Acts

Object Of The Act

• Promotion of new manpower at skills.
• Improvement/refinement of old skills through theoretical and practical training in number of trades and occupation.

Applicability

Areas and industries as notified by the Central Government.[Sec.1]

Central Apprenticeship Advisor - when appointed by Central Government.[2(b)]

Industry

Industry means any industry, or business or optional trade or both after designated trade, or in which any trade, occupation or subject/field in engineering or technology or any vocational course may be specified as a designated trade.

Contract Of The Apprenticeship

No person shall be engaged as an apprentice to undergo apprenticeship training in a designated trade unless such person or, if he is a minor, his guardian has entered into a contract of apprenticeship with the employer.

Even contract of apprenticeship entered into under sub-section (1) shall be sent by the employer within thirty days to the Apprenticeship Advisor until a portal-site is developed by the Central Government, and thereafter the details of contract of apprenticeship shall be entered on the portal-site within seven days, for verification and registration.

The Apprenticeship Advisor shall register the contract of apprenticeship within thirty days from the date of its receipt.

Period Of The Apprenticeship

To be determined by the National Council.

Termination

• On the expiry of the period of the period of apprenticeship training.
• On the application of either the parties to the contract to the Apprenticeship Advisor.[6]

Payment Of Apprenticeship

The employer to pay such stipend at a rate of not less than the prescribed minimum rate as may be specified.

Number of Apprentices in Designated Trade

To be determined by the Central Government after consulting the Central Apprenticeship Council. [8]

Hours Of Work

• 42 to 48 in a week while on theoretical training.
• 42 in a week while on basic training.
• 42 to 45 in a week in second year of training.
• As per other workers 9 (in the third year).
• Not allowed to work between 10 PM to 4 AM unless approved by the Apprenticeship Advisor.

Leave And Holidays

• Medical leave for the maximum period of 15 days and the accumulated leave upto 40 days in a year.
• Extraordinary leave upto a maximum period of 10 days in a year.
• Casual leave for the maximum period of 12 days in a year. [15]

Obligations Of Apprentice

• To learn his trade conscientiously,diligently.
• To attend practical and instructional classes regularly.
• To carry out all lawful orders.
• To carry out his contractual obligations.

Employer's Liability

To pay compensation for injury as per provisions of Workmen's Compensation Act. [16]

Obligations Of Employers

• To provide the apprentice with the training in his trade
• To ensure that a person duly qualified is placed in charge of the training of the apprentice.

Penal Provision

Imprisonment of a term upto 6 month or with fine when employer...

• engages as an apprentice a person who is not qualified for being so engaged or
• fails to carry out the terms and conditions of a contract of apprenticeship, or
• contravenes the provision of the Act relating to the number of apprentices which he is required to engage under those provisions.

Object Of The Act

To regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith.

Applicability [Sec.1]

Every establishment in which 20 or more workmen are employed or were employed on any of the preceding 12 months as contract labour.

Every contractor who employs or who employed on any day of the preceding twelve months 20 or more workmen.

Registration [7]

Principal employer employing 20 or more workers through the contractor or the contractor(s), needs to register its estblishment under the Act, on deposit of required fee in Form1.

Revocation Of Registration

When obtained by misrepresentation or suppression of material facts etc. after opportunity to the principal employer. Sec.

License [Sec. 12/Rule 21]

• Any Contractor engaging 20 or more workers needs to procure a License to operate, on deposit of required fee in Form IV.
• Valid for specified period.

Revocation or Suspension & Amendment of Licences [14]

When obtained by misrepresen­tation or suppression of material facts. Failure of the contractor to comply with the conditions or contravention of Act or the Rules.

Prohibition of Employment of Contract Labour [10]

Only by the appropriate Government through issue of notification after consultation with the Board (and not Courts) can order the prohibition of employment of contract labour.

Welfare measures to be taken by the Contractor[16, 17]

On engaging 100 or more contract labour, a Contracto shall provide:

• One or more canteens
• First Aid facilities
• Rest Rooms
• Drinking water
• Latrines
• Washing facilities

Responsibility Of Contractor For Payment Of Wages

To pay timely and to ensure the disbursement of wages in the presence of the authorised representative of the principal employer.

Rate Of Wages [21/25]

Shall not be less than the rates as fixed or prevailing or such employment as fixed by agreement

Number of Apprentices in Designated Trade

To be determined by the Central Government after consulting the Central Apprenticeship Council. [8]

Registers [Rules 75, 76 and 77]

Principal employer to maintain a register of contractors in respect of every establishment in Form XII.

