Employment

Maternity Benefits (Amendment) Act, 2017

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Published In:Inter Alia - Quarterly Edition - April 2017 [ English Chinese japanese ]

By way of a notification dated March 31, 2017 and a corrigendum dated April 3, 2017 issued by the Ministry of Labour and Employment (‘Ministry’), the provisions of the Maternity Benefit (Amendment) Act, 2017 (‘Maternity Amendment Act’), except Section 4(1) relating to provision of crèche facilities, were brought into force on April 1, 2017. The Maternity Amendment Act increases paid maternity leave from 12 weeks to 26 weeks, provided that women having two or more surviving children will be entitled to 12 weeks’ maternity leave. The Maternity Amendment Act also provides for paid leave of 12 weeks for commissioning mothers (in case of surrogacy) and adopting mothers who legally adopt a child below the age of three months. The Maternity Amendment Act also envisages a ‘work from home’ option for women after the period of maternity leave depending on the nature of work and on certain mutually agreed terms and conditions between the employer and the woman.

The provisions pertaining to crèche facilities under Section 4(1) will be brought into force on July 1, 2017. The Maternity Amendment Act mandates employers employing 50 or more employees in an establishment to provide crèche facilities where women are allowed to visit four times in a day.

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Ease of Compliance to Maintain Registers under Various Labour Laws Rules, 2017

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Published In:Inter Alia - Quarterly Edition - April 2017 [ English Chinese japanese ]

The Ministry has notified the ‘Ease of Compliance to Maintain Registers under various Labour Laws Rules, 2017’ (‘Rules’) by a notification dated February 21, 2017 to facilitate ease of compliance and maintenance of combined registers electronically or otherwise, as required, under certain specified labour laws. The Rules provide for combined registers to be maintained under: (a) Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Central Rules, 1998; (b) Contract Labour (Regulation and Abolition) Central Rules, 1971; (c) Equal Remuneration Rules, 1976; (d) Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Central Rules, 1980; (e) Mines Rules, 1955; (f) Minimum Wages (Central) Rules, 1950; (g) Payment of Wages (Air Transport Services) Rules, 1968, (h) Payment of Wages (Mines) Rules, 1956, (i) Payment of Wages (Railway) Rules, 1938 (j) Sales Promotion Employees (Conditions of Service) Rules, 1976; and (k) Working Journalists (Conditions of Service) and Miscellaneous Provisions Rules, 1957. Where registers are being maintained in an electronic form, the layout and presentation of the registers may be adjusted without changing the integrity, serial number and contents of the columns in the register.

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Increase in Wage Ceiling Coverage of an Employee under the Employees’ State Insurance Act, 1948

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Published In:Inter Alia - Quarterly Edition - January 2017 [ English Chinese japanese ]

Pursuant to Notification no. G.S.R. 1166(E) issued by the Ministry of Labour and Employment, the wage ceiling for coverage of an employee under the Employees’ State Insurance Act, 1948 has been increased from Rs. 15,000 (approx. US$ 200) to Rs. 21,000 (approx. US$ 300). Accordingly, with effect from January 1, 2017, all factories or establishments, to which the Employees’ State Insurance Act, 1948 applies, will now be required to procure insurance for employees earning Rs. 21,000 (approx. US$ 300) or less.

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Amnesty Scheme under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952

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Published In:Inter Alia - Quarterly Edition - January 2017 [ English Chinese japanese ]

Every employer is required to submit a declaration to the Regional Provident Fund Commissioner in respect of membership of its employees, who were required or entitled to become members of the Employees’ Provident Fund for the period beginning from April 1, 2009 and ending on December 31, 2016, but were not enrolled. Within 15 days, the employer is required to remit the employer’s and the employee’s contribution deducted from the employee’s wages along with damages payable at the rate of Rs. 1 per annum and the applicable interest. The Ministry of Labour and Employment has issued a notification dated December 30, 2016, notifying the Employees’ Enrolment Campaign, 2017 (‘Amnesty Scheme’) with effect from January 01, 2017 and expiring on March 31, 2017, for waiving the employee’s contribution for the aforementioned period if the same has not been recovered from the employee’s wages. This Amnesty Scheme also applies in respect of the Employees’ Provident Fund Scheme, 1952, the Employees’ Pension Fund Scheme, 1995 and the Employees’ Deposit Linked Insurance Scheme, 1976.

