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The project report consists of various labor laws that are practiced in different industries.
Industrial Relations involve the collective relation between employees, employers and the
government and its laws. Good industrial relations means harmonious relationships between
employees and employers and bad industrial relations indicate militant strikes from employees
and assertive lockouts from employers. 
Besides employers and employees, governments and institutional bodies have also become
relevant actors in the Industrial Relations, with the aim to define policies related to new labors
related problems.
New information and communication technologies and their particular characters determine deep
changes in industrial organization and, in particular, in work organization. Relevant
consequences are arising with regard to traditional content of Industrial Relations, such as
professional skills, future career perspectives, work satisfaction, working time, etc.
The role of public authorities is to broaden the range of choices, eliminating constraints and,
sometimes, to guarantee procedures. In addition, old tools of unionist bargaining have to be
updated and to assume a different character, trying to improve worker's autonomy. At a general
level, it emerges a need of a more consistent industrial democracy in a socio-economic
framework continuously evolving towards the so-called globalization.
This report has its emphasis on acts such as ESI act 1948, PF act 1952 and Gratuity act 1972
along with the newly amended version of ESI act 2010
















INDEX

SR NO . PARTICULARS PAGE NO.

1 Introduction

2 Objectives, overview, history

3 Theoretical perspective

4 Labor laws & Indian labor laws

5 Employee state insurance act 1948

6 Employee state insurance act 2010

7 Provident fund act 1952

8 Gratuity act 1972

9 Conclusion

10 Case studies




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rp To understand the different labor laws and its practices
rp To know how to make Industrial Relations more effective.
rp To understand how to make the best use of distinctive competencies of employees.
rp To understand various problem arising in industries and provide solutions to it.





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The study is conducted to obtain detailed information about Industrial Relation.

Research is more of descriptive research. Purpose of the research is to bring out facts that will
prove that Industrial Relations can be used to improve the services of the employees working in
industries in many ways. Employees look for better amenities from his employer. Any
unnecessary delay in payment of say wages, remuneration or any compensation in any
department or improper treatment of employees will dissatisfy the employees.

The significance of this project is to study the effectiveness of Industrial Relations in industries.
This research will be useful for all the industries in implementing various labor laws effectively
and development of present situation based on the research.

The data is collected to achieve above-mentioned objectives. This data is collected as:

Secondary data:
Published Material
Magazines
Internet Search





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I owe a great many thanks to a great many people who helped and supported me for preparing
this project report. My deepest thanks to Lecturer, [prof. Abhishek Nikam] the Guide of the
project for guiding and correcting various documents of mine with attention and care. He has
taken pain to go through the project and make necessary correction as and when needed. I
express my thanks to the Principal of, [NKTT COLLEGE OF ARTS AND COMMERCE], for
extending his support. I would also thank my Institution and my faculty members without whom
this project would have been a distant reality. I also thank the library and our librarian for
helping me with various books as and when needed. I also extend my heartfelt thanks to my
family and well wishers.






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"Industrial relations" pose one of the most delicate and complex problems to modern industrial
society. With growing prosperity and rising wages, workers have achieved a high standard of
living; they have acquired education, sophistication and great mobility. Career patterns have
changed, for larger sections of the people have been constrained to leave their farms to become
wage-earners and salary earners in urban areas under trying conditions of work. Ignorant and
drenched in poverty, vast masses of men, women and children have migrated to few urban areas.
The organizations in which they are employed have ceased to be individually owned and have
become corporate enterprises. At the same time, however, a progressive, status-dominated,
secondary group-oriented, universalistic, aspirant, and sophisticated class of workers has come
into being, who have their own trade unions, and who have thus gained a bargaining power
which enables them to give a tough fight to their employers to establish their rights in the
growing industrial society. As a result, the government has stepped in and plays an important
role in establishing harmonious industrial relations, partly because it has itself become an
employer of millions of industrial workers, but mainly because it has enacted a vast body of
legislation to ensure that rights of industrial workers in private enterprises are suitably
safeguarded.
Besides, rapid changes have taken place in the techniques and methods of production. Long-
established jobs have disappeared, and new employment opportunities have been created, which
call for different patterns of experience and technical education. Labor employer relationships
have, therefore, become more complex than they were in the past, and have been given a sharp
edge because of sharp labor unrest.
Hence such circumstances and conditions led to the existence of industrial relations.

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"Industrial relations" refer to a dynamic and developing concept which is not limited to "the
complex of relation between trade unions and management but also refer to the general web of
relationships normally obtaining between employers and employees - a web much more complex
than the simple concept of labor capital conflict."
"Industrial relations are an integral aspect of social relations arising out of employer-employee
interaction in modern industries, which are regulated by the State in varying degrees, in
conjunctions with organized social forces and influenced by the existing intuitions. This involves
the study of the state, the legal system, and the workers' and employers' organizations at the
institutional level; and of the patterns of industrial organization (including management), capital
structure (including technology), and compensation of the labor force and a study of market
forces - all at the economical level."

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In addition to the primary objective of bringing about good and healthy relations between
employers and employees, industrial relations are designed:
rp To safeguard the interest of labor and of management by securing the highest level of
mutual understanding and goodwill among all those sections in the industry which
participate in the process of production;
rp To avoid industrial conflict and develop harmonious relations, which are an essential
factor of productivity of workers and the industrial progress of a country;
rp To raise productivity to a higher level in an era of full employment by lessening the
tendency to high turnover and frequent absenteeism;
rp To establish and nurse the growth of an Industrial Democracy based on labor partnership
in the sharing of profits and of managerial decisions, so that an individual's personality
may grow to its full stature for the benefit of the industry and of the country as well;
rp To eliminate, as far as possible and practicable, strikes, lockouts and gehraos by
providing reasonable wages, improved living and working conditions, and fringe
benefits;
rp To establish government control of such plants and units as are running at a loss or in
which production has to be regulated in the public interest.


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Industrial relations is a multidisciplinary field that studies the employment relationship.
Industrial relations is increasingly being called employment relations because of the importance
of non-industrial employment relationships. Many outsiders also equate industrial relations to
labor relations and believe that industrial relations only studies unionized employment situations,
but this is an oversimplification.
Industrial relations have three faces: science building, problem solving, and ethical. In the
science building face, industrial relations is part of the social sciences, and it seeks to understand
the employment relationship and its institutions through high-quality, rigorous research. In this
vein, industrial relations scholarship intersects with scholarship in labor economics, industrial
sociology, labor and social history, human resource management, political science, law, and
other areas. In the problem solving face, industrial relations seeks to design policies and
institutions to help the employment relationship work better. In the ethical face, industrial
relations contain strong normative principles about workers and the employment relationship,
especially the rejection of treating labor as a commodity in favor of seeing workers as human
beings in democratic communities entitled to human rights.
"The term human relation refers to the whole field of relationship that exists because of the
necessary collaboration of men and women in the employment process of modern industry."It is
that part of management which is concerned with the management of enterprise -whether
machine operator, skilled worker or manager. It deals with either the relationship between the
state and employers and workers organization or the relation between the occupational
organizations themselves.





Industrial relations has its roots in the industrial revolution which created the modern
employment relationship by spawning free labor markets and large-scale industrial organizations
with thousands of wage workers. As society wrestled with these massive economic and social
changes, labor problems arose. Low wages, long working hours, monotonous and dangerous
work, and abusive supervisory practices led to high employee turnover, violent strikes, and the
threat of social instability. Intellectually, industrial relations was formed at the end of the 19th
century as a middle ground between classical economics and Marxism, with Sidney Webb and
Beatrice Webb¶s Industrial Democracy (1897) being the key intellectual work.

Institutionally, industrial relations was founded by John R. Commons when he created the first
academic industrial relations program at the University of Wisconsin in 1920. Early financial
support for the field came from John D. Rockefeller, Jr. who supported progressive labor-
management relations in the aftermath of the bloody strike at a Rockefeller-owned coal mine in
Colorado. In Britain, another progressive industrialist, Montague Burton, endowed chairs in
industrial relations at Leeds, Cardiff and Cambridge in 1930, and the discipline was formalized
in the 1950s with the formation of the Oxford School by Allan Flanders and Hugh Clegg.

Industrial relations was formed with a strong problem-solving orientation that rejected both the
classical economists¶ laissez faire solutions to labor problems and the Marxist solution of class
revolution. It is this approach that underlies the

New Deal legislation in the United States, such as the National Labor Relations Act and the Fair
Labor Standards Act.
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Industrial relations scholars have described three major theoretical perspectives or frameworks
that contrast in their understanding and analysis of workplace relations. The three views are
generally known as unitarism, pluralist and radical. Each offers a particular perception of
workplace relations and will therefore interpret such events as workplace conflict, the role of
unions and job regulations vary differently. The radical perspective is sometimes referred to as
the "conflict model", although this is somewhat ambiguous, as pluralism also tends to see
conflict as inherent in workplaces. Radical theories are strongly identified with Marxist theories.

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In unitarism, the organization is perceived as an integrated and harmonious whole with the ideal
of "one happy family", where management and other members of the staff all share a common
purpose, emphasizing mutual cooperation. Furthermore, unitarism has a paternalistic approach
where it demands loyalty of all employees, being predominantly managerial in its emphasis and
application.
Consequently, trade unions are deemed as unnecessary since the loyalty between employees and
organizations are considered mutually exclusive, where there can't be two sides of industry.
Conflict is perceived as disruptive and the pathological result of agitators, interpersonal friction
and communication breakdown.

