Shops and Establishments Act
- A State-specific legislation to regulate the terms of service and other conditions of work.
- Contains provisions for regulating the working hours, payment of wages, leave holidays in shops, commercial establishments, residential hotels, restaurants, theatres and other places of public amusement or entertainment.
- Every establishment covered by the Statute is required to register itself with the Inspector of the respective Shops and Establishments Authority within 30 days from the date of commencing its work.
- The Employees Provident Funds and Miscellaneous Provisions Act, 1952 (PF Act) applies to all factories or establishments employing twenty (20) or more persons.
- Compulsory registration after the number of employees reaches the prescribed limit.
- Voluntary coverage where the number of employees is less than 20.
- Employer is required to contribute a certain percentage of the salary, dearness allowance and retaining allowance of the employee, into the PF account.
- Employer’s responsibility to deduct employee s contribution and deposit it the PF account along with his own contribution. Failure to collect the employee s contribution would make the employer responsible.
- The employees drawing wages up to INR 15000 (INR Fifteen thousand only) per month arestatutorily entitled to the provident fund benefit under the PF Act.
Employee State Insurance
- The Employee State Insurance Act, 1948 (ESI Act) applies to all factories and establishments employing twenty (20) or more persons.
- Every factory or establishment to which this ESI Act applies shall be registered with the Regional Office within 15 days of the Act becoming so applicable.
Factories Act, 1948
- The Act is applicable where 10 or more persons are employed at a place in which a manufacturing process is carried on with the aid of power, or a place where 20 or more persons are employed at a place in which manufacturing process is carried on without the aid of power.
- Registration is required to be done as per the rules laid by the respective State governments in this regard.
- Professional Tax is levied by various States in India on the income earned by way of profession, trade, calling or employment.
- In case of salaried and wage earners, the liability to deduct Professional Tax is on the Employer and deposit the same with the respective State government. In case of other class of individuals, this tax is liable to be paid by the person himself.
- Every person liable to pay Professional Tax under the respective State legislation shall apply for Registration Certificate to the respective State’s tax department in the manner prescribed.
- In case of more than one place of work, registration has to be done separately with the respective jurisdictional authority.
- The Indian states which have enacted provisions for Professional Tax are Karnataka, West Bengal, Andhra Pradesh, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala,
- Meghalaya, Orissa, Tripura and Madhya Pradesh.
Employees State Insurance Policy
- The ESI Act, wherever applicable, provides for health care and cash benefit payments in the case of sickness, maternity and employment injury. It provides for need-based social insurance schemes that protect the interest of workers in contingencies such as sickness, maternity, temporary or permanent physical disablement, or death due to employment injury.
- The salary limit for eligible employees has been increased from 10,000 rupees to 15,000 rupees.
- The EPF Act provides for the institution of provident funds, family pension funds and deposit-linked insurance funds for the employees, which taken together provide old-age and survivorship benefits, long-term protection and security to the employee.
- The salary limit for employees covered by the EPF Act is 15,000 rupees.
- Contributions to the Fund are made by both employer and the employee and are administered by the Central Board of Trustees.
- An individual must be an employee to be a member of the Fund. Casual engagement is not‘employment’.
Provisions for International Workers in India
- Expatriates working in India are obligated to contribute toward the Indian provident fund systems unless they fall within the category of an “excluded employee.”
- In order to facilitate the balance of social contributions made by foreign expatriates deployed in India and by Indian nationals working in countries outside India, theGovernment of India has signed and is in the process of signing Social Security Agreements(SSAs) with different countries. SSAs have been signed between India and many othercountries; however, only Belgium, Germany, Luxembourg, France, Denmark, Korea,Netherlands, and Switzerland had ratified the agreements.
- The Government of India has imposed a limitation on the withdrawal of provident fundbalances by foreign expatriates. Under this limitation, foreign expatriates will be able towithdraw the accumulated provident fund balance only at the age of 58 years and not at theend of their employment in India. In certain circumstances, an earlier withdrawal may bepossible, such as the following:
- On retirement on account of permanent or total incapacity to work due to bodily ormental infirmity duly certified by a prescribed medical officer/registeredpractitioner;
- On suffering from tuberculosis, leprosy, or cancer, even if contracted after leaving theservice on grounds of illness; or
- Any of the grounds specified in the SSAs.
- Further, pursuant to the ratification of SSAs with Belgium, Germany, Luxembourg, France,Denmark, Korea, Netherlands, and Switzerland foreign expatriates from these countries areexempt from age 58 limitation.
Retrenchment and Termination
Retrenchment is the termination by the employer of the services of an individual worker or groups of workers (excluding mass terminations due to closure), for any reason whatsoever except for the following:
- As a punishment inflicted by way of disciplinary action,
- Voluntary retirement of the worker;
- Involuntary retirement of the worker on reaching the age of superannuation (mandatory retirement), if the contract of employment between the employer and the worker contains a stipulation specifying a mandatory retirement age;
- Termination of a worker as a result of the nonrenewal of the contract of employment between the employer and the worker upon its expiration or as a result of the contract of employment automatically terminating under a contractual stipulation to that effect;
- Termination of the service of a worker on the ground of continued ill health, or closure of a part or the whole of an undertaking.
There are no restrictions on retrenchment of workers whose continuous service with the current employer is of less than one year’s duration
In order to come under the purview of the IDA and to receive the benefits of IDA there under, the employee has to be a ‘workman’ which is defined as any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical and supervisory work for hire or reward, but does not include any such person who is employed mainly in a managerial or administrative capacity; who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees (INR 10,000) mensem or exercises, either by nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
For termination for any reason whatsoever, unless on grounds of misconduct, of every ‘workman’ who has been in continuous employment of the Company for 1 year or more, the employer has to comply with the following requirements:
- The employer must give one month’s notice to the workman indicating the reasons for termination, or payment in lieu of wages for the period of notice.
- The employer is required to give to retrenchment compensation to the workman. Such compensation is to be calculated at the rate of 15 days’ average pay for every completed year of continuous service or part thereof in excess of six months.
- A notice of such retrenchment shall also be given to the Central Government in the prescribed form, within three days of the date on which notice is served to the workman or date on which he is paid wages in lieu of such notice.