COMPENSATION COMPENSATION REGULATIONSREGULATIONS

ININ INDIA INDIA

By:

Mayank JainSoniya TiwariChinmayiArchana

AgendaAgenda

Minimum Wages Act, 1948Minimum Wages Act, 1948

Payment of Bonus Act, 1965Payment of Bonus Act, 1965

Payment of Gratuity Act, 1972 Payment of Gratuity Act, 1972

THE MINIMUM WAGES ACT, 1948THE MINIMUM WAGES ACT, 1948

AN ACT TO PREVENT “SWEATED LABOUR AND AN ACT TO PREVENT “SWEATED LABOUR AND EXPLOITATION OF LABOUR”EXPLOITATION OF LABOUR”

The Act extends to the whole of India The Act extends to the whole of India

Requires the Central and State Govt. to fix minimum Requires the Central and State Govt. to fix minimum rates of wages in certain scheduled employment.rates of wages in certain scheduled employment.

Minimum wages fixed REVISED from time to time Minimum wages fixed REVISED from time to time within 5 yrs. -- Sec. 3(1)(b)within 5 yrs. -- Sec. 3(1)(b)

Wages Wages Sec. 2(h)Sec. 2(h)

All remunerations capable of being All remunerations capable of being expressed in terms of money & expressed in terms of money & includes HRA but does not include:includes HRA but does not include: Value of any house accommodation, Value of any house accommodation,

supply of light, watersupply of light, water Contribution to PFContribution to PF Any travelling allowanceAny travelling allowance Any gratuity payable on discharge Any gratuity payable on discharge

Important SectionsImportant Sections

Minimum Wage – weather to be paid Minimum Wage – weather to be paid in cash or kind (in cash or kind (Sec 11Sec 11))

Payment of Minimum Wages is Payment of Minimum Wages is obligatory on employer (obligatory on employer (Sec 12Sec 12))

Wages of a worker who works less Wages of a worker who works less than normal working day (than normal working day (Sec 15Sec 15))

Offences and Penalties (Offences and Penalties (Sec 22Sec 22))

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.

THE PAYMENT OF BONUS ACT, THE PAYMENT OF BONUS ACT, 19651965

An Act to provide for the payment of Bonus to An Act to provide for the payment of Bonus to persons in certain establishments on the persons in certain establishments on the basis of profits, production or productivity.basis of profits, production or productivity.

Extends to the whole of India.Extends to the whole of India. Applies to every establishment wherein 20 or Applies to every establishment wherein 20 or

more are employed more are employed The Appropriate Govt. shall apply the Act to The Appropriate Govt. shall apply the Act to

any other establishment, including a factory any other establishment, including a factory to which the Factories Act, 1948 applies, to which the Factories Act, 1948 applies, wherein less than 20 workers are employed wherein less than 20 workers are employed provided the number of persons employed is provided the number of persons employed is not less than 10not 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 For calculating the number of working daysworking days

the days for which the worker has been the days for which the worker has been laid off laid off

the days he has been on leave with paythe days he has been on leave with pay the days he has been absent due to the days he has been absent due to

temporary disablement caused by an temporary disablement caused by an employment injuryemployment injury

the days a woman employee has been on the days a woman employee has been on maternity leavematernity leave

shall be taken in to account.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 BonusDisputes on Bonus

The Bonus Act does not provide The Bonus Act does not provide for any machinery to resolve for any machinery to resolve disputes relating to bonus. For disputes relating to bonus. For this, the this, the Industrial Dispute ActIndustrial Dispute Act shall be referred to.shall be referred to.

THE PAYMENT OF GRATUITY THE PAYMENT OF GRATUITY ACT, 1972ACT, 1972

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

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

Gratuity is in the nature of Gratuity is in the nature of a retirement benefit a retirement benefit

payable to an employee for payable to an employee for a long and meritorious a long and meritorious

serviceservice..• It is not paid to an employee It is not paid to an employee

gratuitously or merely as a matter of gratuitously or merely as a matter of boon. It is paid for the service boon. It is paid for the service rendered by him to the employer rendered by him to the employer (Delhi Cloth and General Mills (Delhi Cloth and General Mills Co; Ltd Vs The Workmen)Co; Ltd Vs The Workmen)

Gratuity is payable to an employee on Gratuity is payable to an employee on termination of his employment after he has termination of his employment after he has

rendered rendered continuous service for not less than continuous service for not less than five yearsfive years

on his superannuationon his superannuation on his resignationon his resignation on his death or disablement due to employment injury or on his death or disablement due to employment injury or

disease disease

Payment of Gratuity shall be forfeited:

to the extent of the damage or loss caused by the employee to the property of the employerwhere 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 Piece rate workers and Seasonal establishmentsSeasonal establishments

For piece rated workers, For piece rated workers, average of the three months average of the three months wageswages immediately preceding immediately preceding the day of leaving shall be taken the day of leaving shall be taken as average rate of wageas average rate of wage

An employee in a seasonal An employee in a seasonal establishment shall be paid @ establishment shall be paid @ seven days wages for each seven days wages for each seasonseason

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.

Continuous ServiceContinuous Service An employee is in service in a An employee is in service in a

calendar year provided he has calendar year provided he has worked forworked for 190 days in case employee is 190 days in case employee is

employed below the ground andemployed below the ground and 240 days in any other case.240 days in any other case.

Continuous service (contd.)Continuous service (contd.)

The days he/she has beenThe days he/she has been laid offlaid off under an agreement or under the ID under an agreement or under the ID

Act or as permitted by the Standing OrdersAct or as permitted by the Standing Orders on leaveon leave with pay with pay absent due toabsent due to temporary disablement due temporary disablement due

to to employment injuryemployment injury on maternity leaveon maternity leave

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

For seasonal employment 75% For seasonal employment 75% attendance during a season shall attendance during a season shall

constitute service in a year constitute service in a year

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

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