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In pluralism the organization is perceived as being made up of powerful and divergent sub-
groups, each with its own legitimate loyalties and with their own set of objectives and leaders. In
particular, the two predominant sub-groups in the pluralistic perspective are the management and
trade unions. Consequently, the role of management would lean less towards enforcing and
controlling and more toward persuasion and co-ordination.
Trade unions are deemed as legitimate representatives of employees; conflict is dealt by
collective bargaining and is viewed not necessarily as a bad thing and, if managed, could in fact
be channeled towards evolution and positive change. The focus is on the resolution of conflict
rather than its generation, or, in the words of the pluralist, on µthe institutions of job regulation.¶
Kerr is one of the important exponents of pluralism.
According to him, the social environment is an important factor in industrial conflicts. The
isolated masses of workers are more strike-prone as compared to dispersed groups. When
industrial jobs become more pleasant and employees¶ get more integrated into the wider society,
strikes will become less frequent.

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This view of industrial relations looks at the nature of the capitalist society, where there is a
fundamental division of interest between capital and labor, and sees workplace relations against
this history. This perspective sees inequalities of power and economic wealth as having their
roots in the nature of the capitalist economic system. Conflict is therefore seen as inevitable and
trade unions are a natural response of workers to their exploitation by capital. Whilst there may
be periods of acquiescence, the Marxist view would be that institutions of joint regulation would
enhance rather than limit management's position as they presume the continuation of capitalism
rather than challenge it.




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According to this approach, the industrial relations system is a study of institutions of job
regulations and the stress is on the substantive and procedural rules as in Dunlop¶s model.
Flanders, the exponent of this approach, considers every business enterprise as a social
system of production and distribution, which has a structured pattern of relationship. The
³institution of job regulation´ is categorized by him as internal and external ± the former
being an internal part of the industrial relations system such as code of work rules, wage
structure, internal procedure of joint consultation, and grievance procedure. He views
trade unions as an external organization and excludes collective agreements from the
sphere of internal regulation. According to him, collective bargaining is central to the
industrial relations system.




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G. Margerison, an industrial sociologist, holds the view that the core of industrial
relations is the nature and development of the conflict itself. According to this school of
thought, there are two major conceptual levels of industrial relations. One is the intra-
plant level where situational factors, such as job content, work task and technology, and
interaction factors produce three types of conflict ± distributive, structural, and human
relations. These conflicts are being resolved through collective bargaining, structural
analysis of the socio-technical systems and man-management analysis respectively. The
second level is outside the firm and, in the main, concerns with the conflict not resolved
at the intra- organizational level. 

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Like the systems model, the action theory approach takes the collective regulation of
industrial labor as its focal point. The actors operate within a framework,
which can at best be described as a coalition relationship. The actors, it is claimed, agree
in principle to cooperate in the resolution of the conflict, their cooperation
taking the form of bargaining. Thus, the action theory analysis of industrial relations
focuses primarily on bargaining as a mechanism for the resolution of conflicts.
Whereas the systems model of industrial relations constitutes a more or less
comprehensive approach, it is hardly possible to speak of one uniform action theory
concept.

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The Marxist approach is primarily oriented towards the historical development of the
power relationship between capital and labor. It is also characterized by the struggle of
these classes to consolidate and strengthen their respective positions with a view to
exerting greater influence on each other. In this approach, industrial relations is equated
with a power-struggle. The price payable for labor is determined by a confrontation
between conflicting interests. The capitalist ownership of the enterprise endeavors to
purchase labor at the lowest possible price in order to maximize their profits. The lower
the price paid by the owner of the means of production for the labor he employs, the
greater is his profit.
The Marxist analysis of industrial relations, however, is not a comprehensive approach as
it only takes into account the relations between capital and labor. It is rather, a general
theory of society and of social change, which has implications for the analysis of
industrial relations within what Marxists would describe as capitalist societies.


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An industrial relations system at any one time in its development is regarded as
comprised of certain actors, certain contexts, an ideology, which binds the industrial
relations system together, and a body of rules created to govern the actors at the
workplace and work community. There are three sets of independent variables: the
µactors¶, the µcontexts¶ and the µideology¶ of the system


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Weberian approach gives the theoretical and operational importance to ³control´ as well
as to the power struggle to control work organizations ± a power struggle in which all the
actors in the industrial relations drama are caught up.


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The human relations approach highlights certain policies and techniques to improve
employee morale, efficiency and job satisfaction. It encourages the small work group to
exercise considerable control over its environment and in the process helps to remove a
major irritant in labor-management relations.

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This approach to industrial relation is based upon fundamental principal of truth and non-
violence. This approach presumes the peaceful co-existence of capital and labor. Gandhiji
emphasized that if the employers follow the principal of trusteeship than there is no scope
of conflict of interest between labor and management, Gandhiji accepted the workers
right to strike, but cautioned that they should exercise this right for a just cause and in a
peaceful and non-violence manner.





 
Labor law (or "labor", or "employment" law) is the body of laws, administrative rulings, and
precedents which address the legal rights of, and restrictions on, working people and their
organizations. As such, it mediates many aspects of the relationship between trade unions,
employers and employees. In Canada, employment laws related to unionized workplaces are
differentiated from those relating to particular individuals. In most countries however, no such
distinction is made. However, there are two broad categories of labor law. First, collective labor
law relates to the tripartite relationship between employee, employer and union. Second,
individual labor law concerns employees' rights at work and through the contract for work. The
labor movement has been instrumental in the enacting of laws protecting labor rights in the 19th
and 20th centuries. Labor rights have been integral to the social and economic development since
the industrial revolution.

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Labor law arose due to the demands for workers for better conditions, the right to organize, and
the simultaneous demands of employers to restrict the powers of workers' many organizations
and to keep labor costs low. Employers' costs can increase due to workers organizing to win
higher wages, or by laws imposing costly requirements, such as health and safety or equal
opportunities conditions. Workers' organizations, such as
Trade unions, can also transcend purely industrial disputes, and gain political power - which
some employers may oppose. The state of labor law at any one time is therefore both the product
of, and a component of, struggles between different interests in society.

  
 
Indian labor law refers to laws regulating employment in India. There over fifty national laws
and many more state-level laws.
Traditionally Indian governments at federal and state level have sought to ensure a high degree
of protection for workers. So for instance, a permanent worker can be terminated only for proven
misconduct or for habitual absence.
India can boast of a quarter of the world's workforce by 2025, provided the country harnesses the
potential of its young and productive population. However, the demographic dividend would
become a disaster if India does not radically overhaul the labor ecosystem to enhance the
productivity of the growing workforce. If reforms are not initiated, it is expected that much of the
country's demographic dividend would occur in states with backward labor market ecosystems. It
also ranked that states on the basis of improvement in their labour ecosystems in terms of state
efforts in various areas like education and training, infrastructure, governance and the
legal/regulatory structure.
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The Employee State Insurance Act, [ESIC] 1948, is a piece of social welfare legislation enacted
primarily with the object of providing certain benefits to employees in case of sickness,
maternity and employment injury and also to make provision for certain others matters incidental
thereto. The Act in fact tries to attain the goal of socio-economic justice enshrined in the
Directive principles of state policy under part 4 of our constitution, in particular articles 41, 42
and 43 which enjoin the state to make effective provision for securing, the right to work, to
education and public assistance in cases of unemployment, old age, sickness and disablement.
The act strives to materialize these avowed objects through only to a limited extent. This act
becomes a wider spectrum then factory act. In the sense that while the factory act concerns with
the health, safety, welfare, leave etc of the workers employed in the factory premises only. But
the benefits of this act extend to employees whether working inside the factory or establishment
or elsewhere or they are directly employed by the principal employee or through an intermediate
agency, if the employment is incidental or in connection with the factory or establishment. The
ever expanding industrial horizon and reciprocal uprising of labor consciousness necessitate the
employee and employer to be conversant with the current labor legislation that governs their
relationship, rights and obligation.

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The Employee State Insurance act was promulgated by the Parliament of India in the year
1948.To begin with the ESIC scheme was initially launched on 2 February 1952 at just two
industrial centers in the country namely Kanpur and Delhi with a total coverage of about 1.20 lac
workers. There after the scheme was implemented in a phased manner across the country with
the active involvement of the state government.

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The ESIC Act applies to non-seasonal, power using factories or manufacturing units employing
ten or more persons and non-power using establishments employing twenty or more persons.
Under the enabling provisions of the act, a factory or establishment, located in a geographical
area, notified for implementation of the scheme, falls in the purview of the act. Employees of the
aforesaid categories of factories or establishments, but drawing wages only up to Rs 6,500 a
month are entitled to health insurance cover under the ESI act. The wage ceiling for purpose of
coverage is revised from time to time; to keep pace with rising cost of living and subsequent
wage hikes.
The Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatre,
road motor transport undertakings and newspaper establishment employing 20 or more persons.
The existing wage-limit for coverage under the Act, is Rs.7500/- per month (with effect from
1.4.2004).
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The comprehensive and well-designed social security programme is administered by an apex
corporate body called the Employee State Insurance Corporation. It comprises members
representing vital interest groups that include, employee, employers, the central and state
government, besides, representatives of parliament and medical profession. The corporation is
headed by the union minister of labor, as its chairman, whereas, the director general, appointed
by the central government functions as its chief executive officer. A standing committee
constituted from amongst the members of the corporation, acts as an executive body. The
medical benefit council, constituted by the central government, is yet another statuary body that
advises the corporation on matters related to effective delivery services to the beneficiary
population. The corporation with its central head quarters at New Delhi operates through a
network of 26 regional and sub- regional offices located in various states. The respective state
governments take care of the administration of medical benefit. Except in case of Delhi and
Noida, greater Noida areas of Uttar Pradesh, where, the corporation administers medical
facilities directly.

