IMPORTANT LABOUR AND FACTORY LEGISLATIONS IN INDIA

Acts and Rules

Blend of Acts and Rules

Centered on the responsibility of a Factory Manager, Personnel/ HR Manager or self employed Entrepreneur. Attention has not been made wherever the employer has nothing to do with the provisions but has only to follow the directions of the appropriate govt.

THE FACTORIES ACT, 1948

Act which makes it obligatory on the part of the employer to provide for the health, safety and welfare of the workers employed.

Act extends to the whole of India.

Applies to every factory wherein 10 or more workers are or were employed, if run with power and 20 or more workers are or were employed, if run without power. Application to factories with fewer workers u/s 85

Hours of work (adult) not to exceed 48 hours in a week or 9 hours in a day. Relaxation: Where an adult worker is engaged in urgent repairs. Payment of Overtime wages for overstay at workplace @ twice the ordinary rate of wages. ** Provision relating to hours of work not applicable to supervisory staff. Weekly Holiday: No work for more than 10 days without a day of rest. Intervals of rest: half an hour for 5 hours of work No child (who has not attained the age of 15 years) be permitted to work. Prohibition of employment of Women: No woman shall be employed in any factory for more than 9 hours in any day or between 7 pm and 6 am.

PROVIDES for

Factories Act now allows women to work night shifts PROVIDED

adequate safeguards in the factory as regards occupational safety and health, equal opportunity for women workers, adequate protection of their dignity, honor and safety and their transportation from the factory premises to the nearest point of their residence" are made.

Leave with Wages

@ 1day for every 20 days provided ----240 days of work during preceding year. Days of lay off, paid holidays or leave days considered Encashment of unavailed leave: Encashable at the present rate of wages.

The occupier (Employer) to maintain a register LEAVE WITH WAGES REGISTER- in FORM 15
Provide each employee a Leave Book- thick bound sheet- in FORM 16 (with similar entries as in Form 15) Provide each worker an Attendance Card in form 28 showing the particulars of employment * shall be substituted by Electronic cards

white washing at least once in every 14 months repainting or revarnishing every 5 years ensure proper disposal of wastes and effluents Record the dates on which white washing, painting or varnishing done in a register in FORM 7. Ensure provision of sufficient number of Latrines and urinals separate for gents and ladies Ensure spittoons are provided at adequate places. Ensure workplace has adequate ventilation Avoid overcrowding ensure 500 cubic feet of space for every worker without reference to any space which is more than 14 feet above the level of the floor of the room. Ensure proper lighting- artificial or natural or both. Ensure supply of uninterrupted supply of Drinking Water. Where the no. of workers is more than 250, provision for cold water in every lunch room, rest room and canteen shall be ensured.

EMPLOYER TO KEEP THE FACTORY PREMISES CLEAN

EMPLOYER TO ENSURE SAFETY OF WORKERS

Fencing of Machines and Moving parts of machines spindles, gears, pulleys, belts etc Protection of eyes using screens or goggles from excessive light or infra-red or ultra violet radiations Precaution in case of Fire. No woman or young person shall, unaided by another person, lift, carry or move by hand or head any material or tool exceeding the maximum limit prescribed. * Adult male 75 Kgs * Adult female 30 Kgs * Adolescent male 30 Kgs * Adolescent female 20 Kgs Safety Officer: Appoint a Safety Officer wherein 1000 or more workers are employed.

EMPLOYER TO LOOK AFTER THE WELFARE OF EMPLOYEES

Washing facility separately for women and men Separate rooms for men and women for drying of clothes Separate rest rooms for men and women First Aid boxes equipped with prescribed medicines Ambulance room where 500 or more are employed Canteen for use of workers where 250 or more are employed (150 under Plantation Labour Act) Lunch room where 150 or more are employed Crches where 30 or more women are employed Appoint WELFARE OFFICER (S) where 500 or more are employed (300 under PLA) The duties, qualification and conditions of service of such welfare officers shall be in accordance with the rules of the respective State Govt. NOTICE OF DANGEROUS OPERATIONS

REGISTERS TO BE MAINTAINED
Attendance Register/ Muster roll in form 25 Register of Adult Workers in form 12 Record of Lime washing, painting etc in form 7 Register of Compensatory Holidays in form 9 Overtime Muster roll for Exempted workers in form 10 Register of Leave with Wages in form 15 Health Register in form 17 (in respect of persons employed in occupations declared to be dangerous operations u/s 87) Register of Accidents and Dangerous Occurrences in form 26 Particulars of Rooms in the factory in form 35.

