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Social Security & Labour Welfare
BBA VI
UNIT - I
Industrial Relation
MEANING & CONCEPT
The term ‘Industrial Relations’ comprises of two terms:
‘Industry’ and ‘Relations’
“Industry” refers to “any productive activity in which an individual (or a group of
individuals) is (are) engaged”.
By “relations” we mean “the relationships that exist within the industry between the
employer and his workmen.”
The term industrial relations explains the relationship between employees and
management which stem directly or indirectly from union-employer relationship.
Industrial relations are the relationships between employees and employers within the
organizational settings.
The relationships which arise at and out of the workplace generally include the
relationships between individual workers, the relationships between workers and their
employer, the relationships between employers, the relationships employers and
workers have with the organizations formed to promote their respective interests, and
the relations between those organizations, at all levels
The term industrial relations has a broad as well as a narrow outlook. Originally,
industrial relations was broadly defined to include the relationships and interactions
between employers and employees
The relationships which arise at and out of the workplace generally include the
relationships between individual workers, the relationships between workers and their
employer, the relationships between employers, the relationships employers and
workers have with the organizations formed to promote their respective interests, and
the relations between those organizations, at all levels. industrial relations also includes
the processes through which these relationships are expressed (such as, collective
bargaining, workers’ participation in decision-making, and grievance and dispute
settlement), and the management of conflict between employers, workers and trade
unions, when it arises.
DEFINITIONS
The Industrial Relation relations also called as labor - management, employee
employers relations.
“Employer-employee relationships that are covered specifically under collective
bargaining and industrial relation laws”.
“Concerned with the systems, rules and procedures used by unions & employers to
determine the reward for effort & other conditions of employment.”
OBJECTIVES
a) To safeguard the interest of labor and management by securing the highest level of
mutual understanding and good-will among all those sections in the industry which
participate in the process of production.
b) To avoid industrial conflict or strife and develop harmonious relations,.
c) To raise productivity to a higher level in an aera of full employment by lessening the
tendency to high turnover and frequency absenteeism.
d) To improve the economic conditions of workers in the existing state of industrial
managements and political government
e) To Protect management and labor interests by securing mutual relations between
the two groups.
f) To Avoid disputes between management and labor, and create a harmonizing
relationship between the groups so productivity can be increased.
g) Ensure full employment and reduce absenteeism, hence, increasing productivity and
profits.
h) To Provide better wages and living conditions to labor, so misunderstandings
between management and labor are reduced to a minimum.
i) To bring about government control over plants where losses are running high, or
where products are produced in the public interest.
IMPORTANCE
a. Uninterrupted production
b. Reduction in Industrial Disputes
c. High morale
d. Mental Revolution
e. Reduced Wastage
f. Foster Industrial Peace
g. Promote Industrial Democracy
THREE ACTORS TO IR
a. EMPLOYEES
b. STATE
c. EMPLOYER
ROLE OF THREE ACTORS TO IR
Role of Employee:
a. To redress the bargaining advantage on one-on-on basis
b. To secure better terms and conditions for their members
c. To obtain improved status for the worker in his/her work
d. To increase implementation of democratic way of decision making at various
levels
Role of Employers
a. Creating and sustaining employee motivation
b. Ensuring commitment from employees
c. Negotiating terms and conditions of employment with TU leaders
d. Sharing decision making with employees
Role of State:
a. Labor policies
b. Labor laws
c. Industrial tribunals
d. Wage boards
e. Industrial relations policy
CAUSES FOR POOR IR
The main reasons are as follows:
a. An attitude of contempt towards the workers on the part of the management.
b. Inadequate fixation of wages or improper wage structure.
c. Indiscipline
d. Unhealthy working conditions at the workplace.
e. Lack of human relations skills on the part of supervisors and managers.
f. Desire of workers for higher bonus, wages or daily allowances.
g. Desire of employers to pay as little as possible to its workers.
h. Inadequate welfare facilities.
i. Dispute on sharing the gains of productivity.
j. Retrenchment, dismissal and lockouts by the management.
k. Strikes by the workers.
l. Inter-union rivals.
m. General economic and political environment such as rising prices, strikes by others
and general indiscipline having their effect on the employees attitudes.
n. Mental inertia on the part of the management.
DEVELOPING SOUND IR
a. Developing trust between Labor & Management
b. Maintenance of Industrial Peace
c. Continuous feedback & monitoring
d. Professional approach
e. Existence of sound, democratic TU
CODE OF DISCIPLINE
a. It specifies various obligations for the management and the workers with the
objective of promoting cooperation between their representatives.
b. To maintain harmonious relations and promote industrial peace, a Code of
Discipline has been laid down which applies to both public and private sector
enterprises
OBJECTIVES OF CODE OF DISCIPLINE
a. Maintain peace and order in industry.
b. Promote constructive criticism at all levels of management and employment.
c. Avoid work stoppage in industry.
d. Secure the settlement of disputes and grievances by a mutually agreed
procedure.
e. Avoiding litigation.
f. Facilitate a free growth of trade unions.
g. Eliminate all forms of coercion, intimidation and violations of rules and
regulations governing industrial relations.
PRINCIPALS OF CODE OF DISCIPLINE
a. There should be no strike or lockout without prior notice.
b. No unilateral action should be taken in connection with any industrial matter.
c. Employees should not follow go slow tactic.
d. No deliberate damage should be caused to a plant or property
e. Acts of violations, intimidation and coercion should not be resorted
f. The existing machinery for the settlement of disputes should be utilized.
g. Actions that disturb cordial relationships should be avoided.
h. Approaches to IR
There are mainly three approaches to IR
a. Unitary approach
b. Pluralistic Approach
c. Marxist Approach
APPROACHES TO IR
Unitary Approach
a. IR is grounded in mutual co-operation, individual treatment, team work and
shared goals.
b. Union co-operate with the mgt. & the mgt.’s right to manage is accepted
because there is no ‘ we they feeling’
c. Assumption: Common interest & promotion of harmony No strikes are there.
d. It’s a reactive IR strategy.
e. They seek direct negotiations with employees.
Pluralistic Approach
It perceives:
a. Org. as a coalitions of competing interest.
b. TU as legitimate representatives of employee interests.
c. Stability in IR as the product of concessions and compromises between mgt. &
unions.
d. Conflict between Mgt. and workers is understood as inevitable.
e. Conflict is viewed as conducive for innovation and growth.
f. Strong union is necessary.
Marxist Approach
a. Regard conflict as Pluralists…
b. Marxists see conflict as a product of the capitalist society.
c. Conflict arises due to the division in the society between those who own
resources and those who have only labor to offer.
d. For Marxist all strikes are political.
e. He regard state intervention via legislation & the creation of Industrial tribunals
as supporting mgt’s interest rather than ensuring a balance between the
competing groups.
UNIT II
Objectives Of Trade Unions
Trade unions are formed to protect and promote the interests of their members. Their primary
function is to protect the interests of workers against discrimination and unfair labor practices.
Trade unions are formed to achieve the following objectives:
· Representation
Trade unions represent individual workers when they have a problem at work. If an employee
feels he is being unfairly treated, he can ask the union representative to help sort out the
difficulty with the manager or employer. Unions also offer their members legal representation.
Normally this is to help people get financial compensation for work-related injuries or to assist
people who have to take their employer to court.
Negotiation
Negotiation is where union representatives, discuss with management, the issues which affect
people working in an organization. There may be a difference of opinion between management
and union members. Trade unions negotiate with the employers to find out a solution to these
differences. Pay, working hours, holidays and changes to working practices are the sorts of
issues that are negotiated. In many workplaces there is a formal agreement between the union
and the company which states that the union has the right to negotiate with the employer. In
these organizations, unions are said to be recognized for collective bargaining purposes.