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Like most of the social security schemes, the world over, ESI scheme is a self-financing health
insurance scheme. Contributions are raised from covered employees and their employers as a
fixed percentage of wages. As of now, covered employees contribute 1.75% of the wages,
whereas as the employers contribute 4.75% of the wages, payable to the insured persons.
Employers earning less than Rs 40 a day as daily wage are exempted from payment of their share
of contribution. The state government as per the provision of the act contributes 1/8 of the
expenditure on medical benefit within a per capita ceiling of Rs.600 per insured person per
annum. Any additional expenditure incurred by the state government, over and above the ceiling,
and not falling within the shareable pool, is borne by the state governments¶ concerned. The
contribution is deposited by the employer in cash or by cheaque at the designated branches of
some nationalized banks. The responsibility for payment of all contributions is that if the
employer with a right to deduct the employee¶s share of contribution from employees wages
relating to the period in respect of which the contribution is payable.





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Workers, covered under the ESI Act, are required to pay contribution towards the scheme on a
monthly basis contribution period means a six-month time span from 1st April to 30th October
and 1st November to 31st March. Thus, in a financial year there are two contribution periods of
six months duration. Cash benefits under the scheme are generally linked with contribution paid.
The benefit period starts their months after the closure of a contribution period,
Contribution period corresponding benefit period 1st April to 30st September and 1st January to
30th June of the following year 1st October to 31st march 18th July to 31st December

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Simultaneously with his or her entry into employment in a covered factory or establishment, an
employee is required to fill in a declaration form. The employee is then allotted a registration
number, which distinguishes and identifies the person for the purposes of the scheme. A person
is registered once and only upon his entry in insurable employment. The act would be entitled to
benefit from the date of his employment and not from the date of registration after contribution
by the employer.

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On registration every insured person is provided with a µtemporary identification certificate¶
which is valid ordinarily for a period of three months but may be extended, if necessary, for a
further period of 3 months. Within this period, the insured person is given a permanent µfamily
photo identity card¶ in exchange for the certificate. The identity card serves as a means of
identification and has to be produced at the time of claiming medical care at the dispensary/
clinic and cash benefit at the local office of the corporation. In the event of change of
employment, it should be produced before the new employer as evidence of registration under
the scheme to prevent any duplicate registration. The identity card bears the signature/thumb
impression of the insured person. Since medical benefit is also available to the families of
Insured persons, the particulars of family members entitled to medical benefit are also given in
the identity card affixed with a postcard size family photo. If your identity card is lost, a
duplicate card is issued on payment as prescribed







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Employees covered under the scheme are entitled to medical facilities for self and dependants.
They are also entitled to cash benefits in the event of specified contingencies resulting in loss of
wages or earning capacity. The insured women are entitled to maternity benefit for confinement.
Where death of an insured employee occurs due to employment injury or occupational disease,
the dependants are entitled to family pension. Various benefits that the insured employees and
their dependants are entitled to, the duration of benefits and contributory conditions therefore are
as under


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Full medical facilities for self and dependants are admissible from day one of entering insurable
employment. Whereas, the primary, outpatient, in patient and specialist services are provided
through a network of panel clinics, ESI dispensaries and hospitals, super specialty services are
provided through a large number of advanced empanelled medical institutions on referral basis.
Eligibility to medical benefit
‡ From day one of entering insurable employment for self and dependants such as spouse,
parents and children own or adopted.
‡ For self and spouse on superannuation subject to having completed five years in insurable
employment on superannuation or in case of having suffered permanent physical disablement
during the course of insurable employment.
‡ The rate of contribution for superannuated/ disabled is Rs 1,220 per annum payable in lump
sum at the local office for availing full medical care for self and spouse.
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Sickness benefit is payable to an insured person in cash, in the event of sickness resulting in
absence from work and duly certified by an authorized insurable medical officer/ practitioner.
‡ The benefit becomes admissible only after an insured has paid contribution for at least 78 days
in a contribution period of 6 months.
‡ Sickness benefit is payable for a maximum of 91 days in two consecutive contribution period.
[One year]
‡ Payment is to be made by the local office within 7 days of certificate of sickness at a standard
rate, which is not less than 50% of the wages. [The logic behind fixing of 78 & 91 days of
contribution is based on certain statistics worked by the corporation to give cash benefits. But the
officials in the corporation don¶t know how it is fixed.]

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Extended sickness benefit is payable to insured persons for the period of certified sickness in
case of specified 34 long-term diseases that needs prolonged treatment and absence from work
on medical advice.
‡ For entitlement to this benefit an insured person should have been in insurable employment for
at least 2 years. He/ she should also have paid contribution for a minimum of 156 days in the
preceding 4 contribution periods or say 2 years.
‡ ESI is payable for a maximum period of 2 years on the basis of proper medical certification and
authentication by the designated authority.
‡ Amount payable in cash as extended sickness benefit is payable within 7 days following the
submission of complete claim papers at the local office concerned.
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This cash benefit is payable to insured persons in the productive age group for undergoing
sterilization operation, viz., vasectomy/ tubectomy.
‡ The contribution is the same as for the normal sickness benefit.
‡ Enhanced sickness benefit is payable to the IP¶s for 14 days for tubectomy and for seven days
in case of vasectomy.
‡ The amount payable is double the standard sickness benefit rate that is, equal to equal to full
wages.
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Maternity benefit is payable to insured women in case of confinement or miscarriage or sickness
related thereto.
‡ For claiming this insured woman should have paid for at least 70 days in 2 consecutive
contribution periods i.e. 1 year.
‡ The benefit is normally payable for 12 weeks, which can be further extended up to 16 weeks on
medical grounds.
‡ The rate of payment of the benefit is equal to wage or double the standard sickness benefit rate.
‡ The benefit is payable within 14 days of duly authenticated claim papers.

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Disablement benefit is payable to insured employees suffering from physical disablement due to
employment injury or occupation disease.
‡ An insured person should be an employee on the date of the accident.
‡ Temporary disablement benefit at 70% of the wages is payable till temporary disablement lasts
and is duly certified by authorized insurance medical officer.
‡ In case of permanent disablement, the cash benefit is payable is payable for life. Amount
payable is worked out on the basis of earning capacity determined by a medical board.
‡ Disablement benefit is payable within one month of submission of the complete claim papers.
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Dependants benefit [family pension] is payable to dependants of a deceased insured person
where death occurs due to employment or occupational disease.
‡ A widow can receive this benefit on a monthly basis for life or till remarriage.
‡ A son or daughter can receive this benefit till 18 years of age.
‡ Other dependants like parents including a widowed mother can also receive the benefit under
certain condition.
‡ The rate of payment is about 70% of the wages shareable among dependants in a fixed ratio.
‡ The first installment is payable within a maximum of 3 months following the death of an
insured person and thereafter, on a regular monthly basis.
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a. a. Funeral expenses
On the death of an insured person subject to a maximum of a Rs. 2,500 payable at the local
office.
b. Vocational rehabilitation
In case of disabled insured persons less than 45 years of age with 40% or more disablement.
c. Free supply of physical aids and appliances such as crutches, wheelchairs, spectacles and other
such physical aids.
d. Preventive health care services such as immunization, family welfare services, HIV/AIDS
detection, treatment etc.
e. Medical bonus
Rs250 is paid to an insured woman or in respect of the wife of an insured person in case she does
not avail hospital facilities of the scheme for child delivery.


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1. The employer should get his factory or establishments registered with the E.S.I.
Corporation within 15 days after the Act becomes applicable to it, and obtain the
employers Code Number.
2. The employer should obtain the declaration form from the employees covered under the
Act and submit the same along with the return of declaration forms, to the E.S.I. office.
He should arrange for the allotment of Insurance Numbers to the employees and their
Identity Cards.
3. The employer should deposit the employees¶ and his own contributions to the E.S.I.
Account in the prescribed manner, whether he has sufficient resources or not, his liability
under the Act cannot be disputed. He cannot justify non-payment of E.S.I. contribution
due to non-availability of finance.
4. The employer should furnish a Return of Contribution along with the challans of monthly
payment, within 30 days of the end of each contribution period.
5. The employer should not reduce the wages of an employee on account of the contribution
payable by him (employer).
6. The employer should cause to be maintained the prescribed records/registers namely the
register of employees, the inspection book and the accident book.
7. The employer should report to the E.S.I. authorities of any accident in the place of
employment, within 24 hours or immediately in case of serious or fatal accidents. He
should make arrangements for first aid and transportation of the employee to the hospital.
He should also furnish to the authorities such further information and particulars of an
accident as may be required.
8. The employer should inform the local office and the nearest E.S.I. dispensary/hospital, in
case of death of any employee, immediately.
9. The employer must not put to work any sick employee and allow him leave, if he has been
issued the prescribed certificate.
10. The employer should not dismiss or discharge any employee during the period he/she is
in receipt of sickness/maternity/temporary disablement benefit, or is under medical
treatment, or is absent from work as a result of illness duly certified or due to pregnancy
or confinement.


