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PRACTICAL HANDBOOK

FOR

MAJOR COMPLIANCES

UNDER

LABOUR LAWS
BY

SANTOSH BAGWE

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COMPLIANCES UNDER LABOUR LAWS

INDEX

Sr. No. Particulars

1 The Apprentices Act,1961

2 The Contract Labour (Regulation & Abolition) Act, 1970

3 The Employee’s Provident Fund & Miscellaneous Provisions Act, 1952

4 The Employees’ State Insurance Act, 1948

5 The Employment Exchanges (Compulsory notification of vacancies)


Act, 1959

6 The Equal Remuneration Act, 1976

7 The Factories Act, 1948

8 The Indian Fatal Accidents Act, 1985

9 The Industrial Dispute Act, 1947

10 The Industrial Employment (Standing Orders) Act, 1946

11 The Maternity Benefit Act, 1961

12 The Minimum Wages Act, 1948

13 The Payment of Bonus Act, 1965

14 The Payment of Gratuity Act, 1972

15 The Payment of Wages Act, 1936

16 The Workmen’s Compensation Act, 1923

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APPROPRIATION OF LABOUR LAWS

Broadly Labour laws can be appropriated as under:

1) Labour laws related to welfare measures

2) Labour laws related to payroll

3) Labour laws related to administration

4) Labour laws related to social measures

5) Labour laws related to fire-fighting role of Personnel and HR Manager

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Labour Laws relating to welfare measures

Sr. No. Particulars

1 The Employee’s Provident Fund & Miscellaneous Provisions Act, 1952

2 The Employees’ State Insurance Act, 1948

3 The Maternity Benefit Act, 1961

4 The Payment of Gratuity Act, 1972

5 The Workmen’s Compensation Act, 1923

Labour Laws relating to payroll

Sr. No. Particulars

1 The Equal Remuneration Act, 1976

2 The Minimum Wages Act, 1948

3 The Payment of Bonus Act, 1965

4 The Payment of Wages Act, 1936

Labour Laws relating to administration

Sr. No. Particulars

1 The Factories Act, 1948

2 The Indian Fatal Accidents Act, 1985

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Labour Laws relating to Social Measures

Sr. No. Particulars

1 The Apprentices Act,1961

2 The Contract Labour (Regulation & Abolition) Act, 1970

3 The Employment Exchanges (Compulsory Notification of Vacancies)


Act, 1959

Labour Laws relating to fire fighting role of Personnel and HR Manager

Sr. No. Particulars

1 The Industrial Dispute Act,

2 The Industrial Employment (Standing Orders) Act, 1946

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The Apprentices Act, 1961

Applicability: It is a statutory obligation of every industry/establishment having


training facilities according to syllabus in a designated trade under the
Apprentices Act, 1961 to train a number of apprentices according to ratio of
the trade in their establishment.

Major Compliance:
1) General Obligations:
a) To provide the apprentice with training in his trade in accordance
with Act and rules.
b) To ensure that a qualified person is placed in charge of the training.
c) To carry out obligation under the contract.
2) Registration of contract of apprenticeship:
To send the apprenticeship advisor the contract of apprenticeship within 3
months of date on which it was signed.
3) Payment to apprentice:
To pay to every apprentice during the period of apprenticeship such stipend
at a rate prescribed under the Act.
4) Working hours for apprentice:
a) Total number of hour: 42 to 48 hours per week.
b) Trade apprentice undergoing basic training: 42 hours.
c) Trade apprentice undergoing 2nd year: 42 to 45 hours.
d) Trade apprentice undergoing 3rd and subsequent years: As per the
workers in the trade in the same establishment.
e) No trade apprentice shall be engaged between the hours of 10 p.m. to
5 p.m. without the permission of Apprenticeship Advisor.
f) Graduate or technician apprentice: Normal hours of work of the dept.
5) Health, welfare and safety of apprentice: as per Factories Act.
6) Compensation for injury: as per Workmen Compensation Act.
7) Compensation for termination of apprenticeship: 6 months’ last drawn
stipend by both parties

Note: Apprentices advisors (Inspector) – Labour Minister – Sion Chunabbhati opp.


Priyadarshani Bldg in Mumbai.