Voice in decisions affecting workers
The economic security of employees is determined not only by the level of wages and duration
of their employment, but also by the management’s personal policies which include selection
of employees for lay offs, retrenchment, promotion and transfer. These policies directly affect
workers. The evaluation criteria for such decisions may not be fair. So, the intervention of
unions in such decision making is a way through which workers can have their say in the
decision making to safeguard their interests.
Member services
During the last few years, trade unions have increased the range of services they offer their
members. These include:
o Education and training - Most unions run training courses for their members on employment
rights, health and safety and other issues. Some unions also help members who have left school
with little education by offering courses on basic skills and courses leading to professional
qualifications.
o Legal assistance - As well as offering legal advice on employment issues, some unions give
help with personal matters, like housing, wills and debt.
o Financial discounts - People can get discounts on mortgages, insurance and loans from
unions.
o Welfare benefits - One of the earliest functions of trade unions was to look after members
who hit hard times. Some of the older unions offer financial help to their members when they
are sick or unemployed.
Functions Of Trade Unions
Trade unions perform a number of functions in order to achieve the objectives. These functions
can be broadly classified into three categories:
(i) Militant functions,
(ii) Fraternal functions
Militant Functions
One set of activities performed by trade unions leads to the betterment of the position of their
members in relation to their employment. The aim of such activities is to ensure adequate
wages, secure better conditions of work and employment, get better treatment from employers,
etc. When the unions fail to accomplish these aims by the method of collective bargaining and
negotiations, they adopt an approach and put up a fight with the management in the form of go-
slow tactics, strike, boycott, gherao, etc. Hence, these functions of the trade unions are known
as militant or fighting functions. Thus, the militant functions of trade unions can be summed up
as:
To achieve higher wages and better working conditions
To raise the status of workers as a part of industry
To protect labors against victimization and injustice
Fraternal Functions
Another set of activities performed by trade unions aims at rendering help to its members in
times of need, and improving their efficiency. Trade unions try to foster a spirit of cooperation
and promote friendly industrial relations and diffuse education and culture among their
members. They take up welfare measures for improving the morale of workers and generate
self confidence among them. They also arrange for legal assistance to its members, if
necessary. Besides, these, they undertake many welfare measures for their members, e.g.,
school for the education of children, library, reading-rooms, in-door and out-door games, and
other recreational facilities. Some trade unions even undertake publication of some magazine
or journal. These activities, which may be called fraternal functions, depend on the availability
of funds, which the unions raise by subscription from members and donations from outsiders,
and also on their competent and enlightened leadership. Thus, the fraternal functions of trade
unions can be summed up as:
To take up welfare measures for improving the morale of workers
To generate self confidence among workers
To encourage sincerity and discipline among workers
To provide opportunities for promotion and growth
To protect women workers against discrimination
Importance Of Trade Unions
The existence of a strong and recognized trade union is a pre-requisite to industrial peace.
Decisions taken through the process of collective bargaining and negotiations between
employer and unions are more influential. Trade unions play an important role and are helpful
in effective communication between the workers and the management. They provide the advice
and support to ensure that the differences of opinion do not turn into major conflicts. The
central function of a trade union is to represent people at work. But they also have a wider role
in protecting their interests. They also play an important educational role, organizing courses
for their members on a wide range of matters. Seeking a healthy and safe working environment
is also prominent feature of union activity.
Trade unions help in accelerated pace of economic development in many ways as follows:
by helping in the recruitment and selection of workers.
by inculcating discipline among the workforce
by enabling settlement of industrial disputes in a rational manner
by helping social adjustments.
Workers have to adjust themselves to the new working conditions, the new rules and policies.
Workers coming from different backgrounds may become disorganized, unsatisfied and
frustrated. Unions help them in such adjustment. Trade unions are a part of society and as such,
have to take into consideration the national integration as well. Some important social
responsibilities of trade unions include:
promoting and maintaining national integration by reducing the number of industrial disputes
incorporating a sense of corporate social responsibility in workers
achieving industrial peace
Reasons for Joining Trade Unions
The important forces that make the employees join a union are as follows:
1. Greater Bargaining Power
The individual employee possesses very little bargaining power as compared to that of his
employer. If he is not satisfied with the wage and other conditions of employment, he can leave
the job. It is not practicable to continually resign from one job after another when he is
dissatisfied. This imposes a great financial and emotional burden upon the worker. The better
course for him is to join a union that can take concerted action against the employer. The threat
or actuality of a strike by a union is a powerful tool that often causes the employer to accept the
demands of the workers for better conditions of employment.
2. Minimize Discrimination
The decisions regarding pay, work, transfer, promotion, etc. are highly subjective in nature.
The personal relationships existing between the supervisor and each of his subordinates may
influence the management. Thus, there are chances of favoritisms and discriminations. A trade
union can compel the management to formulate personnel policies that press for equality of
treatment to the workers. All the labor decisions of the management are under close scrutiny of
the labor union. This has the effect of minimizing favoritism and discrimination.
3. Sense of Security
The employees may join the unions because of their belief that it is an effective way to secure
adequate protection from various types of hazards and income insecurity such as accident,
injury, illness, unemployment, etc. The trade union secure retirement benefits of the workers
and compel the management to invest in welfare services for the benefit of the workers.
4. Sense of Participation
The employees can participate in management of matters affecting their interests only if they
join trade unions. They can influence the decisions that are taken as a result of collective
bargaining between the union and the management.
5. Sense of Belongingness
Many employees join a union because their co-workers are the members of the union. At times,
an employee joins a union under group pressure; if he does not, he often has a very difficult
time at work. On the other hand, those who are members of a union feel that they gain respect
in the eyes of their fellow workers. They can also discuss their problem with’ the trade union
leaders.
6. Platform for self expression
The desire for self-expression is a fundamental human drive for most people. All of us wish to
share our feelings, ideas and opinions with others. Similarly the workers also want the
management to listen to them. A trade union provides such a forum where the feelings, ideas
and opinions of the workers could be discussed. It can also transmit the feelings, ideas,
opinions and complaints of the workers to the management. The collective voice of the
workers is heard by the management and give due consideration while taking policy decisions
by the management.
7. Betterment of relationships
Another reason for employees joining unions is that employees feel that unions can fulfill the
important need for adequate machinery for proper maintenance of employer-employee
relations. Unions help in betterment of industrial relations among management and workers by
solving the problems peacefully.
Trade Unionism in India
The trade unionism in India developed quite slowly as compared to the western nations. Indian
trade union movement can be divided into three phases.
The first phase (1850 to1900)
During this phase the inception of trade unions took place. During this period, the working and
living conditions of the labor were poor and their working hours were long. Capitalists were
only interested in their productivity and profitability. In addition, the wages were also low and
general economic conditions were poor in industries. In order to regulate the working hours
and other service conditions of the Indian textile laborers, the Indian Factories Act was enacted
in 1881. As a result, employment of child labor was prohibited.
The growth of trade union movement was slow in this phase and later on the Indian Factory Act
of 1881 was amended in 1891. Many strikes took place in the two decades following 1880 in
all industrial cities. These strikes taught workers to understand the power of united action even
though there was no union in real terms. Small associations like Bombay Mill-Hands
Association came up by this time.
The second phase (1900 to 1946)
This phase was characterized by the development of organized trade unions and political
movements of the working class. Between 1918 and 1923, many unions came into existence in
the country. At Ahmedabad, under the guidance of Mahatma Gandhi, occupational unions like
spinners’ unions and weavers’ unions were formed. A strike was launched by these unions
under the leadership of Mahatma Gandhi who turned it into a satyagrah. These unions
federated into industrial union known as Textile Labor Association in 1920.In 1920, the First
National Trade union organization (The All India Trade Union Congress (AITUC)) was
established. Many of the leaders of this organization were leaders of the national Movement. In
1926, Trade union law came up with the efforts of Mr. N N Joshi that became operative from
1927. During 1928, All India Trade Union Federation (AITUF) was formed.
The third phase began with the emergence of independent India (in 1947). The partition of
country affected the trade union movement particularly Bengal and Punjab. By 1949, four
central trade union organizations were functioning in the country:
1.The All India Trade Union Congress,
2.The Indian National Trade Union Congress,
3.The Hindu Mazdoor Sangh, and
4.The United Trade Union Congress
The working class movement was also politicized along the lines of political parties. For instance
Indian national trade Union Congress (INTUC) is the trade union arm of the Congress Party.