(
cc  
Doctors do not give proper treatment and prefer to attend to the paying patients. As a result,
employees are often forced to pay more than their monthly contributions. The dispensaries do
not have enough medicines in stock and persuading a doctor to authorize the purchase of
medicines elsewhere is a cumbersome and time-consuming process. Doctors are very often
absent and hospital equipments are broken for extended period. Patients suffering from
occupational disease have difficulty finding proper treatment. Workers complain of being treated
as beggars at the ESIC office.
Hence keeping in view these complaints and grievances and various other issues the act is now
been revised and came up with new amendments.



The ESI act provides for medical help and unemployment insurance to industrial workers during
their illness. The basic objective is to offer social insurance to workers in respect of three
contingencies 1. Sickness, 2. Employment injury and 3. Child birth. The main features of the act
are as follows:
,: the act applies to all factories, other than seasonal factories, run with power and
employing 20 or more employees. it covers all types of worker ± manual, supervisory or
administrative whose remuneration in aggregate does not exceed rs.3000 per month.
!" : the administration of the act has been given to the employees¶ state insurance
corporation (ESIC). It is an autonomous body set up by an act of the central government. The
ESIC board has representatives from state government, employers, employees, medical
profession and parliament.




'! : the ESIC scheme is a compulsory and contributory health insurance scheme. Under the
scheme, the employers contribute 4.75% of wages and the employee contributes 1.75% of his
own wages. The scheme is operated through the esi fund, with grants and contributions from
central, state governments and local authorities.
 #under the scheme, the insured person gets primarily, three types of medical help.
1. Outpatient medical care through dispensaries set up in various centers. 2. Laboratory and
testing expenses. 3. Hospitalization charges. The scheme provides the following benefits to more
than 80 lacs insured employee household through an extensive network of offices situated in
over 550 centers throughout the country.
Sickness benefits: about half wages up to 90 days sickness.
Maternity benefits: all insured women are entitled to receive cash payment for confinement,
miscarriage of sickness arising out of pregnancy. They are entitled to receive full wages for leave
up to 12 weeks, of which not more than six weeks must precede the expected date of delivery. if
the insured woman dies during the period of confinement, her nominee will get the benefits for
the entire period.
Disablements¶ benefits : if a person dies from employment injuries his widow and children are
entitled to compensation to be paid in a certain ratio, (e.g. the widow till her remarriage, the son
up to 18 years of age, the daughter up to 18 years of age or marriage whichever is earlier.
Funeral benefits: when an insured person dies, the eldest member of the family or other
dependent or friends as the case may be, is entitled to receive rs.100 towards funeral expenses.
The amount should be claimed within three months of the death.
Assessment: the ESI scheme has been criticized on the following grounds:
rp Even within the organized sector, the coverage of the scheme has been somewhat low.
rp The scheme has not been popular with employees and unions. The state government, too,
have not shown enthusiasm to implement the provisions of the scheme sincerely.
Employees have often complained about the inadequacy of facilities and benefits. Most
of them had to spend additional amounts of money for buying medicines not available in
esi dispensaries.
rp There is delay in providing benefits to insured workers. The penalties for any default in
payment of contribution by the employer are quite severe (including fine &
imprisonment). However, employers are rarely booked for violations on various counts.





$c+3456"* + ====7

Employees state insurance corporation Vs M/s. Bhakra Beas Management Board &Anr.
Civil appeal no. 8335 of 2004 with civil appeal no. 8336 of 2004
17th September, 2009.
V.J. FRANCIS and ANUPAM MISHRA, for Appellant.
OM PRAKASH MISHRA and GHAN SHYAM VASISHT, for Respondents.
CASES CITED:
Fertilizer &Chemicals Tranvancore Ltd. Vs. Regional Director, ESIC, 2009
-This appeal has been filed against the judgment and order dated 14.11.2002 of the High court of
Delhi at New Delhi whereby the appeal filed by the respondent no.1 herein has been allowed and
it has been declared that the respondent no.1 Board is not liable to make any contribution
towards the Employees State Insurance in respect of the impugned demand.
-It appears that the appellant had issued a notice under section 45-A of the Employees State
Insurance Act, 1948 for making employer¶s contribution towards the employees¶ state insurance.
The respondent no.1 board challenged the notice before the Employees State Insurance Court,
Delhi.
-The Employees State Insurance Court decided in favour of the appellant and the respondent
no.1 to pay its contribution towards the employee¶s insurance. Against the said order of the
Employees¶ State Insurance Court, the respondent no.1 ± Board filed an appeal under section 82
of the act before the High Court and the High Court has allowed the said appeal.
-This court has recently held the case of Fertilizer &Chemicals Tranvancore Ltd. Vs. Regional
Director, ESIC, 2009 as under:
- In its petition before the Employees state Insurance Court, the appellant herein only impleaded
the Employees¶ State Insurance Corporation and the District Collectors of Alleppey, Palaghat
and Cannanore as the respondents but did not implead even a single workman as a respondent.
- In this case of the appellant none of the concerned person was the employee and it was difficult
to identify them.
- Hence by referring section 75(1)(a) the matter regarding whether any person is an employee of
the concerned employer or whether the employer is liable to pay the employer¶s contribution
towards the said persons¶ insurance will be decided by the Employees¶ Insurance Court.
-Whenever any petition is filed by an employer under section 75 of the act, the employer has not
only to implead the ESIC but also has to implead atleast some of the workers concerned or the
trade union representing the said workers.
-The ESIC act has been enacted for the benefit of the workers to give them various benefits such
as medical benefits etc. hence the principal beneficiary of the act is the workmen and not the ESI
Corporation. The ESI Corporation is only the agency to implement and carry out the object of
the act and it has nothing to lose if a decision is given in favor of the employer. Hence, the
workmen have to be necessarily made a party/ parties because the act is a labour legislation made
for the benefit of the workmen.
-Neither the workers of the respondent no.1 nor any one of them in representative capacity were
impleaded either before the Employees¶ State Insurance Court or before the High Court. This
violated the principles of the natural justice. Hence, the appeal was allowed by setting aside the
impugned judgment and the order of the High Court as well as that of the Employees¶ State
Insurance Court.




















c 8>3>
The ESI Corporation has approved to enhance wage ceiling from Rs 10,000 per month to
Rs15, 000 per month for coverage of employees under the ESI Scheme in its 149th meeting held
under the chairmanship of Union Minister of Labor and Employment Mallikarjun Kharge.
Union Minister of State for Labor and Employment Harish Rawat and the vice-chairman, ESIC,
were also present in the meeting.
Keeping in view the increase in cost of living index and recommendations of the Parliamentary
Standing Committee on Labor, the corporation increased the wage ceiling limit for coverage of
the employees under the ESI Scheme. This will help the corporation to provide social security
net to more and more employees of the organized sector.
The salient features of the Amendment Act are as under:-
-Facilitating coverage of smaller factories;
-Enhancing age limit of dependent children for eligibility to dependants benefit;
-Extending medical benefit to dependant minor brother/sister in case of IPs not having own
family and whose parents are also not alive;
-Streamlining the procedure for assessment of dues from defaulting employers;
-Providing an Appellate Authority within the Corporation against assessment to avoid
unnecessary litigation;
-Continuing medical benefit to insured persons retiring under VRS scheme or taking premature
retirement;
-Treating commuting accidents as employment injury;
-Streamlining the procedure for grant of exemptions;
-Third party participation in commissioning and running of the Hospitals;
-Opening of medical/dental/paramedical/nursing colleges to improve quality of medical care;
-Making an enabling provision for extending medical care to other beneficiaries against payment
of user charges to facilitate providing of medical care from under-utilized ESI Hospitals to the
BPL families covered under the Rashtriya Swasthaya Bima Yojana introduced by the Ministry of
Labor & Employment
-Reducing duration of notice period for extension of the Act to new classes of establishments
from six months to one month.
-Empowering State governments to set up autonomous Corporations for administering medical
benefit in the States for bringing autonomy and efficiency in the working.

