Social Security Legislation

Social Security Legislation
UNIT - 1
EMPLOYEE’S COMPENSATION ACT, 2010
SYNOPSIS NOTES
1. Introduction
2. Aims & Objectives of the Act
3. Liability of Employer
4. Determination of Amount of Compensation,
5. Compensation when due-Penalty for default, Contracting Out ,
6. Commissioner for Employees’ Compensation- his duties, powers
and procedure
7. Conclusion
AMENDMENTS IN THE WORKMEN’S COMPENSATION ACT

Workmen's compensation Act has been amended on 9th January 2010.
Given below are the synopses of the changes.
(1) THE WORKMEN'S COMPENSATION (AMENDMENT) ACT, 2009

is now renamed as THE EMPLOYEE'S COMPENSATION (AMEND-
MENT) ACT, 2010 and wherever "workman" or "workmen" is men-
tioned in the entire Act the same needs to be read as "Employee"
(2) The compensation payable on death from the injury, is (i) mini-
mum of Rs.80000 is increased to Rs.120000 or (ii) 50% of the monthly
wages of deceased multiplied by the relevant factor.
(3) The compensation payable on Permanent Total Disablement from the
injury, is
(i) minimum of Rs.90000 is increased to Rs.140000 or
(ii) 60% of the monthly wages of deceased multiplied by the relevant
factor.
(4) Definition of wages remains unaltered.
(5) For the purpose of claims settlement actual monthly wages have to be
calculated without ceiling of Rs.4000/- which will lead to multifold in-
crease in claim outgo. The maximum amount of claim compensation
payable was Rs. 4.56 lakh in the case of death and Rs. 5.48 lakh in the
case of permanent total disablement. *(Refer to table and calculation
below).
Employee’s Compensation Act, 2010 1
“Only for Private Circulation”

With the ceiling of Rs.4000/- being removed, the claims outgo will in-
crease.
(6) Definition of workmen replaced by "Definition of Employee"- also
NOTES now includes CLERICAL employees.
* Maximum claim outgo in case of death when ceiling of Rs.4000 was there
is calculated as below:
50% of 4000* 228.54 (if age of employee was 16 years from table below)
= Rs. 4.56 lakhs.
Revised monthly wage ceiling limit of 50% of Rs. 4000 increased to Rs.
8000
Employees Compensation Act for maximum compensation calculation:

Now, a new monthly wage-ceiling limit of Rs. 8000 is introduced for
the purpose of calculation of 50% of it during computation of Maximum
compensation under the Act. Hence, the maximum compensation can go
UPTO 50% of 8000 which comes to Rs. 4000/- that shall be multiplied by
Age factor. Thus, effectively it was erstwhile 50% of Rs.4000 and now it is
50% of Rs.8000/-.
This amendment is notified vide Central Government Notification No. S.O.

1258(E) vide Ministry of Labour & Employment dated 31st May 2010.
Object And Scope:

The Workmen's Compensation Act (Act VIII of 1923) came into force
from 1st July, 1924. It applies to the whole of India, including the State of
Jammu and Kashmir. The Act provides for the payment of compensation
by certain classes of employers to their workmen, for injury by accidents.
The Workmen's Compensation Act does not apply to factories covered by
the Employees State Insurance Act.

Definitions-[Section 2]: Dependant:

Section 2(d) gives a list of persons who come within the category of
"dependant" of a workman. In ordinary language the dependant of a person
is one who lives on his earnings. NOTES
Under Section 2 (d) there are three categories of dependants.
1. The following relations are dependants, whether actually so or not-
widow, minor legitimate son, unmarried legitimate daughter, a wid-
owed mother.-Sub-sec. (i).
2. The following relations come within the category if any were wholly
dependent on the earnings of the deceased workman at the time of his
death-a son or daughter who has attained the age of 18 years and who
is infirm--sub-sec. (ii).
3. The following relations are dependants if they were wholly or
partially so at the time of the workman's death-
a. widower;
b. A parent other than widowed mother;
c. minor illegitimate son; an unmarried illegitimate daughter or a
daughter legitimate or illegitimate if married and a minor or if wid-
owed and a minor,
d. a minor brother or an unmarried sister or widowed sister if minor;
e. a widowed daughter-in-law,
f. a minor child from a predeceased son;
g. a minor child from a predeceased daughter where no parent or
child is alive:
h. or a paternal grandparent if no parent of the workman is alive.-
Sub-sec. (iii).
Calcutta High Court held that the term 'step mother' does not include
this phrase. Manada Devi v Bengal Bone Mill. But Nagpur High Court held
that the term includes an adoptive widowed mother. Additional Dy. Com-
missioner, Simbhum v Smt. Lakhmibai Naidu.
Minor:
According to Section 2(ff) Minor means a person who has not attained
the age of 18 years.

Employer:
Section 2(e) provides that the term Employer "includes" the following:
NOTES i. anybody of persons, whether incorporated or not ii. any managing
agent of an employer
iii. the legal representatives of a deceased employer, and
iv. any person to whom the services of a workman are temporarily lent or
let out, while the workman is working for him. The definition is not
exhaustive.
Defenses of the Employer:

Prior to the passing of this Act, the employer was liable to pay
compensation only if he was guilty of negligence. Even in case of proved
negligence, the employer could get rid of his liability by using any of the
following defenses:
1. The Doctrine of Assumed Risks:

If the employee knew the nature of tte risks he was undertaking when
working in a factory, the employer had no liability for injuries. The court
assumed in such case that the workman had voluntarily accepted the risks
incidental to his work. The doctrine followed from the rule V olenti Non
Fit Injuria, which means that one, who has volunteered to take a risk of in-
jury, is not entitled to damages if injury actually occurs.
2. The Doctrine of Common Employment:

Under this rule, when several Persons work together for a common
purpose and one of them is injured by some act or omission of another,
the employer is not liable to pay compensation for the injury.
3. The Doctrine of Contributory Negligence:

Under this rule' a person is not entitled to damages for injury if he was
himself guilty of negligence and such negligence contributed to the injury.
The three aforesaid defenses and the rule "no negligence no liability
made It almost impossible for an employee to obtain relief in cases of ac-
cident. The Workmen's Compensation Act 'of 1923 radically changed the
law.
According to this Act, the employer is liable to pay compensation ir-

respective of negligence. The Act looks upon compensation as relief to the

workman and not as damages payable by the employer for a wrongful act
or tort. Hence contributory negligence by the employee does not disentitle
him from relief. NOTES
For the same reason, it is not possible for the employer to plead to the
defense of common employment or assumed risks for the purpose of avoid-
ing liability. Thus the Act makes it possible for the workman to get com-
pensation for injuries, unimpeded by the legal obstacles set up by the law
of Torts.
Two ways of claiming compensation:

An injured workman may, if he wishes, file a civil suit for damages
against the employer. Section 3(5) of the Workmen's Compensation Act,
however, provides that if such a suit is filed, compensation cannot be
claimed under the Act and if compensation has been claimed under the Act,
or if an agreement has been entered into between the employer and the
workman for the payment of .compensation, no suit can be filed in the civil
court. Thus the workman has to choose between two reliefs (i) civil suit for
damages and (ii) claim for compensation under the Act. . He cannot have
both.
In a civil suit for damages, it is open to the employer to plead all the
defences provided by the law of Torts. Therefore, a civil suit is a risky
procedure for a workman and is rarely adopted. The legal position of work-
men has, however, been improved by two Acts, viz., The Indian Fatal Ac-
cidents Act of 1855 and the Employers' Liability Act of 1938.
Partial Disablement:
Disablement, in ordinary language, means loss of capacity to work or
move. Such incapacity may be partial or total and accordingly there are two
types of disablement, partial and total. In the Act both types .of disablement
are further subdivided into two classes, temporary and permanent.
By Section 2 (g) Temporary Partial Disablement means such disable-

ment as reduces the earning capacity of a workman in any employment in
which he was engaged at the time of the accident, and Permanent Partial
Disablement means such disablement .as reduces his earning capacity in
every employment he was capable of undertaking at that time.

The Act is not limited only to physical capacity of disablement, but extends
to the reduction of earning capacity as well. Sukkai v Hukum Chand lute
Mills Ltd.
NOTES
In a case of Partial Disablement it is necessary that –
a. there should be. an accident,
b. as a result of the accident the workman should suffer injury, c. which
should result in permanent disablement and
d. as a result whereof his earning capacity must have decreased
permanently.
In the proportion in which his earning capacity has been decreased

permanently he is entitled to compensation.
The medical evidence showing loss of physical capacity is a relevant
factor but it is certainly not the decisive factor as to the loss of earning
capacity. It is the loss of earning capacity that has to be determined. Commrs
for Port of Cal. v A. K. Ghosh.
The type of disablement suffered is to be determined from the facts of
the case. But it is provided that every injury specified in Schedule I to the
Act shall be deemed to result in permanent partial disablement. The sched-
ule also mentions the percentage loss of earning capacity which is to be pre-
sumed in each such case.
Examples:
(From Schedule 1) Percentage loss
Description of Injury of earning Capacity
Loss of both hands .. .. 100
Severe facial disfigurement .. .. 100
Absolute deafness .. .. 100
Loss of thumb .. .. 30
Loss of one eye .. .. 40
Middle finger of left hand (whole) .. 14
(There are 54 items listed in the Schedule with percentage loss of earning
capacity for each item mentioned.)

Total Disablement :
According to Section 2(1) total disablement means such disablement,
whether of a temporary or permanent nature, as incapacitates a workman
for all work which he was capable of performing at the time of the accident NOTES
resulting in such disablement, provided that permanent total disablement
shall be deemed to result from the permanent total loss of the sight of both
eyes or from any combination of injuries specified in Schedule I, where the
aggregate percentage of the loss of earning capacity as specified in that
schedule against those injuries, amounts to one hundred per cent.
Wages:
Wages include any privilege or benefit which is capable of being esti-
mated in money, other than a travelling allowance or the value of any trav-
elling concession. or a contribution paid by the employer of a workman
towards any pension or provident fund or a sum 'paid to a workman to cover
any special expenses entailed on him by the' nature of his employment.-
Sec. 2 (m).
The definition of wages is important because an employee whose
monthly wages exceed Rs. 1000 is not a workman for the purpose of the
Act.
The definition of wages is not exhaustive. Wages include all payment
which can be calculated in terms of money, e.g., ordinary wages, extra pay-
ment for overtime, bonus and other inducements in the shape of payment.
For idle time, free meals, allowances for grain and clothing, free or cheap
housing, etc., offered to the workman to enter into a contract with the em-
ployer. Godavari Sugar Mills v Sakuntala.
But travelling expenses or employer's provident fund contributions are
excluded. Local allowance to a workman for cost of living in a particular
place forms part of wages. Share of profit or bonus under a profit sharing
scheme is wages. Chitra Tanti v Tata Iron &Steel Co. I.
This sub-section read with section 5 indicates that payments made by
a third party, e.g., tips by customers to boys in restaurants are not wages.
Tips may be included within the terms wages if they were received by the
workman with the knowledge of the employer. Penn v. Spiers& Ponds
Monthly Wages:
Section 5 of the Act defines "monthly wages" and states the methods
of calculating it. "Monthly" wages means the amount of wages deemed to

be payable for a. month's service (whether the wages are payable by the
month or by whatever other period or at piece rate). Monthly wages are cal-
culated as follows:
NOTES a) Where the workman was in service for a continuous period of 12
months immediately preceding the accident, monthly wages shall be
one-twelfth of the total wages due for the last twelve months of the
period.
b) Where the whole of the period of continuous service was less than one
month, monthly wages shall be the average monthly amount which
during the twelve months immediately preceding the accident was
being earned by a workman employed on the same work by the same
employer, or if there was no workman so employed, by a workman
employed on similar work in the same locality.
c) In other cases, including cases in which it is not possible for want of
necessary information to calculate the monthly wages under clause (b)
the monthly wages shall be thirty times the total wages earned in re-
spect of the last continuous period or service immediately pre-
ceding the accident from the employer who is liable to pay com-
pensation divided by the number of days comprising such period.
A period of service is deemed to be continuous which has not been in-
terrupted by a period of absence exceeding 14 days.
Workman:
The definition of the term workman is important because only a person
coming within the definition is entitled to the reliefs provided by the Work-
men's Compensation Act.
"Workman" is defined in Section 2(n) read with .Schedule II to the Act.
In Schedule II, a list (consisting of 32 items) is given of persons who

come within the category of workmen.
Examples:
i. Persons employed otherwise than in a clerical capacity or in a railway
to operate or maintain a lift or a vehicle propelled by steam,
ii. electricity or any mechanical power; person employed otherwise than
in a clerical capacity in premises where a manufacturing process is car-
ried on;
iii. seamen in ships of a certain tonnage;

iv. persons employed in constructing or repairing building or electric fit-

tings;
v. persons employed in a circus or as a diver; etc.
NOTES
Subject to the exceptions noted below, the term workman means ~

a) a railway servant as defined in Section 3 of the Indian Railways Act of
1890 who is not permanently employed in any administrative, district
or sub-divisional office of a railway and not employed in any capacity
as is specified in schedule II or
b) employed on monthly wages not exceeding Rs. 1000 in any such
capacity as is mentioned in Schedule II. I
From 1st April 1976, the limit of monthly wages for purposes of this Act
was raised from Rs. 500 to Rs. 1000. I
The words used in clause (b) mean that the wages must not exceed on
average (now Rs. 1000) a month.
The contract of employment may be expressed or implied, oral orin
writing.
The Act provides that the following categories of persons are not to be
deemed as workmen for the purposes of the Act:
a. Persons working in the capacity of a member of the Armed Forces of
the Union.
b. A person whose employment is of a casual nature and who is
employed otherwise than for the purposes of the employer's trade or
business.
The exercise and performance of the powers and duties of a local authority
or of any department acting on behalf of the Government, for the purposes
of the Act, unless a contrary intention appears be deemed to be the trade or
business of such authority or department.
The State Government has been given power to add to the list in
Schedule II any hazardous occupation or specified injuries in such an
occupation. The addition may be made by notification in the official
Gazette, with not less than 3 months' notice.
There are legal decision regarding the question who is a workman. The
general rule is that there must be the relationship of master and servant

between the employer and the workman. Workman is a person whom the
employer can command and control in the manner of performing the work
& According to Wills, the following points is to be taken into consideration
NOTES in determining the question whether a person is a workman:
a. the term of engagement
b. the payment of wages
c. the power of control over the work d. the power of dismiss
What is employment of a casual nature?

Employees of a casual nature, if not employed in the employer trade
or business do not come within the definition of the term workman as used
in the Act.
Generally speaking, casual work is one which is not regular .or con-
tinuous. A person doing odd jobs was employed by the occupier of private
premises to clean windows. Held, his work was of a casual nature. Hill v
Begg "A person officiating in a leave vacancy is not a casual worker. In the
matter of Alam Singh.
Whether the employment is for the purpose of the employer's trade or
business depends on whether the contract of service entered into by the em-
ployer was hi his capacity as businessman or in a private capacity. When a
coal mine employs workers to dig for coal it is for his trade or business.
But a mine owner engaging workers for building his residence is not en-
gaging them for his trade or business.
A person who does service which is illegal and void cannot be a work-
man and cannot claim compensation. Kemp v Lewis.
Rules Regarding Workmen's Compensation:

When is employer liable to pay compensation? Section 3(I) lays down
that if personal injury is caused to a workman by accident arising out of and
in course of employment, his employer shall be liable to pay compensation.
From the above it follows that the employer is liable when-
a) Injury is caused to a workman by accident and
b) the accident arises out of and in course of employment. An
occupational disease is deemed to be an injury by accident and the
employer is liable to pay compensation.
The section itself provides that in certain cases of injury, no compen-

sation is payable.
What is an accident? NOTES

Lord Macnaughten in Fenton v, Thorley &Company defined an acci-
dent as “an unlocked for mishap or untoward event which is not expected
or designed". Thus a self-inflicted injury is not an accident ordinarily.
In Grim.ev. Fletcher a person became insane as a result of accident and
then committed suicide. It was held that death was the result of the accident
and compensation was awarded. But where insanity was not the direct result
of the accident compensation cannot be awarded. e.g. where suicide was
due to brooding over the accident.
Withers v. L. B. &. S. C. Railways A series of tiny accidents, each pro-
ducing some unidentifiable result and operating cumulatively to produce
the final condition of injury, would constitute together an accident to furnish
a proper foundation for a claim under the Act.
Personal Injury:
A personal injury is not necessarily confined to physical or bodily in-
jury. Injury includes psychological at physiological injury such as nervous
shock, insanity etc. The injury must be personal. An injury to the belonging
of a workman does not come within the Act.
A workman had to go into a heating room and from there to cooling
plant. The changes of temperature caused pneumonia an, the workman
died. Held, the death was due to personal injury.
The Indian News Chronick Ltd. v Mrs. Luis Lazarus. Death was the
result of heat-stroke. Held that dependant was entitled to compensations.
Santon Fernandez v B.P. (India) Ltd.
Arising Out Of And In The Course Of Employment

This phrase been copied from the English Act on the subject. The
phrase has been interpreted in a large number of cases, English and Indian.
But difficulties still remain.
In the course of employment:

This part of the phrase covers the period of time during which the
employment continues. Compensation is payable if the accident occurs

within the period of employment. Generally speaking employment com-

mences when the employee reaches his place of work and ceases when he
leaves the place. 'But there are several exceptions to the above rule.
NOTES (1) when the workman uses transport provided by the employer for the
purpose of going to and from the place of work the time during which
he uses the transport, is included in the course of his employment.
(2) The time during which the workman is upon the premises of the em-
ployer should be included in the period of employment. An em-
ployee of the E. I. Railways was knocked down and killed by a train
while returning from duty by crossing the platform area, Held, the ac-
cident arose out of and in course of employment.
(3) If the workman reaches the place of employment before the time when
the employment begins: if it was necessary and not too early, or if at
the time of accident he was doing something to equip himself for the
work, he is in course of employment
(4) If the workman with the knowledge and permission of the employer
lives at some distance from the place where he is called upon to work
and if in the course of proceeding at a reasonable time and in a reason-
able manner from his place to the place of work. he meets with fatal
accident then his accident must be held to arise out of and in course of
employment.
(5) The period of rest during the period of employment is in the course of
employment. But if the workman goes outside the employer's premises
during the rest period and meets with an accident, it is not in course of
employment.
Arising out of the employment:

In Dennis v Whlite, it was observed that, "When a man runs a risk
incidental to his employment and is thereby injured, then the injury arises
out of the employment."
Notional Extension:
As a rule the employment of a workman does not commence until he
has reached the place of employment and does not continue when he has
left the place of employment, the journey to and from the place of
employment being excluded. It is now went settled, however, that this is
subject to the theory or notional extension of employer's premises so as to
include an area which the Workman passes and repasses in going to and in

leaving the actual place of work".
Occupational Diseases: NOTES

Persons employed in certain occupations are liable to be attacked
by certain diseases. For example, a person engaged in an employment
involving exposure to dust containing silica is liable to contract silicosis,
telegraph operators are liable to have what is called Telegraphist's Cramp.
Such diseases are known as Occupational Diseases.
Schedule III to the Workmen's Compensation Act contains a list of
occupational diseases divided into three parts, part A, Part B and Part C.
Part A includes-
a. Anthrax,
b. Compressed Air Sickness,
c. Poisoning by lead tetra-ethyl and nitrous fumes.
'Part B includes-
a. poisoning by lead compounds,
b. phosphorus,
c. mercury etc.,
d. cancer of the skin, t
e. elegraphist's cramp etc.
Part C includes
a. Silicosis,
b. Asbestosis etc.
Section 3(2) of the Act provides that an occupational disease shall be

deemed to be an injury by accident within the meaning of this section and.
unless the contrary is proved, the accident shall be deemed to have arisen
out of, and in the course of, the employment.
For diseases included in Part A of Schedule III, the employer liability'
to pay compensation when a workman employed by him contracts the
disease. For the diseases included in Part B, the employer is liable if a work-

man contracts it while in his service and if the workman has been in his
service for a continuous period of six months which period shall not include
a period of service under any other employer in the same kind of employ-
NOTES ment.
For diseases included in Part C of Schedule III, the workman is entitled
to Compensation if he has been in the service of one or more employers for
such continuous period as the Central Government may specify. In such
cases the compensation is to be paid by all the employers in such propor-
tions as the Commissioner of Workmen's Compensation may deem just.-
Sec. 3(2A).
This list of occupational diseases and the employments producing them
as contained in Schedule In may be extended (by notification) by the State
Government in the case of Parts A and B and by the Central Government in
the case of Part C.
Section 3 (4) lays down that save as provided above, no compensation
shall be payable to a workman in respect of any disease unless the disease
is directly attributable to a specific injury by accident arising out of, and in
the course of his employment.
When is employer not liable to pay compensation?

Section 3 of the Act provides that the employer is not liable to pay
compensation in the following cases:
a. in respect of any injury which does not result in thc total or partial dis-
ablement of the workman for a period exceeding three days
b. in respect of any injury not resulting in death, caused by an accident
which is directly attributable to-
i. the workman having been at the time thereof under the in-
fluence of drink or drugs, or,
ii. the willful disobedience of the workman to an order expressly
given, or to a rule expressly framed, for the purpose of se-
curing the safety of workmen, or,
iii. the willful removal or disregard by the workman of any safety
guard or other device which he knew to have been provided for
the purpose of securing the safety of workmen.
As regards exception clause (b) (in a workman would not lose his right to
compensation only by reason of tile fact that he had acted thoughtlessly or
foolishly.

From Section 3 it follows that the employer is not liable to pay

compensation under the Workmen's Compensation Act, in the cases also
i. When the accident did not arise out of or in the course of the
employment NOTES
ii. When the workmen filed a suit for damages in the Civil Court: and
iii. When disablement lasted 3 days or less(that is ,injuries were not
significant)
The Amount of Compensation:

The Act provides for compensation for –
1. Death
2. Permanent total disablement
3. Permanent partial disablement and
4. Temporary disablement.
For determining the amount of compensation payable under the Act,

Section 4 has to be read with Schedule IV to the Act. In Schedule IV, there
is a table having four columns.
Section 4, are stated below;
For Death : The employer must pay the amount mentioned in column 2 of
Schedule IV.
For Permanent Total Disablement : The employer must pay the amount
mentioned in column 3 of Schedule IV.
For Permanent Partial Disablement : Schedule I to the Act contains a list
of injuries deemed to result in permanent partia1 disablement together with
the percentage loss of earning capacity which is presumed to occur in each
case When permanent partial disablement occurs from an injury specified
in Schedule I, the amount of compensation is to be calculated by finding
out from Schedule IV the compensation payable for permanent
total disablement to the workman concerned and multiplying it with the
percentage loss of earning capacity as stated in Schedule I.
Thus, suppose that there is an injury which, according to Schedule I,
causes a 30% loss of earning capacity. Suppose that the monthly wage of
the workman is Rs. 50. From Schedule IV it is seen that for permanent total
disablement be would have obtained Rs. 10,080. Hence for the permanent
partial disablement he would get 30% of Rs. 10,080, i.e., Rs. 3,024.

In the case of an injury not specified in Schedule I, the percentage loss

of earning capacity permanently caused must be found out. This figure
multiplied by the amount of compensation for permanent total disablement
NOTES gives the amount of compensation payable for the partial disablement.
Where more injuries than one are caused by the same accident, the
amount of compensation payable under this head shall be aggregated but
not so in any case as to exceed the amount which would have been payable
if permanent total disablement had resulted from the injuries.
For temporary disablement :
Where as a result of the injury there is a temporary disablement, total
or partial, the employer is required to make a half-monthly payment to the
workman. The rate of half-monthly payment is given in column 4 of Sched-
ule IV. (There are different-rates for different age groups.)
Rules regarding Half-monthly Payment :

The first half-monthly payment is to be made on the sixteenth day
i. from the date of the disablement, where such disablement lasts for a
period of 28 days or' more, or
ii. after the expiry of a waiting period of three days from the date of the
disablement, where such disablement lasts for a period of less than 28
days.
iii. Thereafter the payments must be made half monthly during the dis-
ablement or during a period of five years, whichever period is shorter.
From any lump sum payment made for compensation and from any
half- monthly payment, any sum which the workman has received from the
employer, prior to the receipt of the lump sum or half monthly payment,
may be deducted. But any sum received for medical treatment, cannot be
so deducted. Section 4(1) (a).
No half-monthly payment shall in any cases exceed the amount, if any,
by which half the amount of the monthly wages of the workman before the
accident exceeds half the amount of such wages which he is earning after
the accident.-Section 4 (1) (b).
On the ceasing of the disablement before the date on which any half-
monthly payment falls due, there shall be payable in respect of that half
month a sum proportionate to the duration of the disablement in that half-
month.-Section 4 (2).

Any half-monthly payment payable to a workman may be reviewed

by the Commissioner on the -application of either the employer or the work-
man on. the ground that there has been a change in the condition of the
workman. The payment may upon review, be continued, increased, de- NOTES
creased or ended or (in case the injury has resulted in a permanent disable-
ment) converted into a lump sum -Section 6.
A right to receive half-monthly payment may, by agreement or by order
of the Commissioner, be redeemed by the payment of a lump sum. This is
called commutation of half-monthly payments.-Section 7.
Distribution of Compensation :
Section 8 lays down the following rules regarding the distribution of
compensation:
1. Compensation for death and lump sum payment due to a woman or to
a person under a legal disability must be deposited with the
Commissioner.
2. But in the case of a deceased workman, an employer may make to .any
dependent advances on account of compensation not exceeding an ag-
gregate of one hundred rupees. So much of such aggregate as does not
exceed the compensation payable to that dependent shall be deducted
by the Commissioner from such compensation and repaid to the em-
ployer.
3. Any other sum amounting to not less than Rs. 10 which is payable as
compensation may be deposited with the Commissioner on behalf of
the person entitled thereto.
4. The receipt of the Commissioner shall be sufficient discharging respect
of any compensation deposited with him.
5. After the deposit of the compensation, the Commissioner shall deduct
there from the actual cost of the- workman's funeral expenses to an
amount not exceeding Rs. 50 and pay the' same to the person by whom
the expenses were incurred.
6. The Commissioner may serve notices calling upon the dependents to
appear before him for the purpose of determining the distribution of
the compensation.
7. If the Commissioner is satisfied that no dependent exists, he shall repay
the balance of the money to the employer.
8. The Commissioner shall on application by the employer, furnish a
statement showing in detail all disbursements made.

9. The compensation money is to be distributed among the dependents

in such proportions as the Commissioner thinks fit. The whole of it
may be given to one person.
NOTES 10. Except in the case of a woman or a person under a legal disability, the
compensation money is to be paid Jo the person entitled thereto
11. Money payable to a woman or a person under legal dis ability may be
invested or otherwise dealt with as the Commissioner thinks fit. Half-
monthly payments payable to a person under a legal disability may be
paid to a dependent of the workman or to any other person whom the
Commissioner thinks best fitted to provide for the welfare of the work-
man.
12. The orders of the Commissioner regarding the distribution of
compensation may be varied later if necessary.
13. Notice must be given to the parties affected.
14. Where under the previous para, the Commissioner varies an order on
the ground .that the payment of compensation to any person has been
obtained by fraud, impersonation or other improper means, any amount
so paid may be recovered by the procedure laid down for the recovery
of arrears of land revenue.
Other Provisions Regarding Compensation Payment Of Compensation

[Section 4a]:
Compensation shall be paid as soon as it falls due. Where the employer
does not accept the liability to the extent claimed, he must make
provisional payment based on the extent of liability which he accepts. This
is without prejudice to the right of the workman to make any further claim.
If an employer fails to pay the compensation within one month of the date
on which it fell due, the Commissioner may direct the payment of simple
interest thereon at 6%.
If the Commissioner thinks that there is no justification for the delay,
he may direct the payment of a further sum, not exceeding 50% of the sum
due, by way of penalty.
Protection of Compensation :
Save as provided by this Act, no lump sum or half-monthly payment
payable- under the Act shall in any way be capable of being assigned or
charged or be liable to attachment or pass to any person other than' the
workman by operation of law, nor shall any claim be set off against the

same.-Section 9.
This section has been framed, to protect as far as possible the workman
from moneylenders.
NOTES
Notice and Claim:

Section 10 of the Act provides that no claim or compensation shall be
entertained by the Commissioner unless notice of the accident has been
given in the manner provided as soon as practicable. (This is subject to cer-
tain exceptions noted below.)
The required notice must be served upon the employer or upon any of
several employers or upon any person responsible to the employer for the
management of any branch of the trade or business in which the injured
workman was employed. .
The notice shall give the name and address of the person injured, the
cause of the injury and the date of the accident. The notice may be given
by the injured workman or by anybody on his behalf. It may be served
by delivering it or sending it by registered post.
The State Government may require that any prescribed class of em-
ployers shall keep at the place of employment a notice book (accessible to
all workers or persons acting bonafide on their behalf) where the occurrence
of accidents may be recorded. An entry in the notice book is sufficient no-
tice.
The want of notice or any defect or irregularity in it shall not be a bar to a
claim in the following cases:
1. Where a workman dies or an accident occurring in the premises of the
employer or while working under the control of the employer or of any
person employed by him~ and the workman died on the premises or
without leaving the vicinity of the premises.
2. If the employer or anyone of several employers or any person
responsible to the employer for the management of any branch of the
trade or business in which the injured workman was employed, had
knowledge of the accident from any other source at or about the time
when it occurred.
3. If the Commissioner is satisfied that the failure to give notice was due
to sufficient cause. A workman is bound to give notice of any accident
which is not merely trivial, and it is not for him to decide whether it is
likely to give rise to a claim for compensation.
Section 10 also provides s that a claim for compensation must be preferred

before the Commissioner. Within two years of the occurrence of the accident
or the date of death as the case may be. In case the accident is the contracting
of a disease the date of its occurrence is the first of the days during which
NOTES the workman was continuously absent from work in consequence of the
disablement caused by the disease.
The Commissioner may entertain a claim filed after the prescribed time, if
he is of opinion that the failure to file it within time, was due to.
Fatal Accident:
Section 10 A provides that where a Commissioner receives information
that a workman has died as a result of an accident arising out of and in
course of his employment, he may send by registered post a notice to the
workman's employer requiring him to submit, within thirty days of the serv-
ice of the notice, a statement in the prescribed from, giving the circum-
stances attending the death of the workman, and indicating whether in the
opinion of the employer, he is or is not liable to deposit compensation
on account of the death.
If the employer is of opinion that he is liable, he shall make the deposit
within thirty days of the service of the notice. If he is of opinion that he is
not liable, he must state his grounds. In the latter case, the Commissioner,
after such enquiry as he may think fit inform any of the dependents of the
deceased workman that it is open to them to prefer a claim and may give
them such further information as he may think fit.
Section 10 B provides that where by any law for the time being in
force, notice is required to be given to any authority by or on behalf
of an employer, at any accident resulting in death or serious bodily injury,
the person required to give the notice shall also send a report to the Com-
missioner. The report may be sent alternatively to any other authority pre-
scribed by the State Government.
The State government may extend the scope of the provision re-
quiring reports of fatal accidents to any class of premises. But Sec. 10 B
does not apply to factories to which the Employees' State Insurance Act ap-
plies.
Medical Examination [Section 11]:

1. After a workman gives notice of an accident, the employer may, within
three days of the service of the notice, offer to have him examined free
of charge by a qualified medical practitioner.

