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Labour Laws

Employer is statutorily liable to comply with the provisions of:-

Provident Fund & Misc. Provisions Act, 1952,


Employees State Insurance Act, 1948,
The Maharashtra Labour Welfare Fund Act, 1953,
The Maternity Benefits Act, 1961,
The Payment of Bonus Act, 1965,
The Payment of Gratuity Act, 1972.
& other relevant Labour Acts.....

The ProvidenT Fund & Misc. Provisions AcT, 1952

Applicability -

PF Act is applicable to all establishments employing more than 20


employees. In case the Principal employer is covered under the said Act
then the contractor is also coverable irrespective of the number of
employees employed by the contractor.

Any establishment employing even less than 20 persons can be covered


voluntarily under section 1(4) of the Act.

The PF payments have to be made before 15th of every month

Benefits to Employer-

Employer gets tax benefits and relief from Non-compliance and other issues
relating to Workmens Compensation Act. He also becomes a good employer
covering workmen under Social Security Schemes.

Benefits to Employee
EPFO guarantees the Employer contribution and credits interest at such
rates as determined by the Central Government.

Member can withdraw from his accumulations to cater to financial


exigencies in life No need to refund unless misused.

On resignation member can settle the account i.e., the member gets his PF
contribution, Employer Contribution and Interest.

Withdrawal Benefits

Member can withdraw from this accumulations to cater to financial exigencies in life - No
need to refund unless misused.
A member employee can also withdraw full amount standing to his credit. in fund On Resignation.
On Retirement from service on attaining the age of 55 yrs.
On Retirement on account for permanent or total incapacity to work.

Immediately before Migration from India for permanent settlement abroad or


for taking up employment abroad.
On Termination due to voluntary retirement scheme, retrenchment, closure
of the factory/establishment.

On resignation, the member can settle the account. i.e., the member gets his PF
contribution, Employer Contribution and Interest.

If not eligible for pension, member may withdraw the amount accumulated in his
pension account
The calculation of this amount is based only on (i) Last average salary and (ii)
Service

Pension Benefits
1. Pension to Member
2. Pension to Family (on death of member)
3. Scheme Certificate
Death Case (Help to dependents)
1.
2.
3.
4.

Provident Fund Amount to Family (or to Nominee)


Pension to Family (or to Parent / Nominee)
Capital Return of Pension
Insurance (EDLI) amount to Family (or to Nominee) (Not based on actual amount
available in Pension Fund Account)

Benefits under Employees Provident Funds Scheme


1.
2.
3.
4.

Advance
Advance
Advance
Advance

for
for
for
for

5. Advance for

6. Advance for
7. Advance for
8. Advance for
9. Advance for
10. Advance for

Purchase of Dwelling Site.


Purchase of a Dwelling House/Flat.
Construction of a House.
Repayment of a housing loan to state government housing board
or any other government recognized housing finance body.
Illness viz. Hospitalization for more than a month, major surgical
operations or Suffering from T.B. leprosy, paralysis, cancer, heart
ailment etc.
Marriage of Self/Son/Daughter/Sister/Brother.
Post Matriculation Education of Son/Daughter.
Damage to the property Due to Natural Calamity
(Flood/Riot/Earthquake).
Member affected by cut in the supply of Electricity.
Member who is physically handicapped.

Every employee is entitled to receive PF slips within six months of the end of the
financial year.

Now employee can get E-passbook which is like our Bank passbook contains
history of payments & Interest.

ExemptionExemption for those employers who providing better benefits than what is provided
under provisions of EPF & MP Act and scheme thereunder.

Penalties

Liable to be arrested without warrants being a cognizable offence.

Defaults by employer in paying contributions or inspection/administrative


charges attract imprisonment upto 3 years and fines upto Rs. 10,000.00

For any retrospective application, all dues have to be paid by employer with
damages upto 100% of arrears.

EmployEEs statE InsurancE act, 1948

Applicability

a) All factories excluding seasonal factories employing 10 or more persons.


b) Any establishment which the Government may specifically notify as
being covered.
c) Shops employing 20 or more persons.

Once Act applies, it continues to apply even if employment strength falls


below 10 or 20.