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Rights of Persons with Disabilities Act, 2016

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Published In:Inter Alia - Quarterly Edition - January 2017 [ English Chinese japanese ]

The Rights of Persons with Disabilities Act, 2016 (‘PWD Act’), which replaces the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, has been notified on December 28, 2016, with the objective of preventing deprivation of personal liberty only on grounds of disability. In addition to widening the definition of ‘establishment’ to include private establishments (such as company, firm, co-operative society etc.), the PWD Act mandates every establishment to notify an equal opportunity policy detailing measures proposed to be taken relating to skill development and employment of persons with disabilities. The equal opportunity policy is to be registered with the Chief Commissioner or the State Commissioner, as the case maybe. The statute further stipulates that no person will be deprived of promotion merely on grounds of disability.

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The Contract Labour (Regulation and Abolition) (Karnataka) (Amendment) Rules, 2016

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Published In:Inter Alia - Quarterly Edition - January 2017 [ English Chinese japanese ]

By way of notification no. LD 267 LET 2016 dated December 19, 2016, the Government of Karnataka has amended the Contract Labour (Regulation and Abolition) (Karnataka) Rules, 1974 to remove the restriction on female contract labourers from being employed before 6:00 A.M. or after 7:00 P.M. in the State of Karnataka, subject to the fulfilment of, inter alia, the following conditions: (i) provision of free transport facilities with adequate security; (ii) posting of adequate number of security guards; (iii) provision of sufficient rest rooms with adequate water supply separately for female employees; (iv) cost of crèche facilities obtained by the woman to be borne by the establishment; and (v) pre-employment screening of the employer’s drivers. Breach of any of these conditions will attract the withdrawal of the license issued to the contractor, under the Contract Labour (Regulation and Abolition) Act, 1970. This notification will become effective from the date of its publication in the Official Gazette.

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Employee’s Compensation (Amendment) Act, 2017

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Published In:Inter Alia - Quarterly Edition - October 2017 [ English Chinese japanese ]

The Employee’s Compensation Act, 1923 has been amended with effect from May 15, 2017. Some of the key amendments introduced are:

i.  Every eligible employer should inform workmen, at the time of employment, of compensation rights under the statute in writing and through electronic means.

ii.  Penalties for contravention have been increased from Rs. 5,000 (approx. US$ 77) to a minimum of Rs. 50,000 (approx. US$ 775), which may extend to Rs. 100,000 (approx. US$ 1,550).

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Code on Wages

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Published In:Inter Alia - Quarterly Edition - October 2017 [ English Chinese japanese ]

As part of the Government’s exercise to reform labour laws and rationalize 38 existing legislations by framing four labour codes, namely: (i) the Code on Wages; (ii) Code on Industrial Relations; (iii) Code on Social Security; and (iv) Code on Occupational Safety, Health and Working Conditions; the Code on Wages Bill, 2017 (‘Bill’) has been introduced in the Lok Sabha on August 10, 2017. The Bill seeks to create a comprehensive code on wages by consolidating: (i) the Minimum Wages Act, 1948; (ii) the Payment of Wages Act, 1936 (‘POW Act’); (iii) the Payment of Bonus Act, 1965; and (iv) the Equal Remuneration Act, 1976.