2. Any workman in receipt of half-monthly payments may also be

required to submit for examination from time to time.
3. The Examination must be in accordance with the rules framed for the
purpose. NOTES
4. If the workman refuses, without sufficient cause, to submit to the ex-
amination or if he leaves the vicinity of the place in which he was em-
ployed, his right to receive compensation shaIl be suspended
during the continuance of the refusal or until his return to the vicinity
and examination.
5. In case 1he workman, who refused medical examination, sub-
sequently dies, the Commissioner has discretionary powers of direct
payment of compensation to the dependents of the deceased workman.
6. The condition of an injured workman may be aggravated by refusal to
submit to medical examination or refusal to follow the instructions of
the medical examiner or failure to be attended by or follow the instruc-
tions of a qualified medical practitioner.
7. In such a case he would get compensation, not for the aggravated in-
jury, but for what the injury would have been had he been properly
treated.
Employment by contractors [Section 12]:

When an employer engages contractors who engage workmen, any
workman injured may recover compensation from the employer if the
following conditions are satisfied:
a) the contractor is engaged to do a work, which is part of the trade or
business of the principal,
b) the engagement is in the course of or for the purposes of his trade or
business, and
c) the accident occurred in or about the vicinity of the employer's
premises.
The workman may also proceed against the contractor. So he has alternative
remedies. When the employer pays compensation, he is entitled to be
indemnified by the contractor.
Remedies of employer against stranger [Section 13]:
Where a workman has recovered compensation in respect of any injury
caused under circumstances creating a legal liability of some person over

than the person by whom the compensation was paid and any person who
has been called on to pay an indemnity under Section 12 shall be indemni-
fied by the Person so liable to pay damages as aforesaid.
NOTES
Insolvency of Employer [Section 14]:
The liability to pay workmen's compensation can be insured against.
If an employer who has entered into a contract of insurance for this purpose,
becomes insolvent or enters into a scheme of composition or arrangement
or (being a company) is wound up, the rights or the employer as against the
insurer shall be transferred to and vest in. the workman.
The liability to pay compensation to a workman is tobe treated as a
preferred debt under insolvency and winding" up. For this purpose, the li-
ability to pay half-monthly payments is to be taken as equivalent to the lump
sum payment into which it can be commuted.
This section does not apply where a company is wound up voluntarily
merely for the purpose of reconstruction or amalgamation with another
company.
Transfer of Assets by Employer [Section 14A]:

Where an employer transfers his assets before any amount due in re-
spect of any compensation, the liability wherefore accrued before the date
of the transfer, has been paid, such amount shall, notwithstanding anything
contained in any other law for the time being in force, be a first charge on
that part of .he assets so transferred as consists of immovable property.
Master and Seamen: So far as masters and seamen are concerned, the
provisions of the Act apply with certain modifications laid down in Section
15. Returns: The State Government may, by notification in the official
Gazette, direct employers to submit returns regarding compensation paid
by them and particulars relating to the compensation. Section 16.
Contracting Out:
Section 17 provides that any contract by which a worker relinquishes
his right to receive compensation for injury is null and void in so far as it
purports to remove or reduce the liability of any person to pay compensation
under this Act.

Penalties:
Section 18A provides for penalties for failure to perfrom the
duties prescribed under the Act, e.g., failure to send returns or maintain
notice books etc. NOTES
Bar to Civil Suits:

A Civil Court has no jurisdiction to settle, decide or deal with any
question which, because of the provisions of the Act, is required to be de-
cided or dealt with by the Commissioner or to enforce any liability under
this Act.- Sec. 19(2).
Recovery of the amount awarded:

Any amount payable under the Act, whether under an agreement or
otherwise, shall be recovered as an arrear of land revenue.-Sec. 31
COMMISSIONER FOR EMPLOYEES’ COMPENSATION Powers and
procedure of Commissioners:
The Commissioner shall have all the powers of a Civil Court under the
Code of Civil Procedure, 1908 (5 of 1908), for the purpose of taking
evidence on oath (which such Commissioner is hereby empowered to im-
pose) and of enforcing the attendance of witnesses and compelling the pro-
duction of documents and material objects, [and the Commissioner shall
be deemed to be a Civil Court for all the purposes of2[section 195 and of
Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)]].
Comments
Award of compensation by Workmen’s Compensation Commissioner.
It is within the competence of the Workmen’s Compensation Commis-
sioner and he is also bound to award compensation as prescribed under
Schedule 4 read with sec. 4 (1) (a) of the Act even if heirs of deceased work-
man claim less compensation than prescribed under the Act and the
Schedule; Mostt., Chhatiya Devi Gowalin v. Rup Lal Sao, 1978 Lab IC
1368: 1978 BLR 502; 1978 ACJ 481; 1978 BJR 622.
Principle of waive or acquiescence Even if the claimant has made a claim

of lesser amount than due, his right to claim or the power of the Commis-
sioner to enhance the compensation is neither waived nor curtailed since
the principle of waive or a acquiscence has no application to such type

of cases; Balavandra Patra v. Chief Engineer Orissa, 1987 (I) LLN 634;
Mohd. Koya v. Balan, 1987 (I) LLN 353.
NOTES
Refusal by Commissioner to record memorandum of agreement
Where it appears to the Commissioner that an agreement as to
the payment of lump sum whether by way of redemption of a half-monthly
payment or otherwise, or an agreement as to the amount of compensation
to a workman or a person under a legal disability ought not to be registered
because of inadequacy of the sum or amount or by reason of the agreement
having been obtained by fraud or undue influence or other improper
means, the Commissioner may refuse to record the memorandum of the
agreement. He may pass such order including an order as to any sum already
paid under the agreement, as he thinks just in the circumstances; Amarshi
Jeram v. M/s. Hazarat and Co., AIR 1962 Guj 262: 1962 II LLJ 187.
From of application:
No application for settlement of any matter by a Commissioner shall
be made, if the parties have been able to settle it by agreement.
An application to the Commissioner shall be made in the prescribed
from according to the rules, and accompanied by a prescribed fee.
The following particulars must be given namely-
a) concise statement of the circumstances and the relief claimed;
b) in case of claim for compensation against an employer, the date of serv-
ice of notice of accident, with its due time of notice and the reason why
notice was not given;
c) the names and addresses of the parties; and
d) except in case of application by dependent for compensation a
concise statement of the matter on which, agreement has and of those
on which agreement has not been come to. If the applicant is illiterate or
for any reason is unable to furnish the required information, the application,
if the applicant so desires, shall be prepared under the direction of the Com-
missioner.-Sec. 22.
Appearance of parties: Appearance may be done on behalf of applicant
by a legal practitioner or an official of Insurance Company, or an authorised
person of a registered Trade Union, duly authorised.-Sec. 24.
Appeals and References: For proceedings under the Act, the High
Court of the State is the Appellate Court. The Commissioner can refer a

question of law to the High Court for decision and he must decide
the matter according to such decision.--Sec 27.
Appeals:
NOTES
An appeal lies to the High Court from the following orders of
a Commissioner
a) an order awarding as compensation a lump sum whether by way of re-
demption of a half-monthly payment or otherwise or an order awarding
interest or penalty under section 4A;
b) an order refusing to allow redemption of a half-monthly payment ;
c) an order providing for the distribution of compensation among the de-
pendents of a deceased workman, or disallowing any dain1 of person
alleging himself to be such dependent;
d) an order allowing or disallowing any claim for the amount of an in-
demnity under the provisions of section 12(2) ;
e) an order refusing to register a memorandum of agreement or registering
the same or providing for the registration of the same subject to condi-
tions.
Other Provisions Regarding Appeal:

1. No appeal shall lie against any order unless a substantial question of
law, is involved in the appeal and, in the case of an order other than an
order such as is referred to in clause (b), unless the amount in dispute
in the appeal is not less than Rs. 300
2. No appeal lies in any case in which the parties have agreed to abide by
the decision of the Commissioner, or in which the order of the Com-
missioner gives effect to an agreement come to by the parties.
3. No appeal by employer lies unless the memorandum of appeal is ac-
companied by a certificate by the Commissioner to the effect that the
applicant has deposited with him the amount payable under the order
appealed against.
4. The period of limitation for an appeal under this section shall be 60
days and the provisions of Section 5 of the Indian Limitation Act, 1908,
shall be applicable to appeals under this section.

Questions
NOTES 1. Explain when an employer liable to pay compensation for personal in-
jury to a workman?
2. “Accident arising out of and in the course of employment is the basis

for compensation”. Comment.
3. What are the circumstances in which an employer is and is not liable

to pay compensation under the Employee Compensation Act?
4. Write notes on-

a. Dependant
b. Powers of commissioner
c. Types of disablement

UNIT - 2
EMPLOYEE’S PROVIDENT FUND ACT, 1952
NOTES
SYNOPSIS
1. Introduction
2. Definition, Object and scope of the Act
3. Employee’s Provident Fund Scheme
4. Penalties, Offences by Companies
5. Enhanced punishment in certain cases after previous convection
6. Conclusion
Object Of The Act:

This is an Act to provide for the institution of Provident Funds (Pension
Fund) and Deposit Linked Insurance Fund for employees in factories and
other establishments.
The provisions are applicable to every establishment engaging 20 or
more persons, the Act shall continue to govern any establishment though
the number of persons may fall from 20.
This Act is a beneficent measure enacted for the purpose of institution
of Provident Fund for employees, the provisions have been made for the
better future for the industrial workers, on their retirement and for the ben-
efit of their dependents in case of death while in employment.
The Act is a beneficent piece of social welfare legislation aimed at pro-
moting and securing the well being of the employees and the Court will not
adopt a narrow interpretation which will have the effect of defeating the
very object and purpose of the Act - 1986 LIC 103 (S.C.)
Since the Act does not make any distinction between wages and salary
it applies not merely to wage earners but also to salaried servants - AIR
1964
S.C. 980. Basic wages under this Act means all emoluments which are
earned by an employee while on duty or in accordance with the terms of
the contract of employment and which are paid or payable in case to him
but does not include - cash value of food concession, any dearness al-
lowance, HRA, OT, Bonus commission or any similar allowance payable
Employee’s Provident Fund Act, 1952 27

to the employee or any presents given by employer.

However, casual labour engaged by or through a contractor falls out-
side the scope of the definition - Nezeena Traders Ltd. V/s RPFC 1966 I
NOTES LLJ 334.
Application of the Act:

The Act shall apply to all establishments consisting of different
departments or its branches whether they are in the same place or different
places unless this establishment has applied for exemption under section of
the Act.
Definitions-[Section 2]:
In this Act, unless the context otherwise requires, -
“Appropriate Government” means - in relation to an establishment be-
longing to, or under the control of, the Central Government or in relation
to, an establishment connected with a railway company, a major port, a mine
or an oil-filed or a controlled industry or in relation to an establishment hav-
ing departments or branches in more than one State, the Central Govern-
ment: and in relation to any other establishment, the State Government:
“Authorised officer”: means the Central Provident Fund Commis-

sioner, Additional Central Provident Fund Commissioner, Deputy Provident
Fund Commissioner, Regional Provident Fund Commissioner or such other
officer as may be authorised by the Central Government, by notification in
the Official Gazette;
“Basic Wages”: means all emoluments which are earned by an em-

ployee while on duty or on leave or on holidays with wages in either case
in accordance with the terms of the contract of employment and which are
paid or payable in cash to him, but does not include-
i. the cash value of any food concession;
ii. any dearness allowance that is to say, all cash payments by whatever
name called paid to an employee on account of a rise in the cost of liv-
ing, house-rent allowance, overtime allowance, bonus, commission or
any other similar allowance payable to the employee in respect of his
employment or of work done in such employment;
iii. any presents made by the employer;

“Contribution”: means a contribution payable in respect of a member

under a scheme or the contribution payable in respect of an employee to
whom the Insurance Scheme applies;
“Controlled industry”: means any industry the control of which by the NOTES
Union has been declared by a Central Act to be expedient in the public in-
terest;
“Employer” means-
i. in relation to an establishment which is a factory, the owner or occupier
of the factory, including the agent of such owner or occupier, the legal
representative of a deceased owner or occupier and, where a person
has been named as a manager of the factory under clause f of sub-sec-
tion 1 of section 7 of the Factories Act, 1948 (63 of 1948), the person
so named; and
ii. in relation to any other establishment, the person who, or the authority
which, has the ultimate control over the affairs of the establishment,
and where the said affairs are entrusted to a manager, managing direc-
tor or managing agent, such manager, managing director or managing
agent; “Employee” means any person who is employed for wages in
any kind of work, manual or otherwise, in or in connection with
the work of an establishment and who gets his wages directly or in-
directly from the employer, and includes any person,-
iii. employed by or through a contractor in or in connection with the work
of the establishment;
iv. engaged as an apprentice, not being an apprentice engaged under
the Apprentices Act, 1961 (52 of 1961) or under the standing orders of
the establishment;
“Exempted employee”: means an employee to whom a Scheme or the
Insurance Scheme, as the case may be, would, but for the exemption granted
under section 17, have applied;
“Exempted establishment”: means an establishment in respect of which
an exemption has been granted under section 17 from the operation of all
or any of the provisions of any Scheme or the Insurance Scheme, as
the case may be, whether such exemption has been granted to the estab-
lishment as such or to any person or class of persons employed therein;
“Factory”: means any premises, including the precincts thereof, in any
part of which a manufacturing process is being carried on or is ordinarily
so carried on, whether with the aid of power or without the aid of power;

“Fund”: means the Provident Fund established under a Scheme; (i) “in-
dustry” means any industry specified in Schedule I, and includes any other
industry added to the Schedule by notification under section 4;
NOTES “Insurance Fund”: means the Deposit -linked Insurance Scheme
framed under sub -section 2 of section 6C;
“Manufacture” or “Manufacturing Process” : means any process for
making, altering, repai ring, ornamenting, finishing, packing, oiling,
washing, cleaning, breaking up, demolishing or otherwise treating or adapt-
ing any article or substance with a view to its use, sale, transport, delivery
or disposal;
Employees’ Provident Fund Scheme-[Section 5(1)]:

The Central Government may, by notification in the Official Gazette,
frame a scheme to be called the Employees’ Provident Fund Scheme for
the establishment of provident funds under this Act for employees or any
class of employees and specify the establishment or class of establishments
to which said scheme shall apply and there shall be established as soon as
may be after the framing shall apply and there shall be established as soon
as may be after the framing of the scheme, a fund in accordance with the
provisions of this Act and the Scheme.
(1A) The Fund shall vest in and be administered by, the Central Board under
section 5A.
(1B) Subject to the provisions of this Act, a scheme framed under sub- sec-
tion (1) may provide all or any of the matters specified in Schedule II.
(2) A Scheme framed under sub-section (1) may provide that any of its pro-
vision shall take effects either prospectively or retrospectively on such
date as may be specified in this behalf in the scheme.
For the purpose of the Indian Income Tax Act, 1961, the Fund shall be
desired to be a recognised provident fund within the meaning of Chapter
IX- A of the Act (Section 9).
The scheme is subject to sections 16 and 17 granting exemptions.

Section 5 does not confer unrestricted discretion on the Central
Government. There are various provisions in the Act for the guidance
of the Central Government. It is an idle contention that section 5 gives
wholly unrestricted and unguided discretion to the central Government

to frame a Scheme, and it appears on the other hand that the Act is full of
carefully laid down principles to guide the Central Government.
NOTES
Contribution and matters which may be provided for in the
scheme-[Section 6]:
The employer shall pay contribution to the fund 8 1/3 of the Basic Wages,
(D.A. and R.A. ) and the employees’ contribution shall be equal to the
contribution of the employer.
R.A. i.e. Retaining Allowance means an allowance payable for the time
being to an employee of any factory or establishment during any period in
which the establishment is not working for retaining his services.
Employees’ pension scheme -[Section 6A]:

Under Section 6 - A of the Act, the Central Government by its
notification has framed a scheme called the Employees Pe nsion
Scheme for the purpose of
a. providing superannuation pension,
b. retiring pension or permanent total disablement pension to the
employees of the establishment or class of establishments and
c. widow or widowers pension,
d. children pension or orphan pension payable to the
beneficiaries.
Under the Pension Scheme, the sums of employers’ contribution not
exceeding 8 1/3% of basic wages, D.A. and R.A., sums payable by the
employers of exempted establishments, net assets of Employees Family
Pensions Fund, any other sums after due appropriation of Parliament.
On the establishment of Pension Fund, the Family Pension Scheme
shall cease to operate and all the assets of the ceased scheme shall be
transferred to the Pension Fund.
Furthermore, the Act provides for Employees Deposit Linked
Insurance Scheme for the purpose of Providing Life Insuranc e benefits
to the employers. As soon as this scheme is framed, the employer shall from
time to time pay in respect of every employee an amount not being more
than 1% of the aggregate of the basic wages, D.A. and R.A.

Employees' Deposit Linked Insurance Sc Heme:

1. The Central Government may, by notification in the Official Gazette,
frame a scheme to be called the Employees' Deposit - Linked Insurance
NOTES Scheme for the purpose of providing life insurance benefits to the em-
ployees of any establishment or class of establishments to which this
Act applies.
2. There shall be established, as soon as may be after the framing
of the Insurance Scheme, a Deposit -Linked Insurance Fund into which
shall be paid by the employer from time to time in respect of every
such employee in relation to whom he is the employer, such amount,
not being more than one per cent of the aggregate of the basic wages,
dearness allowance and retaining allowance (if any) for the time being
payable in relation to such employee, as the Central Government m ay,
by notification in the Official Gazette, specify. Explanation. - For the
purposes of this sub -section, the expressions `dearness allowance'
and `retaining allowance' have the same meaning as in Section 6.
3. [***]
4. a) The employer shall pay into the Insur ance Fund such further
sums of money, not exceeding one -fourth of the contribution
which he is required to make under sub -section (2), as the Central
Government may, from time to time, determine to meet all the ex-
penses in connection with the administratio n of the Insurance
Scheme other than the expenses towards the cost of any benefits
provided by or under that scheme.
4 [***]
5. The Insurance Fund shall vest in the Central Board and be administered
by it in such manner as may be specified in the Insurance Scheme.
6. The Insurance Scheme may provide for all or any of the matters
specified in Schedule IV.
7. The Insurance Scheme may provide that any of its provisions shall take
effect either prospectively or retrospectively on such date as may be
specified in this behalf in that Scheme.]
Laying of Schemes before Parliament :

Every scheme framed under Section 5, Section 6 -A and Section 6-C shall
be laid, as soon as may be after it is framed, before each House of
Parliament, while it is in session, for a total period of thirty days
which may be comprised in one session or in two or more successive

sessions, and if, before the expiry of the session immediately following
the session or the successive sessions aforesaid, both Houses agree
in making 1 Subs. by Act 25 of 1 996, sec. 5, for sections 6A and 6B (w.e.f.
16 -11-1995). NOTES
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
Sec 7 any modification in the scheme, or both Houses agree that the scheme
should not be framed, the scheme shall thereafter have effect only in such
modified from or be of no effect, as the case may be; so, however, that any
such modification or annulment shall be without prejudice to the validity
of anything previously done under that scheme.
Modification of Scheme :
1. The Central Government may, by notification in the Official Gazette,
add to amend or vary, either prospectively or retrospectively, the
Scheme, the [Pension] Scheme, or the Insurance Scheme as the case
may be]
2. Every notification issued under Sub -section (1) shall b e laid, as soon
as may be after it is issued, before each House of Parliament while it is
in session, for a total period of thirty days, which may be comprised
in one session or in two or more successive sessions, and if, be-
fore the expiry of the session immediately following the sessions or
the successive sessions aforesaid, both Houses agree in making any
modification in the notification, or both Houses agree that the notifi-
cation should not be issued, the notification shall thereafter
have effect only in such modified from or be of no effect, as the case
may be; so, however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done under that
notification.]
1. Glamour V/s RPFC 1975 LIC 954
2. The News Paper Publishing Pvt. Ltd. V/s RPFC 1972 LIC 1392
3. Swamy V/s RPFC 1987 (I) LLN 94
4. Royal Talkies V/s ESIC AIR 1978 S.C. 1478
Determination of moneys due from employers -[Section 7A]:

1. The Central Provident Fund Commissioner, any Additional Central
Provident Fund Commissioner, any Deputy Provident Fund Commis-
sioner, any Regional Provident Fund Commissioner or any Assistant
Provident Fund Commissioner may, by order,

a. in a case where a dispute arises regarding the applicability

of this Act to an establishment, decide such dispute; and
b. determine the amount due from any em ployer under any provi-
NOTES sion of this Act, the Scheme or the Pension Scheme or the Insur-
ance Scheme, as the case may be, and for any of the aforesaid
purposes may conduct such inquiry as he may deem necessary.
2. The officer conducting the inquiry under sub -section 1 shall, for the
purposes of such inquiry have the same powers as are vested in a court
under the code of Civil Procedure, 1908 (5 of 1908), for trying a suit
in respect of the following matters, namely:-
a. enforcing the attendance of any person or ex amining him on oath:
b. requiring the discovery and production of documents;
c. receiving evidence on affidavit;
d. issuing commissions for the examination of witnesses, and any
such inquiry shall be deemed to be a judicial proceeding within
the meaning of secti ons 193 and 228, and for the purpose of sec-
tion 196 of the Indian Penal Code 45 of 1960.
3. No order shall be made under sub -section 1, unless the employer

concerned is given a reasonable opportunity of representing his case.
(3A)Where the employer, emplo yee or any other person required
to attend the inquiry under sub -section 1 fails to attend such
inquiry without assigning any valid reason or fails to produce
any document or to file any report or return when called upon to
do so, the officer conducting th e inquiry may decide the
applicability of the Act or determine the amount due from any
employer, as the case may be, on the basis of the evidence adduced
during such inquiry and other documents available on record.
4. Where an order under sub -section 1 is p assed against an em-

ployer ex-parte, he may, within three months from the date of commu-
nication of such order, apply to the officer for setting aside such order
and if he satisfies the officer that the show cause notice was not duly
served or that he was pr evented by any sufficient cause from ap-
pearing when the inquiry was held, the officer shall make an order
setting aside his earlier order and shall appoint a date for proceeding
with the inquiry:

Provided that no such order shall be set aside merely on t he

ground that there has been an irregularity in the service of the
show cause notice if the officer is satisfied that the employer had notice
of the date of hearing and had sufficient time to appear before NOTES
the officer.
Explanation - Where an appeal has b een preferred under this Act
against an order passed ex parte and such appeal has been dis-
posed of otherwise than on the ground that the appellant has withdrawn
the appeal, no application shall lie under this sub - section for set-
ting aside the ex parte order.
5. No order passed under this section shall be set aside on any application
under sub-section 4 unless notice thereof has been served on the
opposite party.
Review of orders passed under Section 7A - [Section 7B]:

Under Sec. 7B of the Act any per son aggrieved by the order passed
under sec. 7A by the Regional Provident Fund Commissioner in which
no appeal has been made can on the discovery of new evidence or
facts which were not within his knowledge at the time of passing the order
and on account o f which the mistake was made can make a order for review
before the same Commissioner who had passed the order.
Provided that the officer who has passed that order find the said appli-
cation in order and if he comes to the conclusion that there is no sufficient
ground for review he may reject the said application.
Where the officer comes to the conclusion that the said order needs to
be reviewed then the s aid application should be heard by giving the parties
an opportunity of being heard. Further proof of the said new evidence of
having been discovered should be produced before the commissioner. This
order has no appeal.
Where an order determining the amount due from the employer
under section 7A or 7B has been passed, and the officer who has passed the
said order has reason to believe that by reason of the omission or failure
on the part of the employer to make any document or report available
or to disclose fully or truly all materials facts necessary for determin-
ing the correct amount for any period has escaped his notice or, has in
consequence of infromation in his possession reason to believe that any
amount to be determined under section 7A or 7B has escaped from his de-
termination for any period, he may within a period of 5 years from

the date of communication of the order may re -open the said case for the
redetermination of the amount. The e mployer must be given an opportunity
of being heard.
NOTES
Deposit of amount due, on filling appeal -[Section 7 O]:
Under Sec. 7 (O) of the Act no appeal shall be entertained unless the
employer has deposited an amount of 7 5% of the amount of claim
determined by the officer under Sec. 7A of the Act.
If the employer fails to pay the amount determined by the officer then he is
liable to pay 12% interest on the amount per annum till the actual payment
is made.
Mode of recovery of moneys due from employers –[Section 8]:

Any amount due –
a. from the employer in relation to an establishment to which any Scheme
or the Insurance Schem e applies in respect of any contribution
payable to the Fund or, as the case may be, the Insurance Fund,
damages recoverable under section 14B, accumulations required to be
transferred under sub -section 2 of section 15 or under sub -section 5
of section 17 or any charges payable by him under any other provision
of this Act or of any provision of the Scheme or the Insurance Scheme;
or
b. from the employer in relation to an exempted establishment in respect
of any damages recoverable under section 14B or any charges payable
by him the appropriate Government under any provision of this Act
or under any of the conditions specified under section 17 or in
respect of the contribution payable by him towards the Pension
Scheme under the said section 17, may, if the amount is in arrear, be
recovered in the manner specified in section 8B to 8G.
Recovery of moneys by employers and contractors -[Section 8A]:

1. The amount of contribution that is to say, the employer’ s contri-
bution as well as the employee’s contribution in pursuance of any
Scheme and the employer’s contribution in pursuance of the Insur-
ance Scheme and any charges for meeting the cost of administering
the Fund p aid or payable by an employer in respect of an employee
employed by or through a contractor may be recov ered by such
employer from the contractor, either by deduction from any amount

payable to the contractor under any contract or as a debt payable by

the contractor.
2. A contractor from whom the amounts mentioned in sub - section
1 may be recovered in respect o f any employee employed NOTES
by or through him, may recover from such employee the employee’s
contribution under any Scheme by deduction from the basic wages,
dearness allowance and retaining allowance if any payable to such em-
ployee.
3. Notwithstanding any contr act to the contrary, no contractor shall
be entitled to deduct the employer’s contribution or the charges re-
ferred to in sub -section 1 from the basic wages, dearness al-
lowance, and retaining allowance if any payable to an employee
employed by or through hi m or otherwise to recover such contri-
bution or charges from such employee.
Explanation – In this section, the expressions “dearness allowance” and

“retaining allowance” shall have the same meanings as in section 6.
Issue of certificate to the Recovery Officer-[Section 8B]:

1. Where any amount is in arrear under section8, the authorised officer
may issue, to the Recovery Officer, a certificate under his signature
specifying the amount of arrears and the Recovery Officer, on
receipt of such certificate, shall proceed to recover the amount spec-
ified therein from the establishment or, as the case may be, the em-
ployer by one or more of the modes mentioned below: -
a. attachment and sale of the movable or immovable property
of the establishment or, as the case may be, the employer;
b. arrest of the employer and his detention in prison;
c. appointing a receiver for the management of the movable or im-
movable properties of the establishment or, as the case may be,
the employer:
Provided that the attachment and sale of any p roperty under this
section shall first be effected against the properties of the estab-
lishment and where such attachment and sale is insufficient for
recovery the whole of the amount of arrears specified in the
certificate, the Recovery Officer may take su ch proceedings
against the property of the employer for recovery of the whole or
any part of such arrears.