Section

2(9)

'employee'

under

ESI

means

any

person

who

is

engaged/employed for wages/salary in connection with the work of the


establishment to which this Act applies. But does not include any person
whose wages (Excluding OT, LTA, Bonus and any payments which are
made once in more than a quarter.) exceed the limit prescribed by
the Central Govt. (Which is 15000/- pm with effect from 01 May
2010).

In case the principal employer is covered under the Act the Contractors
would be automatically covered

As far as ESIC is concerned, there are certain areas where ESIC Act is
implemented and certain areas where it is not implemented due to lack
of infrastructure facilities.In such cases, we need to take Workmen
Compensation Policy
Where ESIC is applicable, we need to ensure that all workmen covered in
the Act are issued with ESIC cards by filing ESIC declaration forms. This
needs to be done within 10 days from the date of joining.

The benefit under the ESIC Act is also extended to families. All
employees who have remitted minimum 9 months contributions are
entitled for any type of surgeries and other medical benefits to any of
their dependant family members. In case the ESI hospitals are ill
equipped to perform the surgeries then the patient is recommended to
Private Hospitals.

ESIC deductions
Employees Contribution- 1.75%
Employers Contribution- 4.75%

Benefits to Employee

a) Free medical treatment is offered to covered employees at dispensaries and


hospital run by ESI Corporation & Tie-up hospitals.
b) About 7/12th of employees normal wage will be payable to him by ESI
during sickness.
c) Cash Benefits Reimbursement of 70% of salary.
d) Accident cases- Reimbursement of 90% of salary.
e) Maternity benefit for 12 weeks of which not more than 6 weeks should be
preceding confinement.
f) Injury during/in course of employment resulting in temporary/permanent
disablement entitles the covered employee to a regular payment to
substitute his lost wages.
g) Death during course of employment entitles specified dependents to a
regular payment.
h) Life time pension to the widow & dependant children can get benefits upto
age of 25.
i) One time payment of Rs.10000/- to help meet funeral expenses.
j) Rajiv Gandhi Shramik Kalyan Yojna (Unemployment of the IPs who have
been rendered unemployed involuntarily due to closure of factory/
establishment /retrenchment or permanent disablement)
k) Vocational Rehabilitation Scheme (applicable to IPs in whose case loss of
earning capacity resulting from employment injury, assessed as not less
than 40%)
l) Insured person can avail cashless treatment in the hospitals referred by ESI
Hospital.
m) Medical benefit to IPs who have opted for VRS or superannuated.

Penal Provision for non-payment-

The ESIC deductions and payments have to be made on time and the last
date of payment is 21st of every month

If delay for one day 12% p.a. Interest will be levied.


If delay for up to 2 months penalty 5 % (Including 12% p.a. Interest.)
Delay of 2 to 4 months- 10% Damages + 12% Interest
Delay of 4 to 6 months- 15% Damages + 12% Interest
More than 6 months

- 25% Damages + 12% Interest

For Non-Payment of employees contribution: Imprisonment for 1 yrs. to


max. 3yrs. and /or fine of Rs.10000/For Non-Payment of employers contribution: Imprisonment for 6 months.
to max. 3yrs. and /or fine of Rs.5000/Subsequent offence after previous conviction - Five years imprisonment and
not less to 2 years and shall also be liable to fine of twenty- five thousand
rupees
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

The PaymenT of GraTuiTy acT, 1972.

Applicability

1. Every factory (as defined under Factories Act)


2. Every shop or establishment to which Shops & Establishment Act of a State
applies in which 10 or more persons are employed at any time during the
year and,
3. Any establishment employing 10 or more persons as may be notified by the
Central Government.
4. Once Act applies, it continues to apply even if employment strength falls
below 10.

Benefits to Employee1) The quantum of gratuity is to be computed at the rate of 15 days wages (7
days wages in case of seasonal establishments) based on rate of wages last
drawn by the employee concerned for every completed year of service or a
part thereof exceeding 6 month.
2) The total amount of gratuity payable shall not exceed the prescribed limit.
3) In case where higher benefit is available under any gratuity Scheme of the
company, the employee will be entitled to higher benefit.