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Rights of Persons with Disabilities

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Published In:Inter Alia - Quarterly Edition - October 2017 [ English Chinese japanese ]

The Rights of Persons with Disability Act, 2016 (‘Disability Act’), replaces the erstwhile Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. The Disability Act was brought into effect on April 19, 2017 with the objective of implementing the United Nations Convention on the Rights of Persons with Disabilities. The key difference is the enhanced scope of the term “disability” and the applicability of the Disability Act to private employers. The Ministry of Social Justice and Empowerment has introduced Rights of Persons with Disability Rules, 2017 (‘Disability Rules’) with effect from June 15, 2017.

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Payment of Wages Act – Enhancement of Ceiling

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Published In:Inter Alia - Quarterly Edition - October 2017 [ English Chinese japanese ]

The Ministry of Labour and Employment has, by a notification dated August 28, 2017, enhanced the salary threshold for applicability of the POW Act from Rs. 18,000 (approx. US$ 300) per month to Rs. 24,000 (approx. US$ 350) per month. The POW Act regulates the payment of wages to certain classes of employed persons, including in relation to time and mode of payment and permissible deductions

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Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017

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Published In:Inter Alia - Quarterly Edition - October 2017 [ English Chinese japanese ]

The Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (‘2017 Act’), which received assent of the Governor of Maharashtra on September 7, 2017, will come into force and repeal the Maharashtra Shops & Establishments Act, 1948 with effect from such date appointed by the State Government by notification in the Official Gazette. Some of its key provisions are:

i. It applies to establishments employing 10 or more workers. Establishments with less than 10 workers are only required to provide an intimation of commencement/closure of business.

ii. The registration certificate granted under the 2017 Act would be valid for a period of up to 10 years.

iii. The employer is required to notify the relevant authority within 30 days of closure of its business.

iv. Overtime is payable where a worker is required to work beyond nine hours a day or 48 hours a week, subject to a maximum of 125 overtime hours in a period of three months.

v. The 2017 Act prohibits discrimination against women in matters relating to recruitment, training, transfers, promotion or wages. Women workers may now be allowed to work between 9:30 PM to 7:30 AM, if they consent to the same and the employer provides adequate protection and transportation.

vi. Every worker is entitled to eight days of casual leave with wages in a calendar year, to be credited to his/her account on a quarterly basis, but which will lapse if not availed by the end of the year. Workers who have worked for a period of at least three months are entitled to five days leave for every 60 days worked during the year and those who have worked for 240 days are entitled to 18 days paid leave during the subsequent year. Paid leaves of up to 45 days can be accumulated by workers.

vii. Establishments with 50 or more workers are required to provide crèche facilities. Further, the State Government may require establishments with 100 or more workers to maintain canteen facilities. A group of establishments may provide a common crèche and canteen facilities, subject to prescribed conditions.

viii. The penalties have been enhanced, with inter alia a maximum fine of Rs. 1 lakh (approx. US$ 1,500) and an additional fine of up to Rs. 2,000 (approx. US$ 30) per day for continuing contravention.

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Payment of Gratuity Act – Ceiling to be Doubled

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Published In:Inter Alia - Quarterly Edition - October 2017 [ English Chinese japanese ]

The Union Cabinet has, on September 12, 2017, given its approval for introduction of the Payment of Gratuity (Amendment) Bill, 2017 (‘Bill’) in the Parliament. The Bill seeks to double the maximum limit of gratuity under the Payment of Gratuity Act, 1972 (‘Gratuity Act’) from Rs. 10 lakhs (approx. US$ 15,000)[1] to Rs. 20 lakhs (approx. US$ 30,000).

[1]     The Gratuity Act entitles every employee who has completed five years of service, upon cessation of employment, to gratuity calculated at the rate of 15 days wage for each year of completed service or part thereof in excess of six months, currently subject to a maximum of Rs. 10 lakhs (approx. US$ 15,000).