The AITUC is the trade union arm of the Communist Party of India. Besides workers, white-
collar employees, supervisors and managers are also organized by the trade unions, as for
example in the Banking, Insurance and Petroleum industries.
Trade unions in India
The Indian workforce consists of 430 million workers, growing 2% annually. The Indian labor
markets consist of three sectors:
1.The rural workers, who constitute about 60 per cent of the workforce.
2.Organized sector, which employs 8 per cent of workforce, and
3.The urban informal sector (which includes the growing software industry and other services,
not included in the formal sector) which constitutes the rest 32 per cent of the workforce.
At present there are twelve Central Trade Union Organizations in India:
1.All India Trade Union Congress (AITUC)
2.Bharatiya Mazdoor Sangh (BMS)
3.Centre of Indian Trade Unions (CITU)
4.Hind Mazdoor Kisan Panchayat (HMKP)
5.Hind Mazdoor Sabha (HMS)
6.Indian Federation of Free Trade Unions (IFFTU)
7.Indian National Trade Union Congress (INTUC)
8.National Front of Indian Trade Unions (NFITU)
9.National Labor Organization (NLO)
10. Trade Unions Co-ordination Centre (TUCC)
11. United Trade Union Congress (UTUC) and
12. United Trade Union Congress - Lenin Sarani (UTUC - LS)
Industrial Employment Standing Order Act,1946.
Introduction & Definition
To avoid friction amongst the employers and workmen employed in an industry is the
principal aim of Indian Legislation in India.
It was considered that the society had a vital interest in the settlement of terms of
employment of Industrial Labor and also settlement of Labor problems.
Therefore, the steps were taken by the Central Government to enact Industrial
Employment (Standing Orders) Act, 1946 with a view to afford protection to the
workmen with regard to conditions of employment.
Definition under the Act (Sec.2)
“Standing Orders” mean rules relating to matters set out in the Schedule to the Act
[Sec.2(g)] to be covered and in respect of which the employer has to draft for submission to
the Certifying Officer, are matters specified in the Schedule.
Objective of the Act
The purpose of having Standing Orders at the plant level and other commercial
establishments is to regulate industrial relations.
This Orders regulate the conditions of employment, grievances, misconduct etc. of
the workers employed in industrial undertakings.
Unsolved grievances can become industrial disputes.
Model Standing Orders
Classification of Workers
Publication of Work Time, Holidays, Pay Days and Wage Rates
Shift Working
Attendance and Late Coming
Leave and Holidays
Casual Leave
Payment of Wages
Stoppage of Work
Termination of Employment
Disciplinary Action for Misconduct
Suspension
Dismissal
Complaints
Procedure for the Approval of Standing Orders
The main provision that deal for the approval of Standing Orders are:
Procedure for the submission of Draft Standing Orders
Procedure for the Conditions for Certification of Standing Orders [Section4].
Procedure for Certification of Standing Orders (Procedure for Adoption) [Section 5].
Appeals [Section 6].
Procedure for the submission of Draft Standing Orders
Within 6 months from the date on which this Act becomes applicable to industrial
establishment, the employer shall submit to the Certifying Officer 5 copies of the draft
standing orders proposed by him.
Provision shall have to be made as such every matter set out in the Schedule which may be
applicable to the industrial establishment and were model standing orders have been
prescribed.
Subject to such conditions as may be prescribed, a group of employers in similar industrial
establishments may submit a join draft or standing orders under this section.
Procedure for the Conditions for Certification of Standing Orders
The standing order to be certified by the certifying officer under certain conditions:
If provision is made therein for every matter set out in the schedule which is applicable to
the Industrial Establishment; and
If the standing orders are otherwise in conformity with the provision of this Act and it shall
be the function of the Certifying Officer or appellate authority to reasonableness of the
provision of any standing orders.
Procedure for Certification of Standing Orders (Procedure for Adoption)
The Certifying officer receipt of the draft Standing Orders from the employer shall
forward a copy of the draft standing orders to the recognized trade union of the
establishment seeking submission of objection to draft standing orders if any.
The standing orders came into operation on the expiry of 30 days from the date on which
the authenticated copies of the standing orders are forwarded to the employer and the
workmen by the certifying officer.
The conditions of employment, which will be binding on the employer and the workmen
from the date when they become operational.
Appeal of Standing Orders
Any employer, workmen, trade union or other prescribed representatives of workmen
aggrieved by the order of the Certifying Officer may appeal to the appellate authority
within 30 days from the date on which copies are to be sent to them.
The appellate authority may confirm the standing orders as certified, or may make
modifications or additions to render them certifiable and it has to send copies of the same
to the concerned person within 7 days of the order[Sec. 7].
Modification of Standing Orders
Standing Order finally certified under the Act shall not, except on agreement between the
employers and the workmen or their Trade Union be liable to modification until the expiry
of 6 months from the date on which the standing orders came into operation.
Subject to the provision of sub-section (1), an employer or workman or a trade union or
other representative body of the workmen may apply to the Certifying Officer to have the
standing orders modified, and such application shall be accompanied by 5 copies of the
modifications proposed to be made.
CERTIFYING OFFICER
Definition:-
The “certifying officer” under standing order act means Regional Labor
Commissioner, Labor Commissioner or other officer appointed by the appropriate
government by the notification in the Official Gazette, to perform all or any of the
functions of certifying officer under Act.
Powers of Certifying Officer:-
Every Certifying Officer and appellate authority shall have all the powers of Civil Court
for he purpose of:
Receiving Evidence,
Administering oaths,
Enforcing the attendance of witness, and
Compelling the discovery and production of documents.
Payment of Subsistence Allowance
Where any workmen is suspended by the employer pending investigation or inquiry into
complaints or charge of misconduct against him, the employer shall pay to such workmen
subsistence allowance:
At the rate of 50% of the wages which the employer is entitled to immediately preceding
the date of such suspension, for the 90 days of suspension; and
At the rate of 70% of such wages for the remaining period of suspension.
Offences and Penalties
An employer fails to submit the draft Standing Orders as required by Section 3 or who
modified his standing orders otherwise with sec.10 shall be punishable with fine which may
extend to Rs.5000 and in case of continuing offence with a further fine of Rs.200 for every
day after the first during which the offence continues.
An employer who does not act in contravention of the standing orders finally certified
under this act for industrial establishment shall be punishable with fine which may extend
to Rs.100 and in case of continuous offence with further fine of Rs.25 every day after the
first during which the offence continues.
No persecution for any offence punishable under this section 13 shall be instituted except
with the previous sanction of the appropriate government. It can be tried only in the Court
of a presidency magistrate or the second class magistrate.
INDUSTRIAL DISPUTE ACT 1947
Definition
The industrial dispute means any dispute or difference between:-
(i) Employers and employers
(ii) Employers and Workmen or
(iii) Workmen and workmen, which is connected with
Industrial disputes may be said to be disagreement or controversy between management
and labor with respect to wages, working conditions, other employment matters or union
recognition.
Industry
Objective
Types Of ID’s
Authority
Prohibition of strikes and lock-outs
According to SEC 22 (1) No person employed with a public utility service shall go on
strike in breach of contract – Without giving the employer notice of strike, within six
weeks before the strike. Before the expiry of date of strike specified in such notice.
According to SEC 23; No employee of any industrial establishment shall go on strike
during the period when proceedings in any disputes case is going on or when final
judgment is awaited .
INDUSTRIAL DISPUTE RESOLUTION MECHANISM
Settlement Without State Intervention
There are two ways in which the basic parties to an industrial dispute- the employer
and the employees- can settle their disputes.