RETURNS TO BE SENT TO APPROPRIATE AUTHORITIES

Notice of accidents and dangerous occurrences resulting in death or bodily injury in form 18 (similar to the one to be sent ESI Local Office under the ESI Act) Half yearly returns in form 22 Annual returns in form 21 Notice of change of Manager in form 23 Details of closure in form 32 Report of examination of Pressure Vessel or Plant in form 8 Report of examination of Water sealed Gas holder in form 38 Report of Examination of Hoist or Lift in form 41 Certificate of Fitness for Dangerous Operations in form 39

THE INDUSTRIAL EMPLOYMENT (STANDING ORDER) ACT, 1946

Defines the terms and conditions of service between the employer and his employees. Applies to every industrial establishment wherein 100 (in some States 50)or more workers are employed The Act extends to the whole of India

SIGNIFICANCE

Terms of appointment order issued to an employee cannot circumvent the provisions of certified standing order. Therefore, it is always desirable to get standing orders drafted and certified as it regulates the relationship between the employer and the employee.

Standing Order drafted shall provide for

Date on which the standing orders shall come in to force and shall remain in force Definitions Classification of workmen as Permanent, Probationer, Badlis, Casual and Trainees

Obligations not to carryon any other business for gain or to take admission in educational institution without permission to observe strict secrecy of company matters not to take photographs, drawing or documents of the process of manufacture of the company not to carry any lethal weapon, explosive or article dangerous to life or property to follow safety rules in force to inform any change in the address etc

contd

contd
Medical examination and aid in case of accident Identification of workmen and issue of Identity cards Working time for different categories of workmen Record of age, qualification and experience Entry, exit and liability for security checking Shift working and weekly off Attendance and late coming Methods of applying for different kinds of leave and extension of leave Action for unauthorised absence

National and festival holidays Transfer Apprehension of danger to the safety and security of factory and its personnels Date of payment of wages/ salary Overtime wages Increment and promotion Stoppage, closing or lay off of establishment and strike Resignation notice or payment in lieu of notice to be given Termination of employment and notice or payment in lieu of notice required to be served or made

contd

contd

Deduction from wages for fine imposed or absence from duty or loss caused to the property and recovery of employees contribution to schemes like EPF, ESI and Labour Welfare fund Age of superannuation Grievance procedure Disciplinary action for misconduct Punishment for misconduct and procedure for imposition of punishment

contd
Service of notice Issue of service certificate Amendment of Standing order Exhibition of Notices as whether if put in the Notice Board or not

THE MATERNITY BENEFIT ACT, 1961

The Act extends to the whole of India except Jammu & Kashmir Applies to every factory, shop or establishment Woman entitled to maternity benefit not withstanding the application of the Employees State Insurance Act, 1948

Employer to ensure
No woman works during the six weeks immediately following the day of her delivery or her miscarriage No woman does any arduous work during the period of ten weeks from the expected date of delivery Not to discharge or dismiss a woman during her pregnancy

Eligibility

Work of 160 days in the 12 months immediately preceding the date of delivery. Leave days & lay offs taken as worked.

Benefit
12 weeks leave of which not more than 6

weeks shall precede the date of her expected delivery The benefit to be paid @ average rate of wages for the three months preceding her maternity leave In case of miscarriage, 6 weeks leave with pay at the same rate as applicable to maternity benefit.