 

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Child Labour (Prohibition and Regulation) Amendment Act, 2016

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Published In:Inter Alia - Quarterly Edition - October 2016 [ English Chinese japanese ]

Amendments to the Child Labour (Prohibition and Regulation) Act, 1986, which have been brought into effect from September 1, 2016, seek to: (i) prohibit the engagement of children in all occupations (except employment: (a) in a family / family enterprise, other than in any hazardous occupation or process, after school hours or during vacations; or (b) as an artist in an audio-visual entertainment industry, except circus, subject to certain prescribed conditions and safety measures) and the engagement of adolescents in hazardous occupations and processes; and (ii) creates a distinction between an ‘adolescent’ and a ‘child’, by defining an ‘adolescent’ as a person between the age of 14 and 18 years, and a ‘child’ as a person who has not completed 14 years of age or such other age as may be prescribed.

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Overhaul of Employment Laws

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Published In:Inter Alia - Quarterly Edition - October 2016 [ English Chinese japanese ]

The following bills have been recently introduced in the Parliament:

i.  The Union Cabinet has, in its meeting dated June 29, 2016, approved the Model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill, 2016, with an intention to inter alia align the statutory provisions on conditions of employment across various States and Union Territories;

ii.  The Rajya Sabha has, on August 11, 2016, passed the Maternity Benefit (Amendment) Bill, 2016 to amend the Maternity Benefit Act, 1961, to inter alia increase the maternity leave period in certain circumstances, provide for a ‘work-from-home’ option for women, and provide crèche facilities in certain establishments. This Bill will be notified upon receipt of approval from the Lok Sabha and receipt of Presidential assent;

iii.  The Lok Sabha has, on August 9, 2016, passed the Employees’ Compensation Amendment Bill, 2016, to amend the Employee’s Compensation Act, 1923, to inter alia, introduce an obligation on the employer to notify the employee of the compensation amount at the time of appointment. This Bill will be notified upon receipt of approval from the Rajya Sabha and receipt of Presidential assent; and

iv.  The Lok Sabha has, on August 10, 2016, passed the Factories Amendment Bill, 2016 to amend the Factories Act, 1948, to inter alia provide for increase in the maximum permitted overtime hours. This Bill will be notified upon receipt of approval from the Rajya Sabha and receipt of Presidential assent.

We will be providing a detailed update on the above proposed legislations once the same have been enacted.

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Payment of Gratuity (Amendment) Act, 2018

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Published In:Inter Alia - Quarterly Edition - March 2018 [ English Chinese japanese ]

The Payment of Gratuity Act, 1972 (‘Gratuity Act’) entitles every employee who has completed five years of service (taken as (i) four years and 240 days for establishments having a six day work week; and (ii) four years and 190 days for those working less than six days a week), upon cessation of employment, to gratuity calculated at the rate of 15 days wages for each year of completed service or part thereof in excess of six months.

With effect from March 29, 2018, the Ministry of Labour and Employment has: (i) increased the statutory ceiling for gratuity to Rs. 2 million (approx. US$ 30,000), from the erstwhile Rs. 1 million (approx. US$ 15,000); and (ii) stipulated 26 weeks as the maximum duration of maternity leave that would be considered as ‘continuous service’ for the purpose of computing gratuity.

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Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018

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Published In:Inter Alia - Quarterly Edition - March 2018 [ English Chinese japanese ]

On October 7, 2016, the Central Government amended the Industrial Employment (Standing Orders) Act, 1946 (‘SO Act’) and allied rules, to permit employment on fixed terms in the apparel manufacturing sector. Pursuant to the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 (‘Amendment Rules’) notified by the Ministry of Labour and Employment, effective from March 16, 2018, all sectors covered under the SO Act have now been permitted to employ personnel on ‘fixed terms’. The Amendment Rules defined a ‘fixed term employment workman’ as ‘a workman who has been engaged on the basis of a written contract of employment for a fixed period’. However, such a ‘fixed term employment workman’ is eligible for all statutory benefits on a pro-rated basis and his hours of work, wages, allowances and other benefits cannot be less than that of a permanent workman.