* Collective bargaining
* Voluntary arbitration
Settlement Under the Influence of the State
Voluntary Arbitration
It is commonly viewed as less expensive and faster than resolving a dispute in court.
An arbitrator may be a single person or a panel.
Sometimes, however, the parties may agree to submit the dispute to an arbitrator but
at the same time, reserve their right to accept or reject the award when it comes.
Labor Courts and the Tribunal can be established both by the central and state
governments, but the National Tribunal is setup only by the central government.
National Tribunal is set up to adjudicate such disputes which involve any question of
national importance or are of such a nature that industrial establishments situated in
more than one state are likely to be interested in or affected by them.
Introduction
The Labor Court adjudicates disputes relating to the propriety or legality of an order
passed by the employer under this standing orders, discharge or dismissal of
workmen, legality or otherwise of a strike or lock-out.
The Tribunal and National Tribunal generally deal with such subject matters as
wages, bonus, profit-sharing, rationalization, allowances, hours of work, provident
fund, gratuity etc.
Strikes and lock-outs are prohibited during the pendency of the proceedings before
any of the adjudication authorities, and two months after the conclusion of such
proceedings and during any period in which the award is in operation, in respect of
any matter covered by the award.
Other Tripartite Bodies at the State Level
Amongst the important tri partite committees functioning in the states are:
Implementation and Evaluation Committees
Committees for particular industries
Labor Welfare Boards or Committees
Some of these are permanent, while others are constituted as and when required.
UNIT III
The Employees' State Insurance Act, 1948
Preliminary
Object of the act:
To provide for certain benefits to employees in case of sickness, maternity and injury
during employment and to make provision for certain other matters in relation thereto.
Preliminary
Applicability of the Act:
All factories
Shops employing 20 or more persons.
Such other Govt. specified establishments.
Act does not apply to:
Seasonal factories engaged exclusively in any of the activities like: cotton ginning, cotton or
jute pressing, decoration of ground nuts, manufacturing coffee, indigo, lac, rubber, sugar,
or tea or any manufacturing process incidental to or connected with any of the afore said
activities, and including factories engaged for a period not exceeding seven months in a
year in blending, packing or repackaging tea or coffee, or in such other processes as may be
specified by the central govt.
The factories exempted as seasonal from the provisions of the act.
Act does not apply to:
Mines
Railway running sheds
Govt. factories or establishments and Indian naval, military, or air force
Other Govt. notified exempted establishments
ACT AUTHORISATION
1. To Promote and measure for health and welfare of INSURED EMPLOYEES (IE)
2. Intervene for the rehabilitation and re-employment for disabled / injured
3. To appoint inspectors for purposed of the act
4. To determine the amount of contribution and relevant verification
Standing committee
empowered to-
1. Shall administer the affair of the corporation
2. Shall submit the consideration and decision of the corporations
3. Have discretion on other issues of corporation
Medical Benefit Council
1. Advise to administration on Medical Benefit, purpose of grants and related matter
2. Have power and duties of INVESTIGATION on Empanelled Medical practitioner, its
treatment and attendance
3. Perform other duties
Inspectors- Duties- Powers
Duties -
1. Inquiring into the correctness in any return of contribution
2. Ascertaining Provision of the Act has been complied
3. Other authorized / specified duties by the corporation.
Powers -
1. To collect require and relevant information of employer / contractor or both
2. To enter org / contractor premises at reasonable time and examined relevant account
books and relevant documents, payment of wages etc.
3. To examine employer, contractor, his agent / servant or IE in factory / office
4. To make copies of extracts from any registrar, account books and other books of
maintenance of org.
Employees’ State Insurance Corporation (Sec3)
A statutory body known as the ESI Corporation has been created under the Act to
administer and execute the ESI scheme. The ESI corporation is a body corporate having
perpetual succession and a common seal.
-separate legal entity
Jhansi Co-operative oil mills v Manoharlal AIR 1975 All 492 held a decree or award
made against the corporate body ie ESI Corpn is not enforceable against the individual
members but against the assets of the corporate body.
Constitution of the Corporation (Sec 4)
The ESI Corporation shall consist of the following members:
(i) a Chairman, a Vice Chairman and not more than 5 persons to be appointed by the
Central Government.
(ii)1 persons each representing each of the state in which the Act is in force to be appointed
by the State Govt.
(iii) 1 person representing Union Territories to be appointed by the Central Govt.
(iv) 10 persons representing employers to be appointed by the Central Govt in consultation
with
such organisation of employees as may be recognised for the purpose by the Central Govt.
(v)10 persons representing the employees to be appointed by the Central Govt in
consultation with such organisation of employees as may be recognised for the purpose by
the Central Govt.
(vi) 2 persons representing medical profession.
(vii) 3 persons from the Parliament. (2 from LS and 01 from the RS elected by LS
& RS respectively)
(viii) The Director General of the ESI Corporation shall be ex- officio member of the ESI
Corporation.
Powers of the ESI Corporation
1. Employment of the Staff Sec 17
2. Promotion of the measures of the health & welfare Sec 19
3. Holding of the property Sec 29
4. Appointment of the Inspectors Sec 45
5. Determination of Contribution Sec 45A
6. Authentication of orders and decisions Sec 7
Duties of the ESI corporation
1. Budget Estimates Sec 34
2. Accounts Sec 33
3. Audit Sec 34
4. Annual Report of the work and activities Sec 35
5. Valuation of the assets and Liabilities Sec 37 at intervals of 5 years made by a valuer
appointed with the approval of the Central Govt.
6. Placement before Parliament Sec 36 - the annual report, audited accounts and budget to
be placed in Parliament and published in official gazette.
Employer/ Employee’s Contribution
It is the principle employer’s responsibility to deposit his own as well as employee’s
contribution in respect of all employees including the contract labour, into the E.S.I.
Account. Non-availability of funds cannot be a ground for non-payment of contributions
under the act. There is no provision to waive the contribution, damages and interest
The employer is required to contribute at the rate of 4.75% of the wages paid/ payable in
respect of every wage period. The employees are also required to contribute at the rate of
1.75% of their wages except when the “average daily wages in a wage period” are equal to
or less than Rs.70.
Employer/ Employee’s Contribution
The employer should get his factory or establishments registered with the E.S.I.
Corporation within 15 days after the Act becoming applicable to it, and obtain the
employer’s Code Number. The regional officer will allot a code number to the employer,
which must be quoted in all documents and correspondence.
Benefits available to insured employee
The purpose of the Employee State Insurance Act is to provide benefits as detailed in the
Act particularly in section 46, to the insured persons or their dependants.
The following benefits are provided under section 46.
Sickness benefit
Maternity benefit
Disablement benefit
Dependents benefit
Medical benefit
Funeral expenses
Sickness benefit
Every insured employee is entitled to the cash benefit for the period of sickness certified by
a duly appointed medical practitioner if the contributions in respect of him were payable
for not less than 78 days in the corresponding contribution period.
Cash benefit takes the form of periodical payment made to an insured person which is
payable for maximum numbers of 91 days in any two consecutive benefit periods. The
benefit is not paid for the first two days of sickness which is treated as the waiting period.
Insured persons suffering from long term diseases like T.B., leprosy, mental, heart etc. and
who have been continuous employment for two years are entitled to get sickness benefit
period up to 309 days.
Maternity benefit
A periodical cash benefit is payable to an insured woman employee, in cash of confinement,
miscarriage, medical termination of pregnancy, premature birth of a child or sickness
arising from pregnancy etc.
If the contributions in respect of her were payable for at least 70days in the two
immediately preceding contribution periods
The benefit is payable of twice the standard benefit rate or Rs.20, whichever is higher for
all days on which she does not work during the prescribed period.
Disablement benefit
It is payable to an employee who is injured in the course of his employment and is
permanently or temporarily disabled or contacts any occupational disease.
