it is a contract between the employer and the workmen prescribing new terms and conditions of service. These constitute a variation of existing terms and conditions. As soon as the settlement is concluded and becomes operative, the contract embodied in it takes effect and the existing terms and conditions of the workmen are modified accordingly. Unless there is something to the contrary in a particular term or condition of the settlement the embodies contract endures indefinitely, continuing to govern the relation between the parties in the future, subject of course to subsequent alteration through a fresh settlement, award or valid legislation. ( emphasis supplied by us).

It is clear from the above that Section 29 will have operation and can be invoked only during the three stages as explained in Bahdur™s case by the Supreme Court, Beyond the three stages as explained in the Bahadur and AR Chacko cases, the Settlement would assume the role of Contract and Section 29 will not have operation at all. It may further be understood that the Drafters of the Act had incorporated specific provision to provide penalty for breach of any term of the settlement under Section 29 of the Act. There is a subtle difference between Section 29 and Section 25 U of the Act. Section 29, by virtue of the phraseology employed in the Section itself , can be invoked only if there is a breach of any term of the settlement but not when there is a breach of the settlement in its entirety.

Entry 13 of Schedule V of the Act should be read with 25T and 25U of the Act. In accordance with the above provisions, failure to implement a settlement, award or agreement is an unfair labour practice and as such it will attract the penal provisions of Section 25U of the Act. However, Section in 29 confines its operation to breach of any term of any settlement and for that it provides the penalty in the Section itself. It is clear from the above that the Drafters consciously made a clear distinction between the breach of any term of any settlement and failure to implement the settlement and provided specific penalties for the same. Hence, it can safely deduced that  for breach of any term of the settlement, Section  , Section 25T and 25 U can not be invoked and as such the same can not be treated as an unfair labour practice and brought under Entry 13 of Schedule V to the Act. 25T , 25 U read with Entry 13 of Schedule V to the Act can be invoked only if there is a failure to implement the terms of the Settlement in its entirety.

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Online Transfer of Provident Fund

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A revised transfer claim settlement process has been started through an Online Transfer Claim Portal to smoothen the process of transfer of PF accounts. The revised process has following features:-

(i) The claim can be submitted by the member in the online mode in addition to physical mode.

(ii) The claim can be submitted through previous or present employer.

(iii) There would be no paper movement between any two offices.

This facility has already been made operational with effect from 02.10.2013.

This facility would benefit all such EPF members who wish to transfer their PF accounts on their change of job from one establishment to other.

Major relief for withdrawal of funds under para 68B of EPF Act, 1952

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The Employees Provident Fund Organisation (Ministry of Labour) has issued a notification to provide major relief towards manner of withdrawal of funds under para 68B of EPF Act, 1952 for housing purpose.

The Form 31 which talks about the withdrawal from the Fund for the purchase of a dwelling house/flat or for the construction of a dwelling house including the acquisition of a suitable site for the purpose was being rejected due to non-submission of various tedious documents like encumbrances certificate/approved plan, house tax receipt etc, but with new declaration form the submission of documents have been waived off.

The eligible employees can now withdraw their EPFO contribution in easy and an obstacle free manner for housing purposes.

 

WAGES UNDER ESIC ACT_Employee’s State Insurance Corporation (ESIC)

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WAGES UNDER ESIC ACT :-

WASHING ALLOWANCE:

It is a sum paid to defray special expenses entailed by the nature of
employment and as such this amount does not amount to wages.
(In lieu of old instructions issued vide Memo No.Ins.III/2/1/65 dt. 8.2.1967)

SUSPENSION ALLOWANCE/SUBSISTENCE ALLOWANCE

During the suspension period the employee is not allowed to actually
work and he is not given full remuneration but the permissible
subsistence allowance is paid to the employee by way of remuneration
for remaining attached to the services of the employer as per the
relevant service regulations governing his contract of service,
therefore, the subsistence allowance is part of wage as defined under
Sec.2(22) of the ESI Act and consequently on the amount of subsistence
allowance paid to the suspended employee, contribution is payable.