2. The authorised officer may issue a certificate under sub - section

1, notwithstanding that proceedings for recovery of the arrears by any
other mode h ave been taken.
NOTES
Recovery officer to whom certificate is to be forwarded -[Section 8 C]:
1. The authorised officer may forward the certificate referred to in section
8B to the Recovery Officer within whose jurisdiction the employer –
a. carries on his business or profession or within whose juris-
diction the principal place of his establishment is situated; or
b. resides or any movable or immovable property of the establishment
or the employer is situated.
2. Where an establishment or the employer has property within the juris-
diction of more than one Recovery Officers and the Recovery Officer
to whom a certificate is sent by the authorised officer –
a. is not able to recover the entire amount by the sale of the property
movable or immovable, within his jurisdiction; or
b. is of the opinion that, for the purpose of expediting or se-
curing the recovery of the whole or any part of the amount, it is
necessary so to do, he may send the certificate or, where only a
part of the amount is to be recovered, a copy of the certificate
c ertified in the prescribed manner and specifying the amount to
be recovered to the Recovery Officer within whose jurisdiction
the establishment or the employer has property or the employer
resides, and thereupon that Recovery Officer shall also proceed
to recover the amount due under this section as if the cer-
tificate or the copy thereof had been the certificate sent to him
by the authorised officer .
Validity of certificate, and amendment thereof -[Section 8D]:

1. When the authorised officer issues a certifica te to a Recovery Officer
under section 8B, it shall not be open to the employer to dispute before
the Recovery Officer the correctness of the amount, and no objection
to the certificate on any other ground shall also be entertained by
the Recovery Officer.
2. Notwithstanding the issue of a certificate to a Recovery Officer,
the authorised officer shall have power to withdraw the certificate
or correct any clerical or arithmetical mistake in the certificate by send-
ing an intimation to the Recovery Officer.

3. The authorised officer shall intimate to the Recovery Officer any

orders withdrawing or canceling a certificate or any correction made
by him under sub -section 2 or any amendment made under sub
-section 4 of section 8E. NOTES
Stay of proceedings under certificate and amendment or withdrawal

thereof-[Section 8E]:
1. Notwithstanding that a certificate has been issued to the Recovery
Officer for the recovery of any amount, the authorised officer may
grant time for the payment of the amount, and thereupon the Recovery
Of ficer shall stay the proceedings until the expiry of the time so granted.
2. Where a certificate for the recovery of amount has been issued, the
authorised officer shall keep the Recovery Officer informed of any amount
paid or time granted for payment, subsequent to the issue of such certifi-
cate.
3. Where the order giving rise to a demand of amount for which a certificate
for recovery has been issued has been modified in appeal or other pro-
ceeding under this Act, and, as a consequence thereof, the demand
is red uced but the order is the subject-matter of further proceeding under
this Act, the authorised officer shall stay the recovery of such part of the
amount of the certificate as pertains to the said reduction for the period for
which the appeal or other proce eding remains pending.
4. Where a certificate for the recovery of amount has been issued and sub-
sequently the amount of the outstanding demand is reduced as a result of
an appeal or other proceeding under this Act, the authorised officer
shall, when the orde r which was the subject-matter of such appeal or
other proceeding has become final and conclusive, amend the certificate
or withdraw it, as the case may be.
Other modes of recovery-[Section 8F]:

1. Notwithstanding the issue of a certificate to the Recovery Officer
under section 8B, the Central Provident Fund Commissioner or any
other officer authorised by the Central Board may recover the amount
by any one or more of the modes provided in this section.
2. If any amount is due from any person to any employer wh o is in ar-
rears, the Central Provident Fund Commissioner or any other officer
authorised by the Central Board in this behalf may require such
person to deduct from the said amount the arrears due from such em-
ployer under this Act, and such person shall com ply with any such

requisition and shall pay the sum so deducted to the credit of the
Central Provident Fund Commissioner or the officer so authorised, as
the case may be: Provided that nothing in this sub -section shall apply
NOTES to any part of the amount ex empt from attachment in execution of a
decree of a civil court under section 60 of the Code of Civil Pro-
cedure, 1908 (5 of 1908).
3. (i) The Central Provident Fund Commissioner or any other of-
ficer authorised by the Central Board in this behalf may, at any
time or from time to time, by notice in writing, require any person
from whom money is due or may become due to the employer or,
as the case may be, the establishment or any person who
holds or may subsequently hold money for or on account of the
employer or as the case may be, the establishment, to pay
to the Central Provident Fund Commissioner either forthwith upon
the money becoming due or being held or at or within the time
specified in the notice not being before the money becomes due
or is held so muc h of the money as is sufficient to pay the amount
due from the employer in respect of arrears or the whole of the
money when it is equal to or less than that amount.
(ii) A notice under this sub -section may be issued to any person
who holds or may subsequ ently hold any money for or on account
of the employer jointly with any other person and for the pur-
poses of this sub -section, the shares of the joint holders in
such account shall be presumed, until the contrary is proved, to
be equal.
(iii) A copy of t he notice shall be forwarded to the employer at his last
address known to the Central Provident Fund Commissioner or as
the case may be, the officer so authorised and in the case of a joint
account to all the joint holders at their last addresses known to the
Central Provident Fund Commissioner or the officer so authorised.
(iv) Save as otherwise provided in this sub -section, every person
to whom a notice is issued under this sub -section shall be bound
to comply with such notice, and, in particular, where any such
notice is issued to a post office, bank or an insurer, it shall not be
necessary for any pass book, deposit receipt, policy or any other
document to be produced for the purpose of any entry, endorse-
ment or the like being made before payment is made notwith-
standing any rule, practice or requirement to the contrary.
(v) Any claim respecting any property in relation to which a notice
under this sub-section has been issued arising after the date of
the notice shall be void as against any demand contained in

the notice.
(vi) Where a person to whom a notice under this sub -section is sent
objects to it by a statement on oath that the sum demanded
or any part thereof is not due to the employer or that he does not NOTES
hold any money for or on account of the employer, then nothing
contained in this sub -section shall be deemed to require such per-
son to pay any such sum or part thereof, as the case may be, but if
it is discovered that such statement was false in any material
particular, such person shall be per sonally liable to the Central
Provident Fund Commissioner or the officer so authorised to ex-
tent of his own liability to the employer on the date of the notice,
or to the extent of the employer’s liability for any sum due under
this Act, whichever is less.
(vii) The Central Provident Fund Commissioner or the officer so au-
thorised may, at any time or from time to time, amend or revoke
any notice issue d under this sub-section or extend the time for
making any payment in pursuance of such notice.
(viii) The Central Provident Fund Commissioner or the officer so au-
thorised shall grant a receipt for any amount paid in compliance
with a notice issued under this sub -section, and the person so
paying shall be fully discharged from his liability to the em-
ployer to the extent of the amount so paid.
(ix) Any person discharging any liability to the employer after the re-
ceipt of a notice under this sub -section shall be person-
ally liable to the Central Provident Fund Commissioner or the
officer so authorised to the ext ent of his own liability to the em-
ployer so discharged or to the extent of the employer’s liability
for any sum due under this Act, whichever is less.
(x) If the person to whom a notice under this sub -section is sent fails
to make payment in pursuance th ereof to the Central Provi-
dent Fund Commissioner or the officer so authorised he shall be
deemed to be an employer in default in respect of the amount spec-
ified in the notice and further proceedings may be taken against
him for the realisation of the amount as if it were an arrear
due from him, in the manner provided in sections 8B to 8E
and the notice shall have the same effect as an attachment
of a debt by the Recovery Officer in exercise of his powers
under section 8B.

4. The Central Provident Fund Commis sioner or the officer au-

thorised by the Central Board in this behalf may apply to the court in
whose custody there is money belonging to the employer for payment
NOTES to him of the entire amount of such money, or if it is more than
the amount due, an amount sufficient to discharge the amount due.
5. The Central Provident Fund Commissioner or any officer not below
the rank of Assistant Provident Fund Commissioner may, if so au-
thorised by the Central Government by general or special order, re-
cover any arrears of amo unt due from an employer or, as the case
may be, from the establishment by distraint and sale of his or its mov-
able property in the manner laid down in the Third Schedule to the In-
come -Tax Act, 1961 (43 of 1961).
Application of certain provisions of Income-tax Act-[Section 8G]:

The provisions of the Second and Third Schedules to the Income -tax
Act, 1961 (43 of 1961) and the Income -tax Certificate Proceedings rules,
1962, as in force from time to time, shall apply with necessary mod-
ifications as if the sai d provisions and the rules referred to the arrears
of the amount mentioned in section 8 of this Act instead of to the income -
tax: Provided that any reference in the said provisions and the rules to the
“assessee” shall be construed as a reference to an emp loyer as defined in
this Act.
Priority of payment of contributions over other debts -[Section 11]:

Under section 11 of the Act where the employer is adjudicated insol-
vent or being a company an order for winding up is made the amount due
from the empl oyer in relation to which any scheme applies in respect
of any contribution payable under the fund damages recoverable under
section 14 B accumulations required to be transferred or charges payable
by him under any other provision of this act or from the e xempted es-
tablishment in respect of the contributions shall when the liability arises
before the order of adjudication is made, be deemed to be included in the
debts.
No employer can reduce the wages either directly or indirectly to which the
scheme of the fund is applicable.

Inspector-[Section 13]:
1. The appropriate Government may, by notification in the Of-
ficial Gazette, appoint such persons as it thinks fit to be Inspectors for
the purposes of this Act, the Scheme, the Pension Scheme or the NOTES
Insurance Scheme and may define their jurisdiction.
2. Any Inspector appointe d under sub-section 1 may, for the purpose
of inquiring into the correctness of any information furnished in con-
nection with this Act or with any Scheme or the Insurance Scheme
or for the purpose of ascertaining whether any of the provisions of
this Act or of any Scheme or the Insurance Scheme have been complied
with in respect of an establishment to which any Scheme or the
Insurance Scheme applies or for the purpose of ascertaining whether
the provisions of this Act or any Scheme or the Insurance Scheme are
applicable to any establishment to which the Scheme or the Insurance
Scheme has not been applied or for the purpose of determining whether
the conditions subject to which exemption was granted under section
17 are being complied with by the employer in r elation to
an exempted establishment.
a. require an employer or any contractor from whom any amount
is recoverable under section 8A to furnish such information as he
may consider necessary.
b. At any reasonable time and with such assistance, if any, as he may
think fit, enter and search any establishment or any premises con-
nected therewith and require any one found in charge thereof to
produce before him for examination any accounts, books, registers
and other documents relating to the employment of persons or t he
payment of wages in the establishment;
c. Examine, with respect to any matter relevant to any of the
purposes aforesaid, the employer or any contractor from whom
any amount is recoverable under section 8A, his agent or servant
or any other person found in charge of the establishment or any
premises connected therewith or whom the Inspector has reason-
able cause to believe to be or to have been, an employee in the es-
tablishment;
d. Make copies of, or take extracts from, any book, register or other
document mai ntained in relation to the establishment and, where
he has reason to believe that any offence under this Act has been
committed by an employer, seize with such assistance as he may
think fit, such book, register or other document or portions
thereof as he may consider relevant in respect of that offence;

e. Exercise such other po wers as the Scheme may provide. (2A) Any
Inspector appointed under sub -section 1 may, for the purpose
of inquiring into the correctness of any information fur-
NOTES nished in connection with the Pension Scheme or for the purpose
of ascertaining whether any of the provisions of this Act or of the
Pension Scheme have been complied with in respect of an estab-
lishment to which the Pension Scheme applies, exercise all or any
of the powers conferre d on him under clause a, b, clause c, or
clause d sub-section 2. (2B) The provisions of the Code of Crim-
inal Procedure, 1898 (5 of 1898) shall, so far as may be, apply to
any search or seizure under sub-section 2 or under sub -section
2A, as the case may b e, as they apply to any search or seizure
made under the authority of a warrant issued under section 98
of the said Code.
(3) ***
Penalties :
Any employer failing to make payment of contributions or makes a
falsestatement or false representation shall be punished with imprisonment
for a term of 1 year or with a fine of Rs. 5000/ - or both.
Any employer who makes a default of payment of administrative
charges shall be fined with Rs. 10,000/ - and imprisonment of a year
or both.
Where an offence has been committed under the act by a com-
pany or is attributable to any neglect on the part of any director or manager
or any other officer, shall be deemed to be guilty of that offence and shall
be liable to be produced against and punished accordingly.
Every employee who is the subscriber to any provident fund to which
the act applies, shall continue to be entitled to the benefits accrued to him
under the act.
Power of the Administrative authority:

The Central Provident Fund Commissioner, or Additional
Central Provident Fund Commissioner or Deputy Provident Fund
Commissioner, or Regional Provident Fund Commissioner may by its
order in case of whether the Act is applicable to any
establishment decide this dispute and determine the amount due from
any employer under the provisions of the Act, Scheme, Pension Scheme or
Insurance Scheme.

The Officer conducting this enquiry may have the powers or the pow-
ers vested in the Court under the Code of Civil Procedure 1908 in respect
of trying the suit namely -
a. enforcing the attendance of any person or examining him on oath, NOTES
b. requiring the discovery and production of documents,
c. receiving evidence on affidavits ,
d. issuing commission for the examination of witnesses.
The Commissioner should not necessarily pass any orders unless a
reasonable opportunity is given to the employer to represent his case.
Where the employer, employee or any other person is required to attend
the inquiry fails to attend the enquiry without valid reasons or fails
to produce documents or file any report or return in order to determine the
amount due from the employer and where the order has been passed
against an employee exparte he can within a period of 3 months from
the date of communication apply to the office to set aside the said order
provided, he is satisfied that there was sufficient cause for non appearance
of the employer and that the show cause notice was not duly served on ti
me;
Enhanced punishment in certain cases after previous conviction-

[Section 14 AA]:
For the same offence shall be subject for every such subsequent
offence to imprisonment for a team which may extend to 5 years but which
shall not be less than 2 year and shall also be liable to fine which may extend
to Rs. 25000.
Notwithstanding anything contained in the Code of Criminal Proce-
dure, 1898, an offence relating to default in payment of contribution by the
employer punishable under this act shall be cognizable (section 14 – AB).
No Court shall take cognizance of any offence punishable under this
Act the Scheme or Pension Scheme or E.D.L.I. Scheme except on a report
in writing of the facts constituting such offence made with the previous
sanction of the Central Provident Fund Commissioner or such other of-
ficer as may be authorised by the Central Government, by notifi-
cation in the Official Gazette in this behalf, by an inspector appointed under
section 13 (Section 14 –AC).
2. No Court inferior to that of a Preside ncy Magistrate or Magistrate of the
first class shall try any offence under this Act or the scheme [Section 14 –
AC (2)].

Section 14 – B An employer is liable to pay dames if he commits, a de-

fault in –
(i) The payment of any contribution to the Employees’
NOTES P. F. Pension Fund or Deposit Linked Insurance Fund; or
(ii) The transfer of accumulations required to be transferred by him, under
section 15(2) or section 17 (5); or
(iii) The payment of any charges payable under any other provision
of Act or of any Employees’ P.F. Scheme, or Deposit linked In-
surance Scheme or under any of the condition specified under section
17.
The Central Provident Fund Commissioner or such other officer as
may be authorised by the Central Government, by notification in the
Official Gazette, in this behalf, may recover from the employer by way of
penalty such damages at the rates given below:
Period of default Rate of damages (percentage of
arrears per annum)
(a) Less than 2 months 17
(b) 2 months and above but less 22

than 4 months
(c) 4 month s and above but less 27
than 6 months
(d) 6 months and above 37
The damages shall be calculated to the nearest rupee 50 paise or more

to be counted as the nearest higher rupee and fraction of a rupee has less
than 50 paise to be ignored:
Provided that before levying and recovering such damages, the
employer shall be given reasonable opportunity of being heard. Provided
further that the Central Board may reduce or waive the damages levied
under this section in relation to an establishment which is a sick industrial
company and in respect of which a scheme for rehabilitation has been
sanctioned by the B.I.F.R. established under section 4 of the Sick
Industrial Companies (Special Provisions) Act, 1985, subject to such terms
and conditions as may be specifie d in the Scheme.
No period of limitation is prescribed for levy or recovering of
damages from the defaulter under section 14 – B.

Where an employer is convicted of an offence of making default in –

1. The payment of any contribution to the Fund or the family Pen-
sion Fund.
NOTES
2. The transfer of accumulations required to be transferred by him
under sub section (2) of section 15 or sub -section (5) of section 17.
The Court may, in addition to awarding any punishment by him in writ-
ing require him within a period specifie d in the order (which the court may
if it thinks fit and on application in that behalf from time to time extend) to
pay the amount of contribution or transfer the accumulations as the case
may be in respect of which offence was committed.
It was held in M/s Hindustan Times Ltd. V. Union of India, AIR 1998
(SC688) that the authority under section 14 -B has to apply his mind
to the fact of the case and the reply to the show cause notice and pass a
reasoned order after following the principle of natural justice and giving
a reasonable opportunity of being heard, the Regional Provident Fund
Commissioner for initiating proceedings under section 14 -B usually
takes into consideration the number of defaults, the period of delay, the
frequency of default and the amount involved.
It was further held that the act does not contain any provision present-
ing a period of limitation for assessment or recovery of damage. It is
not the legislative intention to prescribe any period o limitation for com-
puting and recovering the a rrears.
Act not to apply to certain establishments - This act shall not apply –
[Section 16]:
a) to any establishment registered under the Co -operative Societies
Act, 1912 (2 of 1912), or under any other law for the time being in
force in any state relating to co-operative societies, employing
less than fifty persons and working without the aid of power ; or
b) to any other establishment belonging to or under the control of the Cen-
tral Government or a State Government and whose employees are en-
titled to the benefit of contributed provident fund or old age pension in
accordance with any scheme or rule framed by the Central Government
or the State Government governing such benefits ; or
c) To any other establishment setup under any Central provincial
or State act and whose employees are entitled to the benefits of con-
tributory, provident fund or old age pension in accordance with any
scheme or rule framed under that act governing such benefits.
On an application made by the employer and the majority of the employees
in relation to an establishment employing more than 100 employees may

authorise the employer by an order in writing to maintain a provident

fund, in relation to the establishment. Provided that no authorisation
shall be made if the establishment has made a default or has committed an
NOTES offence during the period of three years after the authorisation.
Where the establishment is authorised to maintain a provident fund account
the employer shall maintain such account submit such return deposit
the contribution in such manner for the facilities of inspection and pay
the charges and abide by such other terms and conditions as may be
specified in the scheme.
Power to exempt-[Section 17]:

The Government may by a notification in the Gazette exempt certain
establishments from the purview of the Act.
Transfer of accounts-[Section 17 A]:

The employer shall establish a Board of trustees for the
administration of the provident fund consisting of such number of members
as may be specified, to maintain detailed accounts, to show the
contributions credited, withd rawals made and interest accrued in respect
of each person and to invest the fund monies in accordance with the
directions issued by the central government and to transfer where the
provident fund account of any employee and perfrom such other duties as
ma y be specified in the scheme.
Further the government may exempt the establishment or class of
establishment from the operation of the pension scheme.
Where an employee employed in an establishment to which this act
applies leaves his employment and obtains re -employment in another
establishment to which this act does not apply, the amount of accumulations
to the credit of such employee in the fund or as the case may be, shall be
transferred within such time as may be to the credit of his account in the
provident fund of the establishment in which he is reemployed and provided
the employee permits the said transfer.
Liability in case of transfer of establ ishment-[Section 17 B]:

Where an employer in relation to an establishment transfers that
establishment in whole or in part by sale, gift, lease or licence or in any
other manner whatsoever, the employer and the person to whom the
establishment is so tr ansferred shall jointly and severally be liable to pay

the contribution and other sums due from the employer under the act.
Case Laws: NOTES

1) Poly clinics are covered by the Act. (E.P.F. V/s Poly clinic (P)
Ltd. 1988 II CLR 212)
2) Charitable Institutions are covered (Venkataramana Dispensary V/s
Union of India 1986 II (L) 411.)
3) The Employer must pay the Provident Fund contributions, no mat-
ter whether he has paid wages or not. Gango Chemical Industry
V/s Union of India 1979 I LLJ 416.

Questions
NOTES 1. Discuss the objects, scope and application of the Employees’

provident fund and Miscellaneous Provision Act, 1952.
2. Define the terms ‘Basic Wages’, “Contribution”, ‘Employee’,

‘Exempted employee’ and ‘Exempted establishment’ under the Act.
3. Write note on ‘Employees’ Family Pension Scheme.
4. Explain and discuss the important provisions of the Employee

Provident Fund Act, 1952.
5. How the Central Board and State Board under the Employees’
Provident Fund Act, 1952, are constituted? What are their functions
and duties?

UNIT - 3
EMPLOYEE’S STATE INSURANCE ACT 1948
NOTES
SYNOPSIS
1. Introduction
2. Authorities under the Act –their powers and function.
3. Employees State Insurance Fund-Contributions to the fund by the
Employer and Employees,
4. Grant by Central and State Government.
5. Benefits available, conditions under which available, persons
entitled.
6. Corporation’s right to recover damages or other amounts from
employer, or to be indemnified in certain cases.
7. Adjudication of disputes claims
8. Conclusion
Introduction:
The Employees' State Insurance Act, 1948 (ESI Act) provides for
health care and cash benefit payments in the case of sickness, maternity and
employment injury. The Act applies to all non-seasonal factories run with
power and employing 10 or more persons and to those factories which run
without power and employing 20 or more persons. The appropriate Gov-
ernment may after notification in the Official Gazette, extend the provision
of the Act to any other establishment or class of establishments, industrial,
commercial, agriculture or otherwise.
Under the Act, cash benefits are administered by the Central Govern-
ment through the Employees State Insurance Corporation (ESIC), whereas
the State Governments and Union Territory Administrations are adminis-
tering medical care.
The Employees' State Insurance Corporation (ESIC) is the premier so-
cial security organization in the country. It is the highest policy making and
decision taking authority under the ESI Act and oversees the functioning
of the ESI Scheme under the Act. The corporation comprises members
representing Central and State Governments, employers, employees,
Employee’s State Insurance Act 1948 51

Parliament and the medical profession. Union Minister of Labour

functions as the Chairman of the Corporation. A Standing Committee
constituted from among the members of the Corporation acts as the Exec-
NOTES utive Body for the administration of the Scheme.
Application and Scope of the Act [Section 1]: The E.S.I. Act extends
to the whole of India. Section 1(3) of this Act empowers the Central
Government to enforce different provisions of this Act in different states or
part thereof on different dates.
According to section 1(4), the Act in the first instance applies to all
factories including factories belonging to the Government other than
seasonal factories.
Section 1(4) was amended to enlarge the statutory definition of

'seasonal factory*. The word "include" in the statutory definition is
generally used to enlarge the meaning of the preceding words and it is by
way of extension, and not with restriction.
According to section 1(5), the Central Government in consultation with

Employees' State Insurance Corporation or the State Government with the
approval of the Central Government, may extend different provisions of the
Act or any of them to any other establishment or class of establishments,
industrial, commercial, agricultural or otherwise and has to give 6 months'
notice.
According to proviso to section 1(4) nothing contained in subsection

(4) shall apply to a factory or establishment belonging to or under the
control of the Government whose employees are otherwise in receipt of
benefits substantially similar or superior to the benefits provided under this
Act.
The expression in Sec. 1(5) which provides for application of the Act
to "commercial industrial, agricultural establishments or otherwise" as an
industrial establishment is wide enough to encompass even the
manufacturing units, petrol pump and service station, employing more
than10 but less than 20 employees.

A cooperative society of government servants engaged in giving loans

to its members will be a 'shop' to be covered by ESI Act. A manager will be
counted as an employee for coverage under ESI Act. ESI Act will be
applicable when the total strength of employees exceeds 20 in different NOTES
shops which are under the control of the head office.
Selling services will be deemed as "Shop" to attract the applicability

of the Act. Where the contractor employing persons as Hamals who are
serving and being paid by him, evidence showing that he is doing business
of retail sale of service on payment of money, held, such business can be
said to be
'shop'.
According to sub-section (6) a factory or an establishment to which

this Act applies shall continue to be governed by this Act, notwithstanding
that the number of persons employed therein at any time falls below the
limit specified by or under this Act or the manufacturing process therein
ceases to be carried on with the aid of power.
The provisions of the Act which were initially applicable to the - paran-
tial factories using power and employing 20 or more persons are being grad-
ually extended to the following new classes of establishments by the State
Governments in excercise of powers vested in them under section 1(5) of
the Act—
i. smaller power using factories employing 10 to 19 persons and non-
power using factories employing 20 or more persons.
ii. shops, hotels, restaurants, cinemas including preview theatres, road
motor transport and newspaper establishments employing 20 or more
persons.
The Scheme was first introduced in Delhi and Kanpur hi February 1952;
and later on progressively implemented in other areas. As on 31st Dec.,
1991, the scheme had been implemented at 607 centres in various parts of
the country, covering 61.68 lakh employees. The total numbers of benefi-
ciaries including family members for medical care are about 3 crores.
The Act was substantially amended in 1966 and 1984, the latest being
in the year 1989.

The Act applies to a premises on the date it becomes a factory by ful-

filling the conditions laid down in section 2( 12) and not from any other
date determined by the E.S.I. Corporation.
NOTES The Government has raised the wage ceiling of the workers contribut-
ing to ESI fund. But now from 1-1-1997, workers earning Rs. 6,500 or less,
would come under ESI's purview. Similarly, the rates of contribution from
monthly income of each contributor have also been increased. The revised
rates of contribution are 4.75 percent and 1.75 per cent of the workers'
wages by employers and employees respectively.
Under the ESI scheme it has been decided to grant exemption from
payment of contribution to the employees whose average daily wages is
Rs.25 as against Rs.15 prescribed earlier. Necessary amendments have since
been made in the ESI (Central) Rules, 1950.
The basic provisions of the Act are:

n Every factory or establishment to which this Act applies shall be
registered within such time and in such manner as may be spec-
ified in the regulations made in this behalf.
n It provided for an integrated need based social insurance scheme that
would protect the interest of workers in contingencies such as sickness,
maternity, temporary or permanent physical disablement, death due to
employment injury resulting in loss of wages or earning capacity.
It also provided for six social security benefits:

a) Medical Benefit
b) Sickness Benefit (SB)
c) Maternity Benefit (MB)
d) Disablement Benefit
e) Dependants' Benefit(DB)
f) Funeral Expenses
g) The Central Government may, by notification in the Official Gazette,
establish a Corporation to be known as the 'Employees' State Insurance
Corporation' for the administration of the scheme of Employees' State
Insurance in accordance with the provisions of the Act.
h) The Corporation may, in addition to the scheme of benefits specified
in this Act, promote measures for the improvement of the health and

welfare of insured persons and for the rehabilitation and re-em-

ployment of insured persons who have been disabled or injured and
may incur in respect of such measures expenditure from the funds of
the Corporation within such limits as may be prescribed by the Central NOTES
Government.
i) The contribution payable under this Act in respect of an employee
shall comprise contribution payable by the employer and contribution
payable by the employee and shall be paid to the Corporation. The con-
tributions shall be paid at such rates as may be prescribed by the Central
Government.
j) All contributions paid under this act and all other moneys received on
behalf of the Corporation shall be paid into a fund called the 'Employ-
ees' State Insurance Fund' which shall be held and administered by the
Corporation for the purposes of this Act.
k) Whoever, for the purpose of causing any increase in payment or benefit
under this Act, or for the purpose of causing any payment or ben-
efit to be made where no payment or benefit is authorised by or under
this Act, or for the purpose of avoiding any payment to be made by
himself under this Act or enabling any other person to avoid any such
payment, knowingly makes or causes to be made any false state-
ment or false representation, shall be punishable with imprisonment
or with fine or with both.
If the person committing an offence under this Act is a company, every
person, who at the time the offence was committed was in charge of, and
was responsible to, the company for the conduct of the business of the com-
pany, as well as the company, shall be deemed to be guilty of the offence
and shall be liable to be proceeded against and punished accordingly.
DEFINITION- [SECTION 2]:

"Appropriate Government" means, in respect of establishments under the
control of the Central
Government or a railway administration or a major port or a mine or oilfield,

the Central Government, and in all other cases, the State Government
[Section 2(1)].
The appropriate Government shall grant exemption under Section 91 with

the consent of the E.S.I. Corporation.