A person who sustains temporary disablement for not less than 3days(excluding the day of
accident) shall be entitled to periodical payment as may be prescribed by the central govt.
The benefit of temporary disablement is, however, not payable for any day on which the
employee works, remains on lease, holiday or strike in respect of which he receives wages.
Dependents benefit
If any employee dies during any period for which he is entitled to a cash benefit, the
amount of such benefit shall be payable up to & including the day of his death.
The amount of benefit shall be paid to the nominee or, where there is no nomination, to the
heir or legal representative of the deceased employee.
Medical benefit
An insured person or a member of his family whose condition requires medical treatment
and attendance entitled to receive medical benefit.
Rs.250 on account of confinement expenses shall be paid to an insured person or his wife if
confinement occurs at a place where necessary medical facilities under E.S.i.C. schemes are
not available.
Employer not to dismiss or punish employee during period of sickness- section73.
Funeral Expenses
If an insured employee dies, the eldest serving member of his family is entitled to
reimbursement of such expenditure subject to maximum of Rs. 10000.
The claim for the funeral expenses should be submitted with prescribed document and
form within three months of the death of the insured employee.
Adjudication of dispute & claims
Employees Insurance Court
Institutions of proceedings, etc.
Powers of employees’ Insurance Court
Reference to High Court
Appeal
Stay of payment during pending of appeal
Offences and penalties
Punishment for false statement:- In this case any false statement or false representation,
shall be punishable with imprisonment up to Rs.2000 or with both
Punishment for failure to pay contributions:- if any person fails to pay any contribution
which under to this act he is liable to pay, he shall be punishable with imprisonment up to
three years.
Punishment for other contravention:- in contraventions like dismisses, discharges, reduces
or otherwise punishes an employee, shall be punishable with imprisonment up to one year
or with fine up to Rs.4000 or with both
Offences and penalties
Power to recover damages:- If employer fails to pay the amount of contribution then
corporation may recover from the employer by way of penalty.
Power of court to make orders:- If court makes order for employer- if employer is not able
to make this order within period then employer shall be punishable with imprisonment in
respect thereof U/S.85 and shall also be liable to pay fine up to Rs.1000 for every day.
Miscellaneous Provisions
Exemption of a factory or establishment (sec.87)
Exemption may be granted to any factory or establishment for maximum period of one
year.
Any exemption granted shall be notified by the notification in the Official Gazette.
The appropriate Govt. while granting exemption can improve any terms and conditions
upon the factory/establishment.
If required any exemption can be renewed for max. one year
Before granting any exemption Corp. must be given opportunity to make representation
which has to be considered by the Govt.
Exemption of persons or class of persons (sec.88)
App. Govt. is authorized to exempt any person or class of person from the operation of the
act
Any exemption granted shall be notified by the notification in the Official Gazette.
Such person or class of persons must be working in a factory/establishment
Any exemption granted shall be accompanied with such conditions as the appropriate
Govt. may think fit to impose
Exemption of a factory or establishment belonging to Govt./any local authority
App.Govt. must consult the Corporation
Any exemption granted shall be notified by the notification in the Official Gazette.
Exemptions shall always be subj. to the conditions imposed by the Govt.
Exemptions shall always be in order only if the employees in any such
factory/establishment are already in receipt of benefits substantially similar or superior to
the benefits provided under this act.
Exemption from one or more provisions of the act (sec.91)
Exemption may be granted to any factory or establishment or any person or class of
person by App.Govt.
Any exemption granted shall be notified by the notification in the Official Gazette.
Any exemption granted under the sec.87,88,90 or 91 in respect of any person or class of
person may be enforced either prospectively or retrospectively the date of its enforcement
has to be specified (sec.91-A)
Obligation of the Employers …
1). Get your Factory / establishment registered with in 15 days after the Act becomes
applicable. Submit Form 01 to the Regional office for this purpose. Obtain Employer’s
code No. for use in all ESIC Forms / documents and correspondence with the offices of
the ESI Corporation.
2). Fill up Declaration Forms in respect of all coverable employees and submit the same to
the Regional Office/ Local Office of the corporation well before the ‘Appointed Day’
and obtain insurance Numbers from the concerned Local Office/ Regional Office, In
respect of newly appointed employees, fill up the declaration form soon after
appointment of such employees and submit the same to the Local Office Concerned.
Obligation of the Employers …
3). Pending receipt of identity cards/ identity certificates you may issue “certificate of
employment” in Form 86 to the covered employee(s) enabling them to avail
cash/medical Benefits
4). Pay ESI contribution (Employee's Share @4.75% and the Employer’s share @ 1.75% of
the wages) with in 21 days of the month following, in which the wages fall due.
5).Maintain an Accident Book as prescribed under the Factory Act / ESI Act.
Obligation of the Employers …
6).Submit an Accident Report to the Local Office / ESI Dispensary concerned immediately
in respect of accidents that could result in death or disablement and within 24 hours of
its occurrence otherwise. Minor accidents which do not cause absence from work need
not be reported
7).Grant leave to insured employees on the basis of sickness certificates issued by any
authorized ESI doctor.
Employee State Insurance Scheme ???
Mission Statement :
To provide for certain benefits to Employees in case of Sickness, Maternity and
Employment Injury and to make provisions for Related Matters.
The ESI Scheme is an integrated measure of “Social Insurance” come to the life through
the Employees' State Insurance Act - 1948, and is designed to complete the task of
protecting “Employees” as defined in the ESI Act – 1948, against the hazards of Sickness,
Maternity, Disablement or Death due to Employment injury and to provide full Medical
care to insured persons and their families.
ESI Scheme Today (As on 31st March 2010)
Coverage in India:
No. of States/UTs covered:- 29
No. of implemented centers:- 787
No. of Employees:- 1.39 crores
No. of Insured Persons/Family units:- 1.43 crores
No. Insured women:- 26.00 lakhs
No. of Beneficiaries:- 5.55 crores
No. of Employers covered:- 4.06 lakhs
Infrastructure in India:
o No. of Regional/Sub-Regional/Divl. Offices:- 52
o No. of Branch/Pay offices:- 798
o No. of ESI Hospitals:- 148
o No. of Hospital Annexes:- 42
o Total No. of Hospital Beds:- 27,739
o No. of ESI dispensaries:- 1388
o No. of IMOs/IMPs/Specialists etc.:- 8925
o No. of Para-medical staff:- 45000
At an average the ESI Corporation makes 40 lacs individual payments each year
amounting to about Rs. 300 crores through its wide spread network of branch Offices in
implemented areas.
Applicability of the ESI Act:
Under Section 2(12) The Act is applicable to the “Factories” employing 10 (Ten) or more
persons irrespective of whether power is used in the process of manufacturing or not.
Under Section 1(5) of the Act, the Scheme has been extended to Shops, Hotels, Restaurants,
Cinemas including preview Theatre, Road motor transport undertakings and Newspaper
establishment employing 20 (Twenty) or more persons.
Further, u/s 1(5) of the Act, the Scheme has been extended to Private Medical Institution
and Educational Institutions employing 20 (Twenty) or more persons in certain States .
The existing wage-limit for coverage under the Act, is Rs. 15,000/- per month (excluding
remuneration for overtime) w. e. f:- May 01, 2010.
AREAS COVERED
The ESI Act is applicable across the length and breadth of the India.
ESI Contribution Share:
Contribution Deposit & Due Date:
The amount of contribution (Employee’s and Employer’s share) is to be deposited with the
authorized bank (State Bank Of India) through Online Generated Challan, on or before
21st day of the Succeeding month, of month following the calendar month.
Contribution can also be submitted Online, by selecting Online Payment Option during
Payment of the contribution, the process will take you the Payment page of SBI corporate
banking login to complete the payment & same will be competed in few minutes.
If the employee is drawing upto Rs.70/- as daily average wage, he is exempt from the
payment of his share of contribution. The employer is however to pay employer's share of
4.75% of the salary received by the employee.