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Mandatory Disclosure of ICC Constitution Status in the Board Report of Eligible Companies

The Ministry of Corporate Affairs has notified an amendment to the Companies (Accounts) Rules, 2014 (‘Accounts Rules’), requiring all eligible companies to incorporate a statement disclosing their compliance with the provisions relating to constitution of an internal complaints committee under the Prevention of Sexual Harassment at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH Act’) in the Board of Directors Report, to be prepared under the provisions of Section 134 of the Companies Act, 2013 (‘Companies Act’). Key highlights of this amendment are set out below:

 

Applicable Law

1. Section 134 of the Companies Act requires all companies to seek approval of its financial statements from the Board of Directors, and file the same with the Registrar of Companies, in accordance with provisions of the Companies Act. The financial statements are to be accompanied with any notes annexed to or forming part of such financial statements, the auditors’ report and the Board of Director’s report.

2. Section 134 (3) describes the extent of information to be disclosed under the Board of Director’s report, such as extracts of annual return, directors’ responsibility statement, etc. Additional information that has to be disclosed has been prescribed under Rule 8 of the Accounts Rules.

3. Failure to include disclosures mandated under Section 134 of the Companies Act and the rules framed thereunder in the Board of Director’s report is punishable with fine of not less than INR 50,000 (approx. USD 715) which may extend to INR 25,00,000 (approx. USD 35,850). Additionally, every officer of the company who is in default is punishable with imprisonment for a term which may extend to 3 years or with fine of not be less than INR 50,000 (approx. USD 715), which may extend to INR 5,00,000 (approx. USD 7,150), or with both.

 

Key aspects of the Amendment

4. The amendment to the Accounts Rules requires every eligible company to mandatorily include a statement in its Board of Directors’ report that it has complied with the provisions relating to the constitution of the Internal Complaints Committee, now re-named as the Internal Committee (‘ICC’), under the POSH Act.

5. The amendment is effective as of July 31, 2018. The amendment is not applicable to a One Person Company or a Small Company.

 

Existing Compliance Framework

6. It may be noted that the POSH Act requires all companies who have more than 10 employees to constitute an ICC in the prescribed manner, and to receive and redress complaints received from women in a time-bound and confidential manner. Further, Section 22 of the POSH Act already requires such companies to make an annual filing which discloses details such as number of cases filed, pending or disposed by the ICC in the company’s annual report.

 

Impact

7. This amendment is merely adding an additional action item for the Board of Directors for making a specific statement that the company has constituted an ICC in compliance with the POSH Act. This will possibly help in formalizing the institution of ICCs across companies since many companies still set-up an ICC only when a complaint arises, which practice is not compliant with the POSH Act.

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Employment Law Update: Forfeiture of Gratuity

This is an update about a recent judgement of the Supreme Court pertaining to forfeiture of gratuity under the Payment of Gratuity Act, 1972 (Gratuity Act).  The Apex Court, in Union Bank of India vs C.G. Ajay Babu and others, has held that forfeiture of gratuity upon termination of employment for an act constituting an offence involving moral turpitude is permissible only if the employee is convicted for the offence by a court of competent jurisdiction.

As per the Gratuity Act, gratuity is payable to employees who have been in continuous employment with the employer for at least five years (beneficially interpreted as four years and two hundred and forty days for those having a six day work week and four years and one hundred and ninety days for those who have a five day work week) at the time of cessation of employment.  Gratuity is calculated at the rate of fifteen days’ wages for each year of completed service, subject to a maximum of INR 2,000,000 (~USD 28,500).

As per the statute, gratuity may be forfeited upon termination of employment of the employee:

a. for any act, willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, to the extent of the damage or loss so caused;

b. for riotous or disorderly conduct or any other act of violence; or

c. for any act which constitutes an offence involving moral turpitude, provided that such offence is committed in the course of employment.

