STRICTLY STATUTES

A Newsletter from ADP India

MARCH 2014

EDITORS NOTE
Hello Readers, We are happy to present the Strictly Statutes issue for March 2014. It has the Compliance Calendar for the month ahead. Some important judgements that have been pronounced recently include: The principal employer is liable, if a contractor fails to pay wages to labourers. The EPF authority showing high handedness on recovery of money is liable to pay interest himself. Under the ESI act, an employer providing better medical facilities cannot claim exemption from covering employees. In case a contract is established as camouflage, the workers will be treated as employees of the principal employer. In other news to note, women in Gujarat can work on night shifts. ESIC has empanelled a private hospital to provide cashless treatment. Delayed remittance of arrears of wages will not attract interest or damages. When default is not wilful, EPF Tribunal cannot impose damages. The EPFO has also directed its field officers to inform companies to file PF claims well in time. We hope you find the contents of this newsletter relevant and useful. We welcome your suggestions and inputs for enriching content as well as your feedback. Please write to: contactadp@adp.com

TABLE OF CONTENTS
Pages

Compliance Calendar for March 2014 Principal Employer Liable, If Contractor EPF Authority Showing High Handedness Providing Better Medical Facilities Would Not Justify Exemption EPFO Warns Employer On Delaying PF Claims Arrears Of Wages Default in deposit when not willful... Grant Of Instalment Facility To Establishments

02 03 03 04 05 06 07 08

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STRICTLY STATUTES
Compliance Calendar for March 2014
Due Date Professional Tax Remittances 10th Mar 14 15th Mar14 20th Mar 14 21st Mar 14 Mar 14 28th Aug 30 13
st 31th Mar 30 Aug 14 13

A Newsletter from ADP India

Scope

Due Under

Mode

Andhra Pradesh & Madhya Pradesh Gujarat Karnataka West Bengal Kerala, Maharashtra, Assam & Orissa Maharashtra, Assam & Orissa Pondicherry (Pondy) Maharashtra, Assam & Orissa

State-wise regulations Gujarat PT regulations Karnataka PT regulations WB PT regulations State-wise State Wise regulations regulations Pondy PT regulations State Wise regulations

By Challan By Challan By Challan By Challan By Challan By By Challan Challan

Labour Welfare Fund Remittances 20th Mar 14 PF 15th Mar 14 15th Mar 14 ESI 21st Mar 14 Wages 15th Mar 14 CLRA 15th Mar 14 Annual Return by Principle Employer CLRA Act By Return in Form XXV Annual Return Payment of Wages Act By Return in Form IV Main Code & Sub Codes - Remittance of Contribution ESIC Act 1948 By Challan Central - Remittance of Contribution Central - International worker with wages and nationality EPF & MP Act 1952 EPF & MP Act 1952 By Challan Statement in 7 I W Kerala Kerala State Labour Welfare Fund By Challan

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STRICTLY STATUTES

A Newsletter from ADP India

Important Judgements
Principle employer is liable, if contractor fails to pay wages to workers
In a case of Shaymji Srivastav and others Vs Management of M/s. Public Works department and Others, the Delhi High Court bench comprising Honourable Justice Mr. S Ravindra Bhat and Justice Mr. Najmi Waziri pronounced that the Principal Employer is liable for payment of wages to the workmen as per section 21(4) of the contract labour (Regulation & Abolition) Act when the immediate employer i.e. contractor fails to discharge his obligation. Even it is categorically stated in section 34 of the Industrial Disputes Act, 1947, that in the event of the contractor failing to pay wages, the principal employer should be liable to pay the wages to the workmen.

EPF authority Showing high handedness on recovery of money, is liable to pay interest himself
In a case of AC Nilson Org-Marg Private Limited Vs Regional Provident Fund Commissioner And others, the Gujarat High Court Justice Honourable Mr. Paresh Upadhyay pronounced that when the orders passed by the EPF Authority is illegal, arbitrarily showing high-handed exercise of powers of his authority, burdening that authority for payment of interest @ 12% per annum, upon the principal amount deposited by the employer, is justified. If the conduct of official of the EPF department is highly deplorable, intending sabotage to the proceedings before the EPF Appellate Tribunal, direction to Central Provident Fund Commissioner for taking action against the EPF Authorities concerned, is appropriate.