The State Govt. bears one-eight share of expenditure on medical benefits with in the per
capita ceiling of Rs. 1200/- per I.P. family per annum & all additional expenditure beyond
the ceiling.
Contribution & Benefit Period:
Employers covered under the Act, are required to Pay the Contribution towards the
scheme on a Monthly basis. There are two contribution periods each of Six months and two
corresponding benefit periods also of Six months duration as under.
Contribution Period Benefit Period
1st April to 30
th Sep. 1
st Jan to 30
th June
(of the following year )
1st Oct to 31
st March 1
st July to 31
st Dec.
** At an average the ESI Corporation makes 40 lacs individual payments each year
amounting to about Rs. 300 crores as cash benefits.
Social Security Benefits of ESIC:
The following benefits are provided under section 46.
a. Medical benefit
b. Sickness benefit
c. Maternity benefit
d. Disablement benefit
e. Dependents benefit
f. Funeral expenses
g. Others Benefits
Medical Benefits
The ESI Scheme provides full range of Medical Care to all Insured person and thier family,
through a network of ESI Dispensaries, Hospitals & Panel Clinics, Diagnostic Centers &
Super Speciality.
Super-Speciality treatment such as:- Open Heart Surgery, Neuro Surgery, Bone Marrow
Transplant, Kidney Transplant or specialized investigations like CAT scan, MRI,
Angiography etc.
Eligibility for MB:- An employee who is covered under the Scheme for the first time is
eligible for medical care for a period of three months. If employee contributes atleast for 78
days in a contribution period the eligibility is there upto the end of the corresponding
benefit period.
Claim form under ESI Act:- Form - 09
Sickness Benefits:
Sickness Benefits represents periodical cash payments made to an IP during the period of
certified sickness occurring in a benefit period when IP requires medical treatment and
attendance with abstention from work on medical grounds.
Eligibility for SB:- Minimum 78 days contribution in one contribution period.
The daily rate of Sickness Benefit is 50% of the daily wages.
Max. Duration:- Maximum period of 91 days in any two consecutive benefit periods.
Claim form under ESI Act:- Form - 09
Extended Sickness Benefit: Extended Sickness Benefit is a Cash Benefit paid for prolonged
illness due to any of the 34 specified diseases as per (Annexure – A).
Eligibility for Extended SB:- Continuous employment for a period of 2 years and should
have contributed for atleast 156 days in 4 preceding contribution periods. The daily rate of
Extended Sickness Benefit is 40% more than SB rate.
Maximum Duration of ESB:- Including Sickness Benefit payable for 91 days the ESB is
payable upto a further period of 124/309 days that can be extended upto 2 years in special
circumstances on recommendation of competent authority.
Maternity Benefits
Maternity Benefit consists of periodical cash payments in case of confinement or
miscarriage or sickness arising out of pregnancy, confinement, premature birth of child or
miscarriage, to an insured woman as certified by a duly appointed medical officer or mid
wife.
Eligibility for MB:- The contribution condition is the same as for Sickness Benefit. The
daily benefit rate is double the Sickness Benefit rate and is thus roughly equivalent to the
full wages. Benefit is paid for Sundays also.
The Benefit is paid as follows:-
(a) For Child Delivery:- For a total period of 12 weeks beginning not more than
6 weeks before the expected date of child birth.
(b) For Miscarriage:- For a period of 6 weeks following the date of miscarriage.
(c) For Sickness arising out of pregnancy, confinement, premature birth
of child or miscarriage:- For an additional period of upto 04 weeks.
Claim form under ESI Act:- Form – 09 & 19 (Notice of Work)
Medical Bonus:- Medical Bonus is lump sum payment made to an insured woman or the
wife of an insured person in case she does not avail medical facility from an ESI hospital
at the time of delivery. The amount of Bonus is Rs. 2500/-.
Disablement Benefit
Disablement Benefit is admissible for disablement caused by employment injury. At the
first instance, temporary disablement benefit is payable as long as the temporary
disability lasts. If the employment injury results in partial or total/permanent
disability, permanent disablement benefit is payable till the death of the insured
person.
The Daily benefit rate for Permanent and Temporary Disablement is roughly
equivalent to about 100% of the wage rate. For permanent partial disablement, the
rate of benefit is proportionate to the percentage of loss of earning capacity. The
benefit is paid for Sundays also.
Claim form under ESI Act: For Temporary Disablement:- Form – 09
For Permanent Disablement:- Form – 14
Dependent Benefits
Dependents benefit is paid as family pension to the dependants of a deceased insured
person in the event of death due to employment injury or occupational disease and is
equivalent to about 70% of the wages.
Eligible Members:
a) A widow can receive this benefit on monthly basis for life or till her Re-Marriage.
b) A son or daughter can receive this benefit till (25) twenty five years of age.
c) Other dependants like parents including a widowed mother etc. can also receive this
benefit under certain conditions.
d) The first installment is payable within a maximum of three months following the
death of an insured person and therefore, on a regular monthly basis.
Claim form under ESI Act:- Form – 15 & 16
Funeral Expenses
Funeral expenses are in the nature of a lump sum payment of Rs. 10000/- (revised from @
5000/- w.e.f:- April 2011) made to defray the expenditure on the funeral of deceased
insured person. The amount is paid either to the eldest surviving member of the family or,
in his absence, to the person who actually incurs the expenditure on the funeral.
Claim form under ESI Act:- Form – 22
Others Benefits:-
Rehabilitation Allowance:- Rehabilitation in case of disabled insured persons under 45
years of age with 40 percent or more disablement.
Free Supply:- Free Supply of physical aids and appliances such as crutches, wheelchairs,
dentures, spectacles and other such physical aids.
Old Age Medical Care:- Old age Medical care for self and spouse at a nominal
contribution of Rs. 120/- per annum.
Rajiv Gandhi Shramik Kalyan Yojana:- Unemployment Allowance is payable to those
workers facing involuntary unemployment due to closure of factory or non-employment
injury. Benefit rate which is just above 50% of the daily wages for max 01 year.
Obligation of the Employers :
Complete the Registration process with in 15 days after the Act becomes applicable.
Submit Form - 01 to the Regional office or apply through Online to get the unique
Registration No. under this Act.
Following Responsibility are:-
* Generated the TIC & handover to employee for Smart Card.
* Maintain an Accident Book in Form - 11 (under Regulation 66)
* Submit an Accident Report in Form – 16 within 24 hours of Accident.
* Grant leave to insured employees on the basis of sickness certificates.
Records Maintenance :-
* Register of Employees in Form -6 (under Regulation 32)
* Accident Book in Form - 11 (under Regulation 66)
* Inspection Book (under Regulation 102A)
* File for copies of return of declaration forms.
* File for copies of Return of Contribution, Challans, etc.
* File for general correspondence & copies of Accident Reports.
Safeguards for Insured Employees:
* Right to receive Payment of any benefit under the Act that shall not be “Transferable
or Assignable”.
* Cash Benefits payable under the Act are not liable to attachment or sale in execution
of any decree or order of any court.
* Employer shall not dismiss, discharge or reduce the wages or otherwise punish a
covered employee during the period he / she is in receipt of Sickness Benefit or
Maternity Benefit etc.
* By reason of his liability to pay his share of contribution under the ESI Act, no
employer shall directly or indirectly reduce the wages of a covered employee.
* Right to register their grievances / complaints at any level for immediate Redressal &
Judgement.
* Right to approach EI Court against any action/ decision of the medical Board etc.
Benefits of Smart Card:
* Medical treatment is available in any ESI Dispensary, Centre & ESI Hospital all
over of India.
* As per rule, Smart card (know as Pahachan card) will be accepted (valid) for life
long.
* No need to take New card, when employee is changing the Job or office.
* It is comfortable to carry always by the insured persons & their families.
* Employee’s & their family members details can change or update with out any
objection.
* Insured person health record will be available online for any future treatment
required to the person in all ESIC centers.