With respect to forfeiture of gratuity for offences involving moral turpitude, the Supreme Court in the said judgement, has observed that the requirement of the statute is not for an employer to merely prove that the misconduct involved moral turpitude, but also that a court of law duly establishes that the said act is an offence involving moral turpitude under applicable law.

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Mandatory Disclosure of POSH Compliance in the Board Report of Companies

Here is a quick update on the obligation under the Indian Companies Act, 2013 (‘Companies Act’) for companies to disclose and confirm their compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (‘POSH Act’).  The Ministry of Corporate Affairs has notified an amendment to the Companies (Accounts) Rules, 2014 (‘Accounts Rules’), requiring companies to incorporate a statement disclosing their compliance with the provisions relating to constitution of an internal complaints committee under the POSH Act in the Board of Directors Report, to be prepared under the provisions of Section 134 of the Companies Act.  Key highlights of this amendment are set out below:

 

Applicable Law

1.            Section 134 of the Companies Act requires all companies to seek approval of its financial statements from the Board of Directors, and file the same with the Registrar of Companies, in accordance with provisions of the Companies Act.  The financial statements are to be accompanied with any notes annexed to or forming part of such financial statements, the auditors’ report and the Board of Director’s report.

2.            Section 134 (3) describes the extent of information to be disclosed under the Board of Director’s report, such as extracts of annual return, directors’ responsibility statement, etc.  Additional information that has to be disclosed has been prescribed under Rule 8 of the Accounts Rules.

3.            Failure to include disclosures mandated under Section 134 of the Companies Act and the rules framed thereunder in the Board of Director’s report is punishable with fine of not less than INR 50,000 (approx. USD 715) which may extend to INR 25,00,000 (approx. USD 35,850).  Additionally, every officer of the company who is in default is punishable with imprisonment for a term which may extend to 3 years or with fine of not be less than INR 50,000 (approx. USD 715), which may extend to INR 5,00,000 (approx. USD 7,150), or with both.

 

Key aspects of the Amendment

 

4.            The amendment to the Accounts Rules requires every eligible company to mandatorily include a statement in its Board of Directors’ report that it has complied with the provisions relating to the constitution of the Internal Complaints Committee, now re-named as the Internal Committee (‘ICC’), under the POSH Act.

5.            The amendment is effective as of July 31, 2018. The amendment is not applicable to a one person company or a small company.

 

Existing compliance framework

6.            It may be noted that the POSH Act requires all companies who have more than 10 employees to constitute an ICC in the prescribed manner, to receive and redress complaints from women in a time-bound and confidential manner. The POSH Act already requires such companies to make an annual filing which discloses details such as number of cases filed, pending or disposed by the ICC in the company’s annual report.

Impact

7.            This amendment has added an additional action item for the Board of Directors to confirm that the company has constituted an ICC in compliance with the POSH Act. This will possibly help in formalizing the institution of ICCs across companies since many companies still set-up an ICC only when a complaint arises, which practice is not compliant with the POSH Act..

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Amendment to the Pradhan Mantri Rojgar Protsahan Yojana

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Administrative Charges payable by the Employer under the Employees’ Provident Funds Scheme, 1952

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Published In:Inter Alia - Quarterly Edition - June 2018 [ English Chinese japanese ]

By way of a notification bearing number S.O. 2011 (E), dated May 21, 2018,  issued by the Ministry of Labour and Employment, the Central Government has fixed the administrative charges payable by the employer under the Employee’s Provident Funds Scheme, 1952 at 0.50%, subject to a minimum of INR 500 per month for every establishment and INR 75 for a non-functional establishment, i.e., an establishment having no contributory member. This notification is effective from June 1, 2018. It was further clarified that the administrative charges payable in respect of the period up to May 31, 2018 i.e. 0.65%, would continue to apply until June 1, 2018.

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