THE MINIMUM WAGES ACT, 1948

AN ACT TO PREVENT SWEATED LABOUR AND EXPLOITATION OF LABOUR

The Act extends to the whole of India

Requires the Central and State Govt. to fix minimum rates of wages in certain scheduled employment. Minimum wages fixed REVISED from time to time

Responsibility of the Employer

to follow the directions and fix wages of the workers at the rate not less than the one fixed to maintain Register of Wages in form XI showing rate of wages payable, actual amount paid, attendance & overtime, deductions for EPF, ESI and other, net amount paid, date of payment and signature of respective employee. Wages slip in form XIII showing the above details to be given to every employee.

PAYMENT OF WAGES ACT, 1936

An

Act to regulate the payment of wages to certain classes of persons

Extends to the whole of India Responsibility of payment wages rests with the employer Employer to fix Wage Period No wage period shall exceed one month.

Time of Payment of wages

7th day of wage month where less than

1000 are working 10th day where more than 1000 are working No payment in KIND

Permissible deduction from Wages

fines for absence from duty for damage caused to the property of the employer for the amenities provided, like house accommodation for recovery of advance or adjusting over payment of wages towards EPF, ESI, Labour Welfare Fund and similar deductions permitted under any Act or the Standing Orders of the establishment for Life Insurance/ general insurance policies and Housing loan.

THE PAYMENT OF BONUS ACT, 1965

An Act to provide for the payment of Bonus to persons in certain establishments on the basis of profits, production or productivity. Extends to the whole of India. Applies to every establishment wherein 20 or more are employed The Appropriate Govt. shall apply the Act to any other establishment, including a factory to which the Factories Act, 1948 applies, wherein less than 20 workers are employed provided the number of persons employed is not less than 10.

Eligibility to Bonus
employee whose salary/ wages does not exceed Rs 10000 per month who has worked in the establishment for not less than 30 days Not disqualified to claim bonus due to fraud, theft or any other misconduct Bonus of very person drawing salary between Rs 3500/- and Rs 10000/- per month shall be calculated as if his salary were Rs 3500 pm

For calculating the number of working days

the days for which the worker has been laid off the days he has been on leave with pay the days he has been absent due to temporary disablement caused by an employment injury the days a woman employee has been on maternity leave
shall be taken in to account.

Rate of Bonus

Minimum :8.33% of salary/wages Maximum 20% of salary/wages Computation of bonus as per Schedule I to IV of the Act. Adjust any interim bonus paid while making payment of the final bonus.

Disputes on Bonus
The Bonus Act does not provide for

any machinery to resolve disputes relating to bonus. For this, the Industrial Dispute Act shall be referred to.

THE PAYMENT OF GRATUITY ACT, 1972

The Kerala Industrial Employees Payment of Gratuity Act, 1970, followed by the West Bengal Employees Payment of Compulsory Gratuity Act, 1971 and the intention of the other States to have similar Acts in their respective states necessitated the Central Act so as to avoid different treatment to employees of establishments having branches in more than one states who are subject to transfer from one state to another.

The Payment of Gratuity Act, 1972 extends to the whole of India.

Applies to every factory, mine, plantation and other establishment wherein 10 or more workers are employed.

 It is not paid to an employee gratuitously or merely as a matter of boon. It is paid for the service rendered by him to the employer (Delhi Cloth and General Mills Co; Ltd Vs The Workmen)

Gratuity is in the nature of a retirement benefit payable to an employee for a long and meritorious service.

Gratuity is payable to an employee on termination of his employment after he has rendered continuous service for not less than five years
on his superannuation on his resignation

on his death or disablement due to employment

injury or disease

The payment of gratuity shall be forfeited

to

the extent of the damage or loss caused by the employee to the property of the employer where the service of the employee is terminated due to misconduct

Rate of gratuity
15 days wages for every completed year of service

The average pay of the monthly rated employee shall be taken by dividing the monthly salary/ wages by 26 and not by 30

Piece rate workers and Seasonal establishments

For piece rated workers, average of the three months wages immediately preceding the day of leaving shall be taken as average rate of wage An employee in a seasonal establishment shall be paid @ seven days wages for each season

Salary ceiling
The

Amendment Act of 1994 removed the salary ceiling of an employee, but the maximum gratuity payable shall be Rs 3.5 lakh.