* Any one can find the details easily of insured persons & his family members by
login with IP No. on esic.in (via- IP’s login).
* Temporary and permanent workers can use this facility of Smart Card to avail all
the above benefits easily.
Interest & Damages as Penalty:
Under Section 39(5)(a) of the ESI act, read with Regulation 31(A) of the ESI (General)
Regulations 1950, the employer is liable to pay simple interest @ 15 percent per annum in
respect of each day of default or delay in payment contributions. In addition, under the
Provision of Regulation 31-C of ESI (General) Regulations, 1950, read with section 85
(B)(i) of the ESI Act, the Corporation is empowered to recover damage as under:
Period of delay in Rate of Damages
payment of Contribution on the amount due
i). Up to less than 2 months 5 %
ii). 2 months and above but less than 4 months 10%
iii). 4 months and above but less than 6 months 15%
iv). 6 months and above 25%
The Employee’s Provident Fund Act 1952
Introduction
Salary consists of two parts i.e. earnings & deductions
Provident Fund is one of the statutory deduction done by the employer at the time of salary
payment
Provident Fund is governed by the Employee’s Provident Fund Act 1952
Introduction
* Provident Fund has come into force to give better future to employees on their
retirement & his dependants in case of his death during employment
* The Employees Provident Funds Act 1952 is compulsory contributory fund for the
future of an employee after retirement or for his dependents in case of his early death
* Act is applicable to all states of India except Jammu and Kashmir
Application
* Every industry employing 10 or more persons (180 industries are specified in
Schedule 1 of the Act)
* Every industry employing 10 or more persons which the Central Govt. may notify
* Any other establishment notified by the Central Government even if employing less
than 10 persons
Eligibility & Entitlement
* Every employee employed directly / through a contractor who is in receipt of wages
are eligible to become a member of the fund (exception - Apprentice under the
Apprentices Act and casual laborers)
* Irrespective of permanent / probationary employees, all employees are eligible for
joining the PF scheme from the date of joining the service
* Minimum 10% of the basic pay for establishments employed less than 10 persons;
sick industries declared by necessary authority; Jute, Beedi , Brick, Coir & Guar
Gum Industries / Factories
* Other industries maximum 12% of the basic pay
* A member can contribute voluntarily more than statutorily prescribed rate (upto
100% of basic salary) which will be transferred to his PF A/c
Calculation
* 12% contribution by the employee is directly transferred to his Provident Fund A/c
* 12% is contributed by the employer out of which 8.33% is credited to Employee
Pension Fund and the balance 3.67% is transferred to PF A/c of the employee
* 1.10% Administration charges on total wages are payable by the employer
* 0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and payable by the
employer towards EDLI fund
* 0.01% EDLI Administration charges calculated on total EDLI slab wages are payable
by the employer
Benefits
* Employees can take advances / withdraw the PF in case of retirement, medical care,
housing, family obligation, education of children & financing of life Insurance Polices
* Upto 90% of the PF amount can be withdrawn at the age of 54 years or before one
year of actual retirement
* PF amount of the deceased member is payable to nominees / legal heirs
* Immediate income tax exemption under Sec 80C of IT Act
* Equal contribution by the employer
* Interest rate is usually higher than the prevailing market rate (present interest rate @
8.5%)
* PF A/c can be transferred if any member changes from one establishment to other
where the PF Scheme is applicable
* Totally tax free returns
Interest
* Interest is credited to the members PF A/c on monthly running balance
* Interest rate is fixed by the Central Government in consultation with the Central
Board of trustees of EEPF every year during March / April
* The present rate of interest is 8.5%
Nomination
* The member can nominate other person / persons to receive the Fund amount in the
event of his death
* The nomination details provided by the members are maintained at the Regional
Provident Fund Office for use in the event of death of the member
Annual Statement of Account
* After the close of each year of contribution, annual statement of account will be sent
to each member through establishment where the member was last employed
* The annual statement of fund account will show the opening balance at the beginning
of the year, contributions during the year, the amount of interest credited at the end of
the period and the closing balance at the end of the year
* If any error is noticed in the annual statement, the member shall bring the same to the
notice of the PF Office through employer within 6 months from the date of receipt of
the statement
Full Settlement
* PF A/c settled immediately under the circumstances;
* Retirement after 58 years
* Retirement on account of permanent incapacity
* Termination of service on retrenchment
* Voluntary Retirement Scheme (VRS)
* Permanent migration from India to settle abroad / taking employment
* For female members leaving service for getting married
* PF A/c settled after two months under the circumstances;
* Resignation from the services
Advances / Withdrawals
* Purchase of site for construction of house / construction of House / purchase of flat
* Additions / alterations / improvements to the house
* Repayment of loan
* Hospitalisation for more than a month / major surgical operation / suffering from
TB, Leprosy, Paralysis, Cancer, Heart ailment etc
* Marriage of self / son / daughter / sister / brother
* Education of son / daughter
* Abnormal conditions like natural calamities
* Physically handicapped member for purchasing an equipment to minimize the
hardship due to handicap
Employer Role & Responsibility
Monthly Returns
* Filing monthly PF returns with the EPFO within 15 days of the close of each month
* Provide list of new employees joined in the establishment during the preceding month
& are qualified to become member in fund (Form-5)
* Provide list of employees leaving service during the preceding month (Form-10)
* Employer should file 'Nil' returns if there is no new employee or no employee leaving
the service during the preceding month
* Provide the total no. of members last month, new members joined and existing
members resigned in the preceding month & total no. of present subscribers to be
fund (Form-12A)
Annual Returns
* Employer shall send to the Commissioner within one month of the close of the year, a
consolidated Annual Contribution Statement (Form-6A) and individual employee
sheet (Form-3A) showing the contributions made by the employees and employer
during the year
Penalty
* 12–37% interest is payable for the delayed period in remitting contributions/
administrative charges depending upon the delayed period
Exemption
* Employer can seek exemption from the Scheme if similar / better benefits are
provided other than the Scheme by forming a Voluntary PF Trust which will work
under the rules & regulations of EPFO
Employee Role & Responsibility
* Provide details of self & nominees (Form-2) for PF & Pension Scheme at the time of
joining the establishment
* In case of already having PF A/c, apply for transfer of previous A/c to the present A/c
* If willing to increase contribution, inform the same to the employer to deduct the
amount from the salary (Voluntary Provident Fund).
* Voluntary PF can be upto 100% of wages
* Understand that the employer is not liable to pay any contribution on voluntary PF
* Periodically verify the details maintained by the employer
* Don't allow employer to deduct his share of contribution/ administrative charges
payable by him from the wages
* Understand that Employees' Provident Fund Organization does not have any agent /
middlemen
The Employees Pension Scheme 1995
Introduction
* To give long term protection / financial security to employee upon retirement and his
family in case of his pre-mature death, family pension scheme has come into force by
diverting 8.33% contribution made by employer towards PF scheme
Application
* Scheme is compulsory for all the existing members who become members of the
Employees Provident Fund Scheme
Eligible
* Monthly pension to employees on retirement
* Widows on death of the member
* Children of the member below 25 years age
* Monthly pension to members upon permanent total disablement during service
The Employees Deposit-Linked Insurance Scheme 1976 (EDLI)
The Employees Deposit-Linked Insurance Scheme 1976 (EDLI)
Application
* EDLI scheme is compulsory for all the existing members who become members of the
PF Scheme
* Life insurance benefit (death coverage) of the employee is available under this scheme
while in service
Calculation
* EDLI is calculated on EDLI slab – Rs. 6500/-
* 0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and transferred to EDLI
fund
* 0.01% Administration charges calculated on total EDLI wages
* EDLI / administration charges are payable by the employer
The Employees Deposit-Linked Insurance Scheme 1976 (EDLI)
Eligible
* Person who is eligible to receive PF dues of deceased member who died while in
service is only eligible to receive EDLI fund
Exemption
* Employer can seek exemption from the Scheme if similar / better benefits are
provided other than the Scheme with the consent of majority of employees
(Ex: IJM opted LIC as it is giving death coverage of Rs. 1,60,000/- under EDLI
instead of Rs. 60,000/- given by EPFO)
The Payment of Gratuity Act, 1972
1. It applies to factories, mine, oilfield, plantation, port , railway, Shops and Establishments employing ten or more persons. 2. Applicable to employees who have rendered continuous service for five years. 3. Employees with less than five years will be entitled in case of death or disablement. 4. Employer has to pay within 30 days from the date it becomes payable to the employee. 5. Total amount of gratuity payable shall not exceed Rs.3,50,000/- to 10 Lakhs unless there is a contract to the contrary. 6. Compulsory insurance is necessary towards gratuity from Life Insurance Corporation, unless employer exempted from the Government. 7. Gratuity is calculated at the rate of 15 days wages for every completed year of service or a part thereof exceeding six months. Payment of Gratuity Act, 1972 An Act to provide for a scheme for the payment of gratuity to employees engaged in factories, mines,
oilfields, plantations, ports, railway companies, shops or other establishments and for matters
connected therewith or incidental thereto.