Workers of contractor will be treated as employees of principal employer, in case a contract is camouflage
In a case of Sudharshan Chemical Industries Limited Vs Labour Commissioner and others, the Bombay High Court bench comprising Honourable Justice Mr. A. S Oka and Mr. G.S. Patel pronounced that if the contract is not genuine or mere camouflage, the contract labourer will be treated as an employee of the principal employer. The Industrial Tribunal has the jurisdiction to decide the issue whether a contract between the principal employer and the contractor is genuine or camouflage. No machinery is created under Act of 1970 for adjudication of issue whether the contract is genuine or camouflage.

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STRICTLY STATUTES

A Newsletter from ADP India

Providing better medical facilities would not justify exemption from ESI Act

In a case of Employee State Insurance Corporation, Chandigarh Vs District Collector, Bathina, the Punjab & Haryana High Court Justice Honourable Mr. K. Kannan pronounced that ESI Act Section 1 (5) notification cannot efface section 1 (3) notification already made to any State/Part of State, issued by the Central Government. Exception as provided under section 1(4) of the Act could not be extended to the employers already providing better medical facilities and is only applicable for those factories which are under the control of the Government. State Government may have the notification to areas which are not notified by the Central Government under section 1 (5) of the Act. Notification issued by State Government would not cause the notification already issued by the Central Government to cease to operate or null the effect of notification already made under section 1(3) of the Act. Contribution has to be made by the employer on the extension of the Act on a suo moto basis and not from the date of knowledge about the provisions of the Act or when a notice was made by the officials of ESIC. Providing better medical facilities to employees by the employer is no ground to avoid applicability of the ESI Act until proper exemption is obtained from the applicability of the Act from the Government. Employer is liable to pay contribution from the date of notification issued by the Central Government.

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STRICTLY STATUTES

A Newsletter from ADP India

News to note
ESIC empanels private hospital to extend cashless treatment
Employees State Insurance Scheme Corporation (ESIC) has empanelled a few private hospitals in Goa to extend cashless, Super-specialty treatment to its 1,53,842 employees and their families. The state. The ESI hospital in Margao lacks full-fledged facilities for treatment and authorities have tied up with Apollo Victor Hospital, Margao, Nusi Wockhardt in Panzorconem in south Goa and Chodankar Nursing Home in north Goa to extend the medical scheme to its employees without any upper ceiling on the expenditure. The ESI hospital in Margao is being upgraded at a cost of 90 crore, said C.V. Joseph, regional director, ESIC. scheme was available for

treatment in hospitals outside the

EPFO warns employer on delaying PF claims

In its latest drive to reduce employees grievances, the Employees Provident Fund Organization has warned establishments of penal action if they delay submission of employees claims beyond five days of receipt in as strongly worded letter to regional PF officers. EPFOs additional commissioner SK Aggarwal said it has been observed that some employers do not forward the claims submitted to them by their outgoing employees. This leads to harassment of such outgoing employees and gives rise to lodging of grievances with EPFO

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STRICTLY STATUTES

A Newsletter from ADP India

ARREARS OF WAGES NOT TO ATTRACT INTEREST / DAMAGES

An appellant filed an appeal before the Employees Provident Fund Appellate Tribunal, questioning the validity and legality of order dated 15-05-2012, passed by the EPF Authority, under section 14-B of the Act, imposing interest and damages on account of delayed remittance in respect of arrears of wages paid later-on, in compliance of settlement between employer and the workmen / union. The EPF Appellate Tribunal observed that enhancement in wage was done with retrospective effect i.e. from October, 2003 to June 2004 vide settlement dated 24-05-2004. In fact the payment of arrears was made only on 09-07-2004. EPF contribution was deposited on 15-07-2004 without delay. Similar issues were considered by the Andhra Pradesh High Court in the case of Regional Provident Fund Commissioner Vs. Employees Provident Fund Appellate Tribunal, 2012 (I) CLR 928 wherein it is held that the obligation to make the contribution gets, in fact, postponed to the actual due date of payment and disbursing the same. The obligation to make payment as per the revised pay springs up only on the day such a decision has been taken through the said decision may be operational with effect from a past date Actually drawn must be understood as actually due, payable and drawn, if the disbursement has not occasioned, it must be understood as liable to be drawn and payable when they become due and payable. Accordingly, the levy of damages in the case, in contrary to the law settled by the Andhra Pradesh High Court and the impugned order is set aside. Appeal is allowed.

