NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to...

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NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement in regard to Management of Contract Labour. Designed, Prepared & conducted By K.Vittala Rao. Management Consultant,Bangalore. 23 rd May, 2015. Email: [email protected]

Transcript of NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to...

Page 1: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

NIPM – Kerala Chapter. Legal Update – 2015.

An interactive session On

Recent Amendments to Labour LegislationsAnd

Recent Trend setting judicial pronouncement in regard to Management of Contract Labour.

Designed, Prepared & conductedBy

K.Vittala Rao.Management Consultant,Bangalore.

23rd May, 2015.

Email: [email protected]

Page 2: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Recent Amendments to Labour Legislations.

Legislations covered:1.Apprentices Act.2.Employees Provident Fund & Miscellaneous Acts3.Factories Act.4.Small Factories Act.5.Industrial Disputes Act.6.Payment of Bonus Act.7.The Labour Laws (Exemption from furnishing Returns and Maintaining Registers by certain Establishments)Amendment Act,2014.8.Rajasthan Model.9.Wage Code Bill, 201510.Industrial Relations Bill 2015

Page 3: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Session I

Recent Amendments to Labour Legislations.

Page 4: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Brought into force from 22nd December, 2014.

Page 5: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

To simplify workflow for establishments while engaging apprentices

Sec.2 (1)(d) has been amended.

An employer in the private sector having pan-India operations has to go to eachState/UT for work relating to engagement of apprentices which they feel that such process is cumbersome. Such employers prefer to go to respective Regional Directorate of Apprenticeship Training (RDAT) under DGE&T for engagement of apprentices.

The amendment is aimed at implementation of Apprenticeship Training Scheme in those organizations which are operating business /trade in more than four States, will rest with the Central Government.

Page 6: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Change in the definition of “Worker”

Of late majority of employers hire contractual workers in their premises instead of employing regular workers thereby resulting in reduction in number apprentices to be engaged and causing training facilities going unutilized. Under the Act, contractual workers are not counted while locating the apprenticeship seats in the establishment.

Accordingly, new definition of worker in clause “(r)” of section 2 of the Act is substituted

Expanding the scope of Apprenticeship

The scope of the apprenticeship training is enhanced in order to bring the internship/on-the-job training of other courses, all graduates in various fields such as B.A, B.Com., B.Sc., etc. may be brought under Act to enhance their skills and employability’This is brought under the category “non-engineering”.

Accordingly, Section 2(j)(K) & Section 6 is amended

Page 7: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Government regulation on additional new trades: Optional Trades

At present, the Employers can not start training in the trade/occupation under the Act in spite of having immediate potential of employment unless the government notified such trade/occupation in the Official Gazette.Now, Companies may be allowed to starts new trade without waiting for notifying such trades in the official gazette of India. But it may be obligatory for the establishment to disclose the duration and syllabi of the Optional Trades on the web-portal to check the quality of training

Accordingly, section 2 & section 37 are amended. Further new section would be added to regulate optional trades..

Page 8: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Trade-wise and Unit-wise regulation and deployment of apprentices in the service & informal sector.

Employers’ associations exhorted that present system of location of seats restrict their freedom in engaging the apprentices as per their requirement and they have to engage apprentices where they don’t need.To encourage employers to engage more number of persons as apprentices, these are more liberalized provisions. The Central government shall prescribe the number of apprentices to be engaged in designated trade and optional trade.

Several employers may join together themselves or through an agency approved by App Advisor according to the guidelines issued from time to time by the Central Government, for the purpose of providing training to the apprentices.

Accordingly, Sec.2 (p),(q) & Sec.8 has been amended.

Page 9: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Age requirement : Sec 3.

1.Not less than 14 yrs in case of designated trades .2.Not less than 18 yrs in case of designated trades in case of Hazardous industries.

Qualification: Sec. 5 A:The qualification, period, holding test, grant of certificate and other conditions shall be as prescribed.[Rules are yet to come]

Page 10: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Provision Existing Amendment.Sec 2 (pp) Technician (vocational)

apprentice:……………………….as may be prescribed.

Technician (vocational) apprentice:……………………….in any designated trade.[Central Govt shall notify]

Sec 2 ( q) Trade apprentices: …………………..as may be prescribed

Trade apprentices: An apprentice who undergoes apprenticeship in any designated trade.[Central Govt shall notify]

The word “may be prescribed” has been substituted by “in any designated trade”.“Designated trade has been defined as any trade or occupation or any subject fieldIn engineering or non engineering or technology or any vacational course, whichthe Central Government shall notify.The scope of engaging is much wider so that number of apprentices to be engagedwill , obviously, be more.

Page 11: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Provision Existing Amended

Sec 4 Registration of contracts.(4) ……..shall be sent by employer within such period ……….for registration.

Registration of contracts.(4) : Replaced.Every contract shall be on line submission on the web portal and in turn the registration will be accepted by the Apprenticeship Advisor

Sec 5 A New provision: The qualification, period of apprenticeship, holding of tests, grant of certificate and other conditions relating to the apprentices in optional trade shall such as may be prescribed.

Sec 5 B New provision: The employer may engage apprentices from other States for the purpose of providing training.

Page 12: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Provision Existing AmendmentSec 6 (aa) Period of apprenticeship training. [Of

those who have already passed the trade tests etc]

Period of apprenticeship training.(aa) substituted: In order to take care of optional trade, it is added “ courses approved under any scheme” and also “who have trade tests conducted by any other agency”.

Sec 8 Number of apprentices for a designated trade

Sec 8 is replaced by new Section.Features: The Central government shall prescribe the number of apprentices to be engaged in designated trade and optional trade.Several employers may join together themselves or through an agency approved by App Advisor according to the guidelines issued from time to time by the Central Government, for the purpose of providing training to the apprentices.

To encourage employers to engage more number of persons as apprentices, these are more liberalized provisions. The Training of apprentices, can, now, be takencare of by an outsider.

Page 13: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Provision Existing AmendedSec 9 This section pertains to imparting

practical training and related instructions training either by the employer or by deputing them to the nearest Industrial Training Institutes . It was stipulated that if the strength was more than 500, it was mandatory to impart such related instruction classes by the Employer under such conditions as stipulated.

Replaced;1.Practical Training shall be imparted by the Employer.2.For related instruction training, basic training may be given in any institute having adequate facilities.

This amendment further encourages the employers to engage persons and impartapprenticeship training, not only in designated trades, but also optional trades. TheTraining pertaining to basic training, related instructions etc can, now be entrustedto an Institute having adequate facilities.