In order to be eligible for gratuity, employee should have at least five continuous years of service with the employer
An employee is in service in a calendar year provided he has worked for
190 days in case employee is employed below the ground and 240 days in any other case.

Continuous service (contd.) The days he/she has been

laid off under an agreement or under the ID Act or as

permitted by the Standing Orders on leave with pay absent due to temporary disablement due to employment injury on maternity leave

shall be taken as worked for the calculation of 190/240 days.

For seasonal employment 75% attendance during a season shall constitute service in a year
An

employee who has worked for 4 years 11 months and 10 days not eligible for gratuity as decided in P. Raghavalu and Sons Vs Additional Labour Court, Andhra Pradesh, as the qualifying phrases part thereof in excess of six months shall be taken only for calculation of gratuity and not for determining the eligibility of gratuity.

THE WORKMENS COMPENSATION ACT, 1923

The Act provides for payment of compensation to the worker injured during the course of employment or contracted by any occupational disease peculiar to that employment Act extends to the whole of India.

The amount of compensation

for accidents resulting in death, an amount equal to fifty per cent of the monthly wages of the deceased workman multiplied by the relevant factor; or an amount of eighty thousand rupees, whichever is more * for permanent total disablement, an amount equal to sixty per cent of the monthly wages of the injured workman multiplied by the relevant factor, or an amount of ninety thousand rupees, whichever is more.

FACTORS FOR WORKING OUT LUMP SUM COMPENSATION AMOUNT IN CASE OF PERMANENT DISABLEMENT AND DEATH.
Completed years of age of the workman immediately on which the compensation fell due 1 Not more than Factors

16

228.54

17

227.49

18

226.38

19

225.22

20

224

21

222.71

The maximum compensation as per W.C. Amendment Act 2000

Fatal Injury - Rs.4,57,080 Permanent Total Disablement Rs.5,48,496 Permanent Partial Disablement According to incapacity caused Temporary Disablement - Rs. 2000 per month upto a period of 5 years

ESI Corporation and Workmen compensation

The liability of payment of compensation shifted from the employer to the Employees State Insurance Corporation

EMPLOYEES STATE INSURANCE ACT, 1948

Act extends to the whole of India, However The ESI Scheme is being implemented areawise by stages. The Scheme has already been implemented in different areas in all States/Union Territories except Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh and Mizoram and UTs of Delhi, Chandigarh and Pondicherry

ESI Act
* Applies to factories and establishments functioning in the notified area and consisting of 10 or more employees. * Provides for health care and cash benefits in cases of sickness, maternity and employment injury. * The Act absolved the employers of their obligations under the Maternity Benefit Act, 1961 and Workmens Compensation Act 1923.

Employees covered
All employees drawing salary of Rs 10,000 or less are covered (w.e.f 1-10-2006)

Contribution
Employees contribution . 1.75% of wages Employers contribution. 4.75 % of wages Employees receiving a daily average wage upto Rs.70/-(w.e.f 1-8-07) are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees. pay contribution within 21 days.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding benefit periods also of six months duration as under
Contribution period
1st April to 30th Sept.

Corresponding Benefit period 1st January of the following year to 30th June
1st July to 31st December of the year following

1st Oct. to 31st March

ESI Benefits

Medical Benefits Available both to IP and family. Also available to disabled/retired IP Super specialist treatment Sickness Benefit Maternity Benefit Disablement Benefit Dependant benefit Funeral Expenses Old age medi care Rehabilitation

Employer to maintain and file the following books and returns.

