FEB

2015

PAGES

Hello Readers,
The Compliance Calendar for the month of February
2015 includes remittances for Professional Tax,
Labour Welfare Fund and ESI Central.
In Important judgements, the Honourable Supreme
Court of India has held that Contractual Appointment
amounts to unfair labour practice. The Honourable
Jharkhand High Court has ruled that gratuity is not a
charity, but is payable for the service rendered by
employee and gratuity has to be paid within 30 days of
cessation of employment. The Honourable Kerala High
Court Performance has held that allowances will be
wages under ESI account. The Honourable Madras
High Court has ruled that any shortfall of notice pay
would violate section 33(2)(b) of the industrial disputes
act to justify reinstatement. The Honourable Delhi High
Court has pronounced that any act of a director without
authority can be ratified by the board of directors. The
Honourable Supreme Court has held that a club
maintaining kitchen with refrigerator, geyser, etc. is
covered by ESI Act. The Honourable Kerala High Court
has held that testing of cylinders by third party would be
construed as principal to principal basis.
In news to note, the Inspector Raj is declining in labour
laws. The new labour law will free small factories from
giving separate returns. A Bill to amend Apprentices Act
has been passed by Rajya Sabha. Inspections have
dropped for violation of Minimum Wages Act. Transfer
of office bearers of unions is not prohibited. Some
officials of the Employees' Provident Fund
Organisation have been asking for records going back
10-15 years to be produced in person for organisations
registering online. The Union Government of India has
invited Comments/ Suggestions to repeal of The
Industrial Dispute Act, 1956. India enters into Social
Security Agreement with Kingdom of Norway and
enhances the list to thirteen

We hope you find the contents of this newsletter

relevant and useful. We welcome your suggestions
and inputs for enriching the content of this
newsletter. Please write to contactadp@adp.com

Compliance Calendar for Feb 2015

02

Important Judgments
Contractual appointment amounts to
unfair Labour Practice.

03

Gratuity is not a charity, but is payable

for the service rendered by employee
and Gratuity has to be paid within 30
days of cessation of employment

03

Performance Allowance will be

wages under ESI Act

04

Any shortfall of notice pay would

violate Section 33(2)(b) of the Industrial
Disputes Act to justify reinstatement

04

Any act of Director without authority can

be ratified by the Board of Directors

05

A club maintaining kitchen with

refrigerator, geyser, etc. is covered
by ESI Act

05

Testing of cylinders by third party would

be construed as principal to principal basis

06

News to note

Transfer of Union Office Bearers

not prohibited

07
07
08
08
08

Some Employees' Provident Fund

Organisation officers asking for
records going back 15-20 Years

08

Union Government of India has invited

comments/ suggestions to repeal of
the Industrial Dispute Act, 1956

09

India Enters into Social Security Agreement

with Kingdom of Norway and enhances
the list to thirteen

09

'Inspector Raj' declining in Labour Laws

New Labour Law to free small factories
from giving separate returns
Bill to amend Apprentices Act passed
by Rajya Sabha
Inspections have dropped for violation
of Minimum Wages Act

PAGE 02

Compliance Calendar for the month of Feb 2015

Activity

Due Date

Due Under

Mode

Professional Tax - States - Remittances

10th Feb15

Andhra Pradesh & Madhya Pradesh

State wise regulations

By Challan

15th Feb 15

Gujarat & Tamil Nadu

Gujarat PT regulations

By Challan

20th Feb 15

Karnataka

Karnataka PT regulations

Online

21st Feb 15

West Bengal

West Bengal
PT regulations

By Challan

28th Feb 15

Kerala, Assam & Orissa

State wise regulations

By Challan

28th Feb 15

Maharashtra

Maharashtra
PT Regulation

Online

Labour Welfare Fund Remittances

20th Feb 15

Kerala

Kerala
State Labour Welfare Fund

By Challan

PF Central
15th Feb 15

Remittance of Contribution

EPF & MP Act 1952

By Challan

15th Feb 15

International worker with

wages and Nationality

EPF & MP Act 1952

Statement in IW 1

ESI Central
21st Feb 15

Remittance of Contribution
(Main code and Sub Codes)

ESIC Act 1948

By Challan

PAGE 03

CONTRACTUAL APPOINTMENT AMOUNTS TO UNFAIR LABOUR PRACTICE.