Page 14: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Provision Existing AmendedSec 15 Hours of work, overtime, leave

and holidays: As prescribed by the Apprenticeship Advisor.

1. The weekly holiday and daily hours of work shall be as determined by the employer subject to the compliance with the training duration, if prescribed.

2. Leave and holidays as are observed in the establishment .

Sec 19 Records & returns. A web-site is to be developed. Till such time, the web-portal is developed, the returns and information shall be furnished, as prescribed on this behalf. The Employer shall also give trade-wise requirements and engagement of apprentices on the we-portal.

Sec 21 Holding of test and grant of certificate and conclusion of training.At present, completely held by the State/Central apprenticeship Board.

The amendment:1.Tests for determination of proficiency by any other Agency authorized by the Central Government also.2.The proficiency certificate may also be awarded by the Agency, so authorized by the Central Government.

Page 15: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Sec 22 ( 1):Every employer shall formulate its own policy for recruiting any

apprentice who has completed the period of apprenticeship in his Establishment.

Prior to this amendment:1.It is not obligatory on the part of the Employer to provide any permanent employment to an apprentice after completion of the Training and not it is obligatory to accept any such employment. Sec 22 ( 1)2.However, notwithstanding the above, if there is an agreed clause incorporated in the Contract, then, the Employer shall offer the employment . Sec 22 ( 2 )

The Supreme Court in the case of Narendrakumar Vs State of Punjab, 1985, upheld this provision. “The object of this provision is to guarantee to the extent of the existence of the vacancies, that the apprentices will not be rendered jobless after they complete the Training”.The reasons for the amendment of Sec 22 ( 1 ) is in this background.

Page 16: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Apprentices (Amendment)Act,2014

Penal provisions amended:

1.Any employer who contravenes the provisions of this Act including not engaging the required number of apprentices , then he shall be given one month’s notice for explaining the reasons for such contravention.2.If the Employer fails to offer satisfactory explanation or fails to offer any explanation, then, after being heard, he shall be punishable with fine of Rs. 500 per month for each short fall of apprentices for the first 3 months and thereafter Rs 1000 per month till such number of seats are filled up.3.If the employer engages as an apprentice who is not qualified or fails to carryout the terms & conditions of a contract of apprenticeship, he shall be punishable with a fine of one thousand rupees or imprisonment of six months or both.

Page 17: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Amendment 2014. Came into force from 1st September,2014.

Page 18: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Prior to amendment After amendmentSalary limit : Rs. 6500 PM Salary limit : Rs.15000 PM

In case the salary exceeds Rs.6500, the contributions could be limited to Rs.6500

In case the salary exceeds Rs.15000 contributions can be limited to Rs. 15000.

In case, if both employer & employee agree to contribute on actual salary exceeding Rs.6500, the contributions be 12 % accordingly.

In case, if both employer & employee agree to contribute on actual salary exceeding Rs.15,000, the contributions be 12 % accordingly.

Diversion of employer’s contribution to pension Fund was 8.33% of the employer’s contribution subject to a limit of Rs.6500. Hence, EPS contribution : Rs.541 [ Max]

Diversion of employer’s contribution to pension Fund was 8.33% of the employer’s contribution subject to a limit of Rs.15000 Hence, EPS contribution : Rs 1250.[Max]

Contribution by Central Government : 1.16 % limited to Rs.6500

Contribution by Central Government : 1.16 % limited to Rs.15000

Page 19: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Prior to amendment After Amendment

Employer: In addition to 12 % contribution.Pay 0.5 % on Rs.6500 towards EDLIPay 1.1 % on total salary [ PF salary] of all the employees. Pay 0.01 % as administrative expenses on Rs. 6,500

Employer: In addition to 12 % contribution.Pay 0.5 % on Rs.15000 towards EDLIPay 0.85 % on Rs 15000 on total [PF salary] of all the employees.Pay 0.01 % as administrative expenses on Rs. 15,000.

Page 20: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Pensionable salaryPrior to amendment After the amendment

Pensionable salary:Average of monthly pay drawn by him in the span of 12 months preceding the date of his exit.[However subject to a max. of Rs 6500]

Pensionable salary:Average of monthly pay drawn by him in the span of 60 months preceding the date of his exit.[However subject to a max. of Rs 15000.].For service prior to Sept. 2014, the maximum limit Rs.6500.For service beyond Sept.2014, the maximum limit Rs.15000.

Page 21: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Calculation of pension.Prior to amendment After amendmentPensionable salary multiplied by pensionable service divided by 70.

[Maximum pensionable salary limited to Rs. 6500]

Pensionable salary multiplied by pensionable service divided by 70.

Maximum pensionable salary limited to Rs.6500 for the service prior to Sept. 14. ANDMaximum pensionable salary limited to Rs.15000 for the service after Sept,14.

The pension so arrived at adding the sum in both the calculations, shall be subject to a minimum guaranteed amount of Rs.1000 per month.

Hence, arising out of this amendment, the pension will be calculated on twoCalculations & the total, thus, arrived shall be the pension, subject to a Minimum of Rs. 1000 per month.

Page 22: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Calculation of pension.Prior to amendment After the amendment

Calculation of pensionable salary:In case where there are periods of non contributions during the preceding 12 months, then the actual salary drawn by him shall be divided by the actual number of days worked by him to arrive @ daily rate and multiplied by 30 to workout average monthly pay.

Calculation of pensionable salary:In case where there are periods of non contributions during the preceding 60 months, then the actual salary drawn by him shall be divided by the actual number of days worked by him to arrive @ daily rate and multiplied by 30 to workout average monthly pay.

Page 23: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Limit on payment of pension.Prior to amendment After the amendment

The maximum pensionable salary shall be limited to Rs.6500, however, if employer or employee agree to contribute 8.33% on pay higher than Rs. 6500, and the contributions of 8.33 % on such higher pay & paid to Pension, the pensionable salary shall be based on such higher pay. And accordingly, pension is arrived.

The maximum pensionable salary shall be limited to Rs.15000.

Page 24: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Limit on contribution to pension.New insertion Paragraph 11 sub para ( 4 )

If the existing members who are contributing at the option of both the employer and employee, a higher contribution than the limit of Rs.6500, towards pension scheme, can, now exercise their option to continue to contribute beyond 15,000 subject to the following:1.Payment of additional contribution by the employee @ 1.16 % on such higher amount. [It means, the Government shall not pay their contribution beyond Rs. 15000].2.A fresh option be exercised within a period of 6 months from 1st Sept,2014.3.If no option is exercised, it will be presumed that the member has not opted and the additional contribution, so paid by him, shall be transferred to his PF account.