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The Contract Labour (Regulation & Abolition) Act, 1970

Applicability:
Applicable to: 1) every establishment in which 20 or more workmen are employed or
were employed on any day of the preceding twelve months as
contract labour.
2) every contractor who employs or who employed on any day of the
preceding twelve months twenty or more workman.

Not applicable to: Establishment which carry on work of a casual nature


occasionally.

Effect of non-registration: The principal employer cannot employ contract labour


in establishment.

Major Compliance:
1) It is obligatory on every contractor not to undertake or execute any work
through contract labour without obtaining a valid licence from the licencing
officer.
2) Obligation to provide certain amenities:
A) Provision of canteens
B) Rest Rooms
C) Drinking water and other facilities like latrines and urinals
D) First-aid facilities
E) Creaches
3) It is obligatory on principal employer to see that wages of the workers are
paid every month on a fixed date and time and on termination of their
employment before the expiry of 2nd working day after termination.

Maintenance of Records:
Form No. XXIV Half yearly Return in duplicate within 30 days by contractor
Register Particulars
Form No. XII Register of Contractor - Maintained by Principal employer for
each establishment
Form No. XIII Maintained by Contractor for each establishment
Form No. XIV Contractor to issue an employment card to each worker within 3
days of employment
Form No. XV A service certificate in case of termination of wokman
XVI-A muster roll, XVII-Register of wages, XX-deduction for damange, XXI –
Register of fines, XXII- Register of advances, XXIII-Register of overtime

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Notes: Company has to register every year
1) In a year labour should not work above 240 workig days
2) Every 80 days employer should break labour service – need to update every
80 days with the contractor
3) Contractor should pay minimum wages to the labour

Documents require:

1) License with the contractor & registration of the company


2) Contractor – PF no., ESIC no.,

Offices of Labour Laws in Mumbai:

1) Mumbai – Labour office is at Tardeo – AC Market


2) Thane – Makhmali Talav
3) New Mumbai – Khanda Colony - Panvel

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The Employee’s Provident Fund & Miscellaneous Provisions Act,1952

Applicability:
1) Applicable to every establishment in which 20 or more persons are
employed.
2) Every employee drawing wages and DA upto Rs.6500/- will be eligible to
become a member.

Main Compliance:
1) Declaration by person taking up employment in writing that whether or
not he is a member of the fund and his account number, particulars of
the last employer.
2) In case of contractor, it is the responsibility of the principal employer to
ensure that provisions of this act are complied by Contractors.

Payment to be made to PF authorities:

Challan No. Payment Particulars Due Date

A/c No.1 Employee and Employer Pf Due 15th of the Following


month
A/c No.2 Admn and Inspection Charge 15th of the Following
1.1 % of Salary month
A/c No.10 Pension Fund 15th of the Following
month
A/c No.21 Insurance Fund 15th of the Following
0.5% of Basic + DA month
A/c No.21 Insurance Fund Inspection and 15th of the Following
Admn Charge month
0.01%

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Submission of Returns:

Form No. Particulars Due Date

Form 9 Details of employees on the 1st Within 1 month of


day of coverage coverage
Form 2 Nomination Form Immediately on joining
the fund
Form 5 Addition of members 15th of the Following
month
Form 10 Deletion of members 15th of the Following
month
Form 12 Detail of payments made 21st of the Following
month
Form 3A A memberwise ledger cards 31st May Each Year
posted monthly
Form 6A Abstract of Form 3A for the 31st May Each Year
year
Form 5A Return of ownership Once in the beginning
Form 19 Withdrawal of PF in case of
retirement/resignation
Form 13 Transfer of PF
Form 31 Loan (minimum service 5yrs)

Settlement:

1) Settlement before completion of 10yrs


Form 19 (PF withdrawal)
Form 10c (Pension withdrawal)

2) Settlement after completion of 10yrs


Form 19 & 10D

3) Death of the Employee


Form 20 & 10D

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Working Notes:

PF contribution by Employer & Employee is 12% on the Basic & DA


6,500/- is a standard amount to calculate pension

Salary Employee - 12% Employer - 12%


(Basic + DA) PF A/c Provident Fund Pension
Less than 6,500/- 12% 3.67% 8.33%
6,500/- 12% 3.67% 8.33%
More than 6,500/- 12% (Salary x 12%) 8.33 % of 6,500
– (8.33% of
6,500)