In a case of Sudarshan Rajpoot Vs. U.P state road Transport Corporation, the Honourable
Supreme Court of India through its bench consisting Honourable Justices Mr. V Gopala Gowda
and Mr. C Nagappan pronounced that
Termination of a bus driver, engaged on contractual basis but

having worked for more than 240 days, without any retrenchment
compensation or holding of enquiry for alleged negligence has
been rightly held to be illegal by the labour court, as such, the high
court erred in setting aside award of the labour court by
substituting with damages/Compensation equivalent to
retrenchment compensation for the service rendered by such
workman hence the supreme court in appeal of the workman,
restored the award of the labour court in holding that the workman
will be entitled to reinstatement with 50% back-wages from the
date of termination till the date of award and cent per cent backwages till the date of reinstatement.
Appointment as made against permanent vacancy deprives a
workman from status of permanency which amounts to unfair
labour practice.
Striking off the name of the work from the roll for causing of heavy
loss to the transport corporation by the driver in an accident
without holding of enquiry would be illegal and unjustified.
Failure of the transport corporation to prove negligence of a driver
causing heavy loss due to mechanical defect in the bus would not
result into denial of reinstatement to a terminated driver and, as
such, the Supreme Court upheld award of the labour court
granting reinstatement of the bus driver.
High court, in its writ jurisdiction, should not have reversed the
award of the labour court which was based on actual facts.
When a bus driver has become disabled, the transport corporation has to provide alternative job when he has
been reinstated after his termination.as an absconder resulting in termination of his service.

GRATUITY IS NOT A CHARITY, BUT IS PAYABLE FOR THE SERVICE RENDERED

BY EMPLOYEE AND GRATUITY HAS TO BE PAID WITHIN 30 DAYS OF
CESSATION OF EMPLOYMENT
In an extraordinary case of Employers in relation to the Management of West Moodidih colliery of
M/s Bharat Coking Coal Limited, the Honourable Jharkhand High Court through its bench
consisting Honourable justices Mr.R Banumathi and Mr. Shree Chandrashekar pronounced that
An employer is under an obligation to pay gratuity to an employee within 30 days of cessation of employment.
Failure of the employer to pay gratuity within prescribed period would attract interest on delayed payment.
It is too well-settled that the payment of gratuity is not a charity, but it is the amount payable for the
service rendered by the employee.

PAGE 04

PERFORMANCE ALLOWANCE WILL BE WAGES UNDER ESI ACT

In a case of Bharat Hotel vs. employees' state insurance corporation, the Honourable Kerala High
Court through the verdict by the Honourable Justice Mr.B.Kemal Pasha pronounced that
After amendment in section 2(9) of the employees' state insurance act, 1948, effective from 20.10.1989, the

term contract of employment as given in section 22(2) of the employees' state insurance act, 1948, cannot
automatically be read as a contract of engaging a trainee or apprentice also.
Stipend being paid to a trainee or an apprentice cannot be

treated as wages within the meaning of section 2(22) of the

employees' state insurance act, 1948.
Performance

allowance is nothing but an additional

remuneration coverable under the term wages under section
2(22) of the employees state insurance act, 1948.

Employees' state insurance act, 1948 being a beneficial piece

of legislation has to be constructed in its correct perspective so

as to fructify the legislative intention underlying its enactment.
When two views are possible on applicability of any provisions

of any social welfare act, that view, which furthers the

legislative intention, should be preferred to the one which
would frustrate it.
A social welfare act must receive a liberal construction so as to

promote the objects of the act.

The courts must even, if necessary, strain the languages of the

act in order to achieve the purpose, which the legislation had, in

placing this legislation on the state book.

ANY SHORTFALL OF NOTICE PAY WOULD VIOLATE SECTION 33(2)(B)

OF THE INDUSTRIAL DISPUTES ACT TO JUSTIFY REINSTATEMENT
In a case of Tamilnadu State Transport Corporation (Madurai) limited, rep. by its Managing Director
vs. Joint Commissioner of Labour (conciliation), office of the Commissioner of Labour, Chennai &
Anr, the Honourable Madras High Court through the verdict by its bench represented by
Honourable Justices Mr. M. Jalchandren and Mr. R. Mahadevan pronounced that
While effecting termination of services of an employee after conduction fair and proper enquiry, providing guilt

against the delinquent-employees, if payment of one month's notice pay is less paid due to any reason
including wrong calculation or under any misconception, termination of services is liable to be set aside
attracting reinstatement with back-wages.
Approval under section 33(2)(b) of the industrial disputes act, 1947, would be declined if payment of one

month's notice pay is less paid due to any reason including wrong calculation or under any misconception.
If the approval by the labour court/industrial tribunal under section 33(2) (b) of the industrial disputes act, 1947,

is liable to be set aside attracting reinstatement with back-wags.

Strict companies of provisions of section 33(2) (b) of the industrial disputes act, 1947, is mandatory in nature.
Concurrent

finding of fact by the competent authority of fact by not suffering from impropriety, material
irregularity or patent illegality in the eye of law, cannot be interfered under writ jurisdiction.

PAGE 05

ANY ACT OF DIRECTOR WITHOUT AUTHORITY CAN BE RATIFIED

BY THE BOARD OF DIRECTORS
In a case of M/s Abaskar construction (p) ltd vs. Devi dutt & Ors, the Honourable Delhi High Court
through the verdict by Honourable Justices Mr.Vibhu Bakhru pronounced that
When the workman are given retrenchment compensation with the order of retrenchment, the retrenchment

so effected would be legally valid.

Reinstatement is not justified when the retrenchment effected is not in violation of sections 25F, 25G and

25H of the industrial disputes act, 1947.

As per provisions act, 1956, particularly section 290 acts of a director of the company, shall be valid,

notwithstanding whether the director was authorized to do so or not.

Actions of a director (not being competent to do so), when ratified later on bye the board of directors of the

company, would have full force in law.

An act, done by a director without authority can be ratified by the board of directors of the company.

A CLUB MAINTAINING KITCHEN WITH REFRIGERATOR,

GEYSER, ETC. IS COVERED BY ESI ACT
In a case of Delhi Gymkhana club ltd Vs. Employees' State Insurance Corporation, the Honourable
Supreme Court of India through the verdict by Honourable justice Ms. R. Banumathi pronounced that
Preparation of food items in the kitchen of a club

falls within the ambit of manufacturing process.

A club, employing more than 20 employees'

maintaining kitchen having refrigerator, geyser, etc.

for preparation of foodstuffs, using power would
amount to engaged in manufacturing process
bringing it under the definition of a factory.
Profit-making or non-profit-making of any

establishment would need no concern for

applicability of the employees' state insurance act,
1948 since the act is a social welfare legislation.
The Employees' State Insurance Act being a

beneficial legislation, contention of the appellant for

covering the under the act prospective or making
the applicability of the order prospective I.e. from
the date of order of apex court cannot be
countenanced since the contributions for welfare of
employees ought to have been paid when it was
demanded by the ESI authority in 1986.
An establishment or shop engaged in manufacturing process with or without the aid of power by employing

more than 20 persons for wages, would come within the meaning of factory as defined under section 2(12) of
the employees' state insurance act, 1948.
Cooking and preparing of food items like preparation of coffee, peeling of potatoes, making bread toast, etc.

qualifies as manufacturing process as per definition given in section 2(k) of the factories act, 1948.

PAGE 06

TESTING OF CYLINDERS BY THIRD PARTY WOULD BE CONSTRUED

AS PRINCIPAL TO PRINCIPAL BASIS
In a case of Indian Oil Corporation limited, Kerala state office, cochin-682036 Vs Employees'
provident fund appellate tribunal, scope minar, core-II, New Delhi-110092 and others, the
Honourable Kerala High Court through the verdict by Honourable Justice Mr.K. Vinod Chandran
pronounced that
Considering the employees of the third party, doing contractual work of statutory testing of cylinders, to

be the employees of the principal employer having no relationship of employer-employee, is not

appropriate since section 2(f) of the employees' provident funds and miscellaneous provisions act,
1952 specifically includes only persons employed by or through contractor.
Employees of contractor having separate license to perform the job of the principal basis, cannot be

treated as employees of the principal employer or the principal employer cannot be burdened with the
liability of employees of the contractor.
Coverage of an establishment under the employees' provident funds and miscellaneous provisions act,

1952 is not proper if there are less than 20 employees.

Clubbing of two different establishments under the employees' provident funds and miscellaneous

provisions act, 1952 is not permissible under the statute when establishment of the contractor is having
separate license for the specific job to be completed in the premises of the principal establishment with
less than 20 employees.

PAGE 07

'INSPECTOR RAJ' DECLINING IN LABOUR LAWS

Among key initiatives of the Narendra Modi

government has been the fast-tracking of labour law

reforms to put an end to 'Inspector Raj' and improving
the country's rank in the World Bank's ease of doing
business index.
However, when it comes to checking labour law

violations, the number of inspection in the central

sphere, which including banks, railways, defence,
insurance, mines among others, has anyway been on
the decline.
For instance, with the number of contract labourers

engaged in the central sphere estimated at about 21,

12,715 persons, the number of inspections under the
contract labour (R&A) act fell to 6990 with 4084
prosecutions launched in 2013-14, against 8146
inspections and 4671 prosecutions launched in 201212, according to labour minister Bandaru Dattatreya,
in a written reply to the Lok Sabha in the last week of
Nov.2015.

NEW LABOUR LAW TO FREE SMALL FACTORIES FROM GIVING SEPARATE RETURNS
Amid the tussle between the government and opposition parties, parliament, on 28.11.2014, approved a
labour law that redefines small companies from furnishing separate labour returns.
This Law will lead to four benefits
1. Lower harassment of small establishments in the hands of labour authorities.
2. Boost manufacturing.
3. Provide impetus to skill development as small business.
4. Convert unskilled workers to skilled ones and ultimately create more employment due to ease in
the process of doing business.
Approval comes two days after parliament approved amendments to the apprentices act, 1961, and sets the

ball rolling on labour reforms to ease the process of doing business in India.
The labour laws (exemption from furnishing returns and maintaining registers by certain establishment)

amendment bill, 2014 was approved by Lok Sabha had approved the draft law after a discussion on black
money.
With this, a company employing between 10 and 40 workers will be called small establishment. Earlier a

small establishment was one with 10-19 employees. It will also allow them to furnish just one return rather
than file separate labour returns, a move that Prime Minister Narendra Modi had spoken of during a function
of the labour ministry on 16th October.

PAGE 08

BILL TO AMEND APPRENTICES ACT PASSED BY RAJYA SABHA

A bill seeking to remove imprisonment as punishment for violating the provisions of the apprentices act,

1961, and allowing employers to fix the hours of work and leave as per their discretion or policy was passed
by the Rajya Sabha on 26.11.2014.
The Apprentices (Amendment) bill, 2014 was passed by a voice vote, with a majority of speakers favouring

the legislation, saying it was aimed at enhancing the skills of youth and making them employable.

INSPECTIONS HAVE DROPPED FOR VIOLATION OF MINIMUM WAGES ACT

Under the minimum wages act, the number of inspections in 2013-14 dropped to 13099 with only 5167

prosecutions launched against 15460 inspections and 5267 prosecutions launched in 2012-13.
Under the equal remuneration act, only 2881 inspections were conducted in 2013-14 against 4167 in

2012-13 with the number of prosecutions launched at 831 against 773 respectively.

TRANSFER OF UNION OFFICE BEARERS NOT PROHIBITED

Transfer of an employee from one place to another is an incident of service. In one case Karnataka high

court has held that an office bearer of a union is first an employee then an official of the union hence it is not
open to the office-bearing of the union to contend that they are not liable to be transferred on the ground that
they are to stall transfer. The Bombay high court has held that transfer, on the ground of mala fide that the
employee is president of the union and also carrying on union activities for the last 10 years. Should not
have been stalled. Transfer should also not have been stalled because of mala fide when, all along a
decade the management has been working at a place for the last 20 years. There is no immunity to an
office-bearer (president of union here) from avoiding transfer under the industrial disputes act.

SOME EMPLOYEES' PROVIDENT FUND ORGANISATION OFFICERS

ASKING FOR RECORDS GOING BACK 15-20 YEARS
It has come to the notice of head office that in spite of instructions

to the contrary field functionaries

are directing establishments who have registered online for PF code to appear personally and
produce all original records for periods beyond 15-20 years. This is against the spirit of instructions
issued on online registration of establishment.

If at the time of such post coverage

inspection or from any complaint received at office it transpires

that the establishment is/are coverable from a back period show cause notices should be issued to
the establishment and appropriate action may be taken as per the provisions contained under
section 7A of the employees provident fund & miscellaneous provisions act, 1952 after giving
reasonable opportunity.

It

is once again clarified that during the post coverage inspection of the establishments, the
documents mentioned by the establishment including PAN details at the time of applying for code
number online, shall only be verified with respect to their original copies.

If any complaint on calling for records than those specified in the circular dated 8.7.2014 is received

at Head office, appropriate action will be taken against the erring officers.

PAGE 09

UNION GOVERNMENT OF INDIA HAS INVITED COMMENTS/ SUGGESTIONS TO

REPEAL OF THE INDUSTRIAL DISPUTE ACT, 1956
Proposes

to repeal the The Industrial Dispute Act, 1956, as recommended by the PC Jain
Commission in their report

The

concept note along with the copy of the The Industrial Dispute (Amendment & Miscellaneous
Provisions) Act, 1956 has been uploaded on the web site of The Ministry of Laboy and Employment
i.e, http:/labour.nic.in for inviting Comments/ Suggestions from the general public.

The comments / Suggestions may be sent to Shri SC Sharma, Deputy Director,[IR(PL)], Ministry of

Labour and Employment, Room No. 309(A), Shram Shakthi Bhawan, Rafi Marg, New Delhi110001 or through e-mail id sc.sharma56@nic.in by 20th Feb 2015.

INDIA ENTERS INTO SOCIAL SECURITY AGREEMENT WITH KINGDOM OF

NORWAY AND ENHANCES THE LIST TO THIRTEEN
The below are the countries that are entered in to with Social Security Agreement by the Union of India.

SOCIAL SECURITY AGREEMENT

S No

Country

Effective from

Belgium

01/09/2009

Germany

01/10/2009

Switzerland

29/01/2011

Denmark

01/05/2011

Luxembourg

01/06/2011

France

01/07/2011

Korea

01/11/2011

Netherlands

01/12/2011

Hungary

01/04/2013

10

Sweden

01/08/2014

11

Finland

01/08/2014

12

Czech Republic

01/09/2014

13

Norway

01/01/2015

PAGE 10

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