Supreme Court has also held in the case of RD, ESIC Vs.M/s.Popular
Automobiles etc.inits judgement dt. 29.9.97 in Civil appeal no.3850 of
1993 that suspension/subsistence allowance is wage and contribution is
payable under Sec.2(22) on the said amount.
(In lieu of earlier instructions were issued vide Memo No.3(2)-1/67
dt. 3.6.67 & letter No.Ins.III(2)-2/71 dt. 10.8.1971)

OVERTIME ALLOWANCE

In the case of the employer as and when the employer finds the need to
have work done expeditiously, in addition to the normal work during
the course of the working hours, the employer offers to the employee
to do the overtime work after the working hours. When employee does
overtime work it amounts to the acceptance for the same, hence there
emerges concluded implied contract between the employer and the
employee. Both the remuneration received during the working hours and
overtime constitutes a composite wage and thereby it is a wage within
the meaning of Sec.2(22) of the ESI Act. Therefore, the contribution
is payable on the overtime allowance. However, overtime allowances
will be considered as wage for the purpose of charging the
contribution only and will not be considered for the purpose of the
coverage of the employee under the Scheme.

The same view was held by the Supreme Court in its judgement delivered
on 6.11.96 in the case of Indian Drugs & Pharmaceuticals Ltd. Vs.
ESIC, in Civil Appeal No.2777 of 1980.
(Old instructions issued vide memo No.3-1(2)/3(1)/68 dt. 31.5.68).

ANNUAL BONUS:

Bonus paid to the employees could not be treated as wage for the
purpose of charging of contribution under Sec.2(22), provided the
periodicity of the payment is more than 2 months. The said issue was
also considered in the meeting of the ESI Corporation held on
19.12.1968 and the Corporation agreed to the recommendations of the
Standing Committee that bonus may not be treated as wage.Hence no
contribution is payable on annual Bonus.
(Earlier instructions were issued vide memo No.Ins.III/2(2)-2/67 dt. 8.2.1967).

INCENTIVE BONUS:

As per the decision of the Supreme Court delivered on 8.3.2000 in the
case of M/s.Whirlpool India Ltd. Vs. ESIC in civil appeal No.1903 of
2000, additional remuneration to become wages has to be paid at
intervals not exceeding two months as distinguished from being
payable. Thus, there has to be actual payment and the payment of
production incentive does not fall either under the 1st part or last
part of the definition of the term wages as defined in Sec.2(22) of
the Act, hence no contribution is payable on the incentive bonus,
provided the periodicity of payment is more than 2 months.
(Earlier instructions were issued by this office vide Memo
No.T-11/13/53/19-84-Ins.IV dt. 19.9.84, Memo No.Ins.III-2(2)/2/69 dt,.
26.12.73, Memo No.T-11/13/54/18/82-Ins.IV dt. 14.7.82 & Memo
No.D/Ins.5(5)/68 dt. 18.9.88.)

PRODUCTION BONUS:

Production Bonus like incentive bonus is paid to the workers as
additional remuneration and hence like incentive bonus such additional
remuneration in order to become wages has to be paid at intervals not
exceeding 2 months as distinguished from being payable. Thus, there
has to be actual payment and hence no contribution is payable,
provided periodicity of the payment is more than 2 months.
(Earlier instructions issued vide letter dated 4(2)/13/74-Ins.IV dated 2.9.85)

INAM/EX-GRATIA PAYMENT:

Inam represents a payment made by the employer to any employee as a
reward for the services rendered by him for which he is/was not under
obligation to render the same under the contract of service which is
expressed or implied but does not include the payment which have been
made to an employee in fulfillment of contract of service. This may
include exgratia payment.

Where Inam is being paid for special skill or higher
responsibilities/additional duties, it may be taken as remuneration
and contribution is payable.

Where the employer has introduced the scheme of Inam but according to
terms and conditions the employer has no right to withdraw it or
revise it, the same may be treated as wages and contribution is
payable.

Where the employer has introduced the scheme of Inam and he has right
to revise or withdraw it at his discretion, the payment of Inam under
such scheme may not be treated as wages and contribution is not
payable provided the payment is made at an interval exceeding two
months..