The Act is also not applicable to the following:

a. Seasonal factories.
NOTES b. Factories or establishments belonging to or under the control of the
Government whose employees are otherwise in receipt of benefits sub-
stantially similar or superior to the benefits provided under this Act.
c. Any member of the India on naval, military or air force. Any employed
person whose wages( excluding remuneration for overtime work) ex-
ceeds such wages as may be prescribed by the Central Government.
d. Factories working with the aid of power whereon less than 10 persons
are employed.
e. Factories working without the aid of power whereon less than 20 per-
sons are employed.
f. Mines subject to the operation of the Mines Act, 1952. g. Railway run-
ning sheds.
"Confinement"
Confinement means labour resulting in the issue of a living child, or
labour after twenty-six weeks of pregnancy resulting in the issue of a child
whether alive or dead [Section 2(3)].
"Contribution"
Contribution means the sum of money payable to the Corporation by
the principal employer in respect of an employee and includes any amount
payable by or on behalf of the employee in accordance with the provisions
of this Act. [Section 2(4)].
"Corporation"
Corporation means the Employees' State Insurance Corporation set up
under this Act. [section 2(6)].
"Dependent"
There are three categories of dependents under the Act. In the
first- category are included:
For the above dependents it is not necessary that they should in fact be
dependent upon the earnings of the deceased insured person.

i. a widow;
ii. a minor legitimate or adopted son;
iii. an unmarried legitimate or adopted daughter; NOTES
iv. a widowed mother.
For the dependents included in the second category, it is necessary that

they must be, in fact, fully dependent upon the earnings of the insured per-
son at the time of his death. The relatives are
1. A legitimate or adopted son, who has attained the age of 18 years and
is infirm;
2. A legitimate or adopted daughter, who has attained the age of 18 years
and is infirm.
Dependents of the third category may claim benefit under the Act
provided they are wholly or in part dependent on the earnings of the
deceased insured person at the time of his death. These relatives are as
follows :
1. a parent other than a widowed mother;
2. a minor illegitimate son;
3. unmarried illegitimate daughter;
4. legitimate daughter if married and minor;
5. adopted daughter if married and minor;
6. illegitimate daughter if married and minor;
7. legitimate daughter if widowed and minor;
8. adopted daughter if widowed and minor;
9. illegitimate daughter if widowed and minor;
10. a minor brother;
11. an unmarried sister;
12. a widowed sister if a minor;
13. a widowed daughter-in-law;
14. a minor child of a predeceased son;
15. a minor child of a predeceased daughter where no parents of the child
is alive, or

16. a paternal grand-parents if no parent of the insured person ', is alive,

[section 2(6-A)]
NOTES
"Duly appointed"
Duly appointed means appointed in accordance with , provisions of
this Act or with the rules or regulations made thereunder 2(7)
"Employment Injury"
Employment injury means a personal injury to an Employee caused
by accident or an occupational disease arising out of in the course of his
employments, being an insurable employment, the accident occurs of the
employment, being an insurable employment, whether the accident occurs
or the occupational disease is contracted within or outside the territorial
limits of India.
Essentials of an Employment Injury:

1. The injury must be personal to an employee.
2. The injury must be caused by an (i) accident (ii) occupational .disease.
3. The injury must arise out of and in the course of employment.
4. The employment must be insurable.
It is immaterial whether accident occurs or the occupational disease is
contracted within or outside the territorial limits of India.
Employment means a contract between the employer and the employee

whereby the latter agrees to serve the fromer subject to his control and su-
pervision.
Employment does not confine to actual place of work only. It notion-

ally extends to all things or places which the employee is entitled by the
contract of employment or implied to do or visit.
It may be noted that the meaning of expression "accident", 'personal

injury’, arising out of and in the course of employment and the notional the-
ory of extension as discussed under the Workmen's Compensation Act, 1923
applies to this Act also.

Personal Injury is a very wide term. It does not only mean physical or
bodily injury but any other kind of injury affecting the capacity of the work-
man. It includes physical, mental, psychological or an injury by mental
shock, NOTES
Arising out of and in the course of employment:

This expression "arising out or suggests some sort of causal connection
between employment and the injury caused to a workman as a result of ac-
cident. The other half --arising in the course of-- refers to time and place of
accident which means that the accident must have taken place during the
currency of employment, for which the following facts must be proved :
1. that at the time of accident the workman was in fact employed on the
duties of his employment,
2. that the accident occurred at the place where he was perfroming his
duties, and
3. that the act which led to accident was one which he was bound to do
under the contract of his employment. When a workman uses a
means of transport provided by the employer to reach his place of em-
ployment and come back to his place or residence.
The employer is liable to pay compensation for an injury caused by an ac-

cident to the workman subject to the following rules :
1. If there is an obligation upon the workman to travel by the conveyance
provided by the employer.
2. There is an alternative means of transport from the place of his resi-
dence to the places of work except that provided by the employer. The
employer's premises shall in law be deemed to extend to and place
where the accident occurs in the way to reach his place of work. But
where there is option to the employee to travel by any alternative means
which may suit him and an accident occurs in the way by which per-
sonal injury is received by the employee, the employer is not liable as
the workman uses the means of transport of his own accord, waiving
the privilege afforded by his employer.
In Regional Director, E.S.I.C., Ahmedabad v Batliboi & another (1988)

2 Lab LJ29 (Guj.)], the workman of a textile mill while on duty had gone
to canteen during the short recess to take tea, where he died of mio-cardiac
infraction. His widow and son claimed compensation. It was held that the

death arose out of and in the cases of employment because the recess period
is not so long as to disrupt the continuity of the employment. If the recess
was indeed short, the liberty of an employee to go away does not in reality
NOTES mean anything, since he could not have gone so far as to snatch the conti-
nuity of his employment. [Section 2(8)].
"Employee" [Section 2(9)]

Employee means any person employed for wages in or in connection
with the work of a factory or establishment to which this Act applies.
The definition of employee is very wide. The essentials of definition are as
under:
1. The employment of the person must be for wages and it shall be i.
in any establishment or
ii. in a factory
iii. in connection with work of factory including any work connected
with
a. administration of a factory or establishment or any part, de-
partment or
b. purchase of raw material for the factory or establishment or
(c) distribution or sale of the product of a factory or estab-
lishment.
2. The employment may be :

i. directly with the principal employer, or
ii. by or through an immediate employer, or
iii. lent or let on hire by the principal employer,
3. In case of an employee directly employed by the principal employer,

the employment must be of any work of the factory or establishment
or elsewhere. The employment must be incidental or preliminary to or
connected with the work of factory or establishment.
i. It is not material whether he is working in the factory, or
establishment or elsewhere.
4. In case of an employee employed by or through an immediate
employer :

i. In the premises of the factory or establishment, or

ii. under the supervision of the principal employer or his agent on
work which is :
NOTES
a. ordinary part of the work of factory or establishment.
b. preliminary to the work carried on in the factory or
c. incidental to the purpose of the factory or establishment.
5. In case of an employee whose services are temporarily lent or let on
hire to the principal employer by the person with whom the person
whose services are so lent or let on hire has entered into a contract of
service.
The following are not employees:

i. any member of India, Naval, Military or Air Force or
ii. any person whose wages (excluding remuneration for overtime work)
exceed rupees one thousand six hundred per month.
There is an exception to this rule namely an employee whose

wages (amended as 'such wages as may be prescribed by the Central
Government, exceed one thousand six hundred per month at any time after
and not before the beginning of the contribution period, shall continue
to be employee until the end of that period.
After careful consideration of section 2(9), section 2(12), section 38
and section 39, it is not possible to accept the restricted interpretation sought
to be put upon the words employees in factories and to accept the contention
that employees who are required to be insured under the Act are only those
employed in factories defined under section 2(12) of the Act.
The word employee would include not only persons employed in the
factory but also persons connected with the work of the factory. The
employee may be working within the factory or outside the factory or may
be employed for administrative purpose or purchase of new materials or for
sale of the finished goods. All such employees are included within the
definition of employee.
Recently in Regional Director, E.S.L Corporation of India v. Manager
A.C. Co. Ltd. (October 1979} a hospital was attached to and maintained by
a factory exclusively for the benefit of employees of factory and their
families : Held that the workers, employed in Hospital, are employees
within section 2(9) of the Act.

Royal Talkies Hyderabad v E.S.L Corporation—A.I.R. 1978 S.C. 1478

is an important decision of the Supreme Court explaining the meaning of
the term employee under the Act. In this case a cinema theatre manager,
NOTES who had no statutory obligation to run a canteen or provide a cycle stand
but, for the better amenities of his customers and improvement of his busi-
ness entered into an arrangement with another to maintain a canteen and a
cycle stand and other employed, on his own, workers in connected with the
canteen and cycle stand.
It was held that persons so employed are employees of the cinema theatre.
Whether partner of a firm may be an employee? Where a Manager
employed by the firm to manage the affairs of the firm and the managing
partners have hot been taking active part in the running, of tile business of
the firm, the burden of proof is on the firm to prove that the managing part-
ner is rendering services to the firm within its premises and should, there-
fore, be treated as an employee. Unless, it is proved the managing partner
cannot be said to be an employee of the factory.
The position of a partner in a firm was examined by the Supreme re-
cently. It was held that the status of a partner in the firm is different from
employees working under the firm. A partner is not an employee notwith-
standing the fact that he is being paid some remuneration for any special
attention which he devotes to the firm. Managing director of a company
will be covered under the Act
E.S.I.C. v Apex Engineering (P.) Ltd. (I997) LLR 1097(SC)]

A partner will not be covered under the Act. [ESIC v Apex Engg. (P.)
Ltd. (1997) Casual employees engaged in a hotel through contractor would
be covered under the ESI Act.
Employees engaged for loading and unloading for sending its consign-
ment will not be deemed as casual workers since not connected with the
work of the establishment hence not to be covered under ESI Act.
Hamals are employees:

Wireman, car cleaner and sweeper working in multi-storied buildings
and being paid a small amount of services will not be covered under the
Act.
Drivers of trucks engaged on trip basis by a Transport Company will
be covered under the Act. The persons working in workshop, laboratory or

godown will be considered 'employees' under the Act. Apprentices/trainees

other than those engaged under the Appentices Act, 1961 are liable to be
covered under the Act.
NOTES
"Exempted employee"
Exempted employee means an employee who is not liable under this
Act to pay the employee's contribution. [Section 2(10)].
"Family" [Section 2(11)]

Family means all or any of the following relatives of an insured person,
namely:
i. spouse;
ii. a minor legitimate or adopted child dependent upon the insured
person.
iii. a child who is wholly dependent on the earnings of the insured
person and who is—
a. receiving education, till he or she attains the age of 21 years,
b. an unmarried daughter;
c. a child who is infirm by reason of any physical or mental ab-
normality or injury and is wholly dependent on the earnings
of the insured person, so long as the infirmity continues,
d. dependent parents.
"Factory" [Section 2(12)] means:

i. a premises, a geographical area within a certain boundary;
ii. in any part of which manufacturing process shall be carried on
iii. twenty or more persons should be working in the premises.
It was held in The proprietor, M/s Balasaraswathi Motor Works,

Tirunelvell Jn. v E.S.I. Corporation (1970) 2 MLJ403, that apprentices paid
or unpaid would be included as person working inside a factory, while
taking into account the numerical strength of the factory under sub-section
(12) of section 2.

"Immediate Employer"
In relation to employees employed by or through him, means a person
who has undertaken the execution on the premises of a factory or an estab-
NOTES lishment to which this Act applies. or under the supervision of the principal
employer or his agent, of the whole or any part of any work which is ordi-
narily part of the work of the factory or establishment of the principal em-
ployer or is preliminary to the work carried on in, or incidental to the
purpose of, any such factory or establishment, and includes a person by
whom the services of an employee who has entered into a contract of service
with him are temporarily lent or let on hire to the principal employer. [Sec-
tion 2(13)]
"Insurable Employment"
Insurable Employment means an employment in a factory or establish-
ment to which this Act applies. [Section 2(13-A)]
"Insured Person"
Insured Person means a person who is or was an employee in respect
of whom contribution are or were payable under this act and who is by rea-
son thereof entitled to any of the benefits provided by this Act. [Section
2(14)]
"Managing Agent"
Managing Agent means any person appointed or acting as the repre-
sentative of another for the purpose of carrying on such other person's trade
or business, but does include an individual manager subordinate to an em-
ployer. [Section 2(14-A)]
"Manufacturing Process"
Manufacturing Process shall have the meaning assigned to it in the
Factories Act, 1948. [Section 2U4-AA)]
"Mis-carriage'
Mis-carriage' means expulsion of the contents of a pregnant uterus at
any period prior to or during the twenty-sixth week of pregnancy but does
not include any mis-carriage, the causing of which is punishable under the

Indian Penal Code. [Section 2U4-B)]
“Occupier” NOTES
Section 2(15) provides that the occupier of that factory shall have the
meaning assigned to it in Factories Act, 1948.The Factories Act defines
'occupier' as follows :
"Occupier of a factory means the person who has ultimate control over the
affairs of the factory and where the said affairs are entrusted to a managing
agent, such agent shall be deemed to be occupier of the factory.
"Permanent Partial Disablement": where

1. Partial disablement must be of a permanent nature.
2. The disablement must- reduce the earning capacity of the em-
ployee.
3. Reduction of earning capacity must be in every employment which he
was capable of undertaking at the time of accident resulting in the dis-
ablement.
4. Every injury specified in Part II of the 2nd Schedule shall be
deemed to result in permanent partial disablement.
"Permanent Total Disablement" [Section 2(15-B)] Where

1. The disablement resulting from injury must be permanent
2. The disablement must be of such a nature which renders the workman
incapable for all work which he was capable of performing at the
time of accident.
3. Every injury, given in Part I of Schedule II shall be deemed to result in
total -disablement*
4. It shall be deemed to be the result of any combination of injuries
specified in Part II of 2nd Schedule when the aggregate percentage of
loss of earning capacity amounts to one hundred per cent or more.
In this case also 'incapacity for work’is not the same thing as 'incapacity to
work. There is incapacity for work when a man has a physical defect which
makes his labour unsaleable in any market reasonably accessible to him

"Power"
Under section 1(15-0), "power" shall have the meaning assigned to it
in the Factories Act, 1948.
NOTES
"Prescribed"
Prescribed means, prescribed by rules made under this Act. [Section
1(16)].
"Principal Employer" means

i. in a factory, the owner or occupier of the factory and includes the man-
aging agent of such owner or occupier, the legal representative of a de-
ceased owner or occupier, and where a person has been named as the
manager of the foe tory under the Factories Act, 1948, the person so
named;
ii. in any establishment under the control of any department of any Gov-
ernment hi India, the authority appointed by such Government in this
behalf or where no authority is so appointed, the head of the Depart-
ment;
iii. in any other establishment, any person responsible for the
supervision and control of the establishment. [Section 1(17)]
"Seasonal Factory”
[Section 2U9-A)] means a factory which is exclusively engaged in one
or more of the following manufacturing processes, namely cotton ginning,
cotton jute pressing, decertification of groundnuts, the manufacture of cof-
fee, indigo, lac, rubber, sugar (including gur) or tea or any manufacturing
process which is incidental to or connected with any of the aforesaid
processes and includes a factory which is engaged for a period not exceed-
ing seven months in a year—
a. in any process of blending, packing or repacking of tea or coffee; or
b. in such other manufacturing process as the Central Government may, by
notification in the Official Gazette, specify .
"Sickness"
Sickness means a condition which requires medical treatment and
attendance and necessitates absentation from work on medical grounds.

[Section 2(20)]
"Temporary Disablement"
Temporary Disablement means a condition resulting from an NOTES
employment injury which requires medical treatment and renders an em-
ployee as a result of such injury, temporary incapable of doing the work
which he was doing prior to or at the time of the injury resulting in such
disablement. [Sec. 2(21)]
"Wages”
Wages means all remuneration paid or payable in cash to an em-
ployee, if the terms of the contract of employment express or implied, were
fulfilled and includes any payment to an employee in respect of any period
of authorised leave, lock-out, strike which is not illegal or lay-off and other
additional remuneration, if any, paid at intervals not exceeding two months
but does not include:
a. any contribution paid by the employer to any pension fund or provident
fund, or under this Act;
b. any travelling allowance or the value of any
travelling concession;
c. any sum paid to the person employed to defray special expenses en-
tailed on him by the nature of his employment; or
Following are not wages:
i. Bonus by way of exgratia payment as a gesture of goodwill,
ii. Subsistence allowance paid during suspension.
iii. Milk allowance, tea allowance and egg allowance are not "wages.
iv. Gratious payment made only once in a year.
v. Reward for good work paid for exceeding the production target.
vi. 'Inam' or incentive given to contractual labour by the principal em-
ployer.
vii. ere ex-gratia payments or gifts or inams paid at the will of the em-
ployer.
viii. Monthly washing allowance. ix. Wages paid for holidays.
x. Amounts paid to attimare employees, lorry hire charges and elephant
hire charges.
xi. Expenses incurred by an employer for maintenance of office and in-
centive to dealers.

xii. 'Wages' includes the following :

xiii. Payments made for overtime work.
NOTES xiv. A settlement arrived in the course of conciliation proceedings before
the conciliation officer u/s 12(3) of the Industrial Disputes Act.
xv. H.R.A, "Night Shift Allowance", "Incentive Allowance" and "Heat,
Gas and Dust Allowance.
xvi. Attendance bonus paid under a scheme between management and
workmen..
xvii.Payment for unsubstituted holidays.
xviii.Remuneration for discharging extra work assigned to him.
xix. Incentive bonus.
xx. Special allowance and mid-day meal allowance payable in terms of a
settlement.
xxi. Production bonus payable at the end of each quarter.
"Wage period”
'Wages period' in relation to an employee means the period in respect
of which wages are ordinarily payable to him whether in terms of the con-
tract of employment express or implied otherwise. [Section 2(23)]
Section 2(24) ,all such other words and expressions as are used but are
not defined in this Act, shall have the meaning assigned to them in
the Industrial Disputes Act, provided they are used and defined in that Act.
REGISTRATION OF FACTORIES AND ESTABLISHMENT

Every factory or establishment to which this Act applies shall be reg-
istered within such time and in such manner as may be specified in the reg-
ulations made in this behalf. [Section 2-A)
Employees State Insurance Corporation-[Sections 3 & 4]

A body corporate by the name of Employee's State Insurance
Corporation has been established under the Act for the administration of
the scheme of Employees' State Insurance.
The Corporation has a perpetual succession, a common seal and may
sue in its name and be sued [Section 3].

(1) The Corporation shall consist of the following members, ;

(a) a Chairman to be appointed by the Central Government,
i. a Vice-Chairman to be appointed by the NOTES
Central Government,
ii. not more than five persons to be nominated by the Central Gov-
ernment;
(b) one person each representing each of the State in which this Act
is in force to be nominated by the State Government concerned;
(c) one person to be nominated by the Central Government to repre-
sent the Union territories;
(d) Ten persons representing employees to be nominated by the Central
Government in consultation with such organisations of employers
as may be recognised for the purpose by the Central Government;
(e) Ten persons representing employers to be nominated by the Cen-
tral Government in consultation with such organisations of the
Central Government.
(f) two persons representing the medical profession to be
nominated by the Central Government in. consultation with such
organisation of medical practitioners as may be recognised for the
purpose by the Central Government;
(g) three members of Parliament of whom two shall be members of
the house of the People (Lok Sabha) and one shall be a member
of the Council of States (Rajya Sabha) elected respectively by the
members of the House of the People and the members of the Coun-
cil of States; and
(h) The Director General of the Corporation, ex-officio.
The term of office of members of the Corporation, other than the mem-
bers referred to in clause (a), (b), (c) and the ex-officio member, shall
be four years, commencing from the date on which their nomination
or election is notified. However, a member of the Corporation shall,
notwithstanding the expiry of the said period of four years, continue
to hold office until the nomination or election of his successor is noti-
fied.
(2) The members of the Corporation referred to in clauses (a), (b), (c),
above shall hold office during the pleasure of the Government nomi-
nating them (Section 5).

Eligibility for re-appointment or re-election (Section 6): An outgoing

member of the following bodies shall be eligible for re-appointment or re-
election as the case may be :
NOTES 1. E.S.I. Corporation;
2 Standing Committee;
3. Medical Benefit Council.
Under Section 7 of the Act, the Director-General of the Corporation
shall be the proper authority to authenticate any orders and decisions of the
Corporation. Any other instrument issued by the Corporation shall be au-
thenticated either by the signature of the Director-General or any other of-
ficer of the Corporation authorised in that behalf by the D.G. of the
Corporation.
Constitution of the Standing Committee-[Section 8]
A Standing Committee of the Corporation must be constituted from
among its members:
(a) a Chairman nominated by Central Government.
(b) three members of Corporation nominated by Central Government. (bb)
three members of the Corporation representing such three State
Governments thereon as the Central Government may, by notification
in the Official Gazette, specify from time to time.
(c) Eight members elected by Corporation as follows :
i. Three members among the members of Corporation representing
employers.
ii. Three members among the members of Corporation representing
employees.
iii. One member from among the members of Corporation represent-
ing the medical profession.
iv. One member from among the members of Corporation elected by
Parliament.
(d) The Director General of the Corporation ex-officio.
The term of office of a member of the Standing Committee referred to
in clause (d) shall be two years subject to conditions that if they cease to be
members of the Corporation, they cease to be members of the Standing
Committee. The other members referred to in clauses (a) to (c) hold office
during the pleasure of Central Government. The Standing committee will
act as the executive of the Board (Section 9).

Medical Benefit Council (Section 10): A Medical Benefit Council is

provided for to advise on matters relating to administration of medical ben-
efits and it shall consist of the following:
a. the Director General, Health Service ex-officio, as Chairman; NOTES
b. a deputy Director General, Health Service, to be nominated by the Cen-
tral Government;
c. the Medical Commissioner of the Corporation, ex-officio;
d. one member each representing each of the States nominated by the
State Government concerned;
e. three members representing employers to be nominated by the Central
Government in consultation with such organisations of employees as
may be recognized by the State Government concerned.
f. three members representing employees to be nominated by the Central
Government in consultation with such organisation of employees as
may be recognised for the purpose by the Government; and
g. three members, of whom not less than one must be a woman, repre-
senting the medical profession, to be nominated by the Central Gov-
ernment in consultation with such organisations of medical
practitioners.
(2) The term of office of a Member of the Medical Benefit Council, re-
ferred to in any of the clauses (e, f, g) is four years from the date on which
his nomination is notified :
But a member of the Medical Benefit Council shall, notwithstanding the
expiry of the said period of four years, continue to hold office until the nom-
ination of his successor is notified.
(3) A member of the Medical Benefit Council referred to in clauses (b)
and (d) holds office during the pleasure of the Government nominating him.
An outgoing member of the Medical Benefit Council shall be eligible for
re- nomination or re-election as the case may be (Section 6).
Resignation of membership:
A member of the Corporation, the Standing Committee or the Med-
ical Benefit Council may resign his office by notice in writing to the Central
Government and his seat shall fall vacant on the acceptance of the resigna-
tion by that Government (Section 11)

Cessation of membership:
(1) A member of the Corporation, the Standing Committee or the Medical
Benefit Council shall cease to be, a member of that body if he fails to
NOTES attend three consecutive meetings thereof.
But the Corporation, the Standing Committee or the Medical Benefit
Council, as the case may be, may subject to rules made by thea Central
Government in this behalf, restore him to membership.
(2) Where in the opinion of the Central Government any person nom-
inated or elected to represent employers, employees or the medical
profession on the Corporation, the Standing Committee or the Medical
Benefit Council, as the case may be, has ceased to represent such em-
ployers, employees or the medical profession, the Central Government
may, be notification in the Official Gazette, declare that with effect
from such date as may be specified therein such person shall c e a s e
to be a member of the Corporation, the Standing Committee or
the Medical benefit Council as the case may be. A member of Parlia-
ment, nominated as the member the Corporation ceases to be a member
when he ceases to be a member of Parliament (Section 12).
Disqualification:
A person is disqualified for being a member of the Corporation, Com-
mittee or Council—
a. if he is declared to be of unsound mind by a competent Court.
b. if he is an undischarged ,
c. insolvent or
d. if he has directly or indirectly any interest in a subsisting contract with
the Corporation, except as a medical practitioner or as a shareholder
(not being a director) of a company; or
e. if he has been convicted of an offence involving moral turpitude
(Section 13).
The test for determining moral turpitude as laid down in Mangali
v. Chakkilal (1963) in "whether the act leading to a conviction was such as
could shock the moral conscience of the society in general, whether the mo-
tive which led to the act was a base one and whether on account of the act
having been committed the perpetrator could be .considered to be of a de-
praved character or a person who was to be looked down by the society.'

Filling of vacancies:
1. Vacancies in the office of nominated or elected members of the
Corporation, the. Standing Committee and the Medical Benefit
Council shall be filled by nomination or election, as the case may be. NOTES
2. A member of the Corporation, the Standing Committee or the Medical
Benefit Council nominated or elected to fill a casual vacancy shall hold
office only so long as the member in whose place he is nominated or
elected would have been entitled to hold office if the vacancy had not
occurred (Section 14).
Fees and allowances:

Members of the Corporation, the Standing Committee and the Medical
Benefit Council shall receive such fees and allowances as may from time
to time be prescribed by the Central government (Section 15).
Principal Officers:
(1) The Central Government may, appoint the following Principal
Officers of the Corporation, namely :
a. a Director General of Employees' State
Insurance Corporation;
b. an Insurance Commissioner;
c. a Medical Commissioner;
d. a Chief Accounts Officer; and e. an Actuary.
(2) The Director General shall be Chief Executive Officer of the Corpora-
tion.
(3) The Principal Officers are whole-time officers of the Corporation and
shall not undertake any work unconnected with their office without the
sanction of the Central Government and of the Corporation.
(4) A Principal Officer shall hold office for such period, not exceed-
ing five years, and is eligible for reappointment if otherwise qual-
ified.
(5) A Principal Officer shall receive such salary and allowances as may be
prescribed by the Central Government.
(6) A person is disqualified from being appointed a Principal Officer if he
is subject to any of the disqualifications specified in section 13.
The Corporation is a statutory body and Article 311 of the Constitution does

not apply.
NOTES Staff:
The Corporation may employ such other staff of officers and servants
as may be necessary for the efficient transaction of its business.
Powers of the Standing Committee [Section 18]:

The Standing Committee administers the affairs of the Corporation and
may exercise any of the powers for the Corporation.
To promote measures for the health etc of insured persons. The Cor-
poration may, in addition to the scheme of benefit specified in this Act; pro-
mote measures for the improvement of health and welfare of the insured
persons and for the rehabilitation and re-employment of injured and dis-
abled persons. It may incur in respect of such measures expenditure from
the funds of the corporation within such limits as may be prescribed by the
Central Government (Section 19).
Duties of Medical Benefit Council (Section 22): The Medical Benefit

Council shall advise the Corporation and the Standing Committee on
matters relating to the administration of medical benefit, the certifica-
tion for purposes of the grant of benefits and other connected matters.
The MBC shall have such powers and perform such duties of investi-
gation as may be prescribed in relation to complaints against medical prac-
titioners in connection with medical treatment and attendance.
The MBC shall perform such other duties in connection with medical
treatment and attendance as may be specified in regulations.
Duties of Director General and the Financial Commissioner—The

D.G. and the Financial Commissioner shall exercises such power and dis-
charge such duties as may be prescribed, and perform such other functions
as may be specified in the regulations (Section 23).