1. Form 7 (Register of Employees showing the details of Gross wages, ESI contribution deducted, Contribution by the Employer and total for the contribution period (six months) 2. Accident book in form 15 3. ESI Declaration in form 1, 4. Return of declaration in form 3 5. Return of Contribution in form 6 for the contribution period (with similar entries as in register of employees Form 7) 6. Accident report in form 16. (similar to Form 18 to be furnished to the Inspector of Factories and Boilers)

EMPLOYEES PROVIDENT FUND AND MISC. PROVISIONS ACT, 1952

An Act to provide for the institution of provident funds, pension funds and deposit linked insurance fund for the employees in the factories and other establishments Extends to the whole of India except the State of Jammu and Kashmir

Applicability

Applies to all factories and establishments in which 20 or more are employed Continuity of application Exemption Where employees get benefits in the nature of provident fund or old age pension fund from the establishment which are not less favourable than the benefits under the Act.

Schemes under the Act

Three beneficial schemes1.Employees Provident Fund Scheme 1952 2.Employees Pension Scheme 1995 3.Employees Deposit Linked Insurance 1976

membership
An employee at the time of joining the

employment and getting wages up to Rs.6500/- is required to become a member. an employee is eligible for membership of fund from the very first date of joining a covered establishment.

Contribution to EPF

Employees share : 12% of the Basic + DA Employers contribution : 12% to be deposited as :

8.33% to be deposited in Pension Fund A/C No 10 and the balance, ie, 3.67% to be deposited in Provident Fund A/C No 01 along with Employees share of 12%

Contribution (contd.)

Administration charges @ 1.1% of the total wages/salary disbursed by deposit to A/C No 02, Employees Deposit Linked Insurance @ 0.5% of the total wages/salary by deposit to A/C No. 21 and Administration of EDLI @ 0.01% of the wages/ salary by deposit to A/C. No. 22.

Duties of employer
Employer to furnish information about: (a) Ownership and names of responsible persons of the establishment. (b) Declaration and nomination. (c) Joining and leaving of service by the members in form 5 and form 10 respectively (d) Form 12A with monthly challans of deposit. (e) Form 9 for details of employees. (f) Form 3A/6A at the end of the financial year. (g) Any other information as may be required under Para 76 of the scheme

Benefits to employees

Provident Fund Benefits Pension Benefits Death Benefits

Provident Fund Benefits

Employer also contributes to Members PF @ 3.67% (1.67% in case of sick industry - eg: beedi) EPFO guarantees the Employer contribution and Govt. gives a decent interest to PF accumulations Member can withdraw from this accumulations to cater financial exigencies in life - No need to refund unless misused On resignation, the member can settle the account. i.e., the member gets his PF contribution, Employer Contribution and Interest

Pension Benefits
Pension to Member Pension to Family (on death of member) Scheme Certificate This Certificate shows the service & family details of a member This is issued if the member has not attained the age of 58 while leaving an establishment and he applies for this certificate Member can surrender this certificate while joining another establishment and the service stated in the certificate is added with the service he is gaining from the new establishment. After attaining the age of 50 or above, the member can apply for Pension by surrendering this scheme certificate (if total service is at least 10 years) This is a better choice than Withdrawal Benefit, that if a member dies holding a valid scheme certificate, his family will get pension (Death when NOT in service)

Pension benefit (contd.)

Withdrawal Benefit if not eligible for pension, member may withdraw
the amount accumulated in his pension account the calculation of this amount is based only on (i) Last average salary and (ii) Service (Not based on actual amount available in Pension Fund Account) No amount is taken from Member to give Pension to the Member. Employer and Govt. contribute to Pension fund @8.33% and @1.16% respectively EPFO guarantees pension to members, even if the Employer has not contributed to Pension Fund.

Pension calculation is similar to that of Govt. Employee

Death Benefits
Provident Fund Amount to Family (or to Nominee) Pension to Family (or to Parent / Nominee) Capital Return of Pension Insurance (EDLI) amount to Family (or to Nominee)

No amount is taken from Member for this facility. Employer contributes for this.

Nominee is basically determined as per the information submitted by the member at this office through FORM-2

The Trade Unions Act, 1926

An act to provide for the registration of Trade Unions and in certain respects to define the law relating to registered Trade Unions. It extends to the Whole of India

Registration

The minimum number of workers to form a registered Trade Union is 10% or 100 whichever is less, subject to a minimum of 7 workers. Ensure that the number of members does not fall down the above requirement.