Examples: Amt in Rupees


Salary Employee - 12% Employer - 12%
(Basic + DA) PF A/c Provident Fund Pension
1. 2,500 300 92 208
2. 3,500 420 128 292
3. 7,500 900 359 541
4. 20,000 2,400 1,859 541

1. Employee Contribution
PF = 2,500 x 12% = 300
Employer Contribution
PF = 2,500 x 3.67% = 92
Pension = 2,500 x 8.33% = 208

3. Employee Contribution
PF = 7,500 x 12% = 900
Employer Contribution
PF = (7,500 x 12%) = 900 – 541 = 359
Pension = 6,500 x 8.33% = 541

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The Employees’ State Insurance Act, 1948

Applicability:
1) Applicable to every establishment in which 20 or more persons are
employed.
2) Every employee drawing wages and DA upto Rs. 10,500/- will be eligible
to become a member.
3) Monthly Challan – 21st of the next month is the last date of submission

Contribution 6.5% of Basic + DA


1.75% deduct from Employee Salary on Basic + DA
4.75% employer contribution

4) Half yearly return – 6A


5) Company should inform within 48 hours to the Factory Inspector and
ESIC inspector if any fatal accident (which can be result into death)

If the person fail to inform it is being created as a death or murder against


a Company

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The Employment Exchanges (Compulsory Notification of Vacancies)
Act, 1959

Notification of vacancies to employment exchanges: Employer in every


establishment in any sector before filing up any vacancy shall notify that
vacancy to employment exchange. But Acts says about only notification
and doesn’t impose obligation on employer to recruit any person through
the employment exchange.

Act not applicable to:


a) Agriculture Industry
b) Domestic Service
c) Duration is less than 3 months
d) Unskilled office work
e) Staff of Parliament, employment through UPSC or like agency
f) Employment carries a remuneration less than Rs.60/- per month.

Time limit for the notification of vacancies:


a) Local employment exchange: 15 days before the date on which applicants
will be interviewed.
b) Central employment exchange: 4 weeks before the date on which
applicants will be interviewed.

Submission of returns:
a) Quarterly Return: Form No. ER-1 within 30days of due dates.
b) Biennial Return: Form No.ERIL within 30 days of due date as notified in
the official gazette

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The Equal Remuneration Act, 1976

Main Compliance:
1) No Employer shall pay to any worker at rates less favourable than
those at which remuneration is paid by him to the workers of the
opposite sex for performing the same work or work of a similar
nature.
2) No employer for complying above provision reduce the rate of
remuneration.
3) No discrimination while recruitment against women except where
the employment of women is prohibited or restricted under any
law.

Maintenance of Register: in form no. D relation to the workers employed.

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The Indian Fatal Accidents Act, 1985

Object: To Provide compensation to families for loss occasioned by the


death of a person caused by actionable wrong.

Main Provision:
1) In case of a death of a person by wrongful act, neglect or default,
the party responsible shall be liable to an action or suit for
damages.
2) Every such action or suit shall be for the benefit of the wife,
husband, parent and child of the person whose death shall have
been so caused.
3) Not more than one action or suit shall be brought in respect of
same subject - matter of complaint.

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The Industrial Employment (Standing Orders ) Act, 1946

Applicability: The Act applied to every industrial establishment which


means:
1) Tramway or motor transport
2) Air transport other than for defense purpose
3) Dock-wharf or jetty
4) Inland vessel
5) Mine, quarry or oil fields
6) Plantation :
a) A factory under Factories Act
b) A Railway under Railways Act
c) The establishment who for the purpose of fulfilling a contract
with the owner of any industrial establishment employs workmen.

Certification of standing order:


1) Within 6 months from the date of applicability, the employer shall
submit to the Certifying Officer 5 copies of the draft standing orders
proposed by him for adoption in his industrial establishment.
2) Such standing order should be in conformity with Model Standing Order.
3) Encl: A statement giving prescribed particulars of the workmen employed
and the name of the trade union if any.

Posing of Standing order: The certified standing order shall be prominently


posted in English and in local language on special boards or near the entrance
and in all departments where the workmen are employed.

Payment of subsistence allowance:


1) If any workmen is suspended pending inquiry, the employer shall pay
subsistence allowance to the workers at following rates:
a) 1st 90 days: 50%
b) 91 to 180 days: 75%
c) After 180 days: 100%

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The Maternity Benefit Act, 1961

Applicability:
1) To every establishment being a factory, mine or plantation including Govt.
establishment and wherein person are employed for the exhibition of
equestrian acrobatic and other performances.
2) To any establishment in which 10 or more persons are employed or were
employed on any day of the preceding 12 months

Prohibition of employment by workmen during certain period:


During 6 weeks immediately following the day of delivery or miscarriage

Prohibition of work by workmen during certain period:


During 1 month immediately preceding the period of six week before the
date of expected delivery, if the work
which is of an arduous nature or
which involved long hours of standing or
which in any way is likely to interfere with her pregnancy or normal
development of the foetus or is likely to cause her miscarriage or to
adversely affect her health.

Payment of Maternity Benefit:


1) Payment of maternity benefits at the rate of the average daily wages for
the period of actual absence.
2) Average daily wages: Wages paid during the period of 3 calendar months
immediately preceding the date of her expected delivery..
3) The workmen must have actually worked for a period of not less than 80
days in the twelve months immediately preceding the date of her
expected delivery.
4) Maximum period entitled: Maximum 12 weeks of which not more than 6
weeks shall precede the date of her expected delivery.

Leave for
1) Miscarriage: 6 weeks immediately following the day of her miscarriage
2) Medical termination of pregnancy: 6 weeks immediately following the day
of her pregnancy.
3) Tubectomy operation: 2 weeks immediately following the day of her
pregnancy.
Nursing Breaks: Every women delivered of a child who returns to duty after
such delivery shall be allowed in the course of her daily work two breaks for
nursing he child until the child attains the age of 15 months

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The Minimum Wages Act, 1948

Main Compliance:

1) To make payment of overtime in excess of number of hours constituting


normal working day at the rate fixed under the Act or any other law
whichever is higher.
2) Minimum wages payable shall be paid in cash.
3) If the custom is to pay wages in kind, then wages can be paid in kind.
4) Govt. can authorise supply of essentital commodities at concessional rate.
5) In respect of any scheduled employment, a notification u/s 5 is in force,
then employer shall pay wages at a rate not less than the minimum rate
fixed under notification.
6) Any contract allowing to pay wages less than minimum is null and void.
7) Sri Dharam Motor Services v. Industrial Tribunal, Madrass : A worker
can be asked to work for more than 6 days a week provided he is paid
extra on the overtime rate.

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The Payment of Bonus Act, 1965

Applicability: to every factor and other establishment in which 20 or more


persons are employed on any day during an accounting year.

Main Compliance:

1) Minimum Bonus: 8.33% if salary or wages earned during accounting year


or Rs.100 whichever is higher, whether or not the employer has any
allocable surplus in the accounting year.
2) Maximum Bonus: 20% of salary or wages only if allocable surplus exceeds
the amount of minimum wages bonus payable under the act
3) Time Limit: Within 8 months from the close of accounting year.
4) Salary or wage calculation:
Salary or wage exceeding Rs.2500 : Rs.2500
Salary or wages less than Rs.2500 : Actual
Salary or wages: Basic + DA

Maintenance of Registers and Returns:

Sr.No. Particulars Register


1 Computation of allocable surplus Form A
2 Set on and Set off the allocation surplus Form B
3 Detail of amount of bonus due to each of the Form c
employee, deduction u/s 17 and 18 and actual
Amount disbursed
4 Return to be submitted within 30 days after Form D
the expiry of the time limit

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The Payment of Gratuity Act, 1972

Applicability:
1) To every factory and other establishment in which 10 or more persons
are employed.
2) Once this is applicable, later on even if employees are reduced to less
than, this Act remains applicable.

Main Compliance:

1) Duty of employer to give notice of application of the Act to controlling


authority.
2) Payment to Gratuity:
a) Eligibility: Continuous 5 years of service
b) In case of death of employee, payment has to be made to minor.
c) Amount of Gratuity:
Normal: Last drawn salary/26*15*no of year of service
Seasonal: Last drawn salary/26*7*no of year of service
Salary: Basic+ DA
d) Maximum amount: Rs.350000
e) Time limit: within 30 days of form due date
3) Duty of employer to determine the amount of gratuity and give notive in
writing to the person to whom the gratuity is payable and to the
controlling authority.
4) Duty of the employer to give notice of opening, change or closure of
establishment
5) Duty of the employer to obtain nominations from the employees.

Ex.
If the salary (Bonus + DA) = 5,000

5000/26 (working days) x 15 (days service) x nos of year service completed

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The Payment of Wages Act, 1936

Person Responsible under the Act:

Nature of Employer Person Responsible

Factory Manager under Factories Act, 1948


Industrial Establishment A person responsible to the employer
for supervision and control of the
Industrial Establishment
Railway Railway Administration

Major Compliance:

1) Authorised persons have to fix the wage period which should not be more
than 1 month.
2) Time Limit for payment of wages
Particulars Time limit

Less than 1000 persons Before expiry of 7th working day of


wage period
More than 1000 persons Before expiry of 10th working day of
wage period
Termination of employee Before expiry of 2nd working day of
termination

3) Wages must be paid in current coin and currency note or cheque or


crediting in Bank account (provided for cheque and credit subject to
written authorization)
4) Obligation for imposing fine:
a) Previous approval of authority of State Govt.
b) Notice to be exhibited in premises
c) Opportunity of showing cause against fine to employee
d) Total fine should not exceed 3 % of wages payable
e) Age of employee must be more than 15 years
f) Fine can’t be recovered in installment and after the expiry of 60
days on which it was imposed.
g) Fine recovered must be applied for purposes beneficial to the
persons employed in the factory.

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The Workmen’s Compensation Act, 1923

Employer’s liability for compensation:


1) Employer is liable to pay compensation as per Chapter II in case of
personal injury by accident arising out of and in the course of
employment.
2) In following cases, employer is not liable:
a) if injury doesn’t result in total or partial disablement for a period
not exceeding 3 days
b) if injury has not resulted in death and is caused by accident
because of following :
i) influence of drink or drugs, or
ii) willful disobedience of an order expressly given or a ruled
framed for the purpose of securing safety of workmen, or
iii) willful removal of any safety guard or other device provided
for the purpose of securing the safety of workman.
3) Occupational disease shall be deemed to an injury if it is proved that
a) continuous service
Nature of employment Continous Service

Part A of Schedule III NA


Part B of Schedule III 6 months
Part C of Schedule III CG will specify
b) the disease has arisen out of and in the course of the employment.
4) More than one employer in case of part C, then payment of compensation
will be in proportion as commissioner may decide.

Amount of Compensation:

Particulars of Injury Amount of Compensation


Death from Injury 50 % of monthly wages* relevant factor
or Rs.50000/- whichever is more
Permanent total disablement 60 % of monthly wages* relevant factor
or Rs.65000/- whichever is more
Permanent partial disablement
a) Injury in Part II of Schedule I % specified in schedule
b) No specified in injury in Schedule I % decided by qualified medical
practioner
Temporary disablement whether partial Half monthly payment equivalent to 25%
or total of monthly wages paid as per provision of
Act

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Method of calculating wages:

Continuous period of employment Wages


preceding the accident
Not less than 12 months 1/12th of the payment in last 12 months
Less than 1 month a) Average monthly amount during 12
month earned by a workman on same
work by same employer or
b) if there was no workman, then by a
workman on same work in same locality
In other case where it is not possible to Total wages earned immediately
calculate monthly wages preceding the accident/no of day * 30

Reports and Returns:


1) Commissioner may ask statement in the prescribed form within 30 days
of notice about the opinion of employer whether he is or not liable to
deposit compensation.
2) Employer is liable to report about fatal accidents and serious bodily
injuries within 7 days of death or serious bodily injury.
3) SG may direct any employer to send a return specifying the number of
injuries in respect of which compensation has been paid by employer
during the previous year.

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