The Corporation may appoint Regional Boards, Local Committees and

Regional and Local Medical Benefit Councils in such areas and delegate to
them such powers and functions as may be provided by the regulations (Sec-
tion 25). NOTES
Finance And Audit:
The Act makes provision for the creation of a fund called Employees'
State Insurance Fund for payment of benefits to the insured persons, for
meeting administration expenses and providing for other authorised pur-
poses.
The fund is created mainly by the contributions from the employer and
the employees and is held and administered by the Corporation.
The Corporation may accept grants, donations and gifts from the Central
Government or any State Government, local authority or any individual or
body whether incorporated or not.
All money accruing or payable to the said fund are paid into the Re-
serve Bank of India or such other bank which may be approved by the Cen-
tral Government to the credit of an account styled the account of the
Employees' State Insurance Fund.
This account is operated upon by such officers as may be authorised
by the Standing Committee with the approval of the Corporation. (Section
26)
Purposes for which the Funds may be expended:
The Employees' State Insurance Fund can be expended only for
the following purposes, namely:
1. payment of benefits and provisions of medical treatment and atten-
dance to insured and their families where the medical benefit is ex-
tended to their families :
2. fees and allowances to members of the Corporation, the Standing Com-
mittee and the Medical Benefit Council, the Regional Boards, Local
Committees and Regional and Local Medical Benefit Councils;
3. salaries, leave and joining time allowances, travelling and
compensatory allowances, gratuities and compassionate
a. allowances,
b. pensions,
c. contributions to provident or
d. other benefit fund of officers and servants of the Corporation;

4. of contributions to any State Government, local authority or any

private body or individual, towards the cost of medical treatment and
attendance provided to insured persons and their families;
NOTES 5. any sums under any contract entered into for the purposes of this Act
by the Corporation or the Standing Committee or by any officer duly
authorised by the Corporation or the Standing Committee in that be-
half;
6. sums under any decree, order or award or any Court or Tribunal against
the Corporation.
7. establishment and maintenance of hospitals, dispensaries and other in-
stitutions for the benefit of insured persons and their families;
8. defraying the cost (including all expenses) of auditing the accounts of
the Corporation and of the valuation of its assets and liabilities;
9. defraying the cost of the Employees' Insurance Courts set up under this
Act;
10. defraying the cost and other charges of instituting or defending any
civil or criminal proceedings arising out of any action taken under this
Act;
11. defraying expenditure, within the limits prescribed, on measures
for the improvement of health and welfare of insured persons and
for the rehabilitation and re-employment of insured persons who have
been disabled or injured; and
12. such other persons as may be authorised by the Corporation with the
previous approval of the Central Government (Section 28).
Administrative Expenses:
The types of expenses which may be treated as administrative
expenses and the percentage of the income of the Corporation which may
be spent for such expenses shall be such as may be prescribed by the Central
Government and the Corporation shall keep its administrative expenses
within the limits so prescribed by the Central Government. (Section 28-A)
Holding of property, etc.:

(1) The Corporation may acquire and hold property, both movable and im-
movable, sell or otherwise transfer any movable or immovable prop-
erty.
(2) The Corporation may from time to time invest any moneys which are

not immediately required for expenses properly defrayable under this

Act from time to time re-invest or realise such investments and also
raise loans and take measures for discharging such loans.
(3) The Corporation may also constitute for the benefit of its staff or any NOTES
class of them, such provident or other benefit fund as it may deem fit
(Section 29).
Vesting of the property in the Corporation :

All income derived and expenditure incurred in the acquisition of prop-
erty shall be brought into the books of the Corporation.(Section 30).
All employees to be insured-[Section 38] :

Under Section 38, all employees in factories or establishments shall
be insured in the manner provided by this Act. For an employee to be in-
sured two conditions are provided :
(i) he must be employed in a factory or an establishment, and
(ii) contributions must be either paid or payable to him under the Act.
Contribution [Section 39],

1. The contribution payable under this Act in respect of an employee shall
comprise of the contribution partly made by the employee and partly by the
employer. The contribution payable by the employer is known as employer's
contribution and that by the employee is known as employee's contribution.
2. The contributions shall be paid at such rates as may be prescribed by the
Central Government:
Provided that the rates so prescribed shall not be more than the rates which
were in force immediately before the commencement of the Employees'
State Insurance (Amendment) Act, 1989.
The wage period in relation to an employee shall be the unit in respect
of which all contributions shall be payable under the Act [Section 39(3)].
The contributions payable in respect of each wage period shall , ordi-
narily fall due on the last day of wage period. Where the employee is em-
ployed for part of a wage period or is employed under two or more
employers during the same wage period, the contributions shall fall due on
the day as may be specified in the regulations. [Section 39 (4)1.

According to section 39(5) of the Act, if any contribution payable is not

paid by the principal employer on the date on which such contribution has
become due, he shall be liable to pay simple interest @ 12 per cent per
NOTES annum or at such higher rate as may be specified in the regulations, till the
date of its actual payment. However, higher interest specified in the regu-
lations should not exceed the lending rate charged by any scheduled bank.
It may be noted that any interest recoverable as stated above may be recov-
ered as an arrear of land revenue or under newly introduced sections 45-C
to 45-1 of the Act.
ESI's contributions will be payable on the suspension allowance.

Recession in market, labour trouble and non-availability of froms will be
good cause for late deposit of ESI's contribution.
While imposing damages for the late payment of ESI's contributions,

authorities must consider the explanation of the defaulter.
Principal Employer to pay contributions in the first instance [Section

40]:
The principal employer shall pay in respect of every employee, whether
directly employed by him or by or through an immediate employer, both
the employer's contribution and the employee's contribution. [Section
40(1)1
Notwithstanding anything contained in any other enactment but subject
to the provisions of this Act and the regulations, if any, made there under,
the principal employer shall, in the case of an employee directly employed
by him, be entitled to recover from the employee's contribution by deduction
from his wages and not otherwise :
As per sub-section (3) neither the principal employer nor the immediate
employer shall be entitled to deduct the employer's contribution from any
wages payable to an employee or otherwise to recover from him.
(1) The principal employer shall bear the expenses of remitting the contri-
butions to the Corporation (Section 40).
It was held in a case that E.S.I. Corporation is not prevented from
demanding contribution after the expiry of the contribution and benefit pe-
riod under section 40 of the Act.

Recovery of contribution from immediate employer:

A principal employer is entitled to recover the amount of contribution
so paid from the immediate employer in the following two ways :
NOTES
(i) by deduction from any amount payable to him by the principal; and
(ii) to treat this amount as a debt and recover through a Court of law
(Section 41).
According to sub-section (1-A) the immediate employer shall maintain
a register of employees by or through him as provided in the regulations
and submit the same to the principal employer before the settlement of any
amount payable under section 41(1).
Sub-section (2) deals with the power of the immediate employer to
deduct the employee's contribution from the wages of the employees.
But his right to recover the employee's contribution is, subject to
section 40(2), limited to a deduction from the wages only to the period or
part of a period for which wages are paid.
General Provisions as to Payment of Contribution-[Section 42]:

1. No employees' contribution shall be payable by or on behalf of one
employee whose average daily wages are below such wages as may be
prescribed by the Central Government. [Section 42(1)]. His average
daily wages shall be calculated in such manner as may be subscribed
by the Central Government.
2. The principal employer shall pay the employer's contribution and em-
ployee's contribution of each wage period in respect of the whole or
part of which wages are payable to the employee and not otherwise.
Method of payment of contribution:

Subject to the provisions of this Act, the Corporation may make
regulations
1. for any matter relating or incidental to payment and collection of con-
tribution payable under this Act; for manner and time of payment of
contribution;
2. for issue, sale, custody, production, inspection and delivery of books
or cards which have been lost, destroyed or defaced.
Employers are to furnish returns and maintain registers in certain cases
[Section 44]. Sub-section (1) states that every principal employer and

immediate employer has to submit to the Corporation such returns in such

from and containing such particulars relating to the persons employed by
him and other returns required but has not been submitted, which are nec-
NOTES essary to decide whether the provisions of this Act are applicable to the fac-
tory or establishment or not. He has also to maintain such registers or
records in respect of his factory or establishment as may be required by the
regulations.
Non-production of documents demanded by the Inspector of the
Corporation for scrutiny is not a continuing offence.
Inspectors, their functions and duties:

The Corporation may appoint Inspectors for the purposes of this Act within
such local limits as it may assign to them with the following powers:
a. require any principal or immediate employer to furnish to him such in-
fromation as he may consider necessary for the purposes of this Act;
or
b. at any reasonable time enter any office establishment, factory or other
premises occupied by such principal or immediate employer and to
allow him to examine such accounts, books and other documents re-
lating to employment of persons and payment of wages;
c. examine, with respect to any matter relevant to the purposes, the prin-
cipal or immediate employer, his agent or servant, or any person found
in such factory or establishment, office or other premises, or any person
whom the said Inspector or other official has reasonable cause to be-
lieve to be an employee;
d. make copies of, or take extracts from, any register, account book or
other document maintained in such factory, establishment, office or
other premises; and exercise such other power as may be prescribed.
(Section 45)
The powers of the Inspector to call for and examine any register can
be exercised when he visits any factory. He has no power to call for pro-
duction of registers and documents at his office arid the failure of the pro-
prietor or manager of the factory to comply with such order of the Inspector
does not expose the proprietor to any penalty.
Determination of contributions in certain cases:
Where in respect of a factory or establishment the inspector is ob-
structed by the principal or immediate employer or any other person in ex-
ercising his functions or discharging his duties under section 45, the

Corporation may, on the basis of information available to it, by order, de-

termine the amount of contributions payable in respect of the employees of
that factory or establishment.
A combined reading of sections 1(6), 39, 40 and 41 of the Act make it NOTES
clear that the payment of contribution is the responsibility of the principal
employer after it becomes due and that responsibility does not start only
after payment of wages to the employees.
The payment of contribution is not made dependent on the factum of
payment of wages to the employees since deduction in the wages is after
payment of contributions and not vice versa. Thus, under the scheme of the
Act, payment of contributions is earlier to payment of wages to employees.
Benefits available under this Act–[Section 46]:

Six types of benefits are provided by the Act to which the insured persons,
their dependants or certain persons are entitled. These are given below:
1. Sickness benefit,
2. Maternity benefit,
3. Disablement benefit,
4. Dependents' benefit,
5. Medical benefit, and
6. Funeral benefit.
1. Sickness Benefit:
It is the from of periodical payment to any insured person, provided
his sickness is certified by a duly appointed medical practitioner, or any
person having such qualifications and experience as may be specified
by regulations of the Corporation. The rates and period thereof shall be such
as may be prescribed by the Central Government. [Section 46(1)]
Where provision is made for sick leave by standing order, the employer
cannot require the employee to seek sickness benefit provided under this
sub-section.
a. qualified to claim sickness benefit for sickness occurring during any
benefit period if the contributions in respect of him were payable for
not less than half the number of days of the corresponding con-
tribution period and shall be entitled to receive such benefit at the daily
standard benefit rate for the period of his sickness.

b. Provided that he shall not be entitled to the benefits for the first two
days of sickness in the case of a spell of sickness following, at an in-
terval of not more than 15 days, the spell of sickness for which sickness
NOTES benefits were last paid.
c. shall not be paid to any person for more than 91 days in any two con-
secutive benefit periods.
d. The daily rate of sickness benefits = standard benefit rate.
Every insured person, claiming benefit or disablement benefit for tem-
porary disablement, shall furnish evidence of sickness or temporary dis-
ablement in respect of the days of his sickness or temporary disablement
by means of a medical certificate given by an Insurance Medical Officer in
accordance with the regulations in the from appropriate to the circumstances
of the case. [Regulation 53 of the E.S.I. (Gen.) Regulation, 1950]
2. Maternity Benefit:
An insured woman is entitled to periodical payments in case
of confinement, or miscarriage or sickness arising out of pregnancy
confinement or premature birth of a child or miscarriage. She should be cer-
tified to be eligible for such payments by an authority specified in this behalf
by the regulation. [Section 46(l)(b)]
i. An insured woman shall be qualified to claim such benefit if the con-
tributions in respect of her were payable for not less than 80 days in
the immediately preceding two consecutive contribution periods.
ii. to claim at the daily rate for all days on which she does not work for
remuneration during a period of 12 weeks of which not more than 6
weeks shall precede the expected date of confinement. But if the
woman dies during her confinement or during the period of 6 weeks
immediately following her confinement, leaving behind the child, the
maternity benefits will be paid for whole of that period. But if the
child dies, then benefits upto the date of death to the nominated
person/legal representative.
iii. In case of miscarriage or M.T.P.—period of 6 weeks immediately
following the date of her miscarriage or M.T.P.
iv. For any sickness arising out of pregnancy or so, additional benefits not
exceeding one month.
v. Daily rate of maternity benefits = twice the standard benefit rate cor-
responding to the average daily wages in respect of the insured woman
during the corresponding contribution period. An insured woman in

the wage group of Rs. 6 to Rs. 8 will get Rs. 7 daily maternity bene-
fit.
An insured woman shall, in case of miscarriage or medical termination of
pregnancy, be entitled to maternity benefit if : NOTES
a. she is qualified to claim maternity benefit ; and
b. she produces such proof of miscarriage or medical termination of preg-
nancy as may be required under the regulations. If these conditions
are satisfied, the insured women shall be entitled to maternity benefit
for all days on which she does not work for remuneration during
a period of 6 weeks immediately following the date of the miscarriage
or medical termination of pregnancy.
An insured woman shall be entitled to maternity benefit for an addi-
tional period not exceeding 1 month for all days she does not work for re-
muneration in case of:
a. sickness arising out of pregnancy, (&) confinement,
b. premature birth of child; of
c. miscarriage.
The fallowing conditions must, however, be fulfilled before the insured

woman can claim maternity benefit:
1. She must be qualified to claim the maternity benefit; and
2. She must produce such proof as may be required under the regulations
in support of her claim.
3. Disablement Benefit:
Any insured person shall be entitled to periodical payments if :

i. he suffers from disablement;
ii. the disablement results from an employment injury.; and
iii. he sustained the employment injury as an employee under condition
mentioned in the Act [Sec. 46(1) (c)]
The benefit is payable only when the injury is duly certified by an Insurance
medical Officer.
An employee shall be qualified to claim disablement benefits for temporary
disablement for not less than 3 days (excluding the day of accident) for the
period of such disablement

He shall be qualified to claim periodical payment for permanent

disablement which may be allowed for that limited period or for life.
NOTES
The daily rate of disablement = 40% more than the standard benefit.
The disablement benefits shall be payable to the insured person as

follows :
a. For temporary disablement of not less than than 3 days and per-
manent total disablement. At the rate of 40% more than the standard
benefit rate.
b. For permanent partial disablement. At such percentage of the benefit
payable in case of (a) above as is proportionate to the percentage of the
loss of earning capacity.
4. Dependents’ Benefit:
The benefit is available to such dependents of an insured person,
who dies as a result of an employment injury as an employee, as are entitled
to compensation under this Act.{Sec. 46(1)(d)]
(A) In the case of death of the insured person, the dependent's benefits shall
be payable :
1. to the widow during life until remarriage—the amount equal to
3/5 of the full rate, and if there are two or more widows—equally
divided.
2. to each legitimate or adopted son, -2/5 of the full rate until he at-
tains the age of 18 years.
Provided that in the case of legitimate so who is infirm and who is
wholly dependent on the earnings of insured person—continue till
the infirmity lasts.
3. to each legitimate or adopted unmarried daughter—2/5 of the fall
rate until she attains the age of 18 years or until marriage,
whichever is earlier.
(B) In the case the deceased does not have a widow or legitimate/adopted
child :
1. to a parent or grand-parent—for life 3/10 of full rate.

2. to any other—
a. male dependent till he attains 18 years of age. (ii) female de-
pendent till she attains 18 years of age or until marriage,
whichever is earlier. 2/10 of the full rate. NOTES
b. Daily rate of dependent's benefits shall be 40% more than the
standard benefit rate" specified in rule 54 rounded to the next
higher multiple of 5 paise.
5. Medical Benefits:
Medical benefit is available to an injured person or to a member of his
family, where such benefit is extended to me members of his family. This
benefit is in the following froms—
i. Out-patient treatment and attachment in the hospital or dispensary;
or
ii. by visits of the home of the insured; or
iii. as an inpatient in a hospital or other institution. [Section 46(1)e]
6. Funeral Expenses:
Such expenses are payable to the eldest surviving member of the family
or to such person who actually incurs funeral expenses. The amount of such
payment shall not exceed such amount as may be prescribed by the Central
Government. Any claim for the funeral expenses must be made within 3
months of the death of the insured or within such extended period as the
Corporation or any other competent official may allow. (Such expenses shall
be one thousand rupees.) [Section 46 (1) (f)]
Presumptions as to accidents arising in the course of employment:

For the purposes of this Act, an accident arising in the course of an in-
sured person's employment is presumed in the absence of evidence to
the contrary, also to have arisen out of the employment (Section 51-A). But
the presumption is rebuttable one and applied to this Act only.
Accidents happening while acting in breach of regulation [Section 51-B]
An accident shall be deemed to arise out of and in the course of em-
ployment if the act is done for the purpose of and in connection with em-
ployer's trade or business unless:

i. the insured person is at the time of accident acting in contravention of

the provisions of any law applicable to him; or
ii. the insured person is acting in contravention of any order given by or
NOTES on behalf of employer or acting with instructions from his employer.
iii. he is acting without instructions from the employer ;
Accidents happening while travelling in employer's transport:

(1) An accident happening while an insured person is, with the express or
implied permission of his employer, travelling as a passenger by any
vehicle to or from his place of work shall, notwithstanding that he is
under no obligation to his employer to travel by that vehicle, be
deemed to arise out of and in the course of his employment, if :
(a) the accident would have been deemed so to have arisen had he
been under such obligation and
(b) at the time of the accident, the vehicle—
i. is being operated by or on behalf of his employer or some
other person by whom it is provided in pursuance of arrange-
ments made with his employer, and
ii. is not being operated in the ordinary service (Sec 51-C)
Employee dying while waiting for bus to reach his place of work—
Extension of the theory of notional extension of time and place of work
[Smt. Sheela v. Regional Director, E.S.I. Corporation and Others (1990 Lab.
I.C. 1686)] The High Court applied the theory of notional extension of time
and place to ascertain whether the accident took place in the course of em-
ployment and arose out of employment. The High Court held that the acci-
dent occurred within the area falling under the notional extension theory.
The case of Saurashtra Salt Manufacturing Company v. Bai Valu Raja,
was also referred.
"Arising out of and in the course of employment" meaning:

The definition given in section 2(8) of the Act envisaged a personal in-
jury to an employee caused by an accident or an occupational disease "aris-
ing out of and in the course of employment." In "arising out of ..,..." the
legislature had given a restrictive meaning to "employment injury". "Out
of in this context must mean caused by employment. The dictionary mean-

ing of "in the course of was "during (in the course of time goes by) while
doing". This meaning indicates that the accident must take place within or
during the period of employment. If the "employment" would begin from
the moment the employee set out from his house for the factory, then even NOTES
if he had stumbled and fell down at the door-step of his house, the accident
would have to be treated as to have taken place in the course of his employ-
ment. Such interpretation would lead to absurdity and should be avoided.
Precedents:
The leading Indian case on the interpretation of the phrase "in the
course of employment" appearing in section 3(1) of the Workmen Compen-
sation Act, 1923, was Saurashtra Salt Manufacturing Co. v Bai Valu Raja
(1958) A.I.R. SC 881; and Regina v National Insurance Commissioner ex.
P. Michael (1977) 1
In the case given above, the fact that the accident occurred 15 minutes
before the workman reached the factory and one mile from the factory could
not be a ground for departing from the principle laid down by decided cases
that the employment would not commence until the workman had reached
the place of employment. What happened before that was not in course of
employment.
Accidents happening while travelling in employer's Transport:

An accident happening to an insured person in or about any premises
at which he is for the time being employed for the purpose of his employer's
trade or business shall be deemed to arise out of and in the course of his
employment, if it happens while he is taking steps, on an actual or
supposed emergency at those premises, to rescue, succour or protect
persons who are, or are thought to be or possible to be, injured or
imperilled, or to avert or minimise serious damage to property .
Section 52 Dependent's Benefit:

(1) If an insured person dies as a result of an employment injury sustained
as an employee under this Act, dependent's benefit shall be payable at such
rates and for such periods and subject to such conditions as may be pre-
scribed by Central Government to his dependents specified in [Section 2(6-
A) [clauses (i)to (ii)].
In case the insured person dies without leaving behind him the dependents
as aforesaid, the dependents' benefit shall be paid to the other dependents

of the deceased at such rates and for such period and subject to such condi-
tions as may be prescribed by the Central Government. [Section 52(2)].
NOTES
Section 52- A deals with occupational diseases:
The provisions of section 5 1-A shall not apply to the case to which
section 52-A applies.
Occupational diseases:
(1) If an employee employed by any employment, contracts, occupational
disease peculiar to that employment, the contracting of the disease shall,
unless the contrary is proved, be deemed to "be an "employment injury"
arising out of and in the course of employment. The third schedule to the
Act contains a list of employments and corresponding and occupational dis-
eases.
The Third Schedule is divided into three parts. The contracting of an occu-
pational disease peculiar to insured person's employment shall be deemed
to be an employment injury arising out of and in the course of employment.
Section 52-A (3) further provides that no benefit shall be payable to an em-
ployee in respect of any disease unless the disease is directly attributable to
a specific injury by accident arising out of and in the course of his employ-
ment.
Bar against receiving' or recovery of compensation or damages under any
other law (Section 53). This section enacts a kind of prohibition against the
insured person or his dependents from receiving or recovering any com-
pensation or damages under—
a. The Workmen's Compensation Act, or

b. any other law for the time being in force or otherwise from;
(i) the employer, or
(ii) from any other person.
It may be noted that the insured person under the Act has no option to
elect the kind of remedy. The bar created under this section operates irre-
spective of the fact that the insured person has received benefit under the
Act or not.

Determination of Question of Disablement:

The following matters shall be determined by a Medical Board consti-
tuted in accordance with the provisions of the regulations:
NOTES
i. whether the relevant accident has resulted in permanent dis-
ablement; or
ii. whether the extent of loss of earning capacity can be assessed provi-
sionally or finally; or
iii. whether the assessment of the proportion of loss of learning ca-
pacity is provisional or final; and
iv. in the case of provisional assessment the period for which such assess-
ment hold good. Any such matter as referred to above shall be known
as "the disablement question." (Section 54)
Reference to Medical Board, etc. (Section 54-A) :

All questions relating to disablement shall be referred to the medical
Board for determination. The case of any insured person for per-
manent disablement benefit shall be referred by the Corporation to a Med-
ical Board for determination of the disablement question. In case of
provisional assessment, it shall be referred to the Board within the period
of provisional assessment.
The Medical Appeal Tribunal shall be constituted by the State Gov-
ernment. The State Government has also the right to frame rules for filing
appeal and prescribing time within which an appeal should be made.
Sub-section (2) provides for appeal where the insured person or
the Corporation is not satisfied with the decision of the Medical Board.
A reference to the M.B. may be made by the Corporation:

i. at the time, on the recommendation of an Insurance Medical Officer;
and
ii. on its own initiative after the expiry of the period of 28 days from the
first date on which the claimant was rendered incapable of work by the
relevant employment injury :
It was held in Vasudevan Nair v. Regional Director E.S.I.C. (1991) 1
Lab. LJ 359 (Kerela)] that though the Insurance Court may not have the ex-
pertise, the statute has empowered the Insurance Court to examine the cor-
rectness of the certificate issued by the Medical Board.

Review of decisions by Medical Board or Medical Appeal Tribunal : (Sec-

tion 55). Review of the decision is permitted on the following grounds :
If the decision was given in consequence of: the non-disclosure,or of
NOTES misrepresentation by the employer or any other person of medical fact.
The Medical Board or Medical Appeal Tribunal, must be satisfied
about the fact of non-disclosure or misrepresentation on the basis of fresh
evidence .
Conditions for the review of assessment of the extent of disablement
resulting from the relevant employment injury by the Medical Board :
(1) There should be substantial and unforeseen aggravation of the results
of the relevant injury.
(2) The Board must be satisfied to the aggravation of injury and must be
of the opinion that substantial injustice would be done if review is not
made.
(3) The application for review must be made after five years in case of final
assessment and six months in the case of provisional assessment from
the date of relevant assessment.
(4) The revised assessment will be made from the date of application. The
Medical Board in deciding an application for review (a) can deal with
it as if it were a reference under section 54-A, or can make provisional
assessment.
Review of Dependants' Benefit-[Section 55A]: The conditions are as

follows:
i. There must be fresh evidence available to show that the previous
decision was given in consequence of
(a) non-disclosure of material facts or
(b) misrepresentation, whether fraudulent or not.
ii. These might have been made either by the claimant himself or any
other person.
iii. If the decision is no longer in accordance with this Act due to
happening of any one or the other of the following contingencies : birth,
death, marriage or remarriage, cesser of infirmity, attainment of the age
of eighteen years by the claimant.
iv. Review of dependants' benefit shall be made by Corporation and as a
result of review may be continued, reduced or discontinued.

v. The amount payable as a dependants' benefit in respect of death of an

insured person may be reviewed on either of the above grounds.
NOTES
Medical Benefit [Section 56]:
An insured person/or a member of his family, may be given
medical treatment in the following from:
(i) out-patient treatment; or
(ii) attendance in a hospital, dispensary, clinic or other injuries; or
(iii) by visits to the home of the insured person; or
(iv) treatment as in-patient in a hospital or other institution.
An insured person shall be entitled to medical benefit during any week:

(i) for which contributions are payable in respect of him.
(ii) in which he is qualified to claim sickness benefit or maternity benefit
or benefit under the regulation!
A person in respect of whom contribution ceases to be payable under

this Act may be allowed benefit for such period and of such nature as may
be provided under the regulation:
Provided further that an insured person who ceases to be in insurabie
employment on account of permanent disablement shall continue, to receive
medical benefit till the date on which he would have vacated the em-
ployment or attaining the age of superannuation had he not sustained such
permanent disablement.
An insured person, who has attained the age of superannuation and his
spouse shall be eligible to receive medical benefits subject to payment of
contribution.
Scale of Medical Benefit
An insured person and his family is entitled to the medical benefit as
below :
(i) medical benefit of such kind as may be provided by State
Government or the Corporation.
(ii) only such medical treatment as is provided by the dispensary, hospital,
clinic or other institution to which the insured person or his family is
allowed.

(iii) such benefit as may be provided by the regulation.

(v) no claim for re-imbursement, from the Corporation of any expenses
incurred in respect of any medical treatment is allowed except as
NOTES provided by the regulations (Section 57).
Adjudication of Dispute and Claim Constitution of Employee’s
Insurance Court:
The Act empowers the. State Government to constitute Employees'
Insurance Court for such local area ms may be specified in the notification.
All matters, questions and disputes arising from the insurance of workmen
are to be decided by the Court. The Court consists of such number of judges
as the State Government may think proper. (Section 74).
Any person who is or has been a judicial officer or is a legal practi-
tioner of five years' standing shall be qualified to be a Judge of the Employ-
ees' Insurance Court. [Sub-section (3)]
The State Government may appoint two or more Courts for the same
local area.
Where more than one Court has been appointed for the same local area,
the State Government may, by general or special order, regulate the distri-
bution of business between them.
Matters to be decided by Employees' Insurance Court (Section 75)
If any question or dispute arises as to:

a. Whether any person is employee within the meaning of this Act or
whether he is liable to pay the employee's contribution, or
b. the rate of wages or average daily
c. the rate of contribution payable by a principal employer
d. the person who is or was the principal employer in respect of any em-
ployee, or
e. the right of any person to any benefit and so to the amount and duration
thereof, or
f. any direction issued by the Corporation under section 55A on a review
of any payment of dependants' benefits, or
g. any other matter which is in dispute between a principal employer and
the Corporation,

1. Such question or dispute (subject to the provisions of subsection 2-A)

shall be decided by the Employees' Insurance Court in accordance with
the provisions of this Act,
2. the following claims are to be decided by the Employees Insurance NOTES
Court, namely :
a. claim for the recovery of contributions from the principal em-
ployer ;
b. claim by a principal employer to recover contributions from any
immediate employer,
c. claim against a principal employer under section 68;
d. claim under section 70 for the recovery of the value or of the ben-
efits received by a person when he is not lawfully thereto; and
e. any claim for the recovery of any benefit admissible under this
Act.
[2-A1 If in any proceedings before the Employees' Insurance Court a

disablement question arises and the decision of a medical board or a
medical appeal tribunal has not been obtained on the same and the decision
of such question is necessary for the determination of the claim or question
before the Employees' Insurance Court, the Court shall direct the Corpora-
tion to have the question decided by this Act and shall together proceed
with the determination of the claim or question before it in accordance with
the decision of the medical board or the medical council tribunal, as the
case may be, except when an appeal has been filed before the Employees'
Insurance Court under sub-section (2) of section 54-A in which case the
Employees' Insurance Court may itself determine all the issues arising be-
fore it.
ESI Corporation cannot approach E.S.I. Court for resolving any dif-
ference or dispute with an employee. Order of ESI authorities can be chal-
lenged by filing application in E.S.I. Court and not by filing writ petition.
Court has jurisdiction to decide whether benefits availed by employees
prior to E.S.I. Scheme were more advantageous than under E.S.I. Scheme
No Civil Court shall have jurisdiction to decide or deal with any ques-
tion or dispute to adjudicate on any liability which by or under this Act is
to be decided by a Medical Board, or by a Medical Appeal or by the Em-
ployees' Insurance Court (Section 75)
This sub-section is based on the principle that where the liability is cre-
ated by a statute, party aggrieved must pursue the special remedy provided

by it. In such cases the jurisdiction of the Civil Court is not completely
ousted but is limited.
NOTES
Institution of proceedings [Section 76]:
All proceedings shall be instituted in the Employees' Insurance Court
appointed for the local area in which the insured person was working at the
time the question arose. The State Government has the power to transfer
any proceedings suo motu or on the motion of Employees' Insurance Court
from one Court to another. [Section 76(1)]
If the ES.I. Court is satisfied that any matter pending for decision be-
fore it can be more conveniently decided by another ES.I. Court in the same
State, it may transfer that matter for disposal to that Court. Where any matter
is so transferred that transferring Court shall send all relevant and connected
records to that Court. [Section 76(2)]
So, also the State Government may transfer any matter pending before
any Employees' Insurance Court to any such Court in another State with
the consent of the Government of that State. [Sub-section (3)] (4) The Court
to which any matter is so transferred shall continue the proceedings as if
they had been originally instituted in it.
Commencement of Proceedings:
Any proceeding before an employees' Insurance Court shall be commenced
by an application.
Limitation:
Every such application shall be made within three years from the date in
which the cause of action arose.
This form of application (if any) and the particulars required to be furnished
with the application shall be prescribed by the State Government in con-
sultation with the Corporation.
(a) the cause of action in respect of a claim for benefit shall not be deemed
to arise unless the insured person claims or in the case of dependant's
benefit the dependants of the insured person claim that benefit in ac-
cordance with the Regulations made in that behalf within a period of
twelve months after the claim became due or within such period on the

Employees’ Insurance Court may be allowed on grounds which appear

to it to be reasonable.
(b) The cause of action in respect of claim by the Corporation for
recovering contribution from the principal employer or a claim by the NOTES
principal employer for recovering contribution from an immediate em-
ployer shall not be deemed to arise till the date by which the evidence
of contribution having been paid is due to be received by the Corpora-
tion under the Regulations.
The discretion of the Employers' Insurance Court in condoning delay

in instituting a proceeding on reasonable ground is judicial and must be ex-
ercised on well recognised principles, and every such application shall be
in such from and shall contain such particulars and shall be accompanied
by such fee as may be prescribed by rules made by the State Government
in consultation with the Corporation.
Under section 77(1-A) starting point of limitation would be date of de-
nial of benefits by Corporation and not the date of medical certificate.
Proviso to section 77U-A) of ESI Act cannot stand in the way of de-
termining assessment under Section 45-A.ESI Corporation cannot make
any claim after 5 years from the date on which the cause of action has arisen.
Powers Of Employees' Insurance Court-[Section 78]:

1. The Employees' Insurance Court shall have the powers of a Civil Court
for the purposes of summoning and enforcing the attendance of wit-
nesses, compelling the discovery and production of documents and ma-
terial objects administering oath and recording evidence.Such court
shall be deemed to be a Civil Court within the meaning of section 195
and chapter XXXV df Code of Criminal Procedure 1878.
2. The Employees' Insurance Court shall follow such procedure as may
be prescribed by the State Government.
3. All costs incidental to any proceeding before the E .S.I. Court shall
subject to such rules as may be made in this behalf by the State Gov-
ernment be in the discretion of the Court.
4. An order of the employees' Insurance Court shall be enforceable as if
it were a decree passed in a suit by a Civil Court.
The rules of natural justice are applied by the Employees' Insurance
Courts when there are no statutory rules laying down the procedures for the
guidance of these Courts.