The following sections of the ESI (Amendment) Act, 2010, which do not require consequent
changes in the ESI (Central) Rules, 19501 ESI (General) Regulations,
1950 will become operable from 1st June, 2010.
i) As a result of amendment in Sec.1 (5) of the Act, the notice period for extending the scheme to
new sectors of employment by the 'appropriate government¶ have been reduced from existing six
months to one month.
ii) With the amendment in Sec.2 (9) of the Act, the apprentices appointed under the Standing
orders of the establishment who were earlier excluded from coverage have now become
coverable.
iii) As a result of amendment in the definition of 'factory' in Sec.2 (12) of the Act. Any premises
or precincts thereof where ten or more persons are employed or were employed on any day of the
preceding twelve months, and in any part of which manufacturing process is carried on or is
ordinarily so carried on, have become coverable.
iv) Vide Sec.45 (4), a provision has been made for test inspection/reinsertion.
v) Vide amendment in Sec.45-A, it has now been provided that an order passed by the
Corporation under Sec.45-A can be passed only in respect of period up to 5 years.
vi) In Sec.51 (A) to Sec.51 (D), the words µInsured Persons¶ have been substituted with the word
'employee'. This provision has been made with a view to prevent misuse of the provision by
persons who have gone out of insurable employment but continue to be insured persons and
sustain injury after ceasing to be employees.
vii) A new Section 51-E has been inserted as a result of which an accident occurring to an
employee while commuting from his residence to the place of employment for duty or vice-versa
shall be treated as employment injury if nexus between the circumstances, time and place in
which accident occurred and the employment is established.
viii) In Sec.58 of the Act, a new provision has been made vide Sec.58 (5) and (6) empowering
the State Govts. to set up autonomous organizations for administering medical benefit.
ix) A provision has been made in Sec.59 (3) for third party participation for commissioning and
running ESI Hospitals.
x) A new provision in Sec.5gB has been made empowering the Corporation to establish Medical
Colleges, Nursing Colleges and trailing institutes for para-medical staff and other employees
with a view to improve the quality of services.
xi) A new chapter V (A)-Sec.73 (A) to 73(F) has been created under which medical care can be
provided from underutilized ESJ Hospitals on payment of user charges.
xii) Vide amendment in Sec.87 and Sec.91 (A), it has been provided that exemptions shall be
granted by State Govts. Only in case of substantially similar or superior benefits are provided by
the employers. Further, exemptions are to be granted only prospectively and not from
retrospective date.

The following sub-clause shall be substituted, namely:-


(A)" a widow, a legitimate or adopted son who has not attained the age of¶ twenty-five years, an
unmarried legitimate or adopted daughter,
In sub-clause (ii), for the words "eighteen years", the words "twenty-five years" is substituted;

(B) In clause (9), for the words "or under the standing orders of the establishment;´ the words
"and includes such person engaged as apprentice whose training period is extended to any length
of time" is substituted;

(C) In clause (11), for sub-clause (v), the following sub-clauses is


Substituted, namely:-
"(v) Dependant parents, whose income from all sources does not exceed such income as may be
prescribed by the Central Government;
(vi) In case the insured person is unmarried and his or her parents are not alive, a minor brother
or sister wholly dependent upon the earnings of the insured person.

(D) For clause (12), the following clause is substituted, namely:-


'(12) "factory" means any premises including the precincts thereof whereon ten or more persons
are employed or were employed on any day of the preceding twelve months, and in any part of
which a manufacturing process is being carried on or is ordinarily so carried on, but does not
include a mine subject to the operation of the Mines Act, 1952 or a railway running shed;
Amendment 4. In section 10 of the principal Act, in sub-section (1), for clauses (0) and (b), of
section 10. Following clauses shall be substituted, namely:-
"(a) The Director General, the Employees' State Insurance Corporation, ex officio as Chairman;
(b)The Director General, Health Services, ex officio as Co-chairman;´

(E) In section 12 of the principal Act, for sub-section (3), the following sub-section is
substituted, namely:-
Amendment of section 12.
"(3) A person referred to in clause (I) of section 4 shall cease to be a member on becoming a
Minister or Speaker or Deputy Speaker of the House of the People or Deputy Chairman of the
Council of States or when he ceases to be a member of Parliament.´ Amendment of section I 7.
Amendment 8. In section 45 of the principal Act of section 45.
(a) For the words "Inspectors" and "Inspector", wherever they occur, the words "Social Security
Officers" and "Social Security Officer" shall respectively be substituted;

If an employer is not satisfied with the order referred to in section 45A, he may prefer an appeal
to an appellate authority as may be provided by regulation, within sixty days of the date of such
order after depositing twenty-five per cent of the contribution so ordered or the contribution as
per his own calculation, whichever is higher, with the Corporation: Provided that if the employer
finally succeeds in the appeal, the Corporation shall refund such deposit to the employer together
with such interest as may be specified in the regulation.".

In the principal Act, in sections 51Aand 5IB, for the words "an insured person's", the words "an
employee's" shall be substituted.
. An accident occurring to an employee while commuting from his residence to the place of
employment for duty or from the place of employment to his residence after performing duty,
shall be deemed to have arisen out of and in the course of employment if nexus between the
circumstances, time and place in which the accident occurred and the employment is
established.".
In section 56 of the principal Act, in sub-section (3), for the third proviso, the Amendment
following proviso shall be substituted, namely: - of section 56. "Provided also that an insured
person who has attained the age of superannuation, a person who retires under a Voluntary
Retirement Scheme or takes premature retirement, and his spouse shall be eligible to receive
medical benefits subject to payment of contribution".

As the ESI Amendment Act 2010 has been notified and it has come in to effect w.e.f. 01-06-
2010. The ESI Amendment Act 2010 has brought new changes which are necessary to be
understood by all HRM & other Labor Law practitioners.



'%%2$"*"!" ! "*%+ #-
3. The age of the dependents has been increased from 18 years to 25 years-though in the
proposed bill, the age suggested was 21 years.
8. "Family"- A qualification has been attached to the "dependent parents" of the Insured Person
to avail the medical benefits etc under the Act, which was not in the Act earlier.
9. "Family" - New members has been introduced to the words "Family" in case the insured
person is unmarried and his or her parents are not alive, a minor brother or sister wholly
dependent upon the earnings of the insured person" shall also form part of family of the Insured
Person.
5. Trainees appointed under the Standing Orders- ESI Contribution liable to be paid - The
definition of the "employee" has been amended. Now the trainees are brought under the ambit of
the Act and are liable to pay ESI contribution.









:. FACTORY -DEFINITION-
c' 
According to Sec 2 (12) "factory" means any premises including the precincts thereof-
(a) whereon ten or more persons are employed or were employed FOR WAGES on any day of
the preceding twelve months, and in any part of which a manufacturing process is being carried
on with the aid of power or is ordinarily so carried on, or
(b) whereon twenty or more persons are employed or were employed for wages on any day of
the preceding twelve months, and in any part of which a manufacturing process is being carried
on without the aid of power or is ordinarily so carried on, but does not include a mine subject to
the operation of the Mines Act, 1952 (35 of 1952) or a railway running shed];

cc' #-
According to Sec 2 (12) "factory" means any premises including the precincts thereof whereon
ten or more persons are employed or were employed on any day of the preceding twelve months,
and in any part of which a manufacturing process is being carried on or is ordinarily so carried
on, but does not include a mine subject to the operation of the Mines Act, 1952 or a railway
running shed;¶.

On comparing both the definition following implications of the amendment comes


out:-
rp Now the units where manufacturing activities are performed by 10 or more PERSONS
has been brought under the ambit of the Act, irrespective of use of POWER and
irrespective of the fact that 10 or more coverable employees are engaged or not.
rp The definition of the "Factory" has been amended to bring the small units within the
ambit of the Act. Earlier the ESI Act was applicable to units employing 10 or more
persons manufacturing with aid of "POWER"- Now the word POWER has been omitted.
Thus, every unit manufacturing and employing 10 or more persons has been brought
under the ambit of the ESI Act.
rp Secondly, one hidden amendment has been made in the Act-The uncovered employees
would also be counted for the purpose of applicability of the ESI Act. Earlier the unit
employing 10 or more workers and doing manufacturing process, would still be out of
the purview of the Act, if there are Persons drawing salary above the prescribe limit. Let
me explain with an example-
rp Suppose in a unit there were 12 employees and using Power to manufacture. Out of the
said 12 employees 3 employees were drawing salary above the prescribed limit of Rs.
10000/-(or 15000/-). The ESI Act would not be applicable on the said unit, since the
strength of the coverable employees is less than 10.
rp But now, the ESI Corp. has very smartly omitted the words " for wages" in the new
definition of the "Factory", bringing all the units employing 10 or more Persons and
engaged in manufacturing process within its ambit.
rp The ESI Corporation has brought back the old definition of "factory" as it stood prior to
Amendment Act 44 of 1966. In the old definition (prior to 1966) the "Factory" means
any premises including the precincts thereof wherein 20 or more persons are WORKING
or were WORKING on any day of the preceding twelve months, and in any part of
which a manufacturing process is being carried on with the aid of power or is ordinarily
so carried on, but does not include a mine subject to the operation of the INDIAN Mines
Act, 1923 (iv OF 1923) or a railway running shed".
rp After the amendment by Act 44 of 1966 as aforementioned the words "or were working"
in the definition of 'factory' were substituted by the words "or employed or were
employed for wages".
It was necessary to know the old definition of the Factory to understand the exact implication of
the latest amendment in the definition of "Factory".
