Exemption

For the purpose of exemption of gratuity under sec.10 (10) the employees are
divided under three categories:
1. Any death cum retirement gratuity received by Central and State Govt.
employees, Defense employees and employees in Local authority
shall be exempt.

2. Any gratuity received by persons covered under the Payment of


Gratuity Act, 1972 shall be exempt subject to following limits:-

For every completed year of service or part thereof, gratuity shall


be paid at the rate of fifteen days wages based on the rate of wages
last drawn by the concerned employee.

The amount of gratuity as calculated above shall not exceed Rs.


10,00,000/-

3. In case of any other employee, gratuity received shall be exempt from


Income Tax Act,1961, subject to the following exemptions
o

Exemption shall be limited to half month salary (based on last 10


months average) for each completed year of service or Rs. 10 Lakhs
whichever is less.

Penalties if not followed

Non-payment

of

Gratuity

payable

under

the

Act

is

punishable

with

imprisonment up to 2 years (Minimum 6 months) and/or fine up to Rs.


20,000/-. Other contravention/offenses attract imprisonment up to 1 year
and/or fine up to Rs. 10,000.

Payment of Bonus Act, 1965

Applicability
The Act is applicable to:

Every factory ,
Every other establishment in which 20 or more persons (less than 20
but 10 or more if appropriate govt. notifies ) are employed on any day
subject to certain exemptions.
Employees drawing remuneration of Rs 10,000/- or more and those
who have worked for less than 30days are not eligible to receive
bonus under the act.(salary limit of Rs 3,500/- enhanced to Rs
10,000/- w.e.f. 1-4-2006)

Bonus to be paid within 8 months from the expiry of the accounting


year.

Registers to be maintained A, B and C registers.

The Government can, however, apply the Act to any establishment employing less
than 20 but not less than 10 persons. In Maharashtra, act is applicable to
establishments employing 10 or more employees.
An establishment to which the Act applies shall continue to be governed by the Act
irrespective of any fall in the number of persons employed therein.

Benefits to Employee

a) Subject to other provisions:-minimum bonus shall be 8.33% of salary/wages


earned or Rs 100 whichever is higher.
b) If allocable surplus exceeds the amount of minimum bonus, then bonus
shall be payable at higher rate subject to a maximum 20% of salary/wages
c) Payment of bonus exceeding Rs 3,000/- to be paid by cheque only in
Maharashtra state.

ExemptionTrainee/Apprentice get stipend hence they are not entitled for Bonus.

Penal provisions

For contravention of the provisions of the Act or rules the penalty is imprisonment
up to 6 months or fine up to Rs.1000, or both.
For failure to comply with the directions or requisitions made the penalty is
imprisonment up to 6 months or fine up to Rs.1000, or both.
In case of offences by companies, firms, body corporate or association of
individuals, its director, partner or a principal officer responsible for the conduct of
its business, as the case may be, shall be deemed to be guilty of that offence and
punished accordingly, unless the person concerned proves that the offence was
committed without his knowledge or that he exercised all due diligence.

The Maharashtra state Welfare fund Act, 1953

The Maharashtra Labour Welfare Fund Act, 1953 provides for the constitution of a
fund for the financing of activities to promote welfare of labour in the state of
Maharahstra.

Applicability
Any establishment which is covered under the Bombay Shops and Establishments
Act, 1948 or employs at least 5 employees is required to make bi-annual
contributions in the months of June and December every year to the Maharashtra
Labour Welfare Fund with respect to each of its employees including contract
laborers except those employed in managerial capacity or supervisory role drawing
monthly salary of more than Rs. 3,500/-.

Benefits to Employee

These funds are considered as fringe benefits since they are offered through
collective contribution which is supported by employee, employer who contributes
three-times of the amount contributed by the employee and the state government.

Dues and penalty


Any dues under this act are treated as land revenue due to the state government.
If an employer is not paying contributions due to the Board, the commissioner will
issue a notice to pay the dues. If the employer fails to pay despite notice, interest
will be charged on the dues. If the employer does not deduct employees
contribution in a timely manner, employer may have to pay it himself. There is no
provision for imprisonment in the statute.