Appearance by Legal Practitioners :Any application, appearance or act re-

quired to be made or done by any person to or before an Employees' Insur-
ance Court may be made or done by :
NOTES a. a legal practitioner ;or officer of a registered trade union authorised in
writing by person; or a person authorised in writing with the permis-
sion of Insurance Court-
b. appearance of a person is required for the purpose of examination as a
witness, he shall appear in person.
Reference to High Court [Section 81]:

The E.I. Court may submit any question of law for the decision of the
High Court and if it does so it shall decide the question pending before it in
accordance with such decision.
Appeal:
An appeal from an order of an E.I. Court shall lie to the High Court
only on substantial question of law within a period of 60 days and provi-
sions of Sections 5 and 12 of the Indian Limitation Act, 1908 shall apply to
appeals.
An appeal will not lie when Employees' Insurance Court discards opin-
ion of Medical Board recommending partial disablement of a workman in
holding 100 per cent disability,
Stay of Payment pending Appeal: Section 83 provides that where the
Corporation has presented an appeal against an order of E.I. Court that
Court may if so directed by the High Court shall, pending the decision of
the appeal, with hold the payment of any sum directed to be paid by the
order appealed against.
Penalties And Procedure Punishment For False Statement:

Whosoever knowingly makes or causes to be made any false statement or
false representation for the purpose—
(1) causing any increase in payment or benefit under this Act.
(2) causing any payment or benefit to be made where no payment or ben-
efit is authorised under this Act.
(3) avoiding any payment to be made by himself under this Act.
(4) enabling any other person to avoid any such payment.

The penalty provided is imprisonment for a period which may extend

to 6 months, or fine not exceeding Rs. 2,000, or both :
Provided that where an insured person is convicted under this section,
he shall not be entitled for any cash benefit under this Act for such period NOTES
as may be prescribed by the Central Government.
Punishment for failure to pay contributions, etc. (Section If any person

(a) fails to pay any contribution which under this Act he is liable to pay,
or
(b) deducts or attempts to deduct from the wages of all employees the
whole or any part of the employer's contribution, or
(c) in contravention of section 72 reduces the wages or any privileges
or benefits admissible to an employee, or
(d) in contravention of section 73 or any regulation dismisses, discharges,
reduces or otherwise punishes an employee, or
(e) fails or refuses to submit any return required by the regulations,
or made a false return, or
(f) obstructs any Inspector or other official of the Corporation in the dis-
charge of his duties, or
(g) is guilty of any contravention of or non-compliance with any of the re-
quirements of this Act or the rules or regulations in respect of
which no special penalty is provided. He shall be punishable.
Any person who commits an offence under clause(a) with imprison-
ment for a term which may extend to three years but :
(a) which shall not be less than one year in case of failure to pay the em-
ployees' contribution which has been deducted by him from the em-
ployee's wages and shall also be liable to fine of Rs. 10,000;
(b) which shall not be less than 6 months in any other case, and shall also
be liable to fine of five thousand rupees :
Provided that the court may, for any adequate and special reasons to be
recorded in the judgement, impose a sentence of imprisonment for a lesser
term;
Where he commits an offence under any of the clauses (b) to (g) (both in-
clusive), with imprisonment for a term which may extend to one year or
with fine which may extend to four thousand rupees, or with both.

For contravention to section 40 of the Employees' State Insurance Act

though it is punishable under section 85 (a) and (g) proceedings under sec-
tion 406/403 of Indian Penal Code are maintainable. The director of a lim-
NOTES ited company is the owner and as such the principal employer within the
meaning of section 2(17) of the Act. Therefore the directors may be held li-
able for contravention of the provisions of the Act
The new sections 85-A to 85-C inserted by Amendment Act No. 38 of
1975 provided for enhanced punishment where the same offence is com-
mitted again and gives powers to Court to make orders to pay the amount
of contribution in respect of which the offence was committed in addition
to awarding any punishment. These are given below:
Enhanced Punishment in Certain Cases after Previous Conviction:

Whoever having been convicted by a court of an offence for failure by
the employer to pay any contribution which under the Act, punishable under
this Act, commits the same offence shall, for every such subsequent offence
be punishable with imprisonment for a term which may extend to one year,
or with fine which may extend to five thousand rupees;
Power to Recover Damages Section 85-B newly inserted by Amendment

Act, 1975 gives powers to the Corporation, where an employer fails to pay
the amount due in respect of any contribution or any other amount payable
under this Act, to recover from him after giving him a reasonable op-
portunity of being heard, such damages net exceeding the amount of arrears
as it may think fit to impose.
Provided that before recovering such damages, the employer shall be given
a reasonable opportunity of being heard.
And also the corporation may reduce or waive the damages recoverable
under this section in relation to an establishment which is a sick industrial
company in respect of which a scheme for rehabilitation has been
sanctioned by B.I.F.R. subject to such terms and conditions as may be spec-
ified in regulations.
Any damages recoverable under sub-section (1) may be recovered as an ar-

rear of land revenue (Section 85-B).

Prosecutions:
1. No prosecution under this Act shall be instituted except by or with the
previous sanction of the Insurance Commissioner or of such other of-
ficer of the Corporation as may be authorised in this behalf by the Di- NOTES
rector General of the Corporation.
2. No Court inferior to that of a Presidency Magistrate or a Magistrate of
the First Class shall try any offence under this Act.
3. No Court shall take cognizance of any offence under the Act except
on complaint made in writing in respect thereof within three months
of the date on which the offence is alleged to have been committed
(Section 86).
Offences by Companies [Section 86-A]:

If the person committing an offence under this Act is a company, every
person, who at the time the offence was committed was in charge of, and
was responsible to, the company for the conduct of the business of the
company, as well as the company, shall be deemed to be guilty of the
offence and shall be liable to be proceeded against and punished accordingly
But the person shall not be liable to any punishment if he proves that
the offence was committed without his knowledge or that he exercised all
due diligence to prevent the commission of such offence.
Notwithstanding anything contained in sub-section (1), where an of-
fence under this Act has been committed with the consent or connivance
of, or is attributable, any neglect on the part of, any Director or Manager,
Secretary or the Officer of the Company, such Director, Manager, Secretary
or other officer shall be deemed to be guilty of that offence and shall be li-
able to be proceeded against and punished accordingly.
"Company" means anybody corporate and includes a firm and other
association of individuals; "Director" in relation to (a) a company, other
than a firm, means the managing director or a whole-time director ;(b)in a
firm means a partner in the firm.
In the absence of any averment in the complaint or any other material
on record indicating that he was in charge of, and responsible for, the con-
duct of the business of the company, a director other than the Managing Di-
rector cannot be prosecuted for an offence committed by the company,
Exemption of a factory or establishment-[Section 87]:
(1) The authority to grant exemption from the operation of this Act is
vested in the appropriate Government.

(2) Exemption may be granted to :

(i) any factory or establishment, or
NOTES (ii) any class of factories or establishments.
(3) Exemption can, at one time, be granted for a maximum period of one
year.
(4) Any exemption granted under this section shall be notified by a noti-
fication in the Official Gazette.
The Central and the State Governments are empowered to make Rules
Regulations for the purpose of giving effect to the provisions thereof after
consultation with the Corporation.

Questions
1. What are the purposes for which the Employees' State Insurance fund
may be expended?
NOTES
2. Explain the various benefits under the Employees' State Insurance

Act,1948.
3. Explain the conditions which must be observed by recipient of

sickness or disablement benefits under the Employees' State In-
surance Act, 1948?
4. Can an insured person claim sickness benefits and disablement benefits

for temporary disablement simultaneously under the E.S.I. Act,
5. Who is entitled to claim the funeral expenses of a deceased employee

and how much under the Act?
6. Elaborate the provisions of the Employees' State Insurance Act, 1948

for the payment of medical benefit.
7. Discuss briefly the rules relating to obligations of the employer.
8. Describe the provisions relating to contribution to the Employees' State

Insurance Fund.
9. How the Employees’ Insurance court constituted and what is are the
matters to be decided by such a Court?

UNIT - 4
THE MATERNITY BENEFIT ACT, 1961
NOTES
SYNOPSIS
1. Introduction
2. Aims and objectives of the Act
3. Applicability, Nature of benefits and privileges available under the
Act
4. Procedure for claiming payment
5. Inspectors – their powers and functions.
6. Penalties.
7. Conclusion
Introduction
The Maternity Benefit Act, aims to regulate of employment of women
employees in certain establishments for certain periods before and after
child birth and provides for maternity and certain other benefits.
The Act extends to the whole of India and is applicable to:

1. Every factory, mine or plantation (including those belonging to
Government) and
2. An establishment engaged in the exhibition of equestrian, acrobatic
and other performances, irrespective of the number of employees, and
3. To every shop or establishment wherein 10 or more persons are
employed or were employed on any day of the preceding 12 months.
The State Government may extend the Act to any other establishment
or class or establishments; industrial, commercial, agricultural or otherwise.
However, the Act does not apply to any such factory/other
establishment to which the provisions of the Employees’ State Insurance
Act are applicable for the time being.
But, where the factory/establishment is governed under the Employees’
State Insurance Act, and the woman employee is not qualified to claim
maternity benefit under section 50 of that Act, because her wages exceed
The Maternity Benefit Act, 1961 102

Rs. 3,000 p.m. (or the amount so specified u/s 2(9) of the ESI Act), or for
any other reason, then such woman employee is entitled to claim maternity
benefit under this Act till she becomes qualified to claim maternity benefi-
tunder the E.S.I. Act. NOTES
Who is Entitled to Maternity Benefit

1. Every woman employee, whether employed directly or through a con-
tractor, who has actually worked in the establishment for a period of
at least 80 days during the 12 months immediately preceding the date
of her expected delivery, is entitled to receive maternity benefit.
2. The qualifying period of 80 days shall not apply to a woman who has
immigrated into the State of Assam and was pregnant at the time of
immigration.
3. For calculating the number of days on which a woman has actually
worked during the preceding 12 months, the days on which she has
been laid off or was on holidays with wages shall also be counted.
4. There is neither a wage ceiling for coverage under the Act nor there is
any restriction as regards the type of work a woman is engaged in.
Notice For Maternity Benefit

A woman employee entitled to maternity benefit may give a notice in
writing (in the prescribed from) to her employer, stating as follows:
1. that her maternity benefit may be paid to her or to her nominee (to be
specified in the notice);
2. that she will not work in any establishment during the period for which
she receives maternity benefit; and
3. that she will be absent from work from such date (to be specified by
her), which shall not be earlier than 6 weeks before the date of her ex-
pected delivery.
The notice may be given during the pregnancy or as soon as possible,

after the delivery.
On receipt of the notice, the employer shall permit such woman to ab-
sent herself from work after the day of her delivery. The failure to give no-
tice, however, does not disentitle the woman to the benefit of the Act.

Restriction on Employment of Pregnant Women

1. No employer should knowingly employ a woman during the period of
6 weeks immediately following the day of her delivery or miscarriage
NOTES or medical termination of pregnancy. Besides, no woman should work
in any establishment during the said period of 6 weeks.
2. Further, the employer should not require a pregnant woman employee
to do an arduous work involving long hours of standing or any work
which is likely to interfere with her pregnancy or cause miscarriage or
adversely affect her health, during the period of 1 month preceding the
period of 6 weeks before the date of her expected delivery, and any pe-
riod during the said period of 6 weeks for which she does not avail of
the leave.
Discharge or Dismissal to be Void

When a pregnant woman absents herself from work in accordance with
the provisions of this Act, it shall be unlawful for her employer to discharge
or dismiss her during, or on account of, such absence, or give notice of dis-
charge or dismissal in such a day that the notice will expire during such ab-
sence or to vary to her disadvantage any of the conditions of her services.
Dismissal or discharge of a pregnant woman shall not disentitle her to
the maternity benefit or medical bonus allowable under the Act except if it
was on some other ground.
Other Benefits
Leave for miscarriage and illness:
In case of miscarriage or medical termination of pregnancy, a woman
shall, on production of the prescribed proof, be entitled to leave with wages
at the rate of maternity benefit, for a period of 6 weeks immediately fol-
lowing the day of her miscarriage or medical termination of pregnancy.
Leave For Tubectomy Operation
In case of tubectomy operation, a woman shall, on production of pre-
scribed proof, be entitled to leave with wages at the rate of maternity benefit
for a period of two weeks immediately following the day of operation.
Leave for illness:

Leave for a maximum period of one month with wages at the rate
of maternity benefit are allowable in case of illness arising out of pregnancy,

delivery, premature birth of child, miscarriage or medical termination of

pregnancy or tubectomy operation.
NOTES
Medical bonus:
Every woman entitled to maternity benefit shall also be allowed a med-
ical bonus of Rs. 250, if no pre-natal confinement and post-natal care
is provided for by the employer free of charge.
Duties of Employers:
Important obligations of employers under the Act are:
1. To pay maternity benefit and/or medical bonus and allow maternity
leave and nursing breaks to the woman employees, in accordance with
the provisions of the Act.
2. Not to engage pregnant women in contravention of section 4 and not
to dismiss or discharge a pregnant woman employee during the period
of maternity leave.
Right of Employees:
Important rights of an employee are:
1. To make a complaint to the Inspector and claim the amount of mater-
nity benefit improperly with held by the employer.
2. To appeal against an order of the employer depriving her of the mater-
nity benefit or medical bonus or dismissing or discharging her from
service, to the competent authority, within 60 days of the service of
such order.
In this Act, unless the context otherwise requires, “appropriate Government”
means in relation to an establishment being a mine 7[or an establishment
where persons are employed for the exhibition of equestrian, acrobatic and
other performances], the Central Government and in relation to any other
establishment, the State Government;
“child” includes a still-born child; “delivery” means the birth of a child;
“employer” means –
i. in relation to an establishment which is under the control of the Gov-
ernment, a person or authority appointed by the Government

for the supervision and control of employees or where no person or au-

thority is so appointed, the head of the department;
ii. in relation to an establishment which is under any local authority,
NOTES the person appointed by such authority for the supervision and control
of employees or where no person is so appointed, the chief executive
officer of the local authority;
iii. in any other case, the person who are the authority which has the ulti-
mate control over the affairs of the establishment and where the said
affairs are entrusted to any other person whether called a manager, man-
aging director, managing agent, or by any other name, such person;
“Establishment” means –
(i) a factory;
(ii) a mine;
(iii) a plantation;
(iv) an establishment wherein persons are employed for the exhibition of
equestrian, acrobatics and other perfromances; or 5 Subs.
(v) an establishment to which the provisions of this Act have been declared
under sub-section (4) of section 2 to be applicable;] “factory” means a
factory as defined in clause (m) of section 2 of the Factories Act, 1948
(63 of 1948); “Inspector” means an Inspector appointed under section
14; “maternity benefit” means the payment refereed to in sub-section
(1) of section 5; “mine” means a mine as defined in clause (j) of section
2 of the Mines Act, 1952 (35 of 1952) “miscarriage” means expulsion
of the contents of a pregnant uterus at ay period prior to or during the
twenty-sixth week of pregnancy but does not include any miscarriage
the causing of which ins punishable under the Indian Penal Code (45
of 1860); “wages” means all remuneration paid or payable in cash to a
woman, if the terms of the contract of employment, express or implied,
were fulfilled and includes :
(1) such cash allowances (including dearness allowance and house
rent allowance) as a woman is for the time being entitled to;
(2) incentive bonus; and
(3) the money value of the concessional supply of foodgrains and
other articles, but does not include :
(i) any bonus other than incentive bonus;
(ii) overtime earnings and any deduction or payment made on

account of fines;
(iii) any contribution paid or payable by the employer to any pen-
sion fund or provident fund or for the benefit of the woman
under any law for the time being in force; and NOTES
(iv) any gratuity payable on the termination of service; “Woman”
means a woman employed, whether directly or through any
agency, for wages in any establishment.
Employment of, or work by, women prohibited during certain period:

1. No employer shall knowingly employ a woman in any establishment
during the six weeks immediately following the day of her delivery or
her miscarriage.
2. No woman shall work in any establishment during the six weeks
immediately following the day of her delivery of her miscarriage.
3. Without prejudice to the provisions of section 6, no pregnant woman
shall, on a request being made by her in this behalf, be required by her
employer to do during the period specified in sub-section (4) any work
which is of an arduous nature or which involves long hours of standing
or which in any way is likely to interfere with her pregnancy or the
normal development of the foetus, or is likely to cause her miscarriage
or otherwise to adversely affect her health.
4. The period referred to in sub-section (3) shall be :
a. at the period of one month immediately preceding the period of

six weeks, before the date of her expected delivery;
b. any period during the said period of six weeks for which the
pregnant woman does not avail of leave of absence under
section 6.
Right to payment of maternity benefit:

1. Subject to the provisions of this Act, every woman shall be entitled to,
and her employer shall be liable for, the payment of maternity benefit
at the rate of the average daily wage for the period of her actual absence
immediately preceding and including the day of her delivery and for
the six weeks immediately following that day.
Explanation. – For the purpose of this sub-section, the average daily
wage means the average of the woman’s wages payable to her for the

days on which she has worked during the period of three calendar
months immediately preceding the date from which she absents herself
on account of maternity, or one rupee a day, whichever is higher.
NOTES 2. No woman shall be entitled to maternity benefit unless she has
actually worked in an establishment of the employer from whom she
claims maternity benefit for a period of not less than one hundred and
sixty days in the twelve months immediately preceding the date of her
expected delivery:
Provided that the qualifying period of one hundred and sixty days
aforesaid shall not apply to a woman who has immigrated into the State
of Assam and was pregnant at the time of the immigration.
Explanation: - For the purpose of calculating under this sub-section
the days on which a woman has actually worked in the establishment,
the days for which she has been laid-off during the period of twelve
months immediately preceding the date of her expected delivery shall
be taken into account.
3. The maximum period for which any woman shall be entitled to mater-
nity benefit shall be twelve weeks, that is to say, six weeks up to and
including the day of her delivery and six weeks immediately following
that day:
Provided that where a woman dies during this period, the maternity
benefit shall be payable only for the days up to and including the day
of her death:
Provided further that where a woman, having been delivered of a child
dies- during her delivery or during the period of six weeks immediately
following the date of her delivery, leaving behind in either case the
child, the employer shall be liable for the maternity benefit for the en-
tire period of six weeks immediately following the day of her delivery
but if the child also dies during the said period, then for the days up to
and including the day of the death of the child.
Continuance of payment of maternity benefit in certain cases:

Every woman entitled to the payment of maternity benefit under this
Act shall, notwithstanding the application of the Employees’ State Insurance
Act, 1948 (34 of 1948), to the factory or other establishment in which she
is employed, continue to be so entitled until she becomes qualified to claim
maternity benefit under Sec. 50 of that Act.]

Payment of maternity benefit in certain cases:

Every woman :
a. who is employed in a factory or other establishment to which the NOTES
provisions of the Employees’ State Insurance Act, 1948 (34 of 1948),
apply;
b. whose wages (excluding remuneration for overtime work) for a
month exceed the amount specified in sub-clause (b) of clause (a) of
section 2 of that Act; and
c. who fulfils the conditions specified in sub-section (2) of section 5, shall
be entitled to the payment of maternity benefit under this Act].
Notice of claim for maternity benefit and payment thereof:

1. Any woman employed in an establishment and entitled to maternity
benefit under the provisions of this Act may give notice in writing in
such from as may be prescribed, to her employer, stating that her ma-
ternity benefit and any other amount to which she may be entitled
under this Act may be paid to her or to such person as she may nomi-
nate in the notice and that she will not work in any establishment
during the period for which she receives maternity benefit.
2. In the case of a woman who is pregnant, such notice shall state the date
from which she will be absent from work, not being a date earlier than
six weeks from the date of her expected delivery.
3. Any woman who has not given the notice when she was pregnant may
give such notice as soon as possible after the delivery.
4. On receipt of the notice, the employer shall permit such woman to ab-
sent herself from the establishment until the expiry of six weeks after
the day of her delivery.
5. The amount of maternity benefit for the period preceding the date of
her expected delivery shall be paid in advance by the employer to the
woman on the production of such proof as may be prescribed that the
woman is pregnant, and the amount due for the subsequent period shall
be paid by the employer to the woman within forty-eight hours of pro-
duction of such proof as may be prescribed that the woman has been
delivered of a child.
6. The failure to give notice under this section shall not disentitle a
woman to maternity benefit or any other amount under this Act if she
is otherwise entitled to such benefit or amount and in any such case an
Inspector may either of his own motion or on an application made to

him by the woman, order the payment of such benefit or amount within
such period as may be specified in the order.
NOTES
Payment or maternity benefit in case of death of a woman:
If a woman entitled to maternity benefit or any other amount under this
Act, dies before receiving such maternity benefit or amount, or where
the employer is liable for maternity benefit under the second proviso to sub-
section (3) of section 5, the employer shall pay such benefit or amount to
the person nominated by the woman in the notice given under section 6 and
in case there is no such nominee, to her legal representative.
Payment of medical bonus:

Every woman entitled to maternity benefit under this Act shall also be
entitled to receive from her employer a medical bonus of twenty-five rupees,
if no pre-natal confinement and post-natal care is provided for by the em-
ployer free of charge.
Leave for miscarriage:

In case of miscarriage, a woman shall, on production of such proof as
may be prescribed, be entitled to leave with wages at the rate of maternity
benefit for a period of six weeks immediately following the day of her
miscarriage.
Leave for illness arising out of pregnancy, delivery, premature birth of
child, or miscarriage:
A woman suffering illness arising out of pregnancy, delivery, premature
birth of child or miscarriage shall, on production of such proof as may be
prescribed, be entitled in addition to the period of absence allowed to her
under section 6, or, as the case may be, under section 9, to leave with wages
at the rate of maternity benefit for a maximum period of one month.
Nursing breaks:
Every woman delivered of a child who returns to duty after such de-
livery shall, in addition to the interval for rest allowed to her, be allowed in
the course of her daily work two breaks of the prescribed duration for nurs-
ing the child until the child attains the age of fifteen months.

Dismissal during absence or pregnancy:

1. Where a woman absents herself from work in accordance with the pro-
visions of this Act, it shall be unlawful for her employer to dis-
charge or dismiss her during or on account of such absence or to give NOTES
notice of discharge or dismissal on such a day that the notice will expire
during such absence, or to vary to her disadvantage any of the condi-
tions of her service.
2. (a) The discharge or dismissal of a woman at any time during her
pregnancy, if the woman but for such discharge of dismissal would
have been entitled to maternity benefit or medical bonus referred
to in section 8, shall not have the effect of depriving her of the
maternity benefit or medical bonus:
Provided that where the dismissal is for any prescribed gross mis-
conduct the employer may, by order in writing communicated to
the woman, deprive her of the maternity benefit or medical bonus
or both.
(b) Any woman deprived of maternity benefit or medical bonus or
both may, within sixty days from the date on which the order of
such deprivation is communicated to her, appeal to such authority
as may be prescribed, and the decision of that authority on such
appeal, whether the woman should or should not be deprived of
maternity benefits or medical bonus or both, shall be final.
(c) Nothing contained in this sub-section shall affect the provisions
contained in subsection (1).
No deduction of wages in certain cases:

No deduction from the normal and usual daily wages of a woman en-
titled to maternity benefit under the provisions of this Act shall be made by
reason only of :
a. the nature of work assigned to her by virtue of the provisions contained
in subsection (3) of section 4 : or
b. breaks for nursing the child allowed to her under the provisions of
section 11.
Inspector
Appointment of Inspectors:
The appropriate Government may, by notification in the Official

Gazette, appoint such officers as it thinks fit to by Inspectors for the pur-
poses of this Act and may define the local limits of the jurisdiction within
which they shall exercise their function under this Act.
NOTES
Powers and duties of Inspectors:
An Inspector may, subject to such restrictions or conditions as may be
prescribed, exercise all or any of the following powers, namely: -
a. enter at all reasonable times with such assistants, if any, being
persons in the service of the Government or any local or other public
authority as he thinks fit, any premises or place where women are em-
ployed or work is given to them in an establishment, for the purposes
or examining any registers, records and notices required to be kept or
exhibited by or under this Act and require their production for inspec-
tion;
b. examine any person whom he finds in any premises or place and who,
he has reasonable cause to believe, is employed in the establishment:
Provided that no person shall be compelled under this section to answer
any question or give any evidence tending to incriminate himself:
c. require the employer to give information regarding the names and ad-
dresses of women employed, payments made to them, and appli-
cations or notices received from them under this Act; and
d. take copies of any registers and records or notices or any portions
thereof.
Inspectors to be public servants:

Every Inspector appointed under this Act shall be deemed to be a public
servant within the meaning of section 21 of the Indian Penal Code (45 of
1860).
Power of Inspector to direct payments to be made:

1. Any woman claiming that maternity benefit or any other amount to
which she is entitled under this Act and any person claiming that pay-
ment due under section 7 has been improperly withheld, may make a
complaint to the inspector.
2. The Inspector may, of his own motion or on receipt of a complaint re-
ferred to in subsection (1), make an enquiry or cause an inquiry to be
made and if satisfied that payment has been wrongfully withheld, may

direct the payment to be made in accordance with his orders.

3. Any person aggrieved by the decision of the Inspector under sub- sec-
tion 2) may, within thirty days from the date on which such decision
is communicated to such person, appeal to the prescribed authority. NOTES
4. The decision of the prescribed authority where an appeal has been
preferred to it under sub-section (3) or of the Inspector where no such
appeal has been preferred shall be final.
5. Any amount payable under these sections shall be recoverable as an
arrear of lane revenue.
Forfeiture of maternity benefit:

If a woman works in any establishment after she has been permitted
by her employer to absent herself under the provisions of section 6 for any
period during such authorized absence, he shall forfeit her claim to the ma-
ternity benefit for such period.
Abstracts of Act and rules thereunder to be exhibited:

An abstract of the provisions of this Act and the rules made thereunder
in the language or languages of the locality shall be exhibited I a conspic-
uous place by the employer in every part of the establishment in which
women are employed.
Registers, etc.:
Every employer shall prepare and maintain such registers, records and
muster-rolls and in such manner as may be prescribed.
Penalty for contravention of Act by employers:

If any employer contravenes the provisions of this Act or the rules
made thereunder he shall be punishable with imprisonment which may ex-
tend to three months, or with fine which may extend to five hundred rupees,
or with both; and where the contravention is of any provision regarding ma-
ternity benefit or regarding payment of any other amount and such mater-
nity benefit or amount has not already been recovered, the court shall
in addition recover such maternity benefit or amount as if it were a fine,
and pay the same to the person entitled thereto.