;. TEST INSPECTIONS & RE-INSPECTIONS
The system of Test inspection or Re-inspection has been introduced in the Act. This system was
though prevalent in practice but did not have any statutory force behind it.
<. LIMITATION PERIOD
The unbridled powers of the visiting inspectors demanding the contribution for the very old
periods also, have been put to hold by the Parliament (on the recommendations of the Apex
Court). The New Proviso has been inserted in Section 45A, which provides as under
"Provided further that no such order shall be passed by the Corporation in respect of the period
beyond five years from the date on which the contribution shall become payable.´
6. APPELLATE AUTHORITY
New Section 45AA has been introduced in the Act, according to which if an employer is not
satisfied with the order referred to in section 45A, he may prefer an appeal to an appellate
authority as may be provided by regulation, within sixty days of the date of such order after
depositing twenty-five per cent. Of the contribution so ordered or the contribution as per his own
calculation, whichever is higher, with the Corporation Provided that if the employer finally
succeeds in the appeal, the Corporation shall refund such deposit to the employer together with
such interest as may be specified in the regulation."

4. ACCIDENTS OCCURING WHILE COMMUTING TO PLACE OF WORK AND VICE-
VERSA - COVERED UNDER THE ACT
- New Section 51E has been inserted
According to which ³An accident occurring to an employee while commuting from his residence
to the place of employment for duty or from the place of employment to his residence after
performing duty, shall be deemed to have arisen out of and in the course of employment if nexus
between the circumstances, time and place in which the accident occurred and the employment is
established."








(
c'?('@34:8

Provident fund is the fund which is composed of the contribution made by the employee during
the time he has worked along with an equal contribution by his employers. It is calculated as a
percentage of his salary, say 12% and is returned to him on his retirement.
The provident fund was originally setup in a bid to provide monetary security to employees
when they retire. Too often, people find that the golden years of their life are years marked by
financial inadequacy and dependency on relatives or children. The provident fund is designed to
provide the retiring individual with dignity and security.

"
The Employees' Provident Fund aims to provide social security and to help employees increase
savings, which will benefit workers after they retire, or their family members after their death.
To the employers, it helps to ensure a steady workforce, which will increase productivity. It also
gives the government a substantial sum for investment.

**%+1%)
The Employees' Provident Fund was established by an Act in 1952. It was originally intended to
cover workers in factories with a workforce of over 50 people. It now applies to establishments
of more than 20 people, and has been extended to cover a wide range of organisations, specified
in Schedule 1 of the Act. It was also extended to cover plantations (tea, coffee, rubber, pepper or
cardamom) employing 50 or more workers. The government can also specify establishments to
be covered by the Act, which have fewer than 20 employees.

Any business to which this Act applies continues to be covered by it even if the number of
workers falls below 20.

The persons employed should be generally required by the establishment for its regular business.
The term "employee" means any person who is employed for wages of any kind, paid either
directly or indirectly by the employer. It includes casual or temporary workmen, trainees,
apprentices etc. Persons taken on briefly for some temporary or emergency work are not
included. However if a number of persons are required for the regular work of the establishment,
the Act does not cease to apply just because the employment may fall short of a complete year.
In fact, if an establishment employs 20 or more people for just one day, it is sufficient condition
to ensure the applicability of the Act.
Establishments which are not covered by the conditions of the Act can apply for coverage on a
voluntary basis if a majority of employees are in favour. Such establishments are required to
comply with the provisions of the Act at par with other covered establishment and cannot opt out
of coverage on a subsequent date.

c."*
Subject to various conditions, the government can grant exemptions to the establishments, which
it feels, are providing sufficient pension and gratuity benefits to its employees.

Exemption once granted can be cancelled for contravention of any of the prescribed conditions
governing exemption and on such cancellation the establishment would be required to comply
with the provisions of statutory schemes. The Act provides for imprisonment upto six months
and a fine of Rs 5000 for failure to comply with the conditions under which exemption was
granted.


&
The amount of an Employee's Provident Fund is calculated as 12 per cent of his wages,
contributed by both the employer and the employee. (In the case of establishments with fewer
than 20 employees, the contributions can be made at the rate of 10 per cent.) The employee's
contribution must be deducted from his earnings. Wages here include basic pay, house rent
allowance, dearness allowance, overtime, bonus, cash value of food coupons or concessions,
gifts from the company etc.
Emoluments earned while on leave are included. The employer must contribute an equal amount
towards the fund. Employees can voluntarily contribute a larger portion of their earnings to the
fund, though the employer is under no obligation to contribute this excess amount. The
responsibility for making the payment of the total amount to the Provident Fund (PF) rests on the
employer.

As soon as possible and after the close of each period of currency of contribution, annual
statement of accounts will be sent to each member by the employer. The statement of accounts in
the fund will show the opening balance at the beginning of the period, amount contributed during
the year, the total amount of interest credited at the end of the period or any withdrawal during
the period and the closing balance at the end of the period. Members should satisfy themselves as
to the correctness of the annual statement of accounts and any error should be brought through
employer to the notice of the concerned Provident Fund Office within six months of the receipt
of the statements.
Contributions of the employer towards pension fund do not allow him to decrease or do away
with contributions to PF on behalf of an employer. Similarly, or contributions to provident fund
or special contributions to the fund do not nullify pension fund or gratuity schemes.

All employers are required to deposit their dues directly with SBI and its branches authorised to
collect the dues. The employers have to deposit dues assessed into the bank in a prescribed
challan within a stipulated period. A register called "Demand-Collection-Balance-Register"
(DCB Register) is maintained by regional offices of EPFO to watch the recovery of amounts due.

Default in payment of contribution by employer is a cognizable offence.

In an establishment of over 100 employees, if the employer and the majority of employees agree,
the government may authorise the employer to maintain the provident fund account of its
employees
p
There are different types of provident fund. They are:-
(a) Statutory provident fund- all industries and establishments that employee 20 or more people
are bound to contribute towards these funds. These funds specifically cover those whose income
is below a certain limit prescribed by the government.
(b) Voluntary provident fund- the contribution of these funds are voluntary. This is applicable for
all those whose salary is beyond the limit specified by the government.
(c) Recognized provident fund- this is a fund wherein the contributions are recognized for
income tax calculations.
(d) Unrecognized provident fund- as the name suggest contribution is not recognized by the
government.
(e) Public provident fund- this kind of provident fund is designed for self employed people like
doctors, lawyers, engineers, businessmen etc.
A person who is a member of provident fund can withdraw money from the fund upto a
maximum ceiling set by the government after attaining a certain age, say, 54 or at actual
retirement. In addition there are, generally, provision for withdrawal of the amount, such as,
acquisition or construction of property or repayment of loans taken for the same, treatment of
illness, for marriage expenses, for purchase of equipment to alleniate the hardships caused by
handicap etc.
The PF Act 1952 explains the following terms as :
(a) µc"*%)¶ means:-
i. In relation to an establishment which is a factory, the owner or occupier of the factory,
including the agent of such owner or occupier, the legal representative of a deceased owner or
occupier and, where a person has been named as a Manager of the factory under clause (b) of
sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and
ii. In relation to any other establishment the person who, or the authority which, has the ultimate
control over the affairs of the establishment and where the said affairs are entrusted to a
Manager, Managing Director or Managing agent such Manager, Managing Director or Managing
Agent.

(c) µEmployee¶:- means any person who is employed for wages in any kind of work manual or
otherwise, in or in connection with the work of the establishment and who gets his wages
directly or indirectly from the employer and includes any person.
i. Employed by or through a contractor in or in connection with the work of the establishment
ii. Engaged as an apprentice, not being an apprentice under the Apprentices Act, 1961 (52 of
1961) or under the standing orders of the establishment.
(d) µ'!¶:- means the Provident Fund established under these rules.
(e) µ  ¶:- means and includes the Trustees of the Fund for the time being.
(f) µ"1¶:- means an employee who is required under these rules to subscribe to the Fund,
and shall include such other persons to whom the Employees Provident Fund Scheme may be
extended.
(g) µ'"%)¶ means:-
rp In the case of a male member, the wife, his children whether married or unmarried, and
dependant parents of the member, and the widow and children of a deceased son of the
member, provided that if a member proves that his wife has ceased under the personal
law governing him or the customary law of the community to which the spouses belong
to be entitled to maintenance, she shall no longer be deemed to be a part of the
member(s) family for the purpose of these rules, unless the member subsequently
intimates by express notice in writing to the Board of Trustees that she shall continue to
be so regarded; and
rp In the case of the female member, her husband, her children whether married or
unmarried, her dependant parents, her husband(s) dependant parents and her deceased
son(s) widow and children, Provided that if a member, by notice in writing to the Board
of Trustees, expresses her desire to exclude her husband from the family, the husband
and his dependant parents shall no longer be deemed to be a part of the member(s)
family for the purpose of these rules unless the member subsequently cancels in writing
any such notice.
Explanation:
In either of the above two cases, if the child of a member has been adopted by another person
and if, under the personal law of the adopter, adoption is legally recognized, such a child shall be
considered as excluded from the family of the member.

(h) µc.+%!!c"*%)¶ means:-


rp An employee who having been a member of the Fund withdrew the full amount of his
accumulations in the Fund under Rules 23(1)(a) or (c).
rp An employee whose pay at the time he is otherwise entitled to become a member of the
fund exceeds six thousand five hundred rupees per month.
Explanation: - "Pay" includes basic wages with dearness allowance, retaining allowance (if any),
and cash value of food concession admissible thereon.

rp Apprentice.
Explanation: An "apprentice" means a person who, according to the certified standing orders
applicable to the factory or establishment, is an apprentice, or who is declared to be an apprentice
by the authority specified in this behalf by the appropriate Government.