The MaTerniTy BenefiTs acT, 1961

Applicability

It applies to every establishment being a factory, mine or plantation


including any such establishment belonging to Government and to every
establishment

wherein

persons

are

employed

for

the

exhibition

of

equestrian, acrobatic and other performances;

It also applies to every shop or establishment within the meaning of any law
for the time being in force in relation to shops and establishments in a
State, in which 10 or more persons are or were employed on any day of the
preceding 12 months;

Maternity Benefit Act, 1961 is not applicable on any factory or other


establishment to which the provisions of ESI Act, 1948 apply.

Benefits to Employee

An women employee is entitled for payment of maternity benefit at the rate


of average daily wage for the period of her actual absence i.e. period
preceding the day of her delivery, the actual day of her delivery and any
period immediately following that day, subject to maximum of 12 weeks and
additional 1 month for illness arising out of pregnancy.

Even unmarried women can avail benefit As there is not given in Act, the
women should be married. So to protect her motherhood she should be
granted benefits.

Penalties if not followed

If any employer contravenes the provisions of this Act or the rules made there
under he shall be punishable with imprisonment which may extend to one year or
with fine which may extend to five hundred rupees, or with both; and where the
contravention is of any provision regarding maternity benefit or regarding payment
of any other amount and such maternity benefit or amount has not already been
recovered, the court shall in addition recover such maternity benefit or amount as
if it were a fine, and pay the same to the person entitled thereto.

The MaharashTra Profession Tax acT, 1975.

Applicability

In Maharashtra, this duty is applicable both on individuals and companies as laid


down by the guidelines of the Maharashtra Professional Tax Act of 1975.
The Maharashtra State Tax on Professions, Trades, Callings and Employments
Act, 1975 (Profession Tax Act) has come into operation from 1-4-1975. The
purpose is to collect revenue for the purpose of implementing Employment
Guarantee Scheme.
Every individual living in Maharashtra, involved in any business, profession,
occupation or employment is legally responsible to pay it and has to get a
Certificate of Enrolment from the Professional Authority.

Exemption Employee who is earning below Rs.5000/- or who is a senior citizen is exempted
from paying profession tax. And also i)
ii)
iii)
iv)

Person suffering from a permanent physical disability


Parents of mentally retarded child.
Parents of a child suffering from a physical disability.
Persons who have completed the age of 65 years.

Are exempted

Penalties if not followed

Default in payment of profession tax attracts for fines from an individual. The
severity of the penalty differs with the aim of a person to dodge PT.

Where an individual furnishes false details about his registration, penalty


can be three times the amount payable.

If an individual postpones in getting the registration certificate, he will be


responsible to pay a penalty @Rs. 2 per day till such postponement is
ceased.

If an individual fails to make the payment of any professional tax, he will be


asked to pay a fine, which is tantamount to 10 times of the amount of tax.

Detailed information as under:-

Penalties and Interest

Penalty for "late application" for enrolment/registration -The prescribed


authority may impose penalty of Rs. 5/- for each day of delay in case of an
employer for registration and of Rs. 2 /-for each day of delay in case of any
person for enrolment, after giving a reasonable opportunity of hearing.

Penalty

for

giving

"False

information

in

any

application"

for

enrolment/registration - The authority may impose penalty equal to 3


times the tax payable under the Act, after giving hearing opportunity.

Penalty for "late filling of returns" by Employer- The Employer have to


pay penalty of

Rs.1000/- per return before filling delayed return as the

return can not be accepted without paid challans number.

Penalty

for

"Non-payment

or

late

payment

of

tax."

by

Enrollee/Employer - The authority may impose a penalty equal to 10% of


the tax due.

Interest on late payment of tax. -The interest for late payment of tax or
any additional demand of tax raised in assessment is 1.25% p.m. with effect
from 1-7-2004 (2% p.m. up to 30-6-2004.)

Interest on refund of excess payment of tax -If any refund is due from
any order in respect of period 1.4.2004 and onwards then interest on refund
@ 6% p.a. is receivable by such person entitled to refund, for maximum 18
months.

THANK YOU.

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