Contractor to maintain register of workers for each registered establishment in Form XIII. To issue an employment card to each worker in Form XIV. To issue service certificate to every workman on his termination in Form XV.

When covered by Payment of Wages Act, register and records to be maintained are: Muster Roll, Register of Wages, Register of Deductions, Register of Overtime, Register of Fines, Register of Advances, Wage slip. [Rule 79]

Returns [Rule 82]

Contractor to send half yearly return in Form XXV in duplicate within 30 days
Princlpal employer to send annual return in Form XXViIn dupllcate before 15th Feb. following the end of the concerned year.

Liability-Principal Employer [20]

Principal Employer shall ensure provision for: Canteen, Rest-rooms, Sufficient supply of drinking water, latrines and urinals, washing facilities.
Principal employer entitled to recover from the contractor for providing such amenities or to make deductions from amount payable.

Liability-Contractor

Every contractor shall:

• Maintain Muster Roll and a Register of Wages In Form XVI and Form XVII respectively when combined.
• Maintain a Register or wage-cum-Muster Roll in Form XVII where the wage period is a fortnight or less.
• Maintain a Register of Deductions for damage or loss, Register or Fines.
• Maintain Register of Advances in Form XX, form XXI and Form XXII respectively.
• Maintain a Register of Overtime in Form XXIII.
• Issue wage slips in Form XIX, to the workmen at least a day prior to the disbursement of wages.
• Obtain she signature or thumb impression of the worker concerned against the entries relating to him on the Register of Wages or Muster Roll-cum-Wages Register.
• To display an abstract of the Act and Rules In English and Hindi and in the language spoken by the majority of workers in such form as may be approved by appropriate authority. [Rule 80]
• To display notices showing rates of wages, hours of work, wage period, dates of payment, names and addresses of the inspector and to send copy to the inspector and any change forthwith. [Rule 81]

Penal Provision

• For obstructing the inspector or failing to produce registers etc. :3 months' imprisonment or fine upto Rs.500, or both.
• For violation of the provisions of Act or the Rules, impri-sonment of 3 months or fine upto Rs.1000.
• On continuing contravention, additional line upto Rs. 100 per day. [Sec 22 & 23]

Applicability

• Every establishment which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed.
• Any other establishment employing 20 or more persons which Central Government may, by notification, specify in this behalf.
• Any establishment employing even less than 20 persons can be covered voluntarily u/s 1(4) of the Act.

Eligibility

All the employees (including casual, part time, Daily wage contract etc.) other then an excluded employee are required to be enrolled as members of the fund the day, the Act comes into force in such establishment.

Employee Definition

As defined in Section 2(f) of the Act, means any person who is employee for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and who gets wages directly or Indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment.

Excluded Employee

Exempted employee means an employee to whom a Scheme or the Insurance Scheme, as the case may be, would, but for the exemption granted under section 17, have applied. However, if the wage of an employee as covered under the Act, exceeds the prescribed ceiling he will be continue to remain covered upto prescribed ceiling. Similarly, if a new employee is drawing more than the prescribed wages but he will not be coverable but if he has never been member of Fund, he will be covered upto the prescribe wage ceiling.

WAGES FOR COVERAGE

"Basic Wages" means all emoluments which are earned by employee while on duty or on leave or holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash, but does not include:

• The cash value of any food concession;
• Any cash payment, by whatever named called, paid to an employee on account of a rise in the cost of living, House rent Allowance, Overtime Allowance, Bonus, Commission or any other allowance payable to the employee in respect of employment or of work done in such employment.

Damages On Default [per Annum]

Less than 2 months: @5%
2 months and above but less than 4 months: @10%
4 months and above but less than 6 months: @15%
4 months and above: @25%

Penal Provision

Liable to be arrested without warrant being a cognisable offence. Defaults by employer in paying contributions or inspection/adminis charges attract imprisonment upto 3 years and fine upto Rs.10,000 (S.14). For any 15 retrospective application, all dues have to be paid by employer with damages upto 100% of arrears.

Applicability

• The Act is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establishments including educational institations employing 10 or more person.
• It has also been extended upon shop, hotels, restaurants, roads motor transport undertakings, etc.

Eligibility

All Employees drawing wages/salary upto RS. 21000/- per month engaged either directly or thru' contractor, are covered under the Scheme.

Contribution Period

• 1st April to 30th September, and
• 1st October to 31st March

Benefit Period

If the person joined insurable employment for the first time, say on 5th January, his first contribution period will be from 5th January to 31st March and his corresponding first benefit will be from 5th October to 31st December.

Benefits

• ESI Scheme takes care of following needs of the member:
• Medical sickness, extended sickness for certain diseases, enhanced sickness, dependants maternity, besides funeral expenses, rehabilitation allowance, medical benefit to insured person and his or her spouse.

Membership

If an insured person's wages/salary becomes more than RS. 21000/- per month, even then he/she remains covered till the end of a Contribution Period which is either April to Septermber & October to March.

SCHEME OF CONTRIBUTION

Employer's Share: 4.75%
Employee's Share: 1.75% of wages/salary.

Wages/Salary

• Basic pay
• Dearness allowance
• House rent allowance
• City compensatory allowance
• Overtime wages (but not to be taken into account for determining the coverage of an employee)
• Payment for day of rest
• Production incentive
• Bonus other than statutory bonus
• Night shift allowance
• Heat, Gas & Dust allowance
• Payment for unsubstituted holidays
• Meal/food allowance
• Suspension allowance
• Lay off compensation
• Children education allowance (not being reimbursement for actual tuition fee)

Not As Wages/Salary

• Contribution paid by the employer to any pension/provident fund or under ESI Act
• Sum paid to defray special expenses entailed by the nature of employment - Daily allowance paid for the period spent on tour.
• Gratuity payable on discharge
• Pay in lieu of notice of retrenchment compensation
• Benefits paid under the ESI Scheme
• Encashment of leave
• Payment of Inam which does not form part of the terms of employment
• Washing allowance for livery
• Conveyance :
  • - Amount towards reimbursement for duty related journey.
  • - Reimbursement of journey on production of ticket.
  • - Maintenance of vehicle subject to producton of record.
  • - Fixed when paid at an interval exceeding 2 months.

Manner And Time Limit

for making payment of contribution

The total amount of contribution (employee's share and employer's share) is to be deposited with the authorised bank through a challan in the prescribed form in quadruplicate on or before 15th of month following the calendar month in which the wages fall due.

Penal Provision

Different punishments have been prescribed for different types of offences in terms of section 85 : (i) (six months imprisonment and fine Rs. 5,000), (ii) (one year imprisonment and fine), and
85-A :(five years imprisonment and not less to 2 years) and
85-C(2) of the ESI Act, which are self-explanatory.
Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust.

Object Of The Act

To provide for the payment of equal remuneration to men and women workers and for the prevention of discrimination, on the ground of sex, against woman, in the matter of employment and for connected or incidental matters.

Overriding Effect

The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any award, agreement or contract of service, whether made before or after this Act. Sec. 3

Maintaining of Register

Upto date for all workers employed in Form D at the place where the workers are employed. Sec. 8 Rule 6

No Discrimination

• No discrimination to be made while recruiting men and women workers.
• No discrimination on promotion, training or transfer except where employment of women restricted.
• These provisions not applicable when priority is to be to scheduled castes or scheduled tribes, ex-servicemen or retrenched employees. Sec.5

Duty Of Employer

No employer shall pay to any worker, employed by him in an establishment or employment, remuneration, cash or in kind, at rates less favourable than those at which remuneration is paid by him to the workers of the opposite sex for performing the same work or work of a similar nature.

No employer shall reduce the rate of remuneration. Sec.4

Penal Provision

Simple imprisonment upto one month or fine upto Rs.10000 or both, when any employer:

• Omits or falls to maintain any register or other document in relation to workers.
• Omits or fails to produce any register, muster-roll or other document.
• Omits or refuses to give any evidence or prevents his agent, servant, etc. from giving evidence, or
• Omits or refuses to give any Information.

Fine not less than Rs. 10,000 which may extend to Rs.20,000 or imprisonment not less than 3 months which may extend uplo one year for 1st offence, and upto two years for second and subsequent offences, if any employer:

• makes any recruitment in contravention to the provisions of the Act, or
• makes any payment of remuneration at unequal rates to men and women workers, for the same work or work of a similar nature, or
• makes any discrimination between men and women workers in contravention of the provisions of the Act, or
• omits or falls to carry out any direction made by the appropriate Government under sub-sec (5) of sec 6.

Applicability

Any premises whareon 10 or more persons with the aid of power or 20 or more workers are/were without aid of power working on any day preceding 12 months, wherein Manufacturing process is being carried on. Sec.2(ii)

Registration & Renewal

Registration and Renewal of Factories to be granted by Chief Inspector of Factories on submission of prescribed form, fee and plan. Sec.6

Employment of Young Persons

• Prohibition of employment of young children e.g. 14 years.
• Non-adult workers to Carry tokens e.g. certificate of fitness.
• Working hours for children not more than 41/2 hrs. and not permitted to work during night shift. [Secs.67, 68 & 71]

Working Hours, Spread Over & Overtime of Adults

• Weekly hours, not more than 48.
• Daily hours not more than 9 hours.
• Rest for at least 1/2 hour on working for 5 hrs.
• Spreadover not more than 101/2 hours.
• Overlapping shifts prohibited.
• Extra Wages for overtime double than normal rate of wages.
• Restrictions on employment of women before 6 A.M. and beyond 7 P.M. [Secs. 51,54 to 56,59 & 60]

Safety Measures

• By fencing of machinery
• By not allowing work on or near machinery in motion.
• By not employing young persons on dangerous machines,
• By striking gear and devices for cutting off power.
• By installing Self-acting machines,
• By casting of new machinery.
• By prohibition of employment of women and children near cotton-openers.
• By providing Hoists and lifts. [Secs. 21 to 28]

Annual Leave with Wages

• An adult worker having worked for 240 days shall get one day for every 20 days and,
• a child for every 15 days. Accumulation of leave for 30 days. Sec. 79

Basic Amenities

Employer shall ensure for the health of workers:

• - Cleanliness
• - Disposal of wastes and effluents
• - Proper ventilation and temperature control
• - Dust and fume control
• - Overcrowding control
• - Artificial humidification
• - Lighting
• - Drinking water
• - Spittoons [Secs. 11 to 20]

Welfare Measures

Employer to provide:

• Washing facilities
• Facilities for storing and drying clothing.
• Facilities for sitting
• First-aid appliances - one first aid box not less than one for every 150 workers
• Canteens when there are 250 or more workers.
• Shelters, rest rooms and lunch rooms when there are 150 or more workers.
• Creches when there are 30 or more women workers.
• Welfare office when there are 500 or more workers. [Sec. 42 to 49]

Fine not less than Rs. 10,000 which may extend to Rs.20,000 or imprisonment not less than 3 months which may extend uplo one year for 1st offence, and upto two years for second and subsequent offences, if any employer:

Penal Provision [Secs 92 - 99]

• Imprisonment upto 2 year or fine upto Rs. 1,00,000 or both: for contravention of the provisions of the Act or Rules .Rs.1000 per day: On continuation of contravention
• On contravention of Chapter IV pertaining to safety or dangerous operations: Not less than Rs. 25,000 in case of death. Not less than Rs. 5,000 in case of serious injuries. Subsequent contravention of some provisions: Imprisonment upto 3 years or fine not less than Rs. 10,000 which may extend to Rs. 2,00,000.
• Imprisonment upto 6 months or fine upto Rs.10,000 or both: for Obstructing Inspectors
• Imprisonment upto 6 months or fine upto Rs. 10,000 or both: for Wrongful disclosing result pertaining to results of analysis
• For contravention of the provisions of Sec.41B, 41C and 41H pertaining to compulsory disclosure of information by occupier, specific responsibility of occupier or right of workers to work imminent danger: Imprisonment upto 7 years with fine upto Rs. 2,00,000 and on continuation fine @ Rs.5,000 per day. Imprisonment of 10 years when contravention continues for one year.

Object

Provisions for investigation and settlement of industrial disputes and for certain other purposes.

Important Clarlfications

• Industry - has attained wider meaning than defined except for domestic employmant, covers from barber shops to big steel companies. [Sec.2(j)]
• Works Committee - joint Committee with equal number of employers and employees' representatives for discussion of certain common problems. [Sec.3]
• Concillation - is an attempt by a third party in helping to settle the disputes. [Sec.4]
• Adjudication - Labour Court, Industrial Tribunal or National Tribunal to hear and decide the dispute. [Sec. 7, 7A & 7B]

Notice of Change

21 days by an employer to workmen about changing the conditions of service as provided in IVth Schedule. [Sec. 9A]

Power of Labour Court

Labour Court/Industrial Tribunal can modify the punishment of dismissal or discharge of workmen and give appropriate relief including reinstatement. [Sec.11A]

Right Of A Workman

During Pendency of Proceedings in High Court, Employer to pay last drawn wages to reinstated workman when proceedings challenging the award of his reinstatement are pending in the higher Courts. [Sec. 17B]

Period Of Operation Of Settlements And Awards

• A settelement for a period as agreed by the parties, or a period of six months on signing of settlement.
• An award for one year after its enforcement. [Sec.19]

Prohibition Of Unfair Labour Practice

As stipulated in the Vth schedule, both the employer and the Union can be punished on resorting to unfair labour practices. [Sec 25-T]

Condition For Laying Off

Failure, refusal or inability of an employer to provide work due to

• - Shortage of coal, power or raw materiel.
• - Accumulation of stocks.
• - Breakdown of machinery.
• - Natural calamity.    [Sec.2(kkk)]

Prior Permission For Lay Off

When there are more than 100 workmen during preceding 12 months.    [Sec.25-M]

Lay Off Compensation

Payment of wagen except for iIntervening weekly holiday compenaation 50% of total or basic wages and DA for a period of lay off upto maximum 45 days in a year.    [Sec.25-C]

Retrenchment of Workmen Compensation & Conditions

• Workman must have worked for 240 days.
• Retrenchment compenaation @ 15 days' wages for every completed year to be calculated at last drawn wages
• One month's notice or wages in lieu thereof.
• Reasons for retrenchment
• Complying with principle of 'last come first go'.
• Sending Form P to Labour Authorities
• Prior Permission by the Government for Retrenchment to be taken:
  When there are more than 100(in UP 300 or more) workmen during preceding 12 months.
• Three months' notice or wages thereto to be given to the workmen.
• Form QA to be submitted.    [Sec.25-N]

Protection

• Conditions of service etc. to remain unchanged under certain circumstances during pendency of proceedings
• Employer not to alter to the prejudice of workmen concerned the condition of service.
• To seek expressed permission of the concerned authority by paying one month's wages on dismissal, dicharge or punish a protected workmen connected with the dispute.
• To seek approval of the authority by paying one month's wages before altering condition of service, dismissing or discharging or punishing a workman.    [Sec.33]

Closure Of The Undertaking

• 60 days' notice to the labour authorities for intended closure in Form QA.    [Sec.25FFA]
• Prior permission at least 90 days before in Form O by the Government when there are 100 or more workmen during preceding 12 months (in UP 300 or more workmen)    [Sec.25-O]

Prohibition of Strikes and Lock Outs

• Without giving to the employer notice of strike, as hereinafter provided, within six weeks before striking.
• Within fourteen days of giving such notice.
• Before the expiry of the date of strike specified in any such notice as aforesaid.
• During the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings.
• During the pendency of proceedings before a Labour Court, Tribunal or Nationl Tribunal and two months, after the conclusion of such proceedings.
• During the pendency of arbitration proceedings before an arbitrator and two months after the conclusion of such proceedings, where a notification has been issued under sub-section(3A) of section 10A.
• During any period in which a settlement or award is in operation, in respect of any of the matters covers covered by the settlement or award.    [Sec.22 & 23]

Penal Provision

• Committing unfair labour practices: Imprisonment upto 6 months or with fine upto Rs. 3,000. [25(u)]
• Illegal strike and lock-outs: Imprisonment upto one month or with fine upto Rs. 50 (Rs. 1000 for lock-out) or with both. [26]
• Instigation etc. for illegal strike or lock-outs: Imprisonment upto 6 months or with fine upto Rs. 1,000 [27]
• Giving finencial aid to illegal strikes and lock-outs : Imprisonment upto 6 months or with fine upto Rs. 1,000 [28]
• Breach of settlement or award: Imprisonment upto 6 months or with fine. On continuity of offence fine upto Rs. 200 per day. [29]
• Disclosing confidential information pertaining to Sec.21: Imprisonment upto 6 months or with fine upto Rs. 1,000 [30]
• Closure without 60 days' notice under Sec.25FFA: Imprisonment upto 6 months or with fine upto Rs. 5,000 [31 A]
• Contravention of Sec.33 pertaining to charge of conditions of service during pendency of dispute etc.: Imprisonment upto 6 months or fine upto Rs. 1,000. [31]

Object Of The Act

To provide for fixing minimum rates of wages in certain employments

Minimum Rates Of Wages

• Such as Basic rates of wages etc.
• Variable DA and
• Value of other concession etc. etc. Sec.-4

Fixing Working Hours

• Normal working hours shall constitute a normal working day, inclusive of one or more specified intervals.
• To provide for a day of rest in every period of seven days with remuneration.
• To provide for payment for work on a day of rest at a rate not less than the overtime rate. Sec. 13

Overtime

• To be fixed by the hour, by the day or by such a longer wage-period works on any day in excess of the number of hours constituting a normal working day.
• Payment for every hour or for part of an hour so worked in excess at the overtime rate double of the ordinary rate of(11/2 times for agriculture labour) Sec. 14

Working For Less Than Normal Working Days

A worker, save as otherwise hereinafter provided, be entitled to receive wages in respect of work done by him on that day as if he had worked for a full normal working day. Sec.15

Fixation Of Minimum Rates Of Wages

The appropriate government to fix minimum rates of wages for the employees employed in para 1 or para B of Schedule either at 2 or part of notification u/s 27.
To make review at such intervals not exceeding five years the minimum rates or so fixed and revised the minimum rates.
Government can also fix Minimum Wages for

• Time Work
• Piece work at piece rate
• Piece work for the purpose of securing ot such employees on a time work basis
• Overtime work done by employees for piece work or time rate workers. Sec.3

Procedure

Procedure for fixing and revising Minimum Rates of Wages will be through:
Appointing Committee
Issue of Notification etc.
Sec.5

Payment For Minimum Wages

Employer to pay to every employee engaged in schedule employment at a rate not less than minimum rates of wages as fixed by Notification by not making deduction other than prescribed. Sec.12

Wages For Two Class Of Work

Where an employee does two or more classes of work to each of which a different minimum rate of wages is applicable, wages at not less than the minimum rate in respect of each such class be paid to him. Sec.16

Claims By Employees

Claims to be filed by employee, before the Authority constituted under the Act, within 6 months.
Compensation upto 10 times for under or non-payment of wages. Sec. 20

Compensation Of Committee

Representation of employer and employee in schedule employer in equal number and independent persons not exceeding 1/3rd or its total number one such person to be appointed by the Chairman. Sec.9

Maintenance Of Registers And Records

• Register of Fines - Form I Rule 21(4)
• Annual Returns - Form III Rule 21 (4-A)
• Register for Overtime - Form IV Rule 25
• Register of Wages - Form X,
• Wage slip - Form XI,
• Muster Roll - Form V Rule 26
• Representation of register - for three year Rule 26-A. Sec-18

Penal Provision

Imprisonment upto 6 months or with fine upto Rs.500:-

• - For paying less than minimum rates of wages.
• - For contravention of any provision pertaining to fixing hours for normal working day etc. Sec-20

Applicability

• Every factory wherein 10 or more persons are employed with the aid of power or
• An establishment in which 20 or more persons are employed without the aid of power on any day during an accounting year. Sec.1
• The Act not applicable to certain employees of LIC, General Insurance, Dock Yards, Red Cross, Universities & Educational Institution, Chambers of Commerce, Social Welfare Institutions, Building Contractors, etc.etc. Sec.32

Establishment

Establishment includes departments, undertakings and branches, etc. Sec.1
If profit and loss accounts are prepared and mainland in respect of any such department or undertaking or branch,then such department or undertaking or branch is treated as a separate establishment. Sec. 3

Eligibility Of Bonus

• An employee will be entitled only when he has worked for 30 working days in the subject year. Sec.8
• For the purpose of considering the minimun 30 working days, an employee shall be deemed to have worked, during the day/s of:(i)Lay Off, (ii) Leave with pay, (iii) Temporary disablement caused by accident in the course of employment, or(iv) Maternity leave.

Components of Bonus

Salary or wages includes dearness allowance but no other allowances e.g. over-time, house rent, incentive or commission. Sec.2(21)

Minimum Bonus

An establishment has to pay bonus @8.33% of the salary or Rs.100(on completion of 5 years in existence in business after 1st Accouting year, even if there is no profit).

Wage/Salary Ceiling

• Employees drawing wages upto Rs. 21000/- per month or less.
• However, for calculation purposes Rs.7000/- per month maximun will be considered for bonus calculation even if an employee is drawing upto Rs.10,000 per month.    Sec.12

Method Of Bonus Calculation

• 1. Calculate the gross profit profit in the manner specified in:-
• a. First Schedule, in case of a banking company, or
• b. Second Schedule, in any other case.
• 2. Available Surplus = A+B, where:-
  A = Gross Profit (–) Depreciation admissible u/s 32 of the Income tax Act (-) Development rebate or investment Development or Development allowance (-) Direct taxes payable for the accounting year(calculated as per Sec.7) (-) Sums specified in the Third Schedule.
  B = Direct Taxes (calculated as per Sec. 7) in respect of gross profits for the immediately preceding accounting year (–) Direct Taxes in respect of such gross profits as reduced by the amount of bonus, for the immediately preceding accounting year.
• 3. Calculate Allocable Surplus:-
  Allocable Surplus = 60%* of Available Surplus (67% in case of foreign companies).
• 4. Make adjustment for 'Set-on' and 'Set-off':- For calculating the amount of bonus in respect of an accounting year, Allocable surplus is computed after considering the amount of Set On and Set Off from the previous years, as illustrated in Fourth Schedule.
• 5. The allocable surplus so computed is distributed amongst the employees in proportion to salary or wages.

Maintenance of Registers and Records etc.

• Form A: A register showing the computation of the allocable surplus    clause (4) of section 2
• Form B: A register showing the set-on and set-off of the allocable surplus.     section 15
• Form C: A register showing the details of the amount of bonus due, the deductions, and the amount actually disbursed to each of the employees.    Sec.17 and 18.

Submission of Return

In Form D to the inspector within 30 days of the expiry of time limit.     Sec 19. Rule 5.

Disqualification and Deduction of Bonus

• On dismissal of an employee for fraud; or
• Riotous or violent behaviour while on the premises of the establishment;or
• Theft, misappropriation or sabotage of any property of the establishment; or
• Misconduct of causing financial loss to the employer to the extent that bonus can be deducted for that year.     Sec 9 & 18

Time Limit for Payment of Bonus

Within 8 months from the close of accounting year.    Sec 19

Penal Provision

For contravention of any provision of the Act or the Rules : Upto 6 months or with fine upto Rs.1000.    Sec 28

Applicability

Every factory, mine, oil field, plantation, port, railways, company, shop, establishment or educational institutions employing 10 or more persons, Sec - 1

Coverage

All employees Irrespective of status or salary shall be covered under this Act.

Eligibility

Gratuity shall be payable to an employee on separation from employment due to any of the following reasons, after he has rendered continuous service* for not less than five years:

• on his superannuation, or
• on his retirement / registration, or
• on his death or disablement due to accident or disease

Continuous Service

*Continuous Service means, that the employee shall be deemed to be in continuous service even under the following circunstances:

• If he has been laid-off
• If he has been on leave with full wages
• If he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
• In the case of a female, if she has been on maternity leave, however, that the total period of such maternity leave does not exceed twelve weeks.

Nomination

To be obtained by employer after expiry of one year's service, in Form 'F'. Sec.6, Rule 6

Method Of Calculation

General Calculation: Last drawn Basic (or Wages) [/] 26[x]15[x] Service Length, where: 26 is the no. of days assumed for a whole month, and 15 is the no. of days for which the payment is to be made, and Service Length is the no. of years of service(not less than 5 year) Sec.2(s)
Piece Rate Based Calculation: @15 days' wages for every completed year on an average of 3 months' wages.
Seasonal Based Calculation: @7 days' wages for every completed year of service.

Maximum Limit

Payment of Gratuity not to exceed Rs.20,00,000. Sec-4(3)

Mode of Payment

Cash or, if so desired, by beneficiary, by Bank Draft or Cheque. Rule-9

Display of Notice

On conspicuous place at the main entrance in English language or the language understood by majority of employees of factory, etc Rule-4

Protection of Gratuity

Can not be attached in execution of any decree. Sec-13

Recovery of Gratuity

Cancerned employee / beneficiary to apply within 30 days in Form-I when not paid by the employer within 30 days

Forfeiture

As per the provisions of the Act, Gratuity of an employee can be forfeited, if his services have been terminated for any act, willfull omission or negligence causing any damage or loss to, or destruction of, property belonging to the Company to the extent of damage or loss so caused.

Penal Provision

Imprisonment for 6 months or fine upto Rs.10,000 for avoiding to make payment by making false statement or representation
Imprisonment not less than 3 months and upto one year with fine on default in complying with the provisions of Act or Rules.