(i) µ$%!¶:- means legitimate children and includes adopted children; if the Board of
Trustees is satisfied that under the personal law of the Member adoption of a child is legally
recognized.
(j) µ  +*)¶ :- means all emoluments which are earned by an employee while on duty or on
leave or on holiday with wages in either case in accordance with the terms of the contract of
employment and which are paid or payable in cash to him but does not include -
rp The cash of any food concession
rp Any dearness allowance (that is to say, all cash payments by whatever name 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 similar allowance, payable to the employee
in respect of his employment or of work done in such employment.
rp Any presents made by the employer.
(k) µ'+% ¶:- means the period commencing on 1st of April and ending on 31st March.

NOMINATION OF TRUSTEES:
The employer shall nominate his representatives from amongst the officers employed in
managerial or administrative capacity in the establishment,
a) Election of employees¶ representatives:
The representatives of the employees shall be elected by the members of the Fund in an election
to be held for the purpose on any working day.
Provided that wherever there is a recognized Union under code of discipline or under any Act
such union shall nominate the employee¶s representatives.
Provided in case there are more than one recognized trade unions (recognized by the employer)
in one establishment, the procedure of elections of Members of Board of Trustees shall be
followed as prescribed under the Rules. Provided further, where there is no recognized union
under code of discipline or under any Act and more than one registered unions functioning, only
the union with the largest number of members but with minimum of 15% membership shall have
the right to nominate employees¶ representatives and in case there is only one registered union
functioning, it shall have the right to nominate the employees¶ representatives on the Board of
Trustees, if it has a minimum of 15% membership.
(b) Qualification of candidate for election:-
Any employee of the employer who is a member of the Fund and who is not less than 21 years of
age may, if nominated as herein after provided, as a candidate for election as an employees¶
representative. An outgoing trustee shall be eligible for re-election or re-nomination as the case
may be.
(c) Procedure for Election:-
The employer shall fix a date for receiving the nomination form the candidates for election as
employees¶ representatives. He shall also fix a date for withdrawal of nomination and the date of
election which shall not be earlier than three days or later than 10 days after the closing of the
date for withdrawal of nominations. The date so fixed shall be notified to the members at least
seven days in advance. The notice shall be affixed on the Notice Board of the establishment. The
notice shall also specify the number of seats to be filled by the employees¶ representatives. A
copy of such notice shall also be sent to the recognized trade union or unions concerned in the
establishment and to the Regional Provident Fund Commissioner. The election notice and
procedure shall be published / conducted in the regional language besides in English.
(d) Nomination of candidates for election:-
Every nomination shall be made in the form given in below. Each nomination paper shall be
signed by the candidate to whom it relates and attested by atleast TWO members of the Fund,
other than the proposer and shall be delivered to the employer before or on the closing date fixed
for receiving the nominations.
.
(f) Voting in election:-
rp If the number of the candidates who have been validly nominated is equal to the number
of seats, the candidates shall forthwith be declared duly elected.
rp If the number of candidates is more than the number of seats, voting shall take place on
the date fixed for election.
rp The election shall be conducted by the Employer in the presence of an officer deputed by
the Regional Provident Fund Commissioner.
rp Every member of the fund shall have as many votes as there are seats to be filled on the
Board. Provided that each member shall be entitled to cast only one vote in favor of any
one candidate.
rp The voting shall be by secret ballot
Membership of the Fund:
(a) Every employee employed in or in connection with the work of the establishment other than
an excluded employee shall be entitled and required to become a member of the Fund from the
date of joining the establishment.

(b) An excluded employee shall on ceasing to be such an employee be entitled and required to
become a member of the Fund from the date he ceased to be such employee.

(c) Every employee on becoming a member shall remain and continue to be a member until he
withdraws his Provident Fund accumulation from the fund.

(d) Notwithstanding anything contained in this rule, the Board of Trustees may, on the joint
request in writing, of any employee of the establishment and the employer, enroll such employee
as a member or allow him to contribute on more than SIX THOUSAND AND FIVE HUNDRES
RUPEES of his pay per month if he is already a member of the Fund and thereupon such
employee shall be entitled to the benefits and shall be subject to the conditions of the Fund,
provided that the employer gives an undertaking in writing that he shall pay the inspection
charges payable and comply with all statutory provisions in respect of such employee.

(e) Every employee shall on becoming a member sign a declaration. Absence of such declaration
will not, however, invalidate his membership.

(f) Every employee shall become a member of the Fund from the date of his joining the
establishment provided he was previously a member of a fund in respect of exempted
establishment or of a fund established under the Employees¶ Provident Fund Scheme 1952 and
he did not withdraw his provident fund accumulations.

(g) If any question arises whether an employee is entitled or required to become or continue as
member or as regards the date from which he is so entitled or required to become a member, the
decision thereon of the Regional Provident Fund Commissioner shall be final.
RULES FOR NOMINATIONS
(a) Every member shall as soon as may be after joining the Fund make a nomination conferring
the right to receive the amount that may stand to his/her credit in the Fund in the event of his
death before the amount standing to his credit has become payable or where the amount has
become payable before payment has been made.

(b) A member may in his nomination distribute the amount that may stand to his credit in the
Fund amongst his nominees at his own discretion. If a member has a family at the time of
making nomination, the nomination shall be in favor of one or more persons belonging to his
family. Any nomination made by such a member in favor of a person not belonging to his family
shall be invalid. Provided that a fresh nomination shall be made by the member on his marriage
and any nomination made before such marriage shall be deemed to be invalid.

(c) If at the time of making a nomination the member has no family, the nomination may be in
favor of any person or persons, but if the member subsequently acquires a family, such
nomination shall forthwith be deemed to be invalid and the member shall make a fresh
nomination in favor of one or more persons belonging to his family.

(d) A nomination may at any time be modified by a member after giving a written notice of his
intention of doing so. If the nominee predeceases the member, the interest of the nominee shall
revert to the member, who may make a fresh nomination in respect of such interest.

(e) Where the nomination is wholly or partly in favor of a minor, the member may, for the
purposes of this rule appoint a major person of his family, as to be the guardian of the minor
nominee in the event of the member predeceasing the nominee and the guardian so appointed.
Provided that where there is no major person in the family the member may, at his discretion,
appoint any other person to be a guardian of the minor nominee.

(f) A nomination or its modification shall take effect to the extent that it is valid on the date on
which it is received by the Board of Trustees.
Contribution by Members:
(a) Every member shall subscribe to the Fund every month a sum equal to 12% of the total of his
monthly basic pay, dearness allowance and retaining allowance,

(b) Every member contributing to the provident fund can contribute voluntarily to the provident
fund an amount exceeding 12% of his total monthly basic pay and dearness allowance. A
member desiring to contribute to the provident fund an amount exceeding 12% of his basic pay
and dearness allowance per month shall submit an application. A member who is permitted to
contribute to the provident fund an amount exceeding 12% of his total monthly basic pay and
dearness allowance shall be allowed to change the rate of voluntary contribution on his applying
for such change in contribution, only at intervals of a minimum period of one year. Such a
change in the rate by way of voluntary contribution shall only be given effect to from the
beginning of an accounting period of the Fund.
Explanation: The term dearness allowance shall include the cash value of food concession and
retaining allowance, if any.

(c) Each monthly contribution to the Fund shall be calculated to the nearest rupee that is 50 paisa
or more shall be counted as the next higher rupee and any fraction of a rupee less than 50 paisa
shall be ignored.

(d) The establishment shall every month deduct from the emoluments of the members and shall
transfer such sum every month not later than 15th of the following month to the Board of
Trustees. The money so deducted shall be credited to the Member(s) individual account.

(e) No subscription shall be recovered from an employee for such period as he is absent from
duties without pay.
Employer¶s contributions to the Fund:
(a) The employer shall not later than the fifteenth day of the succeeding month, in respect of each
of the members of the fund, pay to the trustees as employer¶s contribution to the Fund a sum
equal to the total of the Member¶s compulsory contribution.

(b) From and out of the contribution payable by the employer each month under Rule 11 above, a
part of contribution representing 8.33% of the employees pay shall be remitted by the employer
to the employee¶s pension fund within fifteen days of the close of every month by a separate
bank draft of cheaque on account of Employees¶ Pension Fund contribution in such manner as
may be specified in this behalf by the Regional Provident
Fund Commissioner. The cost of the remittance, if any, shall be borne by the Employer.
Provided that where the pay of the member exceeds Rs.6500/- per month where contribution
payable by the employer be limited to the amount on his pay of Rs.6500/- only. The balance of
employer¶s contribution after the remittance of contribution to the employee¶s pension fund shall
be credited to the member¶s individual account. The establishment shall not be liable to make
any contribution in respect of the voluntary contribution, if any, made by the member to the
Provident Fund.

(c) The contributions shall be calculated on the basis of the basic wages, dearness allowance
(including the cash value of any food concession) and retaining allowance (if any) actually
drawn during the whole month whether paid on weekly, fortnightly or monthly basis.

