Employment Law Alert - September 2022

• Date: 28-Sep-2022
• Post in: Employment

Editor's Note

We at Singhania & Partners LLP, have always strived to keep our viewers up to date on the current legal situation across the country, as well as the most recent happenings that you should not miss. With the hope of accomplishing this goal, we present to you our most recent compilation of Employment Laws in India.

Our Employment Law Alert, which serves as your one-stop-shop for a monthly dose of employment law scenarios from across the country will provide you with the most important recent circulars issued by the central government and different states pertaining to employment law. It is also a healthy mix of recent Supreme Court and High Court decisions that answers a significant question of law.

From the case of Sabu M. Jacob v. The State of Kerala & Anr which talks about the prosecution of a director to Rubber Wood India Pvt Ltd & Ors v. Manojkumar P.S. & Ors. and Rubber Board v. Manojkumar P.S. & Ors  we have covered it all for you.

We hope you find our efforts useful and knowledgeable. Happy reading!

1. Central Notifications

1. Clarification regarding the determination of eligible service for the settlement of Pension claims related to workers of seasonal factories/establishments

The EPFO has issued a notification dated vide notification No.PenII/6556/clarification on 17th August 2022 that amends Section 9(A) of the Employees Pension Scheme for the determination of the settlement of pension claims to workers of seasonal factories and establishments.

It states that the contributory service for new entrants will be treated as eligible service, rounded off to the nearest year. In seasonal establishments operational for four months, for instance, if an employee has contributed for all four months, it shall be treated as a full year.

2. Pension Fund Regulatory and Development Authority (PFRDA) bans Credit Card Payments for Tier II National Pension System (NPS) Account

According to the PFRDA circular issued on August 3, the authority has decided to stop the facility of payment of subscriptions/contributions using credit card as a mode of payment in the Tier-II account of NPS. Accordingly, all Points of Presence (PoPs) have been advised to stop the acceptance of credit cards as a mode of payment for the Tier-II account of NPS with immediate effect.

PFRDA issued this circular exercising the powers it has been conferred under Section 14 of the Pension Fund Regulatory and Development Authority Act, 2013 to protect the interest of subscribers and to regulate, promote and ensure orderly growth of the National Pension System and pension schemes.

2. State notifications

1. Amendment in Kerala Shops and Commercial Establishments Rules, 1961

The Government of Kerala on August 02, 2022 has issued the Kerala Shops and Commercial Establishments (Amendment) Rules, 2022 vide notification No. G.O.(P) No.78/2022/LBR. to further amend the Kerala Shops and Commercial Establishments Rules, 1961.

Rule 2E, which provided for the issuance of duplicate registration certificates, Rule 2G(3), which provided for obtaining a duplicate copy of the registration certificate, and Rule 12A, which provided for the submission of returns under the said rules, were all omitted as a result of the amendment.

2. Conditions for employing women in factories during the night shifts in the state of Himachal Pradesh.

The government of Himachal Pradesh vide notification number Shram (A)3-4/2022 dated August 12, 2022, listed the conditions for employing women in factories during night shifts i.e. from 07.00 P.M. to 06.00 A.M to ensure the safety, security and safeguard the interest of women.

To name a few conditions, women must not be forced to work at night without her consent, employers must ensure compliance with the Maternity Benefit Act of 1961, and employers must provide appropriate medical facilities and proper lighting.

3. Standard Operating Procedure (SOP) to settle claims in case of death due to Industrial accidents

The Employees’ Provident Fund Organisation (“EPFO”), Ministry of Labour and Employment, vide circular no. GJ/AHD/EPF/RPFC-II/SOP dated August 3, 2022 has issued an SOP for settlement of PF Claims in the case of the death of an employee due to Industrial Accidents. This SOP directs processes and procedures to provide benefits to family members of the deceased.

According to the SOP, all the establishments have been requested to report industrial death immediately to the EPFO with full particulars and failing to adhere such would be treated as a violation under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (“EPF Act”) and other schemes and shall be liable for action as per law.

The family member or nominee or legal heir of the deceased provident fund member will receive a number of benefits as per the provision of The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 which includes (Employees Provident Fund) EPF accumulation in their EPF account, (The Employees' Deposit Linked Insurance Scheme) EDLI benefits, monthly family pension, monthly children pension, and so on.

Judgements

1. Any of the director in control of the factory can be prosecuted, if no intimation or nomination is done: Supreme Court

Supreme Court in Sabu M. Jacob v. The State of Kerala & Anr^[1]., declined to entertain Special Leave Petition (SLP) filed against the judgment of the Kerala High Court wherein the Kerala High Court dismissed the contentions put forward by the Managing Director that prosecution contemplated under Section 92 of the Factories Act, 1948 (“Factories Act”) is against the ‘occupier’ of the premises and in the absence of any specific documents indicating the same, the petitioner who is the Managing Director of the Company, cannot be treated as an occupier.

The High Court observed that question as to whether the Managing Director was the occupier even in terms of deeming provision, is a matter to be adjudicated at the time of trial and after evaluating the evidence adduced since the deeming provision as contemplated under section 2(n) of the Factories Act, 1948 is confined to only one of the directors, which would indicate that, the director who is in control of the factory shall be held responsible as an occupier and therefore, in the absence of any nomination or intimation to the contrary, any of the directors can be prosecuted for the offences.

2. If an injury or disease is caused incidentally to a workman during the performance of his duty, the workman compensation award must reflect that finding: Andhra Pradesh High Court

The Andhra Pradesh High Court in the case of The New India Assurance Company Ltd. v. Smt. M. Lakshmi Ramateertham^[2] made the observation that the labour commissioner in an award under the Workmen Compensation Act, 1923, has to make a specific finding on whether the employee's injury was caused by an accident occurring during and as a result of employment or if the employee had contracted any occupational disease specific to that employment.