Page 25: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Withdrawal benefit:If a member has not rendered the eligible service required prescribed in paragraph on the date of his exit [10 yrs of contribution] or on attaining 58 yrs, he shall be entitled to withdrawal benefit as laid down in Table “D” or may opt for the scheme certificate.There is no change in this provision.

Page 26: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Benefits to members; Pension Scheme.Prior to amendment After amendmentPension on exit / retirement [58 yrs] as calculated.

Pension on exit / retirement [58 yrs] as calculated. Min. pension: Rs1000

Widow pension: As per the table C, depending the salary at the time of death.[ Min: Rs.425, Max: Rs. 2051]

Widow pension: As per the table C, depending the salary at the time of death.[ Min: Rs.1000, Max: Rs. 2051]

Monthly children pension 25 % of the widow pension subject to a minimum of Rs.150 per child, limiting to 2 children

Monthly children pension 25 % of the widow pension subject to a minimum of Rs.250 per child, limiting to 2 children

Orphan pension: 75 % of the widow pension, subject to a minimum of Rs.250 PM.

Orphan pension: 75 % of the widow pension, subject to a minimum of Rs.750 PM.

Page 27: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Return of capital:1.Pension is payable for 20 years starting at the age of 58 years.2.The member has an option to commute the pension to 1/3 of the amount. He will get the commuted amount: 1/3 X 100 times= The commutation amount.3.The pension will be balance 2/3 per month for next 20 years.4.After 20 years, the withdrawal benefit will be the pension so paid every month multiplied by 100.5.If the employee do not opt for commutation, then he will receive full pension for 20 years and thereafter, the withdrawal amount equivalent to pension amount multiplied by 100.

Page 28: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Ex: 1 Pension so calculated is Rs 4500.In case he opts for commutation: 1/3 of Rs.4500 will be the commuted amount. This will be Rs.1500.Commuted amount payable to him on superannuation: 1500 X 100 = Rs.1,50,000Pension per month will be Rs. 3000 per month.Withdrawal benefit after 20 years of pension:Rs. 3000 X 100 = Rs.3,00,000.

Ex: 2 Pension so calculated is Rs 4500.He does not opt for commutation:His monthly pension will be Rs. 4500 PM for 20 years.Withdrawal benefit after 20 years: Rs.4500 X 100 = Rs.4,50,000.

Example:

Page 29: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

EDLI:Prior to amendment After amendment.

Benefit to the family:The average monthly salary, subject to a maximum of Rs.6,500 during previous 12 months multiplied by 20 times

Benefit to the family:The average monthly salary, subject to a maximum of Rs.15,000 during previous 12 months multiplied by 20 times

The benefit under the scheme shall further be increased by 20 % in addition to the benefits payable.

This additional benefit has prospective effect. Members who have died priorTo 1st September, 2014, shall be governed as per the pre-amendment calculation.

Page 30: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Provisions relating to International workers:1.A new International worker who is not an existing Member of the Scheme, will only become Member of PF & not Pension Scheme.2.For an international worker who is an existing member of the Pension Scheme as on 1.9.2014, out of Employer’s contribution, 8.33 % of salary is still required to be paid.

Page 31: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Employees Provident Funds and Miscellaneous Provisions Act, 1952

Amendments on the way.1.Number of employees for coverage under the Act will be 10 as against 20.2.HRA is likely to be deleted in the exclusion definition. It means, HRA will also attract PF contributions.3.There appears to redefine the definition of “Salary”.

Page 32: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act.Amendment- 2014.

Page 33: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 2014.

The Amendment aims to ensure adequate safety measures and promote the health and welfare of the workers employed in Factories.The statement of Objects and Reasons states that the amendments are based on the changes in the manufacturing practices and technologies, ratification of ILO conventions, judicial decisions, recommendations of various committees and decision taken in the conference of Chief Inspector of Factories.

Page 34: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 2014.

Salient features:1.Definitions of Factory, hazardous process, manufacturing process. It also adds hazardous substance and disability.2.Ensure safety.3.Workers’ safety.4.Facilities for workers.5.Overtime and paid leave.6.Employment of women and persons with disability7.Power to make Rules8.Compounding of offences9.Penalties.

Page 35: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 2014Existing provision AmendmentHazardous process.As per the First schedule of the Act

Redefined to include usage of “hazardous substance” in any process. Hence, the First schedule is deleted.

Insertion: “ Hazardous substance “ shall have the same as defined under Environment Protection Act.

Insertion: ‘Disability” shall have the same meaning under “Persons With Disabilities ( Equal Opportunities, Protection of Rights and Full Participation) Act,1995.

On account of changed process and usage of various chemicals, hazardous substancesand processes, the listed activities in First Schedule do not match which the definitionand controls stipulated under Environment Protection Act, it has been aligned withthe same. “Disability” has been defined to identify persons affected due to process to ensure safety and social security for them.

Page 36: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 2014Definition of “Hazardous Substance”: The Environment ( Protection) Act.

“Means any substance or preparation which, by reason of its chemical or physio-chemical properties or handling, is liable to cause harm to human beings, other living creatures, plants, micro-organism, property or the environment.

Definition of “ Disability”Persons with Disabilities etc Act, 1995.“ Disability “ means:1.Blindness.2.Low vision.3.Leprosy-cured.4.Hearing impairment.5.Locomotors disability6.Mental retardation7.Mental illness.“Person with disability means a person suffering from not less than forty percent of any disability as certified by a medical authority.

Page 37: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 2014Existing provision Amendment

Factory has been defined as:10 or more with power.20 or more without power.

Factory has been defined as:20 or more with power.40 or more without power.The State Government can fix any number not exceeding the above limit.

Extension of the Factory:A certificate from a competent person need to be taken even in cases of replacement of plant & machinery or in addition, to ensure the safety , environment, cause accident, dangerous occurrences to public etc.

Horse power Power is “ Kilowatts”.

Page 38: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 2014

1. General duties & responsibilities of manufacturers regarding usage, manufacturers is extended to include in erection & commissioning installation to ensure health, safety, hazards , lilely to cause any injuries-physical or otherwise in particular usage of hazardous substance is elaborately dealt.

2. Sec 13 of the Act regarding ventilation and temperature, & lighting the State Government shall frame standards.

3. Drinking water/cool water availability irrespective of the size of the Factory.

4. “Week” can be defined by the Chief Inspector of Factories even in respect of a Factory.

5 “Manufacturing Process” to include processing of printing etc

6. Tight fitting cloth to be supplied by the Factory for adult male & female workers who works on machine in motion or near.

7 Restriction on engaging young persons on dangerous operations.

8. The manufactures, suppliers of articles including machinery ,responsible for manufacturing/ supplying safe machinery to be used in Factory.