Where there is no scheme of Inam in writing but still employer might
be making payment under the head Inam on the basis of some
understanding between the parties, in such cases, the nature of
payment and its periodicity may be ascertained and whether payment of
Inam is an exgratia payment which is not covered by the contract of
service. In case the periodicity is more than 2 months, no
contribution may be charged.
(Last instructions were issued vide letter No.D-Ins.5(5)/68 dated 21.2.1975).

WAGES PAID DURING LAYOFF:

During the period of layoff though the employee is not given actual
work and is also not given full remuneration but certain wages are
paid to the employee by way of remuneration for remaining attached to
the factory/establishment of the employer, therefore, such payments
paid for the period of layoff are also wages for the purpose of
Sec.2(22) of the ESI Act and hence contribution is payable on such
payments.
(Earlier instructions were issued in 1968).

ANNUAL COMMISSION

Sales Commission would fall within the 3rd category of wages as
defined underthe Act as additional remuneration and there has to be
actual payment as the word used is paid and not payable, at intervals
not exceeding two months. The question as to why the period of 2
months is fixed was debated in Supreme court in the case of Handloom
House, Ernakulam Vs. RD,ESIC in Civil Appeal No.2521 of 1999 when it
was held that no employer shall have the permission to draw the
payment of contribution on the premise that annual payments have to be
work out. Normally, the wage period is one month, but the Parliament
would have thought that such “wage period” may be extended a little
more but no employer shall make it longer than two months. This could
be the reason for fixing a period of two months as the maximum period
for counting the additional remuneration has to make it part of ‘wage’
under the Act. Therefore, the annual commission is excluded from the
definition of the wages and hence no contribution is payable on the
annual commission.
( Earlier instructions were issued vide Hqrs.letter No.
Ins.III(2)-2/71 dated 10.8.71).

HOUSE RENT ALLOWANCE

House Rent Allowance is wage in cases where it is being paid. Notional
amount of house rent can not be presumed as wages for deciding the
coverage. In cases where an employee is being paid house rent
allowance, the same will be included both for coverage and
contribution. In cases where the staff quarters have been allotted the
amount of salary and wages paid will count for coverage and
contribution and no notional house rent allowance is to be presumed in
such cases.

In the cases of Braithawait & Co. Vs. ESIC and M/s.Harihar Polyfibres
Vs. ESIC, Bangalore, Supreme Court has also held that house rent
allowance is a wage under Sec.2(22) of the ESI Act.
(Earlier instructions were issued vide memo No.T-11/13/11/15-Ins.III
dt. 28.9.75, No.Ins.III(2)/15/15/74-Ins.Desk.I dated Dec.,76,
No.T-11/13/53/19-84/Ins.IV dt. 19.9.84 & No.D.Ins.II/11/3087/303 dated
1.3.1985).

NIGHT SHIFT/HEAT/GAS & DUST ALLOWANCE:

It is an additional remuneration paid to the employee for performing
duty atnight time during the hours of darkness. This amount is paid by
way of incentive under the scheme of settlement entered into between
the Management and its workmen and hence are wages within the meaning
of Sec.2(22) of the ESI Act. This view was observed by the Full Bench
of Karnataka High Court in the case of NGEF Ltd. Vs. Dy.Regional
Director, ESIC, Bangalore. Supreme Court in the case of M/s.Harihar
Polyfibers Vs. RD ESIC, Bangalore has also held the same view. Hence,
Night Shift Allowance, Heat, Gas & Dust allowance are wages under
Sec.2(22) of the ESI Act and contribution is payable on the said
amount paid by the employer to the employees.
(Earlier instructions were issued vide Memo No.T-11/13/53/19/84-Ins.IV
dated 19.9.94).