Section: 1
Short title, extent, application and commencement.
(1) This Act may be called the Payment of Gratuity Act, 1972.
(2) It extends to the whole of India:
Provided that in so far as it relates to plantations or ports, it shall not extend to the State of Jammu and
Kashmir.
(3) It shall apply to- -
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time being in force in relation to
shops and establishments in a State, in which ten or more persons are employed, or were employed, on
any day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or more employees are employed,
or were employed, or, any day of the preceding twelve months, as the Central Government may, by
notification, specify in this behalf.
(3A) A shop or establishment to which this Act has become applicable shall continue to be governed by
this Act notwithstanding that the number of persons employed therein at any time after it has become
so applicable falls below ten.]
(4) It shall come into force on such date as the Central Government may, by notification, appoint.
Section: 2
Definitions.
In this Act, unless the context otherwise requires, -
(a) "appropriate Government"' means, -
(i) in relation to an establishment-
(a) belonging to, or under the control of, the Central Government,
(b) having branches in more than one State,
(c) of a factory belonging to, or under the control of, the Central Government,
(d) of a major port, mine, oilfield or railway company, the Central Government,
(ii) in any other case, the State Government;
(b) "completed year of service" means continuous service for one year;
[2] [(c) "continuous service" means continuous service as defined in section 2A;]
(d) "controlling authority" means an authority appointed by the appropriate Government under
section 3 ;
(e) "employee" means any person (other than an apprentice) employed on wages, [3] [***] in any
establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled,
semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the terms of such
employment are express or implied, [4] [and whether or not such person is employed in a
managerial or administrative capacity, but does not include any such person who holds a post under
the Central Government or a State Government and is governed by any other Act or by any rules
providing for payment of gratuity].
(f) "employer" means, in relation to any establishment, factory, mine, oilfield, plantation, port,
railway company or shop
(h) "retirement" means termination of the service of an employee otherwise than on
superannuation;
(i)"superannuation", in relation to an employee, means the attainment by the employee of such age
as is fixed in the contract or conditions of service at the age on the attainment of which the
employee shall vacate the employment;]
(j) "wages" means all emoluments which are earned by an employee while on duty or on leave in
accordance with the terms and conditions of his employment and which arc paid or arc payable to
him in cash and includes dearness allowance but does not include any bonus, commission, house
rent allowance, overtime wages and any other allowance.
Section: 3
Controlling authority
The appropriate Government may, by notification, appoint any officer to be a controlling authority,
who shall be responsible for the administration of this Act and different controlling authorities may
be appointed for different areas.
Section: 4
Payment of gratuity.
(1) Gratuity shall be payable to an employee on the termination of his employment after he has
rendered continuous service for not less than five years, -
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where the
termination of the employment of any employee is due to death or disablement:
Provided that in the case of a piece-rated employee, daily wages shall be computed on the average
of the total wages received by him for a period of three months immediately preceding the
termination of his employment, and, for this purpose, the wages paid for any overtime work shall
not be taken into account.:
Provided further that in the case of death of the employee, gratuity payable to him shall be paid to
his nominee or, if no nomination has been made, to his heirs, and where any such nominees or heirs
is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest
the same for the benefit of such minor in such bank or other financial institution, as may be
prescribed, until such minor attains majority.]
Provided further that in the case of [an employee who is employed in a seasonal establishment and
who is riot so employed throughout the year], the employer shall pay the gratuity at the rate of
seven days wages for each season.
Section: 6
Nomination.
(1) Each employee, who has completed one year of service, shall make, within such time, in such
form and in such manner, as may be prescribed, nomination for the Purpose of' the second
provision to sub-section (1) of section 4.
(2) An employee may, in his nomination, distribute the amount of gratuity payable to him under
this Act amongst more than one nominee.
(3) If an employee has a family at the time of' making a nomination, the nomination shall be
made in favour of one or more members of his family, and any nomination made by such
employee in favour of a person who is not a member of his family, shall be void.
(7) Every nomination, fresh nomination or alteration of nomination, as the case may be, shall be
sent by the employee to his employer, who shall keep the same in his safe custody.
How much?
Section: 7
AMOUNT OF GRATUITY
For every completed year of service or part thereof in excess of 6 months, the employer has to pay
gratuity to an employee@ 15 days’ wages based on the rate of wages drawn by the concerned
employee. In the case of piece-rated employee, daily wages are computed on the average of the
total wages received by him for a period of 3 months immediately preceding the termination of his
employment.
The amount of gratuity payable to an employee is not to exceed Rs 3,50,000.
Inspectors
Section: 7A
Inspectors
(1) The appropriate Government may, by notification, appoint as many Inspectors, as it deems fit,
for the purposes of this Act.
(2) The appropriate Government may, by general or special order, define the area to which the
authority of an Inspector so appointed shall extend and where two or more Inspectors are
appointed for the same area, also provide, by such order, for the distribution or allocation of work
to be performed by them under this Act.
Powers
Section: 7B
Powers of Inspectors.
(1) Has to exercise all or any of the following powers, namely:-
(a) require an employer to furnish such information as he may consider necessary
Enter and inspect at reasonable hours for the purpose of examining any register, record or notice or
other document required to be kept or exhibited under this Act.
(c) examine with respect to any matter relevant to any of the purposes aforesaid, the employer or
any person whom he finds in such premises or place and who, he has reasonable cause to believe, is
an employee employed therein;
(d) make copies of, or take extracts from, any register, record, notice or other document, as he may
consider relevant, and where he has reason to believe that any offence under this Act has been
committed by an employer, search and seize with such assistance as he may think fit, such register,
record, notice or other document as he may consider relevant in respect of that offence;
Recovery
Section: 8
Recovery of gratuity.
If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed
time, to the person entitled thereto, the controlling authority shall, on an application made to it in
this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall
recover the same, together with compound interest thereon at such rate as the Central Government
may, by notification, specify,] from the date of expiry of the prescribed time, as arrears of land
revenue and pay the same to the person entitled thereto :
Provided that the controlling authority shall, before issuing a certificate under this section, give the
employer a reasonable opportunity of showing cause against the issue of such certificate:
Provided further that the amount of interest payable under this section shall, in no case exceed the
amount of gratuity payable under this Act
Offences
Section: 9
Penalties.
(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act or of
enabling any other person to avoid such payment, knowingly makes or causes to be made any false
statement or false representation shall be punishable with imprisonment for a term which may
extend to six months, or with fine which may extend to ten thousand rupees or with both.
(2) An employer who contravenes, or makes default in complying with, any of the provisions of this
Act or any rule or order made there under shall be punishable with imprisonment for a term which
shall not be less than three months but which may extend to one year, or with fine which shall not
be less than ten thousand rupees but which may extend to twenty thousand rupees, or with both: