-MANAGEMENT DEVELOPMENT INSTITUTE

(SUKHRALI, GURGAON)

PGHR - 2020-2022 TERM IV

MID TERM

EMPLOYMENT LAWS II- Labour Laws Hari Parmeshwar

Max Marks : 30 Weight : 30 %

Time : 150 minutes

The paper is closed book / no notes. All 6 questions are to be answered. The last page has
some extracts of the Indian Contract Act to enable answering Q 1.

1) Shweta a partner at Law Firm , told Shamim a final year law student that he would
get an annual salary of Rs 6 lakhs if he joined their firm. Shamim expressed interest
but noted that another firm had already promised him Rs 6.5 lakhs per annum.
The next day , Shamim received the following letter from Shweta :
“ Law firm hereby offers to hire you at Rs 7 lakh per annum plus bonuses contingent
on your graduating from law school”
Shamim decided to seize this opportunity. He immediately called the other firm to
decline its Rs 6.5 lakhs offer. Later that day Shweta reread the letter she had sent
Shamim and noticed that what she had dictated as Rs 6 lakhs had been typed as Rs 7
lakhs. She tried to call Shamim at home but he was not available. She called the law
school and left this message with the receptionist “ Salary has a typographical error.
Offer revoked.” Shweta. The receptionist placed the message in Shamim’s mailbox.
Shamim faxed an acceptance letter to Shweta the next day stating as follows : “ Offer
accepted .Will be joining as soon as exams are over.” Shamim.

Thereafter Shamim read the mailbox and called up Shweta who explained the error.
Shamim insisted that as head accepted the offer Law Firm was bound by it. Shweta
denies any liability and in view of Shamim’s insolence tells him that they do not wish
to hire him at all. Shamim decides to sue.

Decide with reasons and sections based on relevant sections of Indian Contract Act
placed in the box at the end of the question paper. (Evaluation includes proper
drafting of answer.) (3 marks)

2)a) Advise Sumi. (2 marks)

Dear Sumi,
 Congratulations! You are a lucky winner of a lottery conducted by us for all our
valued customers. You have won an APPLE phone priced at Rs. 45000 for just Rs.
15000! …

Sumi was not interested and she threw away the letter. In the next month’s
statement, she was charged Rs. 15000 for the APPLE phone. The credit card
company pointed out the following in the letter they had sent.

“If we do not hear from you within a month, we would understand that you have
accepted the offer. We would go ahead to charge Rs. 15000 in the next month’s
statement and deliver you the APPLE phone. After all, who would miss on such a
fabulous offer!”

2(b) Advise Saurav. (2 marks)

Saurav got a new job in another city. The employer was insistent that he joined the
next week. Thus Saurav made distress sale of his belongings. He sold off his
treadmill, which he had bought the previous year for Rs.50,000 for just Rs.5,000 to
his neighbour. The same evening, Saurav learnt from his new employer that he need
not join the next week. He could take his time and join a month later. Saurav is
claiming that no contract for selling the treadmill was made as the price was highly
inadequate.

3) How would you ensure that (5 marks)

a) secrets and confidential information are not leaked to competitors by your

employees ?

b) that employees do not join competitors after leaving the company?

c) that employees do not deal with the clients of the company ?

What are the issues that you will consider while deciding on the above ?

4) A contract lays down the terms of engagement between an employee and the employer.
This includes the right of the employee to resign and the right of the employer to
terminate by giving appropriate notice.

However in the case of workmen this becomes very difficult because the laws of the
land are favouring the workers ? In other words the freedom to contract is superseded
by the provisions of law.

What are these provisions in law ? (5 marks)

5) "The Code on Wages 2019 is "similar" to the existing laws in many ways while
simultaneously being "different " . What are the points of difference and
convergence ? ( 8 marks)

6) You come across this incorrect version of the Fourth Schedule of the Payment of Bonus
Act which explains the set on and set off concepts. Write down the correct Fourth
 Schedule in the answer sheet format which follows the version based on concepts
understood in the Payment of Bonus Act 1965. You must explain the change in the
column (6) provided for. (5 marks)

FOURTH SCHEDULE

In the Schedule, the total amount of bonus equal to 8.33 per cent of the annual salary or
wage payable to all the employees is assumed to be Rs. 1,04,167. Accordingly, the maximum
bonus to which all the employees are entitled to the paid (twenty per cent of the annual salary or
wage of all the employees) would be Rs. 2,50,000.

Year Amount equal to sixty per Amount payable as Set on or set off Total set on or
cent, or sixty seven per bonus of the year set off Carried
cent, as the case may be, carried forward forward
or available surplus
allocable as bonus
(1) (2) (3) (4) (5)
Rs. Rs. Rs. Rs. of (year )
1. 1,04,167 1.04,167 Set on 1,04,167 (1)
1,04,167
2. 6.35,000 3,54,167 Set on 3,85,000 Set on
3,85,000 (2)
3. 2,20,000 2,50,000 Nil Set on
2,20,000 (2)
4. 3,75,000 3,75,000 Set on 1,25,000 Set on
2,20,000 (2)
1,25,000 (4)
5. 1,40,000 2,50,000 Nil Set on
1,10,000 (2)
1,25,000 (4)
6. 3,10,000 2,50,000 Set on 60,000 Set on
1,10,00 (2)
1,25,000 (4)
60,000 (6)
7. 1,00,000 2,50,000 Nil Set on
35,000 (6)
8. Nil (due to loss) 2,50,000 Set off 69,167 Set off
69,167 (8)
9. 10,000 69,167 Set off 94,167 Set off
69,167 (8)
94,167 (9)
10. 2,15,000 30,000 Nil Set off
52,501 (9)
ANSWER FORMAT

Year Amount equal to Amount Set on or set Total set on Explanation for change (if any).
sixty per cent, or payable as off of the or set off
sixty seven per bonus year carried Carried
cent, as the case forward forward
may be, or
available surplus
allocable as
bonus

(1) (2) (3) (4) (5) (6)

RELEVANT SECTIONS FROM INDIAN CONTRACT ACT TO ANSWER Q 1

3. Communication, acceptance and revocation of proposals

The communication of proposals, the acceptance of proposals, and the revocation of

proposals and acceptances, respectively, are deemed to be made by any act or omission of
the party proposing, accepting or revoking, by which he intends to communicate such
proposal, acceptance or revocation, or which has the effect of communicating it.
4. Communication when complete

The communication of a proposal is complete when it becomes to the knowledge of the

person to whom it is made.
The communication of an acceptance is complete-
as against the proposer, when it is put in a course of transmission to him so at to be out of
the power of the acceptor;
as against the acceptor, when it comes to the knowledge of the proposer.
The communication of a revocation is complete-
as against the person who makes it, when it is put into a course of transmission to the person
to whom it is made, so as to be out of the power of the person who makes it;
as against the person to whom it is made, when it comes to his knowledge.

5. Revocation of proposals and acceptances

A proposal may be revoked at any time before the communication of its acceptance is
complete as against the proposer, but not afterwards.
An acceptance may be revoked at any time before the communication of the acceptance is
complete as against the acceptor, but not afterwards.

6. Revocation how made

A proposal is revoked-
(1) by the communication of notice of revocation by the proposer to the other party;
(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so
prescribed, by the lapse of a reasonable time, without communication of the acceptance;
(3) by the failure of the acceptor to fulfill a condition precedent to acceptance; or
(4) by the death or insanity of the proposer, if the fact of the death or insanity comes to the
knowledge of the acceptor before acceptance.