CONVEYANCE ALLOWANCE

Fixed conveyance allowance flowing out of a wage settlement or as per
terms and conditions of employment should be treated as wages under
section 2(22) for all purposes except:

1) Amount towards conveyance paid or reimbursed to any employee for
incurring expenses for specific duty related journey

2) Reimbursement of actual cost of conveyance for coming to work and
going from work on production of ticket or season ticket and subject
to proof of actual expenditure

3) Payment of certain amount for maintenance of vehicle depending upon
cadre of the official and category of vehicle and subject to
production of records for actually maintaining the vehicles

4) Fixed allowance paid at an interval exceeding 2 months, unless such
payment is made as per contract or agreement.

SERVICE CHARGES

Service charges are collected by management of the hotel on behalf of
their employees in lieu of direct tips and the same is paid to their
employees at a later date.

Such amount collected as service charges will not constitute wages
under Sec.2(22) of the ESI Act. In the case of ESIC Vs. M/s.Rambagh
Palace Hotel, Jaipur, the High Court of Jaipur has held that service
charges are not wages under Section 2(22) of the ESI Act. This verdict
of the High Court of Jaipur was accepted in the ESIC and hence no
contribution is payable on service charges.
(Earlier instructions were issued vide letter
No.P-12/11/4/79-Ins.Desk.I dt. 18.9.79)

MEDICAL ALLOWANCE

The employees working in factories/establishments are being provided
medical services in kind by the employer but in certain
factories/establishments instead of providing medical services in
kind, the amount spent by the employees on medical care is reimbursed
while in some other organisations, employees are being paid monthly
cash allowance in lieu of medical aid/reimbursement of medical
expenses. Where such payments are made by the employer in lieu of the
medical benefit, the same are to be treated as wages under Sec.2(22)
of the ESI Act and the contribution is chargeable.
(Earlier instruction were issued vide letter No.Ins.5(5)/68-Ins.III
dt. 21.8.71 & Ins.III/2(2)2/68 dated 24.6.71)

NEWSPAPER ALLOWANCE

In certain factories/establishments the employees are reimbursed the
cost of Newspapers while in some other factories/establishments the
employees are paid monthly newspapers allowance instead of
reimbursement of the cost of the Newspapers. Where the amount is being
paid regularly to the employees by the employer as Newspapers
allowance the same will be treated as wages under Sec.2(22) of the ESI
Act and the contribution is chargeable. However, where the cost of
Newspapers is reimbursed to the employees, no contribution is to be
charged on such payments.

EDUCATION ALLOWANCE:

Employees are being paid monthly Education allowance for the children
studying in the Schools/Colleges. Where such education allowance is
being paid monthly, the same is to be considered as wages under
Sec.2(22) of the ESI Act and the contribution is chargeable on the
said amount.

However, in such cases where instead of paying the education allowance
on monthly basis, the amount spent as fee is reimbursed to the
employees and booked under education allowance, in such cases no
contribution is payable.

DRIVERS’ ALLOWANCE

In some of the factories/establishments the officers employed as
employees are being paid drivers’ allowance per month. This allowance
is being paid to enable the officers to appoint a driver at their own
level and such drivers employed are not being paid salary directly by
the factories/establishments. Where such allowance is being paid to
the employees and the drivers are not engaged by the employees, in
such event the allowance paid as such will be considered as wage under
Section 2(22) of the ESI Act and contribution will be chargeable
provided the employee is coverable under the Scheme.

However, where the services of the drivers are being utilised, in such
event the drivers so engaged will be covered as employee and
contribution will be payable on the amount paid to the drivers as
salary and booked in the ledgers of the employer under the heading
“Drivers’ Allowance”.

FOOD/MILK/TIFFIN/LUNCH ALLOWANCE:

Each case of payment of Food, Milk, Tiffin and Lunch Allowance has to
be examined on its merits depending on the following conditions under
which the allowance is payable:-

a) Tiffin/Food/Milk/Lunch Allowance paid in cash at a fixed rate
irrespective of whether the person is absent or on authorised leave
etc. may be treated as wages.

b) Tiffin/Food/Milk/Lunch allowance paid in cash with deduction for
leave or absence etc. may not be treated as wages.

c) Tiffin/Food/Milk/Lunch allowance paid in kind i.e. canteen
subsidy/food subsidy etc. may not be treated as wages.
(Earlier instructions were issued vide letter No.P-11/13/97-Ins.IV
dated 2.2.1999)

GAZETTED ALLOWANCE

Certain factories/establishments are paying gazetted allowance to its
employees in lieu of duties performed by them on gazetted holidays.
Such gazetted allowance is not wage for the purpose of Sec.2(9) of the
ESI Act. However, it will be wage for the purpose of Sec.2(22) of the
ESI Act and the contribution are to be recovered on such payments.