Penalty for obstructing Inspector:

Whoever fails to produce on demand by the Inspector any register or
document in his custody kept in pursuance of this Act or the rules made
NOTES thereunder or conceals or prevents any person from appearing before or
being examined by an Inspector, shall be punishable with imprisonment
which may extend to three months, or with fine which may extend to five
hundred rupees or with both.
Cognizance of offences:
1. No prosecution for an offence punishable under this Act or any rule
made thereunder shall be instituted after the expiry of one year from
the date on which the offence is alleged to have been committed and
no such prosecution shall be instituted except by, or with the previous
sanction of, the Inspector; Provided that in computing the period of
one year aforesaid, the time, if any,taken for the purpose of obtaining
such previous sanction shall be excluded.
2. No court inferior to that of a Presidency Magistrate or a Magistrate of
the First Class shall try any such offence.
Protection of action taken in good faith:

No suit, prosecution or other legal proceeding shall lie against any person
for anything which is in good faith done or intended to be done in pursuance
of this Act or of any rule or order made thereunder.
Power of Central Government to give directions:

The Central Government may give such directions as it may deem
necessary to a State Government regarding the carrying into execution the
provisions of this Act and the State Government shall comply with such di-
rections.
Power to exempt establishments:

If the appropriate Government is satisfied that having regard to an es-
tablishment or a class of establishments providing for the grant of benefit
which are not less favorable than those provided in this Act, it is necessary
so to do, it may, by notification in the Official Gazette, exempt subject to
such conditions and restrictions, if any, as may be specified in the notifica-
tions, the establishment or class of establishments from the operation

of all or any of the provisions of this Act or of any rule made thereunder.
Effect of laws and agreements inconsistent with this Act: NOTES

1. The provisions of this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law or in the terms of any
award, agreement or contract of service, whether made before or after
the coming into force of this Act:
Provided that where under any such award, agreement, contract of serv-
ice or otherwise, a woman is entitled to benefits in respect of any matter
which are more favorable to her than those to which she would be en-
titled under this Act, the woman shall continue to be entitled to the
more favorable benefits in respect of that matter, notwithstanding that
she is entitled to receive benefit in respect of other matters under this
Act.
2. Nothing contained in this Act shall be construed to preclude a woman
from entering into an agreement with her employer for granting her
rights or privileges in respect of any matter, which are more favorable
to her than those to which she would be entitled under this Act.
Power to make rules:

1. The appropriate Government may, subject to the condition of previous
publication and by notification in the Official Gazette, make rules for
carrying out the purposes of this Act.
2. In particular, and without prejudice to the generality of the foregoing
power, such rules may provide for :
a. the preparation and maintenance of registers, records and
muster rolls;
b. the exercise of powers (including the inspection of estab-
lishments) and the performance of duties by Inspectors for the pur-
poses of this Act;
c. the method of payment of maternity benefit and other benefits
under this Act in so far as provision has not been made
therefore in this Act;
d. the from of notices under section 6:
e. the nature of proof required under the provisions of this Act;
f. the duration of nursing breaks referred to in section 11;

g. acts which may constitute gross misconduct for purposes of

section 12;
h. the authority to which an appeal under clause (b) of sub-section
NOTES (2) of section 12 shall lie, the from and manner in which such ap-
peal may be made and the procedure to be followed in dis-
posal thereof;
i. the authority to which an appeal shall lie against the decision of
the Inspector under section 17; the form and manner in which such
appeal may be made and the procedure to be followed in disposal
thereof;
j. the from and manner in which complaints be made to In-
spectors under subsection (1) of section 17 and the procedure to
be followed by them when making inquiries or causing inquiries
to be made under sub-section (2) of that section;
k. any other matter which is to be, or may be, prescribed.
3. Every rule made by the Central Government under this section shall
be laid as soon as may be after it is made, before each House of Parlia-
ment while it is in session for a total period of thirty days which may
be comprised in one session 11[or in two or more successive sessions,
and if, before the expiry of the session immediately following the ses-
sion or the successive session, aforesaid,] both Houses agree in making
any modification in the rule or both houses agree that the rule should
not be made, the rule shall thereafter have effect only in such modified
from or be of no effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the validity of
anything previously done under that rule.

Questions
1. What are the eligibility requirements for maternity benefit? NOTES
2. What are the benefits available under maternity benefit act and how
are these paid?
3. What are the powers and duties of Inspector appointed under the
maternity benefit act?
4. Write a note on
a. maternity benefit b. medical bonus

UNIT - 5
BOMBAY LABOUR WELFARE FUND ACT, 1953
NOTES
SYNOPSIS
1. Introduction
2. Aims and objectives of the Act
3. Salient features of Bombay Labour Welfare Fund Act, 1953.
4. Payment of contribution to the fund
5. Unpaid accumulation
6. Powers of State Government under the Act
7. Conclusion
Introduction:
After independence in 1947, the rate of industrialisation went on in-
creasing. As per the domestic needs large number of factories started pro-
duction with the considerable number of workers. Thus, a class of persons,
viz, industrial workers came into being and this labour society has to face
many problems like housing, entertainment, social security and health, etc.
There was different legislation in force in different factories for the purpose
of ensuring the welfare of the labour force. However, there was no uniform
system of implementing the measures to promote the welfare and these sit-
uation necessities the enactment of this legislation.
So this Bombay Labour Welfare Act, 1953, has been enacted to make
provision for the constitution of welfare Fund for financing the activities in
the direction of promotion of welfare, in the State of Maharashtra, of the
labour class.
The State Government shall constitute a fund called the Labour Welfare
Fund and notwithstanding anything contained in any other laws for the time
being in force or in any contract or instrument, all unpaid accumulations
shall be paid at such intervals, as may be prescribed to the Board, which
shall keep a separate account there from until claims thereto have been
decided in the manner provided in section 6-A and the other sums specified
in sub-section (2) shall be paid into the fund, [Section 3(1)1].
Bombay Labour Welfare Fund Act, 1953 118

Definition: Section 2
In this Act, unless the context otherwise requires- Section 2 (1)
"Board" means (the Maharashtra Labour Welfare Board) constituted under
section 4. NOTES
Section 2 (1A) "Contribution" means the sum of money payable as contri-

bution to the Board in accordance with the provisions of section 6BB".
Section 2 (2) "Employee" means any person who is employed for hire or
reward to do any work, skilled or unskilled, manual clerical, supervisory or
technical, in an establishment; but does not include any person -
i. who is employed mainly in a managerial capacity, or
ii. who, being employed in a supervisory capacity, draws wages
exceeding three thousand and five hundred rupees per mensem or
exercises, either by the nature of duties attached to the office or by
reason of the powers vested in him, functions mainly of a managerial
nature" :
iii. who is employed as an apprentice under the Apprentice Act 1961
Section 2 (3) "Employer" means any person who employs either directly
or through another person either on behalf of himself or any other person,
one or more employees in an establishment and includes-
i. in a factory, any person named under section 7(i) (f) of the Factories
Act, 1948 (LXIII Act 1948), as the manager;
ii. in any establishment, any person responsible to the owner for the su-
pervision and control of the employees or for the payment of wages;
Section 2 (4) "Establishment" means -

i. a factory ;
ii. a tramway or motor omnibus service or a motor transport undertaking
to which the Motor Transport Workers Act applies; and
iii. any establishment within the meaning of the Bombay Shops and Es-
tablishments Act, 1948 (Bom, LXIII of 1948), which employees, or on
any working day during the twelve months, preceding the specified
date employed, five or more persons including the establishments
which have been granted exemption partly or wholly under the proviso

to section 4 of the act.

Provided that, any such establishment shall, subject to the provision
contained in the succeeding proviso continue to be an establishment for the
NOTES purposes of this Act, notwithstanding a reduction in the number of persons
to less than five at any subsequent time:
Provided further that, where for a continuous period of not less than
three months the number of persons employed therein has been less than
ten, such commercial establishment shall cease to be an establishment for
the purposes of this Act with effect from the beginning of the month fol-
lowing the expiry of the said period of three months, and the employer shall,
within one month from the date of such cessation, intimate by registered
post the fact thereof to such authority as the State Government may specify
in this behalf.
Explanation: For the removal of doubt, it is hereby declared that where
an establishment has different branches or departments, all such branches
or departments, whether situated in the same premises, or different premises
shall be treated as parts of the same establishment.
Section 2 (5) "Factory" means a factory as defined in section 2(m) of
the Factories Act, 1948 and includes any place wherein five or more persons
are employed or working(LXIII of 1948);
Section 2 (6) "Fund" means the (Labour Welfare Fund) constituted
under section 3 ;
Section 2 (7) "Independent member" means a member of the Board
who is not connected with the management of any establishment or who is
not an employee, and includes an officer of Government nominated as a
member ;
Section 2(10) "Unpaid accumulations" means all payments due to the
employees but not made to them within a period of three years from the
date on which they become due whether before or after the commencement
of this Act including the wages, and gratuity legally payable but not includ-
ing the amount of contribution if any, paid by an employer to a provident
fund established under the Employees' Provident Funds Act, 1952 (XIX of
1952) ;
Welfare Fund-[Section 3]:

1. The State Government shall constitute a fund called the Labour
Welfare Fund and notwithstanding anything contained in any other law
for the time being in force or in any contract or instrument, all unpaid
accumulations shall be paid at such intervals as may be prescribed to

the Board which shall keep a separate account therefore until claims
thereto have been decided in the manner provided in section 6A, and
the other sums specified in sub-section (2) shall be paid into the Fund
2. The Fund shall consist of: NOTES
a. all fines realised from the employees;
b. unpaid accumulations transferred to the Fund under Section 6A;
bb. any penal interest paid under section 6B
bbb. any contribution paid under Section 6BB
c. any voluntary donations ;
d. any fund transferred under sub-section (5) of section 7;
e. any sum borrowed under section 8.
f. Any loan, grant-in-aid or subsidy paid by the State Government
3. The sums specified in sub-section (2) shall be paid or collected by such
agencies and in such manner and the accounts of the Fund shall be
maintained and audited in such manner as may be prescribed.
Board-[Section 4]:
1. The State Government shall, by notification in the Official Gazette,
constitute a Board for the whole of the State of Maharashtra for the
purpose of administering the Fund, and to carry on other functions as-
signed to the Board by or under this Act; The Board shall consist of
the following members not exceeding 26 in number, namely :-
a. Such number as may be prescribed of representatives of employ-
ers and employees to be nominated by the State Government :
Provided that both employers and employees shall have equal rep-
resentation on the Board:
b. Such number of independent members as may be prescribed,
nominated by the State Government ;
c. Such number of independent members as may be prescribed,
nominated by the State Government to represent women.
d. the principal secretary or Secretary (Finance) or his nominee shall
be the ex-officio member; and
e. the principal secretary or Secretary (Labour) or his nominee shall
be the ex-officio member;
2. The member of the Board shall elect one of its independent members

as the Chairman of the Board.

3. Save as otherwise expressly provided by this Act, the term of office of
the members of the Board shall be three years commencing on the date
NOTES on which their names are notified in the Official Gazette.
4. The allowances, if any, payable to the members of the Board shall be
such as may be prescribed.
5. The Board shall be a body corporate by the name of the Maharashtra
Labour Welfare Board having perpetual succession and a common seal,
with power to acquire property both moveable and immoveable; and
shall by the said name sue and be sued.
6. Notwithstanding anything contained in this section, until the Board for
the State of Maharashtra is duly constituted in accordance with the pro-
visions of sub-section (1), the existing Board functioning and operating
immediately before the commencement of the Bombay Labour Welfare
Fund In any area of the State, shall continue to function and operate in
that area and shall be the Board for the purposes of this Act that area,
and on the constitution of the Board for the whole of the State of Ma-
harashtra under sub-section (1),-
a. such exiting Board shall stand dissolved, and the members thereof
shall vacate office;
b. all properties, funds and dues which are vested in or realisable by
the existing Board shall vest in, and be realisable by, Board so
constituted ;
c. all right and liabilities which are enforceable by or against the ex-
isting Board, shall be enforceable by or against the Board so con-
stituted and where in any proceedings, in any Court or Tribunal
the existing Board is a party thereto, the Board so constitute shall
be deemed to be substituted as a party to those proceedings ; and
d. the Welfare Commissioner and the other officers and servants of
the existing Board shall continue to be the Welfare Commissioner
and officers and servants of the Board so constituted; but the terms
and conditions of service of the Welfare Commissioner and other
officers and servant shall not, until duly altered by a competent
authority, be less favourable under the Board so constituted than
those admissible to then while in service of the existing Board.
Disqualifications and removal-[Section 5]:

1. No person shall be chosen as, or continue to be a member of the Board

who-
a. is a salaried official of the Board, or
b. is or at any time has been adjudged insolvent or has suspended NOTES
payment of his debts or has compounded with his creditors; or
c. is found to be a lunatic or becomes of unsound mind; or
d. is or has been convicted of any offence involving moral turpitude.
2. The State Government may remove from office any member who-
a. is or has become subject to any of the disqualifications mentioned
in sub-section (1); or
b. is absent without leave of the Board for
more than three consecutive meetings of the Board.
Resignation of office by members and filling up of casual vacancies –

[Section 6]:
1. A member may resign his office by giving notice thereof in writing to
the State Government, and on such resignation being accepted he shall
be deemed to have vacated his office.
2. A causal vacancy in the office of a member shall be filled up, as soon
as conveniently may be by the authority concerned and a member so
nominated shall hold office for the unexpired portion of the term of
the office of his predecessor.
3. No act or proceeding of the Board shall be questioned on the ground
merely of the existence of any vacancy in or any defect in constitution
of the Board.
Power to appoint committees-[Section 6AA]:

For the purpose of advising the board in the discharge of it's functions
and also for carrying into effect any of the matters specified in sub-section
(2) of section 7, the Board may constitute one or more Committees, of
which at least one on each committee shall be a member of the Board
Section 6A: Unpaid accumulations and claim thereto
1. All unpaid accumulations shall be deemed to be abandoned property.
2. Any unpaid accumulations paid to the Board in accordance with pro-
vision of section 3 shall on such payment discharge an employer of the
liability to make payment to an ex-employee in respect thereof, but to
the extent only of the amount paid to the Board and the liability to make

payment to succeeding provisions of this Section be deemed to be

transferred to the Board.
3. As soon as possible after the payment of any unpaid accumulation is
NOTES made to the Board the Board shall by notice (containing such particu-
lars), as may be prescribed.
a. Exhibit on the notice board of the factory or establishment in
which the unpaid accumulations was earned; and
b. Also publish in any two newspapers circulating and in the
language commonly understood in the area in which the factory
or establishment in which the unpaid accumulations was earned
is situated or in such other manner, as may be prescribed, regard
being had to the amount of the claim invite claims by employees
for any payment due to them. The notice shall be inserted in the
manner aforesaid in June and December of every year, for a period
of three years from the date of the payment of the unpaid accu-
mulations to the Board.
4. If any question arises whether the notice referred to in subsection (3)
was given as required by that sub-section a certificate of the Board that
it was so given shall be conclusive.
5. If a claims received whether in response to the notice or otherwise,
within a period of four years from the date of first publication of the
notice in respect of such claim, the Board shall transfer such claim to
the authority appointed under section 15 of the Payment of Wages Act,
1936 having jurisdiction in the area in which the factory or establish-
ment, is situated and the authority shall proceed to adjudicate
upon and decide such claim. In hearing such a claim the authority shall
have the powers conferred by and follow the procedure (in so far as it
is applicable) followed in giving effect to the provisions of that Act.
6. If the authority aforesaid is satisfied that any such claim is valid so that
the right to receive payment is established, it shall decide that the un-
paid accumulation in relation to which the claim is made shall cease to
be deemed to be abandoned property and shall order the Board to pay
the whole of the dues claimed, or such part thereof as the authority de-
cides are properly due, to the employee and the Board shall make pay-
ment accordingly.
7. If a claim for payment is refused, the employee shall have a right of
appeal in Greater Bombay to the Court of Small Causes and elsewhere
to the District Court, and the Board shall comply with any order made
in appeal. An appeal shall lie within sixty days of the decision of the
authority.

8. The decision of the authority subject to appeal aforesaid and the deci-
sion in appeal of the Court of Small Causes, or as the case maybe, the
District Court, shall be final and conclusive as to the right to receive
payment, the liability of the Board to pay and also as to the amount, if NOTES
any.
9. If no claim is made within the time specified in sub-section or a claim
has been duly refused, as aforesaid, by the authority or an appeal by
the Court, then the unpaid accumulation in respect of such claim shall
accrue to, without further assurance be deemed to be transferred
to , from part the fund.
It is to be noted here that the fund shall not be utilised for financing meas-
ures which are required to be carried out by the employer.
Payment of contribution to the fund -[Section 6BB]:

1. There shall be paid to the Board for the purposes of this Act a contri-
bution payable by the employer in respect of an employee in an estab-
lishment (hereinafter referred to as 'the employer's contribution'), a
contribution payable by such employee (hereinafter referred to as the
employee's contribution) and a contribution payable by the State Gov-
ernment, as hereafter provided and every such contribution shall from
part of the Fund.
2. The amount of employee's contribution payable every six months in
respect of very employee and an employer of such employee shall be
at the following rates, namely:-
i. in respect of an employee drawing wages upto and inclusive of
three thousand rupees per mensem - 6 rupees
ii. in respect of an employee drawing wages exceeding three
thousand rupees per mensem, twelve rupees only if the name of
the employee stands on the register of an establishment on the 30th
June and 31st December respectively,
Provided that the State Government may, on receipt of a proposal from
the board, by notification in the Official Gazette, increase once in every 3
years the rate of employees contribution so however that such increase shall
not exceed 30 per cent of the rates of contribution.
3. Every employer shall pay to the Board both the employer's
contribution and the employee's contribution in accordance with the
provisions of sub section (2) before the 15th day of July and 15th day
of January as the case may be.

4. Notwithstanding anything contained in any other enactment but subject

to the provisions of this Act and the rules made thereunder the em-
ployer shall be entitled to recover from any such employee contribution
NOTES by deduction from his wages, and not otherwise and such deduction
shall be deemed to a deduction authorised by or under the Payment of
Wages Act, 1936 (IV of 1936).
Provided that no such deduction shall be made in the excess of the amount
of the contribution payable by such employee, not shall any such deduction
except the deduction in respect of the employee's contribution payable for
the first time after the appointed date be made from the any wages other
than the wages for the months of June and December.
Provided further that, if through in advertence or otherwise, no deduc-
tion has been made from the wages of an employee for the months afore-
said, such deduction may be made from the wages of such employee for
any subsequent month or months with the permission in writing of the In-
spector appointed under this Act.
5. Notwithstanding any contract to the contrary no employer shall
deduct the employer's contribution from any wages payable to
employee or otherwise recover it from the employee.
6. Any sum duly deducted by an employer from the wages of an
employee under this section shall be deemed to have been entrusted to
him by the employee for the purpose of paying the contribution in re-
spect of which it was deducted.
7. An employer shall pay the employer's and the employee's contribution
to the Board by the cheque, money other or in case, and he shall bear
the expenses of remitting to the Board such contribution.
8. The Welfare Commissioner shall submit to the State Government as
soon as possible after the end of July and January every year in the pre-
scribed from a statement showing the total amount of the em-
ployer's contribution and the employee’s contribution in respect of
employees in each establishment. On receipt of the statement from the
Welfare Commissioner, the State Government shall pay to the Board a
contribution of an amount equal to half the employee's contribution for
the period from the 31st December 2000 to the 31st March 2003 and
an amount equal to twice the employee's contribution with effect from
the 1st April 2003, in respect of every employee referred to in sub-
clauses (i) and (ii) of clause (a) of sub-section (2).

Interest on unpaid accumulations, fines contributions after notice of

demand-[Section 6B]:
1. Where an employer does not pay to the Board any amount of unpaid
accumulations or fines realised from the employee or any amount of NOTES
the employer's or employees contributions under section 6BB within
the time he is required by or under the provisions of this Act to pay it,
the Welfare Commissioner may cause to be served a notice on such
employer t pay to the Board the amount within the period specified
therein which shall not be less than thirty days from the date of service
of such notice.
2. Where the employer on whom a notice is served under sub-section (1),
fails without sufficient cause to pay any such amount within the period
specified in the notice, he shall without prejudice to any penalty
which may be imposed on him under this Act be liable to pay to the
Board simple interest -
a. in case of a failure to pay any amount of unpaid accumulations or
fines realised from the employees
i. For the first three months at one and a half per cent of the
said amount for each completed month after the last date by
which he should have paid it according to the notice and
ii. thereafter at two percent of that amount for each completed
month during the time he continues to make default in the
payment of that amount.
b. in case of a failure to pay any amount of the employer's or em-
ployees contributions under section 6BB
i. For the first three months at one and a half per cent of the
said amount for each completed month after the last date by
which he should have paid it in accordance with the provi-
sions of sub-section (3) of section 6BB.
ii. thereafter at two percent of that amount for each completed
month during the time he continues to make default in the
payment of that amount.
Provided that the Welfare Commissioner may, subject to such con-
ditions as may be prescribed, remit the whole or any part of the
penalty in respect of any period.
Vesting and application of Fund-[Section 7]:

1. The fund shall vest in and be held and applied by the Board as Trustees

subject to the provisions and for the purposes of this Act. The moneys
therein shall be utilised by the Board to defray the cost of carrying
out measures which may be specified by the State Government
NOTES from time to time to promote the welfare of labour and of their depend-
ents.
2. Without prejudice to the generality of sub-section (1) the moneys in
the Fund may be utilised by the Board to defray expenditure on the fol-
lowing:
a. community and social education centers including reading
rooms and libraries;
b. community necessities;
c. games and sports ;
d. excursions, tours and holiday homes;
e. entertainment and other froms of recreations;
f. home industries and subsidiary occupations for women and un-
employed persons;
g. Corporate activities of a social nature;
h. Cost of administering the Act including the salaries and al-
lowances, pension, provident fund and gratuity and any other
fringe benefits of the staff appointed for the purposes of the Act;
and
i. such other objects as would in the opinion of the State Gov-
ernment improve the standard of living and ameliorate the social
conditions of labour:
Provided that the Fund shall not be utilised in financing any measure
which the employer is required under any law for the time being in force to
carry out.
Provided further that unpaid accumulations and fines shall be paid to
the Board and be expended by it under this Act notwithstanding anything
contained in the Payment of Wages Act, 1936, (IV of 1936) or any other
law for the time being in force.
3. The Board may, with the approval of the State Government, make a
grant out of the Fund to any employer, any local authority or any other
body in aid of any activity for the welfare of labour approved by the
State Government.
4. If any question arises whether any particular expenditure is or is not
debitable to the Fund, the matter shall be referred to the State Govern-

ment and the decision given, by the State Government shall be final.
5. It shall be lawful for the Board to continue any activity financed from
the labour welfare fund of any establishment, if the said fund is duly
transferred to the Board. NOTES
Power of Board to borrow-[Section 8]:

The Board may from time to time with the previous sanction of the
State Government and subject to the provisions of this Act, and to
such conditions as may be specified in this behalf borrow any sum required
for the purposes of this Act.
Investment of Fund-[Section 9]:

Where the Fund or any portion thereof cannot be applied at an early
date for fulfilling the objects of the Act, the Board shall invest the same in
any of the securities specified in clauses (a) to (d) and (f) of section 20 of
the Indian Trusts Act, 1882 (II of 1882).
Direction by State Government to Board-[Section 10]:

The State Government may give the Board such directions as in its
opinion are necessary or expedient in connection with expenditure from the
Fund or for carrying out the other purposes of the Act. It shall be the duty
of the Board to comply with such directions.
Appointment and powers of Welfare Commissioner-[Section 11]:

(1) (i) The Welfare Commissioner shall be appointed by the Board with
the previous approval of the State Government.
(ii) The Welfare Commissioner shall be the principal executive officer
of the Board.
(iii) It shall be the duty of the Welfare Commissioner to ensure that the
provisions of this Act and rules made thereunder are duly carried
out for this purpose he shall have the power to issue such orders
not inconsistent with the provisions of this Act and rules made
thereunder as he deems fit including any order implementing the
decisions taken by the Board under the Act or rules made there-
under.
(2) ****

Appointment of Inspectors-[Section 12]:

1. The State Government may appoint Inspectors to inspect the records
in connection with the sums payable into the Fund. Inspector ap-
NOTES pointed, whether by a local authority or the State Government under
the Bombay Shops and Establishments Act, 1948 (Bom. LXXIX of
1948) in relation to any area, shall be deemed to be also Inspector for
the purposes of this Act, in respect of establishments, to which this Act
applies and the local limits within which such Inspector shall exercise
his functions under this Act shall be the area for which he is appointed
under the said Act.,
2. Any Inspector may -
a. with such assistance, if any, as he thinks fit, enter at any reasonable
time any premises for carrying out the purposes of this Act ;
b. exercise such other powers as may be prescribed.
Absorption of the existing staff under Commissioner of Labour-

[Section 13]:
1. Any staff under the control of the Commissioner of Labour, Bombay
which was --
i. taken over by a Labour Welfare Board constituted under this Act
and existing on the date of such taking over, and
ii. allotted to the Bombay Labour Welfare Board shall be subject to
the provisions of this Act and the rules made there under :
Provided that -
a. during the period of such employment all matters relating to pay, leave
retirement, allowances, pensions, provident fund and other conditions
of service of the said staff shall be regulated by the Bombay Civil Serv-
ices Rules or such other rules as may from time to time be made by
the State Government;
b. every such member shall have a right of appeal to the State Govern-
ment against any order of reduction, dismissal or removal from service,
fine or any other punishment :
Provided further that person so taken over may elect within the
prescribed period that he desires to be governed by the rules made under
this Act in respect of the conditions of service of the staff appointed by the
Board under this Act and on his electing to do so the provisions of the first

proviso shall cease to apply to him.
2. On the coming into force of this Act in any area to which it is extended NOTES
by the Bombay Labour Welfare Fund, the Board shall take over and
employ such of the existing staff under the control of the Commissioner
of Labour, Ahmedabad as the State Government may direct, and every
such person so taken over and employed shall be subject to like terms
and conditions and to the same provisions as in sub-section (1).
Appointment of clerical and other staff by Board-[Section 14]:

1. The Board shall have power to appoint the necessary clerical and ex-
ecutive staff to carry out and supervise the activities financed from the
Fund;
Provided that the expenses of the staff thus appointed and other ad-
ministrative expenses shall not exceed a prescribed percentage of the
annual income of the Fund.
2. The board shall with the approval of the State Government make reg-
ulations regarding the method of recruitment, pay and allowances, and
other conditions of service of the members of its staff (other than the
Welfare Commissioner and the Inspectors).
Provided that until the regulations are so made, the conditions of serv-
ice of such staff shall be governed by rules made by the State Govern-
ment in this behalf.
Power of State Government to remove any person on staff of Board :

[Section 15]:
The State Government shall have the power to remove any person whom it
may deem unsuitable, from the service of the Board and to make an ap-
pointment in respect of whom more than one-third of the members of the
Board have not agreed.
Power of State Government or authorised officer to call for records,

etc.– [Section 16]:
The State Government or any officer authorised by the State Govern-
ment may call for the records of the Board, inspect the same and may su-
pervise the working of the Board.

Mode of recovery of sums payable (to the Board or) into Fund, etc.-
[Section 17]:
Any sum payable to the Board into the Fund under this Act shall, with-
NOTES out prejudice to any other mode of recovery, be recoverable on behalf of
the Board as an arrears of land revenue.
Penalty for obstructing inspectors exercising powers or discharging
duties, etc.-[Section 17A]:
Any person who wilfully obstructs an Inspector in the exercise of his
powers or discharge of his duties under this Act or fails to produce for in-
spection on demand by an Inspector any document maintained in pursuance
of the provisions of this Act or the rules made thereunder or to supply to
him on demand true copies of any such document shall on conviction, be
punishable.
a. for the first offence, with imprisonment for a term which may extent
to three months, or with fine which may extent to five hundred rupees
or with both; and
b. for a second or subsequent offences, with imprisonment for a term
which may extend to six months, or with fine which may extend to one
thousand rupees, or with both:
Provided that in the absence of special and adequate reason to the con-
trary to be mentioned in the judgment of the Court in any case where the
offender is sentenced to a fine only, the amount of fine shall not be less than
fifty rupees.
Supersession of Board-[Section 18]:

1. If the State Government is satisfied that the Board has made default in
perfroming any duties imposed on it by or under this Act or has abused
its power the State Government may by notification in the Official
Gazette supersede and reconstitute the Board in the manner specified
in sub-section (1) of section 4 of the constitution of the Board.
Provided that before issuing the notification under this sub-section, the
State Government will give a reasonable opportunity to the Board to
show prescribed why it should not be superseded and the shall consider
the explanations and objections, if any, of the Board.
2. After the supersession of the Board and until it is reconstituted the pow-
ers, duties and functions of the Board under this Act shall be exercised
or perfromed by the Board or by such officer or officers, as the State
Government may appoint for this purpose.