WHEN DEFAULT IN DEPOSIT IS NOT WILFUL, PENAL DAMAGES ARE UNJUSTIFIED

An appellant filed an appeal before the Employees Provident Fund Appellate Tribunal, questioning the validity an legality of orders, passed by the EPF Authority , under section 14-B of the Act, imposing damages and interest on account of delayed remittance whereas the appellant have suffering losses delay was not willful. The EPF Appellate Tribunal observed that the power to impose damages under section 14-B is judicial power with the EPF Authority. It provides for an enabling provision. It does not envisage mandatory levy of damages. It does not also contemplate computation of quantum of damages in the manner prescribed under the scheme. The Legislature limited the jurisdiction of the Authority to levy penalty i.e. not exceeding the amount of arrears. Para 32A of the EPF Scheme, 1952 provides sliding scale for the imposition of damages based on the period of defaults. Delayed deposit does not ipso facto invite levy of damages. The Employer is answerable for damages for delayed payment, irrespective of having suffered heavy losses, is based on wrong presumption of law and not sustainable. If the employer has furnished sufficient cause for the delay, the EPF authority may not levy damages in a given case. In the instant case, no reason or justification is given as to why damages are levied at the highest rates prescribed in Para 32 of the EPF Scheme. It is settled position that a penal provision should be construed strictly. Levy of damages cannot be construed as imperative by the reason of an enabling provision. After amendment to Para 32A of the EPF Scheme with effect from 26-09-2008, the damages are to be levied at the lower rate by excluding the element of interest included earlier. In the impugned order, the EPF Authority has not indicated the reasons for delay in remittance of EPF dues attracting levy of damage. There is no finding by the EPF Authority to establish that the appellant had unlawfully diverted the funds collected from the employees for its business use. Since there is not means, damages or interest should not be levied. Hence, the impugned order is set aside.

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STRICTLY STATUTES

A Newsletter from ADP India

DEFAULT IN DEPOSIT WHEN NOT WILLFUL, PENAL DAMAGES UNJUSTIFIED

An appellant filed an appeal before the Employees Provident Fund Appellate Tribunal, challenging the order dated 11-12-2003, passed by the EPF Authority, under section 14-B of the Act, levying damages and interest for delayed remittance of PF dues without giving opportunity of hearing, which is illegal. The EPF Appellate Tribunal has held that the power to impose damages under section 14-B is a judicial power with the EPF Authority. It provides for an enabling provision. It does not envisage mandatory levy of damages. The Legislature limited jurisdiction of the Authority to levy penalty i.e. not exceeding the amount of arrears. Para 32A of the EPF Scheme, 1952 provides a sliding scale for the imposition of damages based on the period of defaults. Delayed deposits does not ipso facto invite levy of damages. If the employer has furnished sufficient cause for the delay, the EPF authority may not levy damages in a given case. It is settled position of law that penal provision should be constructed strictly. Levy of damages cannot be construed as imperative by the reason of an enabling provision. In the impugned order, the reasons, as indicated, for delay in remittance of EPF dues, does not attract levy of penal damages. Since there is not means, penal damages should be more or less has failed to prove on record the willful default on the part of appellant, levy of damages be restricted to 25% of the actual amount of damages levied under the impugned order. The appeal is disposed accordingly.

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STRICTLY STATUTES

A Newsletter from ADP India

EPFO DIRECTS FIELD OFFICES TO ASK COMPANIES FILE PF CLAIMS WELL IN TIME
To avoid harassment of employees, retirement fund body EPFO has directed its field offices to sensitize about the need to forward PF claims of outgoing workers in time All regional offices and sub-regional offices should sensitize the employers under their respective jurisdiction to comply with the provision of Para 72(5) of the EPF Scheme, 1952 where the employer is duty-bound to forward duly filled-in and attested claim application to the respective EPF office within five days of receipt, says a circular of EPFO.

GRANT OF INSTALMENT FACILITY TO ESTABLISHMENTS FOR LIQUIDATING THE ARREARS

The Central Board of Trustees, in its meeting held on 13.Jan.2014 had accepted the proposal and formulated the below terms and conditions for allowing the establishments desirous to avail instalment facility to liquidate the arrears in 36 instalments The facility of instalment : Be available for both exempted and un exempted establishments Shall cover employees as well as employer share of contribution, interest and damages Each instalment shall be paid along with interest under Sec 7Q of the month along with current contributions A revolving bank guarantee for an amount equal to one instalment shall be furnished along with the application for instalment facility. On dues exceeding Rs. 25 Lakhs, an undertaking for non- transfer of immovable property by sale, lease, gift or any other manner during the period on instalment facility Postdated cheques for the number instalments to be submitted along with application Un exempted establishments can avail 72 instalments. The establishment shall submit revolving bank guarantee equivalent to six months instalments.

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STRICTLY STATUTES

A Newsletter from ADP India

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