WAGES AND DEARNESS ALLOWANCE FOR UNSUBSTITUTED HOLIDAYS:

Such wages and dearness allowance paid to the employees for the
unsubstituted holidays are to be treated as wages under Sec.2(22) of
the Esi Act and the contribution is payable. High Court of Gujarat in
the case of ESIC Vs. New Assarw Manufacturing Co.Ltd. held the same
view.

EXGRATIA PAYMENT DURING STRIKE FOR TRAVELLING EXPENSES

Like conveyance allowance if any exgratia payment is made during the
period of strike to some of the employees to incur certain travelling
expenses such amount will neither be considered as wage under Sec.2(9)
nor under Sec.2(22) of the ESI Act and no contribution is payable on
such amount. High Court of Bombay in the case of ESIC Vs. Willman
(India) (P) Ltd. in case No.210 of 1976, held the same view.

INTERIM RELIEF:

Interim relief paid to the employees is normally paid when either the
wage is under revision or when the payment of Dearness Allowance is
delayed due to any reason. Whatsoever may be the case, if the interim
relief is paid to the employees by any employer, the same will amount
the wages within the meaning of Sec.2(22) of the ESI Act and
contribution is payable thereon.

SAVING SCHEME

Certain factories/establishments are contributing towards the saving
scheme for the welfare of the workers. Such amount paid by the
employer as his contribution to the saving scheme, will not constitute
wages under Sec.2(22) of the ESI Act and the contribution is not
payable. (Earlier instructions were issued vide Memo
No.P-12/11/4/77-Ins.IV dt. 15.11.80)

ATTENDANCE BONUS

It is a special allowance being paid by certain employers to their
employees to discourage the workers from absenting from the job. Any
amount paid by the employer to its employees as Attendance Bonus will
constitute wages under Sec.2(22) of the ESI Act and the same opinion
was held by Bombay High court in the case of ESIC Vs. Indian Dyestuff
Industries Ltd.. However, the periodicity aspect has to be kept in
mind. In case the periodicity is more than 2 months, the same will not
constitute wages and no contribution will be payable as in the case of
incentive bonus.

PAYMENT MADE TO RICKSHAW PULLERS,HATHRAIRY PULLERS AND TRUCK OPERATORS
(INCLUDING LOADING & UNLOADING CHARGES WHEN THE LOADERS/UNLOADERS ARE
THE EMPLOYEES OF THE TRUCK OPERATORS:

Rickshaw pullers, Hathrairy pullers and Truck Operators (who bring
labour with them) no contribution is payable on the amount paid by the
employer if the amount paid is lumpsum amount including
loading/un-loading charges and no separate wages are paid by the
employer.

Similar view was held by Bombay Division Bench in 1990 in the case of
Raisaheb Tekchand, Mohate Mills Vs. R.D. ESIC.

HAMALS/COOLIES EMPLOYED AT A PARTIULAR TIME

Where Hamals & Coolies are employed at a particular place and a
particular time, outside the premises of the factory/establishment to
perform a specific job on the spot in such cases no contribution is
payable on the amount paid to such Coolies/Hamals, however the
contribution is payable on the amount paid to the coolies and hamals
for services rendered within the premises of the employer.

Bombay High Court in the case of Parley Bottling Co.Ltd. VS. ESIC,Bombay

1989 and Supreme Court in the case of ESIC VS.Premier Clay Products,
have held this view.

SHORT PERIOD CONTRACT FOR SERVICE – ELECTRICIAN, CARPENTERS,
MECHANICS, PLUMBERS ETC./REPAIR WORK DONE ON SHOP

In such cases also contribution is payable on the amount paid by the
Employer if the services are rendered within the premises. This view
was also held by Punjab and Haryana High Court vide its judgement
dated 29.3.84 in the case of Modern Equipment Vs. ESIC in Civil Appeal
No.3218 of 1989.

EXPENDITURE ON SERVICING OF MACHINES

No contribution is payable on the servicing of machines where the job
awarded is to the Engineer and instead of contract of service, there
is a contract for service for servicing of machines.

EXPENDITURE ON ANNUAL/PERIODICAL SERVICE CONTRACT

In the factories/establishments certain amount is being paid by the
employer to the supplier of machines or to the firms of repute for the
annual/periodical servicing of the machines and for such purposes the
contract is awarded. In such cases no contribution is payable on the
amount paid for annual/periodical service contracts.

COMMISSION TO DEALERS/AGENTS:

Where dealers/agents are appointed by the employers but no regular
wages are paid and it is not obligatory on the part of such
dealers/agents to attend to the factories/ establishments and they are
paid commission only on the quantum of sales, in such cases the amount
paid by the employer as commission/dealership does not constitute wage
under Section 2(22) of the ESI Act and hence no contribution is
payable.

SERVICE CONTRACT

Amount paid to an organisation for maintenance of Machinery/Equipments
as part of service contract will not attract ESI contribution.

PAYMENT MADE TO LABOUR CONSULTANTS, LAWYERS, ENGINEERS, COUNSELS,
CHARTERED ACCOUNTANTS:

The amount paid by the employer to labour consultants, lawyers,
engineers, counsels, chartered accountants does not constitute wage as
per provisions under Section 2(22) of the ESI Act and hence no
contribution is payable.

The following items will form part of the wage both under Section 2(9)
i.e for considering the employee for the purpose of coverage and
Section 2(22) of the ESI Act for the purpose of charging of
contribution:-

a) Matinee allowance which is being paid to employees in Cinema Houses.

b) Shift allowance paid to employees who work on shift duty at odd shifts.

c) Location allowance paid, in addition to Dearness Allowance to meet
the high house rent.

d) Compensatory allowance.

e) Cash handling allowance paid to Cashier.

f) Supervisory Allowance.

g) Additional pay paid to training staff.

h) Charge allowance

i) Steno/Typist allowance

j) Plant allowance

k) Honorarium for looking after the hospital/dispensary

l) Computer allowance

m) Gestetner/Photocopier/Printer allowance

n) Personnel/Special allowance

o) Machine allowance

p) Convassing allowance

q) First-aid allowance

r) Personnel allowance – Pay over and above the basic wage and
Dearness allowance for skill, efficiency or past good records.

s) Area allowance – given to employees living in a particular area to
meet the high cost of living in that area.

t) Exgratia payment if payment is made within an interval of two months.

The following items will not form part of the wage either under
Section 2(9) or under Section 2(22) of the ESI Act:-

a) Payment made on account of un-availed leave at the time of discharge.

b) Commission on advertisement secured for Newspapers, if not paid to
the regular employee.

c) Fuel allowance/Petrol allowance

d) Entertainment allowance

e) Shoes allowance

f) Payment made on account of gratuity on discharge/retirement.

g) Payment made on encashment of leave.

 

Thanks & Regards,

Meetesh Shiroya

 

EPFO has raised interest rate on Provident Fund to 8.8% for Financial Year 2015-16

$
0
0

For Financial Year 2015-16 from 8.75% last year Employees Provident Fund Organization (EPFO) has raised interest rate on Provident Fund to 8.80%.In case of exempted trusts i.e. trusts run by companies who manage their own PF corpus under EPFO guidelines, the increased rate shall also apply.

Companies who manage their own PF corpus are required to measure and recognize in their books of accounts a liability in respect of interest rate guarantee i.e. a liability in respect of the requirement to honour interest rate declared by EPFO irrespective of the actual earnings of the its own fund.

The above marginal increase in the PF rate is likely to result in an increase in Interest Rate Guarantee Liability by between 2% to 8% (depending upon certain factors).

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