Rules-[Section 19]:
1. The State Government may by notifications in the Official Gazette and
subject to the condition of previous publication, make rules to carry
out the purposes of this Act. NOTES
2. In particular and without prejudice to the generality of the foregoing
power, such rules may be made for all or any of the following, matters,
namely:
a. The intervals at which or the period within which any of the sums
referred to in Section 3 shall be paid to the Board or into the fund,
the manner of making such payment and the agency for the
manner of collection of any such sum
b. the manner in which the accounts of the Fund shall be maintained
and audited under subsection (3) of section 13,
c. the procedure for making grants from the Fund under section 7;
d. the procedure for defraying the expenditure incurred in
administering the Fund;
e. The number of representatives of employers and employees,
independent members and representatives of women on the Board,
and the allowances, if any, payable to them, under section 4 ;
f. the manner in which the Board shall conduct their business;
g. the duties and powers of the Inspectors and the conditions of
service of the Welfare Commissioner and Inspectors appointed
under this Act; ga. The delegation of the powers, and functions of
the Board to the Welfare Commissioner and the conditions and
limitations subject to which the powers may be exercised or
functions discharged;
h. the percentage of the annual income of the Fund beyond which
the Board may not spend on the staff and on other administrative
measures;
i. the registers and records to be maintained and returns to be sent
to the Board under this Act;
j. the publication of the report of the activities financed from the
Fund together with a statement of receipts and expenditure of the
Fund and statement of accounts;
k. any other matter which under this Act is or may be prescribed.

3. Every rule made under this Act shall be laid as soon as may be after it
is made, before each house of the State Legislature while it is in session
for a total period of thirty days which may be comprised in one session
NOTES or in two successive seasons, and if, before the expiry of the session in
which it is to be so laid or the session immediately following, both
houses agree in making any modification in the rule or both houses or
both houses agree that the rule should not be made, the rule shall, from
the date of publication of a notification in the official gazette of such
decision, have effect only in such modified from or be of no effect as
the case may be; so however that any such modification or annulment
shall be without prejudice to the validity of anything previously done
or omitted to be done under the rule.

Questions
1. State the salient features of Bombay Labour Welfare Fund Act, 1953. NOTES
[Diploma in Labour Laws and Labour Welfare]
2. Write a note on-

a. Unpaid accumulations
b. Labour welfare Fund
3. Write a detailed note on – Labour Welfare Fund under the Bombay

Labour Welfare Fund Act, 1953.
4. Explain the concept of ‘employee’ and state the provisions relating to

contributions under Bombay. Labour Welfare Fund. [Diploma in
Labour Laws and Labour Welfare]
5. Discuss the powers of State Government under Bombay Labour

Welfare Fund Act, 1953.

UNIT - 6
THE PAYMENT OF GRATUITY ACT 1972
NOTES
SYNOPSIS
1. Introduction
2. Definition, Scope and application of the Act
3. Controlling authority
4. Inspector, powers of Inspector
5. Penalties, Exemption of employer from liability in certain cases
6. Conclusion
Introduction:
The Payment of Gratuity Act 1972 is a social security enactment. An
Act to provide for a scheme for the payment of gratuity to employees en-
gaged in factories, mines, oilfields, plantations, ports, Railway companies,
shops or other establishments.
i. The significance of this legislation lies in the acceptance of the princi-
ple of gratuity as a compulsory statutory retiral benefit.
ii. The Act accepts, in principle, compulsory payment of gratuity as a so-
cial security measure to wage earning population in industries, factories
and establishments. Thus, the main purpose and concept of gratuity is
to help the workman after retirement, whether retirement is a result of
the rules of superannuation, or physical disablement or impairment of
vital part of the body. Thus, it is a sort of financial assistance to tide
over post retiral hardships and inconveniences.
iii. It is derived from the word ‘gratuitous’, which means ‘gift’ or
‘present’.
However, having being enacted as a social security from, it ceases to

retain the concept of a gift but it has to be seen as a social obligation by an
employer towards his employee. Gratuity shall be payable to an employee
on the termination of his employment after he has rendered continuous serv-
ice for not less than five years,-
(a) on his superannuation, or
(b) on his retirement or resignation, or
The Payment of Gratuity Act 1972 136

(c) on his death or disablement(five year service not required) due to ac-
cident or disease
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 NOTES
where any such nominees or heirs is a minor, the share of such minor shall
be deposited with the controlling authority (i.e. government officer) who
shall invest the same for the benefit of such minor in such bank or other fi-
nancial institution, as may be prescribed, until such minor attains
majority[iv]. In computing the gratuity payable to an employee who is re-
employed, after his disablement, on reduced wages, his wages for the period
preceding his disablement, shall be taken to be the wages received by him
during that period, and his wages for the period subsequent to his disable-
ment shall be taken to be the wages as so reduced.
Applicability Of The Act

The Payment of Gratuity Act 1972 applies to the whole of India and
so far as it relates to ports and plantations it does not apply to the State of
Jammu and Kashmir. It applies 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 establishment in a State, in which
10 or more persons are or were employed on any day in the preceding
12 months.
c. Such other establishments or class of establishment, in which 10 or
more employees are or were employed on any day in the preceding 12
months, as the Central Government may notify in this behalf. Any shop
or establishment shall continue to be governed by the Act even if the
no. of its employees comes below 10 persons at any time in the future.
Public charitable and religious trusts are also covered by this Act, pro-
vided that they are shops or establishments within the meaning of the Shops
and Establishment Act applicable to their area of operation and that 10 or
persons have been employed by them on any day in the preceding 12
months.
Salient features of the Payment of Gratuity Act, 1972

1. The Act is a self-contained and an exhaustive Act and the provisions
of this Act and rules made under it have an overriding effect on all other
Acts or instruments or contracts so far as they are inconsistent with this

Act.
2. The Act is fairly sweeping in coverage, as it applies to all factories,
mines, oil fields, plantations, ports and railways irrespective of the
NOTES number of workmen employed by them. It also covers shops and
establishments employing 10 or more persons.
3. The Act gives a statutory right of gratuity to all the employees, who
have rendered five years’ continuous service and whose services stand
terminated after coming into force of the Act on account of
superannuation, or retirement, or resignation, or death or
disablement.
4. The Act provides both executive and quasi-judicial machinery for
matters pertaining to nomination, determination and recovery of
gratuity.
5. The executive machinery pertains to maintenance of records regarding
opening, change or closure of establishments, display of notices and
maintenance of records by the controlling authority. The
quasi- judicial functions have been divided between the employers and
the Controlling Authority in as much as for payment of gratuity, the
first forum provided is an application to the employer. When the
employer has declined or avoided payment of gratuity, then an appli-
cation is required to be made to the Controlling Authority.
6. The machinery provided for recovery rests with the Controlling
Authority.
7. The orders of the Controlling Authority for payment or determination
of gratuity are applicable before the appropriate government or the ap-
pellate authority.
In this Act, unless the context otherwise requires,- (a) “Appropriate Gov-
ernment” 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. NOTES

(b) “Completed year of service” means continuous service for one
year.
1[(c) “Continuous service” means continuous service as defined
in Section 2-A;] (d) “controlling Authority” means an authority
appointed by the appropriate Government under Section 3; 2[
(e) “Employee” means any person (other than an apprentice) who is
employed for wages, whether the terms of such employment are
express or implied, in any kind of work, manual or otherwise, in
or in connection with the work of a factory, mine, oilfield, plan-
tation, port, railway company, shop or other establishment to
which this Act applies, but does not include any such person who
holds a post under the Central Government or a StateGovernment
and is governed by any other Act or by any rules providing for
payment of gratuity;]
3 [***]
(f) “Employer” means, in relation to any establishment, factory,

mine, oilfield, plantation, port, railway company or shop:-
i. belonging to, or under the control of, the Central Government
or a State Government, a person or authority appointed
by the appropriate Government for the supervision and
control of employees, or where no person or authority has
been so appointed, the head of the Ministry or the Department
concerned,
ii. belonging to, or under the control of, any local authority, the
person appointed by such authority for the supervision and
control of employees or where no person has been so ap-
pointed, the chief executive officer of the local authority.
iii. in any other case, the person, who, or the authority which,
has the ultimate control over the affairs of the establishment,
factory, mine, oilfield, plantation, port, railway company or
shop, and where the said affairs are entrusted to any other
person, whether called a manager, or managing director or by
any other name, such person;

(g) “Factory” has the meaning assigned to it in clause (m) of section

2 of the Factories Act, 1948 (63 of 1948);
(h) “Family”, in relation to an employee, shall be deemed to consist
NOTES of:-
i. in the case of a male employee, himself, his wife, his chil-
dren, whether married or unmarried, his dependent parents
4[and the dependent parents of his wife and the widow] and
children of his predeceased son, if any.
ii. in the case of a female employee, herself, her husband, her
children, whether married or unmarried, her dependent
parents and the dependent parents of her husband and the
widow and children of her predeceased son, if any:
Explanation.-Where the personal law of an employee permits the adop-
tion by him of a child, any child lawfully adopted by him shall be deemed
to be included in his family, and where a child of an employee has been
adopted by another person and such adoption is, under the personal law of
the person making such adoption, lawful, such child shall be deemed to be
excluded from the family of the employee.
(i) “Major port” has the meaning assigned to it in clause (8) of section
3 of the Indian Ports Act, 1908 (15 of 1908);
(j) “Mine” has the meaning assigned to it in clause (j) of sub-section
(1) of section 2 of the Mines Act, 1952 (35 of 1952);
(k) “Notification” means a notification published in the Official
Gazette:
(l) “Oilfield” has the meaning assigned to it in clause (e) of Section
3 of the Oilfields (Regulation and Development) Act, 1948 (53 of
1948);
(m) “Plantation” has the meaning assigned to it in clause (f) of Section
2 of the Plantations Labour Act, 1951 (69 of 1951);
(n) “Port” has the meaning assigned to it in clause (4) of section 3 of
the Indian Ports Act, 1908 (15 of 1908);
(o) “Prescribed” means prescribed by rules made under this Act;
(p) “Railway company” has the meaning assigned to it in clause (5)
of section 3 of the Indian Railways Act, 1890 (9 of 1890);
(q) “Retirement” means termination of the service of an employee
otherwise than on superannuation.

2[(r) “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
as the age on the attainment of which the employer shall vacate the
employment;] NOTES
(s) “Wages” means all emoluments which are earned by an employee
while on duty or on leave in accordance with the terms and con-
ditions of his employment and which are paid or are 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.
3[2A Continuous Service:

For the purpose of this Act-
1. An employee shall be said to be in continuous service for a period if
he has, for that period, been in uninterrupted service, including service
which may be interrupted on account of sickness, accident, leave, ab-
sence from duty without leave (not being absence in respect of which
an order 4[***] treating the absence as break in service has been passed
in accordance with the standing orders, rules or regulations governing
the employees of the establishment), lay-off, strike or a lock-out or ces-
sation of work not due to any fault of the employee, whether such un-
interrupted or interrupted service was rendered before or after the
commencement of this Act;
2. Where an employee (not being an employee employed in a seasonal
establishment) is not in continuous service within the meaning of
clause (1), for any period of one year or six months, he shall be deemed
to be in continuous service under the employer-
a. for the said period of one year, if the employee during the period
of twelve calendar months preceding the date with reference to
which calculation is to be made, has actually worked under the
employer for not less than-
i. one hundred and ninety days, in the case of an employee em-
ployed below the ground in a mine or in an establishment
which works for less than six days in a week; and
ii. two hundred and forty days, in any other case:
b. for the said period of six months if the employee during the period
of six calendar months preceding the date with reference to which
the calculation is to be made, has actually worked under the
employer for not less than-

i. ninety-five days, in the case of an employee employed below

the ground in a mine or in an establishment which works for
less than six days in a week; and
NOTES ii. one hundred and twenty days, in any other case;
Explanation.- For the purpose of clause (2), the number of days on

which an employee has actually worked under an employer shall include
the days on which-
i. he has been laid-off under an agreement or as permitted by stand-
ing orders made under the Industrial Employment (Standing Orders)
Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14
of 1947), or under any other law applicable to the establishment;
ii. he has been on leave with full wages, earned in the previous year;
iii. he has been absent due to temporary disablement caused by acci-
dent arising out of and in the course of his employment; and
iv. in the case of a female, she has been on maternity leave; so, however,
that the total period of such maternity leave does not exceed twelve
weeks].
(1) Where an employee, employed in a seasonal establishment, is not
in continuous service within the meaning of clause (1), for any period
of one year or six months, he shall be deemed to be in continuous serv-
ice under the employer for such period if he has actually worked for
not less than seventy-five per cent of the number of days on which the
establishment was in operation during such period.]
4. 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 dif-
ferent areas.
5. Payment Of Gratuity
Gratuity shall be paid to an employee on the termination of his em-
ployment after s/he has rendered continuous service of not less than 5 years
i.e. on superannuation, retirement, resignation, death or disablement due to
accident or disease (Sec 4). The period of 5 years is not necessary if the ter-
mination of the employee is because of death or disablement. In the case of

death the amount is paid to the legal heirs “Continuous Service” means un-
interrupted service which may be interrupted on account of sickness, acci-
dent, leave, absence from duty without (not being treated as break in
service), lay-off, strike, lock-out or cessation of work not due to the fault NOTES
of the employee. (Sec 2A)[xxi].
Amount Of Gratuity:
For every completed year of service or part thereof in excess of six
months, the employer shall pay gratuity to an employee at the rate of fifteen
days’ wages based on the rate of wages last drawn by the employee con-
cerned In the case of a piece rated employee, daily wages shall be com-
puted 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 (in a piece rated system there may not be the concept of basic, DA,
HRA, CCA etc. In the case of an employee who is employed in a seasonal
establishment and who is not so employed throughout the year, the
employer shall pay the gratuity at the rate of seven days’ wages for each
season. In the case of a monthly rated employee, the fifteen days’ wages
shall be calculated by dividing the monthly rate of wages last drawn by him
by twenty-six and multiplying the quotient by fifteen. The amount of gra-
tuity payable to an employee shall not exceed Rs.3,50,000. If there is an
award, agreement or contract for higher amount of gratuity It is
allowed[xiii].
Employer TO Initiate Calculation AND Notice Of Payment:

Any person eligible to receive gratuity shall make an application to the
employer for payment of the same within the prescribed time. Whether an
application is made or not the employer shall determine the amount payable
and give notice to the eligible person/s. The controlling authority shall per-
form the following functions [xiv].
i. Specifying the amount of gratuity determined.
ii. Prescribe the time limit for payment of gratuity.
iii. (iii)The employer shall arrange to pay the amount of gratuity within
thirty days from the date it becomes payable.
iv. (iv)If not paid within the period stipulated above employer is liable to
pay interest for the delayed payment.
v. Interest is not payable if the delay was caused due to the fault of the

employee and the employer has obtained permission in writing from

the controlling authority for the delayed payment on this ground.
vi. (vi)If there is any dispute as to the amount payable or the persons eli-
NOTES gible to receive it the employer shall deposit amount as per his calcu-
lation with the controlling authority.[xv]
Procedure for resolving the disputes:

Where there is a dispute the aggrieved party shall make an application
to the controlling authority for deciding the dispute. controlling authority
shall, after due inquiry and after giving the parties to the dispute a reason-
able opportunity of being heard, determine the matter and pass appropriate
orders.[xvi]
Powers of controlling authority:

The controlling authority shall have the powers in respect of the fol-
lowing matters, namely
a. enforcing the attendance of any person
c. receiving evidence on affidavits;
d. issuing commissions for the examination of witnesses. Appeal if any
shall be made within 60 days from the date of the order[xvii].
Appeal by employer will not be admitted unless the disputed amount
is deposited appellate authority, after giving the parties to the appeal a rea-
sonable opportunity of being heard, confirm, modify or reverse the decision
of the controlling authority.
7. Determination of the amount of Gratuity:

1. A person who is eligible for payment of gratuity under this Act or any
person authorised, in writing, to act on his behalf shall send a written
application to the employer, within such time and in such from, as may
be prescribed, for payment of such gratuity.
2. As soon as gratuity becomes payable, the employer shall, whether an
application referred to in sub-section (i) has been made or not, deter-
mine the amount of gratuity and give notice in writing to the person to
whom the gratuity is payable and also to the controlling authority spec-
ifying the amount of gratuity so determined.

3. 1[(3) The employer shall arrange to pay the amount of gratuity within
thirty days from the date it becomes payable to the person to whom
the gratuity is payable.
(3-A) If the amount of gratuity payable under sub-section (3) is not NOTES
paid by the employer within the period specified in sub-section (3) the
employer shall pay, from the date on which the gratuity becomes
payable to the date on which it is paid, simple interest at such rate, not
exceeding the rate notified by the Central Government from time
to time for repayment of long term deposits, as that Government may,
by notification specify:
Provided that no such interest shall be payable if the delay in the pay-
ment is due to the fault of the employee and the employer has obtained
permission in writing from the Controlling Authority for the de-
layed payment on this ground].
4. (a) If there is any dispute as to the amount of gratuity payable to an

employee under this Act or as to the admissibility of any claim of, or
in relation to, an employee for payment of gratuity, or as to the person
entitled to receive the gratuity, the employer shall deposit with the Con-
trolling Authority such amount as he admits to be payable by him as
gratuity.
[***]
3[(b) Where there is a dispute with regard to any matter or matters
specified in Clause (a), the employer or employee or any other person
raising the dispute may make an application to the Controlling Au-
thority for deciding the dispute.]
[(c)] The Controlling Authority shall, after due inquiry and after giving
the parties to the dispute a reasonable opportunity of being heard, de-
termine the matter or matters in dispute and, if, as a result of such in-
quiry any amount is found to be payable to the employee, the
Controlling Authority shall direct the employer to pay such amount or,
as the case may be, such amount as reduced by the amount already de-
posited by the employer.]
[(d)] The Controlling Authority shall pay the amount deposited, includ-
ing the excess amount, if any, deposited by the employer, to the person
entitled thereto.
[(e)] As soon as may be after a deposit is made under Clause (a), the
Controlling Authority shall pay the amount of the deposit-
(iii) to the applicant where he is the employee; or

(iv) where the applicant is the employee, to the 1[nominee or, as the
case may be, the guardian of such nominee or] heir of the employee if
the Controlling Authority is satisfied that there is no dispute as to the
NOTES right of the applicant to receive the amount of gratuity.
5. For the purpose of conducting an inquiry under Sub-Section (4), the

controlling authority shall have the same powers as are vested in a
Court, while trying a suit, under the Code of Civil Procedure,1908 (5
of 1908), in respect of the following matters namely:-
a. enforcing the attendance of any person or examining him on oath;
c. receiving evidence on affidavits;
d. issuing commissions for the examination of witnesses.
6. Any inquiry under this Section shall be a judicial proceeding within

the meaning of Sections 193 and 228, and for the purpose of Section
196, of the Indian Penal Code, 1860 (45 of 1860).
7. Any person aggrieved by an order under sub-section (4), may, within

sixty days from the date of the receipt of the order, prefer an appeal to
the appropriate Government or such other authority as may be specified
by the appropriate Government in this behalf:
Provided that the appropriate Government or the appellate authority,
as the case may be, may, if it is satisfied that the appellant was pre-
vented by sufficient cause from preferring the appeal within the said
period of sixty days, extend the said period by a further period of sixty
days.
[Provided further that no appeal by an employer shall be admitted un-
less at the time of preferring the appeal, the appellant either produces
a certificate of the controlling authority to the effect that the appellant
has deposited with him an amount equal to the amount of gratuity re-
quired to be deposited under subsection (4), or deposits with the ap-
pellate authority
8. The appropriate Government or the appellate authority, as the case may
be, may, after giving the parties to the appeal a reasonable opportunity
of being heard, confirm, modify or reverse the decision of the control-
ling authority.

Inspectors-[Section 7 A]:
1. The appropriate Government may, by notification, appoint as many In-
spectors, as it deems fit, for the purposes of this Act.
NOTES
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 the Act.
3. Every Inspector shall be deemed to be a public servant within the
meaning of Sec. 21 of the Indian Penal Code, 1860 (Act 45 of 1860).
Powers of Inspectors-[Section 7B]:

1. Subject to any rules made by the appropriate Government in this be-
half, an Inspector may, for the purpose of ascertaining whether any of
the provisions of this Act or the conditions, if any, of any exemption
granted thereunder, have been complied with, exercise all or any of the
following powers, namely:-
a. require an employer to furnish such information as he may con-
sider necessary;
b. enter and inspect, at all reasonable hours, with such assistants (if
any), being persons in the service of the Government or local or
any public authority, as he thinks fit, any premises of or place in
any factory, mine, oil-field, plantation, port, railway company,
shop or other establishment to which this Act applies, for the pur-
pose of examining any register, record or notice or other document
required or exhibited under this Act or the rules made thereunder,
or otherwise kept or exhibited in relation to the employment of
any person or the payment of gratuity to the employees, and re-
quire the production thereof for inspection;
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;

e. exercise such other powers as may be prescribed.
NOTES 2. Any person required to produce any register, record, notice or other
document or to give any infromation, by an Inspector under sub-section
(1) shall be deemed to be legally bound to do so within the meaning of
Sections 175 and 176 of the Indian Penal Code (45 of 1860).
3. The provisions of the Code of Criminal Procedure, 1973 (2 of 1974),

shall so far as may be, apply to any search or seizure under this section
as they apply to any search or seizure made under the authority of a
warrant issued under Section 94 of that Code.]
Recovery of Gratuity:
If the amount of gratuity payable under this Act is not paid by the em-
ployer, within the prescribed time, to the person entitled thereto, the con-
trolling 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 certifi-
cate under this section, give the employer a reasonable opportunity of show-
ing 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].
Penalties:
Failure to comply with the Payment of Gratuity Act 1972 entails certain
penalties (Sec. 9)[xxvi], which are the following:
i. For avoiding any payment knowingly makes any false statement or
representation Shall be punishable with imprisonment upto 6 months
or fine upto Rs. 10,000.00 or both.
ii. Failure to comply with any provision of the Act or Rules Shall be pun-
ishable with imprisonment upto 1 year but will not be less than 3
months or with fine, which will not be less than Rs. 10,000.00 but may

extend upto Rs. 20,000.00 or with both.

iii. Any offence relating to nonpayment of gratuity under the Act
Employer shall be punishable with imprisonment for a term which shall
not be less than 6 months but may extend to 2 years, unless the court NOTES
for reasons recorded decides for a lesser term of imprisonment or fine.
Exemption of employer from liability in certain cases:

Where an employer is charged with an offence punishable under this
Act, he shall be entitled, upon complaint duly made by him and on giving
to the complainant not less than three clear days' notice in writing of his in-
tention to do so, to have any other person whom he charges as the actual
offender brought before the Court at the time appointed for hearing the
charge; and if, after the commission of the offence has been proved, the em-
ployer proves to the satisfaction of the Court-
a. that he has used due diligence to enforce the execution of this Act;
and
b. that the said other person committed the offence in question without
his knowledge, consent or connivance, that other person shall be con-
victed of the offence and shall be liable to the like other pun-
ishment as if he were the employer and the employer shall be
discharged from any liability under this Act in respect of such offence:
Provided that in seeking to prove as aforesaid, the employer may be
examined on oath and his evidence and that of any witness whom he
calls in his support shall be subject to cross-examination on behalf of
the person he charges as the actual offender and by the prosecutor:
Provided further that, if the person charged as the actual offender by
the employer cannot be brought before the Court at the time appointed
for hearing the charge, the Court shall adjourn the hearing from time
to time for a period not exceeding three months and if by the end of
the said period the person charged as the actual offender cannot still
be brought before the Court, the Court shall proceed to hear the charge
against the employer and shall, if the offence be proved, convict the
employer.
Payment Of Gratuity (Central) Rules, 1972:

The rules under the Payment of Gratuity are called as Payment of Gra-
tuity (Central) Rules, 1972. The rules provide that an employer has to sub-
mit, within a period of 30 days of the Act becoming applicable to the

establishment, a notice in From “A” to the Controlling Authority.
NOTES If the nature of the business, name, address of the employer changes,
a notice has to be submitted in From “B”. If the employee closes down his
business, he shall submit From “C” within 60 days. The nomination of any
employee for the claim of gratuity shall be in From “F” in duplicate by the
employee or by RPAD.
In case of an employee who is already in the employment for a year or more,

a nomination from shall be submitted within 90 days; the employer after
receipt of the From “F” from the employee shall verify the service particu-
lars along with the service records of the establishment and may return to
the employee the duplicate copy. In case where at the time of nomination
the employee does not have a family but afterwards acquires a family, then
he has to file nomination within 90 days of his acquiring a family. In case
of an illiterate employee his thumb impression has to be taken in presence
of 2 witnesses who also sign the declaration.
A person entitled to gratuity shall make an application within 30 days to the

employer in From “I”
In case of retirement or superannuation, the application can be made within
30 days in From “J”.
An application on plain paper is also acceptable giving relevant particu-
lars.A legal heir is also entitled to payment of gratuity, if application is made
under From “K”. A delayed application can also be entertained.
Case Law:
1) The Act is applicable to the establishments of the Pune Can-
tonment Board.(Pune Cantonment Board V/s S/K/ Das & Other 1993
II C.I.R. 731)
2) In the case of monthly rated employees, the rate of one day’s
wages is to be computed by dividing the monthly wages by 26 working
days. (M ay & Baker V/s J. S. Kutinho National Union - 1991 I CLR
41 (Bombay))

Questions
1. Explain the provisions of the Payment of Gratuity Act, 1972 relating NOTES
to nomination by an employee.
2. Write a note on-

a. Eligibility for payment of gratuity b. Continues service
3. Write short note on ‘Eligibility for Payment of Gratuity’ under the

Payment of Gratuity Act, 1972
4. Explain the salient features of Payment of Gratuity Act, 1972.
5. What is Gratuity? What are the events on which gratuity becomes

payable under the Payment of Gratuity Act 1972? Can Gratuity be
forfeited?
6. Define the term an ‘Employee’ and state the provisions relating to

payment of gratuity under the Payment of Gratuity Act, 1972

NOTES
Self-instructional Material 152

NOTES

NOTES

Social Security Legislation

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Social Security Legislation

Uploaded by

Copyright:

Available Formats

Social Security Legislation

AMENDMENTS IN THE WORKMEN’S COMPENSATION ACT

(1) THE WORKMEN'S COMPENSATION (AMENDMENT) ACT, 2009

Employee’s Compensation Act, 2010 1

“Only for Private Circulation”

Employees Compensation Act for maximum compensation calculation:

This amendment is notified vide Central Government Notification No. S.O.

Object And Scope:

Employee’s Compensation Act, 2010 2

“Only for Private Circulation”

Definitions-[Section 2]: Dependant:

Employee’s Compensation Act, 2010 3

“Only for Private Circulation”

Defenses of the Employer:

1. The Doctrine of Assumed Risks:

2. The Doctrine of Common Employment:

3. The Doctrine of Contributory Negligence:

Employee’s Compensation Act, 2010 4

“Only for Private Circulation”

respective of negligence. The Act looks upon compensation as relief to the

Two ways of claiming compensation:

By Section 2 (g) Temporary Partial Disablement means such disable-

Employee’s Compensation Act, 2010 5

“Only for Private Circulation”

In the proportion in which his earning capacity has been decreased

Employee’s Compensation Act, 2010 6

“Only for Private Circulation”

Employee’s Compensation Act, 2010 7

“Only for Private Circulation”

In Schedule II, a list (consisting of 32 items) is given of persons who

Employee’s Compensation Act, 2010 8

“Only for Private Circulation”

iv. persons employed in constructing or repairing building or electric fit-

Subject to the exceptions noted below, the term workman means ~

Employee’s Compensation Act, 2010 9

“Only for Private Circulation”

What is employment of a casual nature?

Rules Regarding Workmen's Compensation:

Employee’s Compensation Act, 2010 10

“Only for Private Circulation”

What is an accident? NOTES

Arising Out Of And In The Course Of Employment

In the course of employment:

Employee’s Compensation Act, 2010 11

“Only for Private Circulation”

within the period of employment. Generally speaking employment com-

Arising out of the employment:

Employee’s Compensation Act, 2010 12

“Only for Private Circulation”

leaving the actual place of work".

Occupational Diseases: NOTES

Section 3(2) of the Act provides that an occupational disease shall be

Employee’s Compensation Act, 2010 13

“Only for Private Circulation”

When is employer not liable to pay compensation?

Employee’s Compensation Act, 2010 14

“Only for Private Circulation”

From Section 3 it follows that the employer is not liable to pay

The Amount of Compensation:

For determining the amount of compensation payable under the Act,

Employee’s Compensation Act, 2010 15

“Only for Private Circulation”

In the case of an injury not specified in Schedule I, the percentage loss