Amendments at a glance:

Page 39: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 20149. Prohibition of engaging women , pregnant, persons with disability & young on or near cotton openers.

10. Permission to engage women workers during night shifts subject to such safety conditions as may be imposed. Consultations with workers, unions is essential. No engagement of women before 6 weeks before delivery and 6 weeks thereafter.

11. Further restrictions in regard to hoist, lift, lifting machinery, pressure vessels, pressure plant.

12 Protection to eyes in areas of dusts, fume, dangerous gases , excessive lights etc.

13. State Governments to make rules in regard to personal safety equipment, designs, specifications, etc.

12. Additional safety precautions in respect of explosive, inflammable dust, gas, electrical equipment, apparatus, & fittings etc. in line with the National Electrical Code and shall conform to the National Standards or International Standards. To be approved by Directorate of Occupational Safety & health.

13. State Government to make rules regarding fire-safety

14 Regarding appointment of Safety Officers, the State Government is empowered to make rules regarding the number of Safety officers considering the nature of industry & process involved.

15. On-site emergency plan, disaster management plans – approval, display, information to workers & the public in general. In consultations with the workers.

16. Specific responsibilities on occupier in regard to “hazardous process’, “hazardous substance” – handling, health checkups, health records, maintaining documents etc

Page 40: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 201417. Threshold limits of exposure of chemical and toxic substances . Schedule

18. Canteen to be provided in case there are 200 or more workers as against 250.

19. Further safety precautions to be taken to entry inside a tank, vessel, underground tank etc, for cleaning or repair or to carryout any work- before they enter inside.

20. Spread over may be extended upto 12 hrs with permission.

21.”Such allowances” excludes HRA, transport and small family allowance.

22. Overtime hours enhanced to 100 hrs as against 50.[ Deemed exemptions]

23 Overtime hours in a quarter enhanced to 150 hr a quarter as against 75 [ Specific order of exemption]

24. Annual leave eligibility reduced to 90 days instead of 240 days.

25. Enhancement of penalty to 3 lakhs & imprisonment upto 3 years for any contraventions.

26. Penalties to other than Occupier, namely, suppliers, etc, who are responsible for hazardous and dangerous occurrences.

27. Compounding of certain offences. The listed offences may be compounded by the Inspectorate before launching any prosecutions against the Occupier/Manager.

Page 41: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Factories Act. Amendment- 2014

28. The owner of a premises in which there are 2 or more factories are located, it is the responsibility of such owner to provide all suitable protections of fire safety, stair cases, etc. For the purpose of this Act, all the workers working in such premises shall be considered as single unit for enforcement of safety regulations under this Act.

29. For repeated offences, fines will go up to six lakh rupees and imprisonment up to one year.

30. Penalty for offences by workers enhanced to Rs.3000.31. Wherever “ women or young person” appears in the Act, it is replaced by the words “women or young persons or a person or woman with disability”.

Page 42: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The Small Factories (Regulation of employment & conditions of services) Bill 2014.

In view of the amendment of the Factories Act,2014, wherein the “Factory” is being defined as 20 & 40 in case of power & no power respectively, such excluded factories are to be covered under legislation.

Hence, this proposed Bill.

Once, this Bill is enacted, then, those excluded under the Factories Act, shall get covered under this new Bill.

Page 43: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The Small Factories (Regulation of employment & conditions of services) Bill 2014.

The Bill is a very comprehensive inclusive of certain basic elements of Factories Act, Payment of wages Act, Minimum Wages Act, Maternity Benefit Act, Payment of Bonus Act, Social security, unfair labour practices, powers of labour courts, returns to be filed, joint responsibilities of Directorate of Factories and Labour Commissioner etc.This Bill is a combination of all the above Acts.

Page 44: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The Small Factories (Regulation of employment & conditions of services) Bill

2014.

Page 45: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The Small Factories (Regulation of employment & conditions of services) Bill 2014.

“ Small Factory” has been defined as: Premises where the manufacturing activities take place with workers employing less than 40.

Definitions namely, Wages, Week, Day, Employer, are as defined under the Factories Act.

“ Worker” has been defined as one who is employed directly whether full time or part time or through a contractor. But do not include persons engaged in

Administrative/ supervisory/ managerial cadre.

If the Small Factory is engaging in “Hazardous Process”, then the provisions related to such process under the Factories Act shall apply.

The Authorities under this Act are both the Labour Commissioner and the Directorate of Factories.

Page 46: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The Small Factories (Regulation of employment &

conditions of services) Bill 2014.It is the Registration of “Small Factory” not licensing .

The Chapters under the Bill covers:1.Safety & Health Hazardous in non hazardous small factory.2.Resolution of Disputes by Labour Courts & powers of the Labor Court.3.Procedure in dealing with complaints of unfair labour practices.4.Application of the provisions of the Industrial Disputes Act.5.Retrenchment & termination.6.Payment of Gratuity.7.Health Insurance .8.Provident Fund.9.Maternity Benefit.10.Leave benefits.[ 7 days CL & 7 days SL plus the Annual leave].11.Other service conditions like, attendance, late coming, absents etc.12.Shift working & rest intervals, Hours of work.13.Payment of Overtime @ double the normal wages.14.Appointment letters, welfare facilities like First Aid, crèche, toilets/urinals etc.15.No discrimination of female employees in terms of salary, service conditions, promotions, transfers, deputations etc.16.Payment of Bonus, Payment of wages, Payment of Minimum wages

Page 47: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The Payment of Bonus (Amendment) Rules 2014.

Rule 5:1.Every employer shall on or before 1st Feb,in each year,upload annual returns in FORM D on the web-portal of the Ministry of Labour & Employment giving information as to the particulars specified in respect of the preceding year, provided that the annual returns shall be filed within the limit specified in Sec 19 of the Act.2.Every employer shall on or before 1st Feb,in each year, upload annual returns in FORM D to the Inspector. The Inspector shall require production of accounts, books, register & other documents, if the same are maintained in annual form or electronic form.3.In the Principal Rules, for FORM D, the new FORM D shall be substituted.This notification along with new FORM D has been gazette by Central Government on November, 10, 2014.The date of coming into force is expected.

Page 48: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The Labour Laws (Exemption from furnishing Returns and Maintaining Registers by certain Establishments)

Amendment Act,2014.This Act applies to small establishments who are employing 40 or less persons.The object of this Act is to exempt such establishments from furnishing Returns and Maintaining Registers. This Act is enacted in the year 1988.Now, few amendments are passed. The Amended Act is published by the Central Government on 10.12.2014.The Amendment Act has come into force from 1st January, 2015.[Notification of central gazette dated 31st December, 2014.]

Page 49: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The Labour Laws (Exemption from furnishing Returns and Maintaining Registers by certain Establishments)

Amendment Act,2014.

The amendment mainly aims at:1.Submission of Annual Returns as prescribed.2.The First Schedule list all the Labour Laws applicable.3.The Second Schedule : Annual Returns in FORM I, FORM II-Register, FORM III- Muster Roll-Cum-Wage Register.

Page 50: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Industrial Disputes Act, 1947.

Insertion of Sec.9C: Grievance Redressal Machinery.This amendment has brought into effect in the year 2010.1.Enhancing the wage limit to Rs.10,000 as against Rs.1600 in the definition of “Workman”.2.Sec. 9C – Grievance Redressal Machinery.

Page 51: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Industrial Disputes Act, 1947.9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances. (2) The Grievance Redressal Committee shall consist of equal number of members from the employer and the workmen. (3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on rotation basis every year. (4) The total number of members of the Grievance Redressal Committee shall not exceed more than six: Provided that there shall be, as far as practicable one woman member if the Grievance Redressal Committee has two members and in case the number of members are more than two, the number of women members may be increased proportionately. (5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal Committee shall not affect the right of the workman to raise industrial dispute on the same matter under the provisions of this Act. (6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party. (7) The workman who is aggrieved of the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of Grievance Redressal Committee and the employer shall, within one month from the date of receipt of such appeal, dispose off the same and send a copy of his decision to the workman concerned.

Page 52: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

LABOUR CODE ON WAGES BILL, 2015

Labour Code on Wages Bill, 2015 has been drafted and circulated to all interested & concerned to submit their remarks, objections, suggestions , if any.

The Bill aims at consolidation of the following legislations for simplification of labour law compliances.

1.Payment of Wages Act.2.Minimum Wages Act.3.Equal Remuneration Act.4.Payment of Bonus Act.

Page 53: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

LABOUR CODE ON WAGES BILL, 2015

On plain reading of the Bill:1.It is applicable to all establishments including factories etc.2.Fixation of Minimum Wages is similar to the existing procedure.3.As far as payment of wages is concerned, most of the existing provisions have been incorporated. Payment of Wages to be paid before 7th every month. The salary limit has been taken away, which means, the Act is applicable to all employees.4.Equal Remuneration , no discrimination of employees have been addressed as in the Equal Remuneration Act.5.As far as Bonus is concerned, it looks all employees would be covered.6.However, the Central Government shall decide the minimum salary limit for payment of Bonus @ 8.33 %.7.Higher percentage of Bonus shall be payable if the allocable surplus permits.8.The Schedules for calculation of allocable surplus, set-on & set-off, the other particulars to be taken into, to include in the Schedule have been mentioned; it is same as existing one.9.Maintaining Records, Registers and submission of Annual Returns.10.The Central Government shall frame Rules & also the State Governments.

Page 54: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

LABOUR CODE ON WAGES BILL, 2015

Study reveals the following issues to be taken up:

1.The provisions relating to payment of wages, the wage limit for coverage is eliminated. At present it is Rs. 18,000 per month.2.This means to say that all the employees irrespective of the cadre are covered under the Act. The Supervisory/Managerial personnel also will be empowered to file a compliant before the Authorities for any acts of the Employer. Even the definition of “Employee” supports this view.3.Definition of “wages” is the same as existing one.4.As far as the provisions dealing with the payment of Bonus, the present wage meaning Basic plus DA, is replaced by the wages which means the Bonus pay out will be on the gross salary.5.Again, the salary/wage limit either for eligibility or for the purposes of calculating the Bonus is not mentioned. It goes on say that the Central Government shall announce the minimum salary/wage limit for payment of Bonus.

Page 55: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Labour Code On Industrial Relations Bill, 2015

The newly drafted Bill has been published for inviting objections / suggestions from all concerned. The Bill replaces the following Acts.1.Trade Unions Act.2.Industrial Disputes Act.3.Industrial Employment (Standing Orders) Act The Bill has 107 sections & 3 schedules.

Page 56: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Labour Code On Industrial Relations Bill, 2015

A brief overview of the Bill.

Page 57: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Labour Code On Industrial Relations Bill, 2015

Definition of “Industry”:Made it simple just in line with Justice Krishna Iyer’s statement. All activities carried on with the cooperation of employees etc.The exclusion is “any agricultural operation”.

All other definitions remains the same.

Page 58: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Labour Code On Industrial Relations Bill, 2015

Trade Union Related:

1.There are no changes in the mode of Registration of Union, the proposed provisions are in line with the existing ones.2.Only change proposed is that the number of outside leaders in the Executive of the Union is reduced to two.3.No mention of Recognition of Union and no proposals for incorporating any criteria for Recognition in line with Code of Discipline.4.The periodicity of election is proposed to be 2 yrs.5.Except these, there are no any changes. 6. The other proposed provisions are as existing in the Trade Union Act.

Page 59: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Labour Code On Industrial Relations Bill, 2015

Bi-partite Forums:1.Works Committee. [Wherein more than 100 workmen]2.Grievance Redressal Committee [ Wherein more than 20 workmen]

Standing Orders:There are no changes in the provisions related to the existing provisions of Industrial Employment(Standing Orders) Act, except one change:1.After the draft is prepared by the Employer, the same may be discussed with the Trade Unions/workmen , and if an agreement is reached, the Agreement shall be forwarded to the Certifying Officer, who shall certify the same.2. In case where any agreement is not reached, then the matter may be referred to the Certifying Officer.

Page 60: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Labour Code On Industrial Relations Bill, 2015

Notice of Change. [Present Sec.9 A].The provision related to this remains unchanged.

1. The adjudication proceedings are held by Industrial Tribunals that the State/Central Government, may constitute.

2. The Labour Courts are replaced by Tribunals. No Labour Courts.3. The qualification of a Presiding Officer. Change being proposed is

that the Deputy Labour Commissioner of State/Central Labour Department, having a Degree in Law with atleast 7 years of experience in the Labour Department out of which includes 3 years experience as a Conciliation Officer.

Page 61: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Labour Code On Industrial Relations Bill, 2015

Strikes & Lockouts: Important proposals:

1.There in no “public utility services”. 2.All Industrial undertakings are treated the same.3.Conciliation proceedings are deemed to have commenced from the date of receipt of Notice of Strike or Lockout by the Conciliation Officer.4.During the pendency of conciliation proceedings, Industrial Tribunal/National Tribunal, Arbitration, there is prohibition to go on strike /lockout.5.During the proceedings, no worker shall stage demonstrations, encourage or coerce others to willful “Go-slow”, gherao, squatting on the premises after working hours, demonstrations before the residences of Executives of the Employer etc.

Page 62: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Labour Code On Industrial Relations Bill, 2015

Lay offs, Retrenchment & Closure.

1.There are only two changes are proposed in these matters.2.The present number of workmen of 100 & above for seeking permission from the State/Central Government is now proposed to be enhanced to 300.3.The retrenchment and closure compensation is enhanced to 45 days of wages for every completed year of service.4.Other than these, all existing provisions are proposed.

Penalties:1.Proposed penalties are severe. The fine ranges from three lakhs to ten lakhs, & imprisonment from 3 months to one year for various contraventions of the provisions.2.Provision for compounding the offences have been made.

Page 63: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Rajasthan Model.Rajasthan has taken initiatives towards Labour Reforms:1.Contract Labour Act: Coverage under the Act is enhanced to 50 or more as against 20 or more.2.Factories Act: Applicability raised to 20 & 40 for with power & without power respectively.3.Industrial Disputes Act: Chapter VB is applicable of Industries employing 300 or more.4.Condition precedent of payment of notice or pay is deleted5.Retrenchment compensation is enhanced to three month’s salary for each year of service.6.Closure compensation is also enhanced to three month’s salary for each year of service.7.For the first time, “GO SLOW” has been defined.

Page 64: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Session II

Recent Trend Setting Judicial PronouncementsIn regard to

Management of Contract Labour.

Page 65: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Contract Labour engagement in India.

A flashback.

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Page 66: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Railways. Shipping & Transport. Public Works Departments. Telephones & Telegraphy. Electricity Boards. Power Distributions. Textiles, Jute, Foundries, Steel Plants etc.

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Page 67: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Exploitations like:

1.Low Wages.

2.Poor working conditions.

3.Lack of safety & Health hazards.

4.No social security covers.

5.No restrictions on working hours etc.

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Page 68: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

The issue pertaining to contract labour was reviewed by various Commissions, Committees and Conferences including

National Labour Commission, Planning Commission,Enquiry Commission, Bihar Labour Enquiry Commission The second Planning Commission

Recommended for the progressive elimination of the system

whenever feasible and regulate the working and

service condition where it is to be continued.

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Page 69: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Contract Labour ( Regulation & Abolition) Act came into force from 1971.

The State Governments have formulated the Rules in line with the Central Rules.

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Salient Features of the Act.

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Page 71: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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APPLICABLITY OF THE ACT

Every Establishment in which 20 or more contract laborers are employed.

Each location is a separate Establishment.

Every contractor who employs 20 or more workmen as contract laborers in such Establishment.

Page 72: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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REGISTRATION OF THE ESTABLISHMENT

Every Establishment in which 20 or more contract labourers are employed, is required to obtain Certificate of registration from the authority under the Act & Rules.

The Authority under the Act & Rules is the Jurisdictional Assistant Labour Commissioner .

The Certificate of Registration must be obtained within 30 days of commencement of work.

Page 73: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Licensing by the Contractors:

Every contractor who employs 20 or more in the Establishment. The License so granted by the Authority is valid for one year. Renewal of the license is essential.

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Page 74: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

WHO IS A CONTRACTOR?

Contractor is a person who undertakes to produce a given result for the Establishment or who supplies Contract Labour for any work of the establishmentand includes a sub contractor

Sec. 2(1)(c)

Page 75: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

WHO IS A WORKMAN UNDER THE ACT ?

Simple definition:

Any person who is in non-supervisory position under any contractor.

Page 76: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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WHO IS A WORKMAN UNDER THE ACT ?

Very important: Please note:

A workman shall be deemed to be employed as“contract labour” in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without knowledge of the Principal Employer.

Page 77: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

WHAT IS THE RESPONSIBILITY OF THE PRINCIPALEMPLOYER TOWARDS PAYMENT OF WAGES TO THECONTRACT LABOUR ?

The contractor shall be responsible for payment of wages to each worker employed by him as contract labour and such wages shall be paid before the expiry of such period as may be prescribed.

Every principal employer shall nominate a representative duly authorised by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify in such manner as may be prescribed.

It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the representative of the principal employer.

In case, the contractor fails to make the payment of wages, it shall be duty of the Principal Employer to pay the wages and the wages, so paid, can be recovered from the amount payable to the contractor.

Page 78: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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The Act has not defined:

What is Core activity ?And What is Non-Core activity ?References are drawn from Sec.10 of the Act:1.Conditions of work & benefits provided by the Contractor2. Whether the process, operation in incidental or necessary3. Whether it is of perennial nature.4. Whether it is done ordinarily through regular workmen.5. Whether it is sufficient to employ considerable number of whole-time workmen.

Page 79: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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The Industry and the judiciary have resorted to classifyCore and Non core activities.

To start with the functions like Security, Housekeeping,Canteen, Estate maintenance, further extended toMaterial handling, scrap removal & cleaning, packing &forwarding etc were classified as Non Core Functions.

But, now it is further extended to any activity in themanufacturing process which does not carry any value addition to the product has also been slowly added to this category.

Page 80: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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But, let us miss the point that the State Governmentor Central Government has the power to prohibit the engagement of contract labourin any activity under Sec.10 of the Act, subjectto process to be followed therein, whetherCore activity or non-core activity.

Page 81: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

WHAT ARE OBLIGATIONS OF CONTRACTOR & THE PRINCIPAL EMPLOYER UNDER THE APPLICABLE LEGISLATIONS ?

The Contractor is responsible for the compliances under all the applicable Legislations.

More importantly, it is the responsibility of the Principal Employer to ensure the compliance by the Contractor. If, for any acts of commission/omissions, the PrincipalEmployer shall be responsible.

Page 82: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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Safety is utmost important.

“A Contract worker” being inside the premisesof the Factory, is also a “Worker” under theFactories Act.

Consequently, it is responsibility of the PrincipalEmployer to ensure safety of contract workers.The Occupier will be held responsible in case ofany employment injury to such workers.

Page 83: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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Judicial interpretations between the Years

1971 to 1991

Pre LPG Era.

Page 84: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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No Registration – No licenseThe contract workers are deemed to be employees of the

Principal Employer

Haryana Electricity case: Supreme Court..

Canteen workers engaged by the contractor in LIC Office, are to be absorbed by LIC.

LIC Case: Supreme Court.

Canteen workers engaged by contractor in industrial canteen are entitled for absorption

Air India Statutory Case: Supreme Court.

Engagement of workers on contract merely as camouflage will be against the spirit of Contract Labour (R & A) Act and

the workers working under different contractors for last 10 years will be absorbed by principal EmployerSteel Authority Case: Supreme Court.

Page 85: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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If the contract is sham, then the contract workers are deemed to be employees of the Principal Employer.

Gujarat Electricity Board Case: Supreme Court.

In case the engagement of contract workers is prohibited by the Government, the contract workers shall be automatically be

absorbed.Steel Authority Case: Supreme Court.

In the case of Airport Authority, the Central Government abolished the engagement of contract labour in sweeping,

cleaning, housekeeping of Airports, the Supreme Court ruled that the affected workers are to be regularized.

Airport Authority Case: Supreme Court.

Page 86: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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.In the cases of engagement of Contract Labour the various judgments of the Supreme Court created new rights for the contract labor. The position became so overlapping and confusing that even the engagement of Contract Labour started giving raise to complicated questions of law.At times even the proper interpretation of the provisions of Contract Labour Act and Judgments became difficult.

Page 87: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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JUDGMENTS OF SUPREME COURT

Even though the very object of the enactment is to regulate and where necessary to facilitate abolition of contract labour system, some of the decisions far exceeded the object of the legislation.

Page 88: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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In this Pre- LPG Era, the various judgmentswere not strict interpretation of the Act,but, mostly based on socialist approach.

Page 89: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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Let us see the post LPG Era.

1.Engagement of contract workers.

2.Judicial pronouncements.

Page 90: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

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CONTRACT LABOUR Flexibility in engagement and deployment of labour has been the demanded by global

competitiveness.

Frequent fluctuations in the demand & supply, thus warranting adjustment of manpower.

Optimum utilization of manpower & increased productivity.

Constant war on cost reduction.

Reluctance of the Trade Unions & permanent workers for any changes in the efforts by the Management for higher productivity, cost reduction & high quality.

Hence, engagement of contract workers has been an inevitable function.

There is no exception in any business activity. Even the Central & State Governments are engaging contract workers, be it be, offices, services like, telecom, offices, railways, PWD etc started engaging contract workers in large volumes.

Page 91: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

During the period between 1991 and now,

1.The outsourcing has gone up significantly

in all areas of activity.

2.Temp. Staffing has been catching up

very fast & expanding.

3. Job creation.

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Page 92: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

In this scenario, let us look at the judicial

pronouncements and views.

Post LPG Era.

1991 till date.

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Non registration under Sec.7 and not possessing license under Sec 12 would not result in regularization of the concerned workmen rather it would result in prosecution under

Sec.23/24 of the CLRA. SC. 1992 FLR 39. Dena Naths’ case.

Failure to obtain registration & license by principal employer and the contractor respectively, would not make contract labour system a sham and camouflage.

Jhar. HC. Jan 2014. 64 LLR

Abolition of contract labour will not result in direct employment by principal employer. Also, mere violation of CLRA not to result into automatic absorption of contract workers.

SAIL Case: Supreme Court.Jhar.HC April 2014. 362 LLR

When the employees have been appointed by the contractor and not the principal employer and the contractor has a license under CLRA, held that the employees are the

employees of contractor not the employer.

Mad.HC Sept 2012 962 LLR.

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Contract workers can get relief only when the system is sham. All. HC. Dec 2012. 1249 LLR.

Contract labour system is illegal when it is sham. Mad. HC. Oct 2012. 1077 LLR.

Reinstatement of contract labour, without finding that the contract was sham, to be set aside. Cal. HC July 2011. 771 LLR.

 

If the contract is not guanine or mere camouflage, the contract labour will be treated as employees of the principal employer. In this case,

inspite of prohibition under Sec 10 of the Act, the engagement of contract workers had continued.

BOM HC Feb 2014. 198 LLR.

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The test of supervision and control may be taken as prima facie test for determining the relationship of employment. Since the nature or extent of control varied from business to business it became impossible to precisely define the extent of control and supervision. The judicial dicta therefore suggested that correct method of approach, would be to consider whether having regard to the nature of work, there was due control and supervision by the employer.

Dhrangadhra Chemical Works Ltd. v. State of Saurashtra, SCSilver Jubilee Tailoring House v. Chief Inspector of Shops and

Establishments. SCShivnandan Sharma v. Punjab National Bank Ltd SC

Payment of wages, control & supervision are decisive to determine whether contractor or employer employs contract labour.

. Jar.HC. August 2014. 842 LLR.

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Workers of contractor cannot be thrusted on principal employer in the absence of control and supervision. SC Feb 2011 113 LLR

Contract labourers cannot seek regularization in absence of notification for abolition. Supervision of contracts’ employees will not create relationship

with the Company. Gau.HC August 2014 819 LLR.

When the contractor’s employees were supervised by principal employer, the contract will be sham, bogus and camouflage.

BOM HC.Sept 12 957 LLR.

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Contractor’s employees performing work of regular employees will be entitled to same rates of wages and holidays etc. Mad. HC 2012. LLR April 2012.

Also, refer Rule 25.

BE CAUTIOUS

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Contract workers cannot claim absorption

There is no automatic absorption evenin case of abolition of the system.

Contract workers cannot raise a disputeunless the contract is a sham one.

No Registration –No License.Contract workers shall not be deemed to be

employees of the Principal Employer.

Principles of “Contract of Service” &“Contract for Service”

Page 99: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

There is perceptible change in the Judicial

pronouncements in this Era.

Courts have strictly adhere to interpretation

of Law.

There are innumerable judgments nowadays

which are becoming trend setting ones.

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Page 100: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

All the recent trend setting series of judgments are providing us various hints

and laying down certain principles so that the engagement of contract labour is within the parameters of the Law.

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Page 101: NIPM – Kerala Chapter. Legal Update – 2015. An interactive session On Recent Amendments to Labour Legislations And Recent Trend setting judicial pronouncement.

Hence, my presentation is aimed at:

How to manage the contract Labour within

the parameters of Law, so that the risk

factor is reduced to a considerable extent.

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Let us examine the points normally put forth byany Union of Contract Labour before the Courts:

1.Non-Compliance of legal provisions on the part of the Principal Employer.2. Workers are engaged in perennial nature of work.3.Contractor is merely a supplier of workers.4.Contract workers are under the supervision & control of the Principal Employer.5.There exists Employer –Employee relationship between Principal Employer and the contract workers.6. Finally, the contract is sham and camouflage.

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Hence, we need to counter each of the argumentsthat may be put forth by the Union, by fullyutilising the hints, suggestive guidelines andprinciples enunciated by various judgmentsof the Courts.

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A sham contract: What it is ?

1.Engagement of contract labour when there is prohibition by State / Central Govt.2.Contract Labour is utilised on works other than for which the License is granted.3.Legal non-compliances by both Principal Employer and the Contractor.4. Contract of Service and not Contract for Service.

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First hint by the Judiciary.

The contract must be “Contract For Service”and not “Contract Of Service”.

This must be executed and demonstrated.

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Contract of Service Contract for Service

1.1ttthe 1

1. Supply of Labour.2. The end product or service is not specified.3. There is control & supervision over such labour.4. Bound to obey the orders & instructions.5. There is no discretionary powers.6. Right to reject the product/service & or to refuse to give work.7. The invoice by the contractor is based on the number of persons supplied by him.

1. The end product or service is specified.2. No mention of supply of labour.3. They are not subjected to control and supervision.4. They are bound by the instructions of the contractor.5. The contractor has discretionary powers .6. The contractor is accountable for deficiencies in service.7. The invoice by the contractor is based on the quantum of work or service.

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In “Contract of Service” there is greater

amount of supervision & control.

In “Contract for Service” there is no supervision & control.

This test is to judge “Employer – Employee

Relationship”.

The Supreme Court in one of its judgment:

“ the greater the amount of direct control & supervision, the stronger would be the logic for holding it to be a contract of service”.

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Strategy:

1.Contract must be for specified & quantified service or product.

2.Contractor alone must exercise control & supervision.

3.No direct handling of labour by the Principal Employer.

4.The contractor must demonstrate by engaging his own supervisors.

5.Right thro’ recruitment to exit, all aspects of engagement are handled by the contractor.

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Supervision, check on productivity, Quality of work or service by any contract labour is inevitable.

But, as much as you can, minimise direct control. Question the supervisor of the contractor.

The Jarkhand High Court has, in its recent judgment has endorsed that minimum control will not lead to employer- employee relationship.

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The second hint by the Judiciary:

Ensure complete legal compliance by both the Contractor and the Principal Employer.

There must not be any non-compliance which becomes a pointer in a case.

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• Next, third hint by Judiciary:

Do not engage or continue to engage

contract labour on jobs which are

prohibited by the State/Central

Government.

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• Next, the fourth hint by the Judiciary:

Do not engage contract workers other than

on the jobs for which the Registration and

Licensing have been taken.

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Do’s.

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Do ensure The Certificate of Registration & the license by the

contractor is valid at any time. Select the contractor who has specialized in the area

and has requisite expertise. Execute the Agreement legally on a judicial stamp

paper. Spell out clearly the nature of work to be entrusted. The

nature work mentioned in the Agreement must be the same as mentioned in the Certificate of Registration and in the License of the contractor.

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Do ensure 1. Attendance recording system is separate & exclusive for

contract workers.

2. The contractor issues ID cards of his own & the name of the Company should never appear.

3. The contractor supplies uniform which is different than that of the regular employees of the Company.

4. The Company logo or emblem should never appear either on the ID card or uniform.

5. No group photos are taken with the regular employees or Executives of the Company.

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Do ensure 6. No letters/memo/appreciation letters etc are issued by

the Company.

7. No payments be made to any contract worker directly by

the Company.

8. Documents in the shop floor do not mention the name of

the contract worker.

9. Carry out examination of the appointment letters

issued by the Contractor. Take care that the name of the

Company not to appear and that he/she will carryout the

work as instructed by the Contractor.

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Do ensure

10. The Company to not to involve directly in the

recruitment process, performance evaluation. These

functions can be handled by a Consultant whose

charges be paid by the contractor.

11. The contract workers are covered under PF & ESI all

the time & check the remittances every month.12. Contract workers do not attend any review

meetings etc. Only the Contractor must attend.

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Do ensure

13. A periodical vendor audit is carried out

thoroughly to ensure there are no

non-compliances.

14. Contract workers are not engaged on

any work other than for which the

license has been granted.

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Morale & MotivationNotwithstanding, the monitory compensation,

there is need to ensure the morale of contract workers and motivation is kept up as much as possible.

1.Technical up gradation training, so that there is personal value addition to enable them to enhance their employability in the market.

2.Soft-skill programs.

3.But, these programs must be organized by the contractors.

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Frequently asked questions

Can we engage contract workers on production jobs?

Ans: Yes, we can, subject to the following:

1.The nature of job is not prohibited by the State Government under Sec.10.

2. The Agreement is not a sham contract. means that it is for “Contract for Service”.

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Frequently asked questions

If there is NO REGISTRATION or NO LICENSE, can the contract workers claim regular employment ?

ANS: No.

Recent judicial pronouncements are not supporting. At best, the Principal Employer or the Contractor can be prosecuted under the Act.

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Frequently asked questions

Can the contract workers raise a dispute demanding regularization ?

ANS : No, subject to the condition that:

1.There is prohibition by the Government.

2. The contract is a sham.

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Frequently asked questions

Do the contract workers have a right to claim employment ?

ANS: NO. The recent judgments are not supportive.

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Frequently asked questions

If there is prohibition of engagement of contract worker in any area, will the workmen working therein be absorbed automatically ?

ANS: NO. The Supreme Court view in SAIL case supports this answer.

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Frequently asked questions

Can the contract workers form a Trade Union and / or can become members of the Trade Union of regular employees ?

ANS: YES. It is the fundamental right of anyone under the Constitution of India.

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Frequently asked questions

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Is the Principal Employer is responsible for Payment of Bonus to contract workers ?

ANS : NO.It is not the responsibility of the Principal Employerfor payment of Bonus to contract workers. Definition“Employee” under Payment of Bonus Act, doesnot include contract workmen.KAR HC. June 2013. 595 LLR.

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Frequently asked questions

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Is Principal Employer is liable & responsiblefor payment of Gratuity to contract workers?

ANS: YES:It is the primary responsibility of the Contractorto pay gratuity. In case, he fails or refuses to pay,the Principal Employer is liable to pay, however,the amount so paid, can be recovered from the contractor.Mad.HC. 2013 374.LLR

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OBLIGATIONS ON THE PART

OF THE CONTRACTORS.

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Following legislations becomes applicable to the Contractors and the contract workers

1. Karnataka Shops & Commercial Establishment Act.2. Employees Provident Fund Act.3. Employees State Insurance Act.4. Contract Labour ( Regulation & abolition) Act.5. Payment of Gratuity Act.6. Karnataka Labour Welfare Fund Act.7. Industrial Establishments ( National & Festival Holidays)

Act.8. Minimum Wages Act.9. Payment of wages Act.10. Payment of Bonus Act.

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