Brief Facts

• The appeal has been filed under Section 30 of the Workmen's Compensation Act, 1923 (WCA, 1923 ) by New India Assurance Company Limited challenging the award of the Commissioner allowing compensation.
• The husband of the 1st respondent died in 2005. The respondents filed for Workmen Compensation claiming compensation against the lorry driver and the New India Assurance Company on the ground that the husband while discharging his duties as driver in the course of employment suffered stomach pain and was shifted to hospital where he died.
• The lorry driver admitted the case of the claimants and submitted that on the date of incident the vehicle was insured with the appellant and the policy was in force.
• The Commissioner passed an award allowing workmen compensation for an amount of Rs. 3,33,034/-.

Issues involved

1. Whether the order of the Commissioner was correct in view of the law laid down that the disease suffered by the workman should be related to the work done by him?

2. Whether the order of the Commissioner is correct when the disease suffered by the workman does not fall under occupational disease as specified in Schedule III of Workmen's Compensation Act, 1923 (WCA, 1923 )?

Finding of the Court

The disease, stomach pain suffered by the workman did not relate to the work done by him. The postmortem report showed that the workman was suffering from chronic "Idiopathic Inflammatory Bowel disease". Furthermore, the said disease did not fall under occupational disease.

A bare perusal of Sections 3(1) and 3(2) of the WCA, 1923 make it clear that employer's liability to pay compensation to the employee arises if the personal injury is caused to the employee by accident arising out of and in the course of employment or if the employee contracts any occupational disease peculiar to that employment.

Judgment cited

The Court relied on the Supreme Court judgment in Mackinnon Machenzie and Co. v. Ibrahim Mahmmed Issak^[3]in which it was held that in case of accident, "the burden of proof rests upon the workman to prove that the injury has resulted from some risk incidental to the duties of the service, which unless engaged in the duty owing to the master it is reasonable to believe the workman would not otherwise have suffered. There must be a causal relationship between the accident and the employment."

Judgment

It was noted from the current award that the Commissioner had not specifically determined in the order whether the injury had occurred during or as a result of employment. The Commissioner, according to the court, had not framed any questions or addressed the crucial concerns in his ruling. The specifics of the claim's acceptance were not stated.

Hence, as a result, the appeal was granted, and the Commissioner has been asked to re-evaluate the case.

3. Employees who agree to contractual engagement are not permitted to later pursue benefits under section 25F of the Industrial Disputes Act, 1947: Gujarat High Court

In the case of Rasmilaben R. Thakker v. IndexT/C Industrial Extension, the Gujarat High Court ruled that the petitioner cannot be considered retrenched under section 25F of the Industrial Disputes Act, 1947 ("ID Act") upon expiry of her contractually agreed fixed term, and hence was not entitled to the retrenchment payment compensation. The court further mentioned that under the ID Act, temporary employees of an establishment are not entitled to the same advantages as permanent employees.

The Gujarat HC affirmed the findings of labour court in which the court has relied upon the Supreme Court’s decision of State of Karnataka and Others vs. Uma Devi^[4], in which the Supreme Court ruled that backdoor entries were not permitted without due procedure and that temporary employees could not receive the same benefits as permanent employees of the establishment. Thus, The High Court refused to dismiss the impugned order, stating that the Petitioner had signed the consent letter for the one-year appointment and that the Labour Court had issued a well-reasoned order.

Hence, the petition was dismissed.

4. Continuity of service with back wages can be directed in cases where the retrenchment was not bona fide: Supreme Court.

Reiterating the principle that the continuity of service with order of back wages (as per the Tribunal/Court of law) can be directed in cases where the retrenchment is not bona fide and has been set aside, the Supreme Court of India in the case of Armed Forces Ex Officers Multi Services Cooperative Society Ltd v. Rashtriya Mazdoor Sangh (INTUC)^[5] upheld the order of the Bombay High Court and the Industrial Tribunal. Retrenched workers may be given re-employment on new terms and conditions in cases when the layoff was genuine and they will not be entitled to continued employment.

• Armed Forces Ex Officers Multi Services Cooperative Society Ltd retrenched the services of 55 workmen, on the grounds that it had closed its business.
• Retrenchment compensation as per Section 25F of the Industrial Disputes Act, 1947 (“ID Act”), was also offered.

The Supreme Court affirmed the lower court's decision that the retrenchment appeared to be imposed as retaliation against the workers for participating in a strike and was therefore not legitimate.

As a result, it was decided that the instruction to restore with continuity of service and back pay was reasonable.

5. Shareholders cannot be impleaded independently as party in adjudication of disputes between employers and workmen: Kerala High Court

The Kerala High Court has made it clear in the case of Rubber Wood India Pvt Ltd & Ors v. Manojkumar P.S. & Ors. and Rubber Board v. Manojkumar P.S. & Ors^[6] that the shareholder of a company cannot be made an independent party in a dispute between the company and its workmen.

The observation was made in connec tion with a dispute between Rubber Wood India Pvt Ltd and its workmen, whereby the Rubber Board, being a shareholder of the company, was arrayed as a party Respondent by the workmen.

The Court held that the company, established under Central legislation namely Rubber Act, 1947, is an instrumentality of the Central Government, and accordingly the dispute falls under Section 10(2A)(1)(d) of the Industrial Disputes Act, 1947. It added that since the Rubber Board was only a shareholder in the said company, it could not be impleaded as a party in adjudication of a dispute between the workmen and their employers in relation to management of the Company.

"It is settled law that the Government is not denuded from running a company holding majority of the shareholder. But the shareholder independently cannot be made a party for adjudication of the lis", it was observed.