(d) The contribution to the Employees Pension Fund shall be applicable only in case the
employee in question is a member of the Employee¶s Pension Scheme, 1995 and shall cease on
the employee attaining the age of superannuation as defined in the Employee¶s Pension Scheme,
1995. Provided further that if the employee continues in service even after the date of
superannuation the entire contribution payable by the employer shall be credited to the
Member¶s account.
A Payment of contribution:
(i) the Employer shall, in the first instance, pay both the contribution payable by himself towards
employer¶s contribution and also, on behalf of the member employed by him directly or
by/through a contractor, the contribution payable by such member (in the rules referred to as the
member¶s contribution).
(ii) In respect of employees employed by or through a contractor, the contractor shall recover the
contribution payable by such employee (i.e. member¶s contribution) and shall pay to the
principal employer the amount of member¶s contribution so deducted together with an equal
amount of contribution (in this rule referred to as the employer¶s contribution) and also
inspection charges.
(iii) It shall be the responsibility of the principal employer to pay both the contributions payable
by him in respect of the employees directly employed by him and also in respect of the
employees employed by or through a contractor and also inspection charges.

Member¶s Account:-
An account shall be kept by the Board of Trustees in the name of each member in which shall be
entered:
i) The member¶s contribution;
ii) The contributions made by the company to the member¶s account;
iii) The interest or profit accruing to the member¶s account;
iv) The advance / withdrawal, if any, made to the member out of the fund to be debited;
v) The repayments, towards advance made to the members

Member¶s Pass Book:


Every member shall be given a Pass Book or an annual statement of Accounts within six months
of the close of the year in which shall be entered the particulars referred to in the Rule 12 above.
All Pass Books or the Annual Statements shall be made up to date at the interval of one Year.
Such statement/Pass Book shall be accepted as correct and binding on the members save that if
any manifest error shall be found therein and notified by the member to the Board of Trustees in
writing within six months after the date of making such entry, the same may be rectified. A
member of the fund is also allowed to inspect his account himself or through any person duly
authorized by him in writing to do so, within 72 hours of making such request provided that no
such request shall be entertained more than once in every two calendar months
WITHDRAWAL FROM THE FUND FOR THE PURCHASE OF DWELLING HOUSE/FLAT
OR FOR THE CONSTRUCTION OF DWELLING HOUSE INCLUDING THE
ACQUISITION OF A SUITABLE SITE FOR THE PURPOSE
1. The Board of Trustees may on an application from a member in such form as may be
prescribed and subject to the conditions prescribed in this rule sanction from the amount standing
to the credit of the member in the Fund a withdrawal.
rp For purchasing a dwelling house/flat, including a flat in a building owned jointly with
others (outright or on hire purchase basis) or for construction of a dwelling house
including the acquisition of a suitable site for the purpose from the Central Government,
the State Government, a co-operative society, an institution, a trust, a local body or
Housing Finance Corporation (herein after referred to as the agency/agencies)
OR
rp For purchasing a dwelling site for the purpose of construction of a dwelling house or a
ready built dwelling house/flat from any individual;
OR
rp For purchasing dwelling house/flat on ownership basis from a promoter governed by the
provisions of any Flats or Apartments Ownership Act or by any other analogous or
similar law of the Central Government or the State Government as may be in force in
any State or area for the time being and who intends to construct or constructs dwelling
house or block of flats and the member is required to pay to the said promoter in advance
for financing the said construction of the house/flat. Provided that the member has
entered into an agreement with the promoter as may be required under the Flats or
Apartments Ownership Act or any other analogous or similar law of the Central
Government or State Government which may be in force in any State or any area and the
said agreement is registered under the Indian Registration Act, 1908.
rp The construction of a dwelling house on a site owned by the member or the spouse of the
member or jointly by the member and the spouse, or for completing/continuing the
construction of a dwelling house already commenced by the member or the spouse, on
such site or for purchase of a house/flat in the joint name of the member and the spouse
.Explanation: In this rule the expression, co-operative society means a society registered or
deemed to be registered under the Co-operative Societies Act, 1912 or under any other law for
the time being in force in any State relating to Cooperative societies.
2)
rp For the purpose of purchase of a site for construction of house thereon, the amount of
withdrawal shall not exceed the Member¶s basic wages and dearness allowance for 24
months or the Member¶s own share of contribution, together with the Employer¶s share
of contributions, with interest thereon or the actual cost towards the acquisition of the
dwelling site whichever is the least.
rp The amount of withdrawal shall not exceed the member¶s basic wages and dearness
allowance for 36 months or the member¶s own share of contributions, together with the
employer¶s share of contribution with interest thereon in his account in the Fund or the
actual cost towards the acquisition of the dwelling house (together with the cost of
construction thereon) of the purchase of the dwelling house / flat or the construction of
dwelling house, whichever is the least.
Explanation: The actual cost towards the acquisition of the dwelling site or the purchase of
dwelling house/flat shall include the charges payable towards registration of such site, house or
flat.

Withdrawals from the fund for repayment of loans in Special Cases:


(1) (a) The Board of Trustees may on an application from a member, sanction from the amount
standing to the credit of the member in the Fund, an withdrawal for the repayment wholly or
partly, of any outstanding principal and interest of a loan obtained in the name of the member or
spouse of the member or jointly by the member and spouse from a State Government, Registered
Co-operative Society, State Housing Board, Nationalized Banks, Public Financial Institutions,
Municipal Corporation or a body similar to the Delhi Development Authority.
(b) The amount of withdrawal shall not exceed the member¶s basic wages and dearness
allowance for THIRTY SIX (36) months or his own share of contribution together with the
employer¶s share of contribution, with interest thereon, in the member¶s account in the fund or
the amount of outstanding principal and interest of the said loan, whichever is least.

2) No withdrawal shall be sanctioned under this rule unless -


a) The member has completed ten years¶ membership of the Fund; and
b) The member¶s own share of contributions, with interest thereon, in the amount standing to his
credit in the Fund, is One thousand rupees or more; and
c) The member produces certificate or such other documents, as may be prescribed by the Board
of Trustees, from such agency, indicating the particulars of the member, the loan granted, the
outstanding principal and interest of the loan and such other particulars as may be required.
d) The payment of the withdrawal under this rule shall be made direct to such agency on receipt
of an authorization from the member in such manner as may be specified by the Board, and in no
event the payment shall be made to the member.

Advances from the Fund for illness in certain cases:


(1) A member may be allowed non-refundable advance from his account in the Fund in cases of:
a) Hospitalization lasting for one month or more, or
b) Major surgical operation in a hospital, or
c) Suffering from T.B, leprosy, paralysis, cancer, mental derangement or heart ailment and
having been granted leave by his employer for treatment of the said illness.

(2) The advance shall be granted if -


a) The employer certifies that the employees¶ State Insurance Scheme facility and benefits there
under are not actually available to the member or the member produces a certificate from the
employees¶ State Insurance Corporation to the effect that he has ceased to be eligible for cash
benefits under the employees¶ State Insurance Scheme; and
b) A doctor of the hospital certifies that a surgical operation or, as the case may be,
hospitalization for one month or more had or has become necessary (or a registered medical
practitioner, or in the case of mental derangement or heart ailment, a specialist certifies that the
member is suffering from T.B. leprosy, paralysis, cancer, mental derangement or heart ailment).

(3) A member may be allowed non-refundable advance from his account in the fund for the
treatment of a member of his family who has been hospitalized or requires hospitalization, for
one month or more -
a) For a major surgical operation, or
b) For the treatment of T.B., leprosy, paralysis, cancer, mental derangement or heart ailment:
Provided that no such advance shall be granted to a member unless he has produced -
rp A certificate from a doctor of the hospital that the patient has been hospitalized or
requires hospitalization for one month or more, or that a major surgical operation had or
has become necessary, and
rp A certificate from his employer that the employees¶ State Insurance Scheme facility and
benefits are not available to him for the treatment of the patient.

(4) The amount advanced under this rule shall not exceed the member¶s basic wages and
dearness allowance for 6 months or his own share of contribution with interest in the Fund,
whichever is less.

(5) Where the Board of Trustees is not satisfied with the medical certificate furnished by the
member under this rule it may before granting an advance under this rule demand from the
member another medical certificate to it satisfaction.

Advance from the Fund for marriages or post matriculation education of children:
(1) The Board of Trustees, may on an application from a member authorize payment to him or
her of a non-refundable advance from his or her provident fund account not exceeding fifty per
cent of his/her own share of contribution with interest thereon, standing to his/her credit in the
Fund, on the date of such authorization for his/her own marriage, the marriage of his/her
daughter, son, sister or brother or for the post matriculation education of his/her son or daughter.

(2) No advance under this rule shall be sanctioned to a member unless -


a) He has completed SEVEN years¶ membership of the Fund; and
b) The amount of his own share of contribution with interest thereon standing to his credit in the
Fund is Rupees ONE thousand or more.
(3) Not more than 3 advances shall be admissible to a member.
Grant of Advances in abnormal conditions
(1) The Board of trustees may on an application from a member whose property, movable or
immovable has been damaged by a calamity of exceptional nature, such as floods, earthquakes or
riots, authorize payment to him from the provident fund account, a nonrefundable advance of
RUPEES FIVE THOUSAND OR FIFTY PER CENT of his own total contributions including
interest thereon standing to his credit on the date of such authorization, whichever is less, to meet
any unforeseen expenditure.

(2) No advance under sub-rule (1) shall be paid unless -


(i) The State Government has declared that the calamity has affected the general public in the
area;
(ii) The member produces a certificate from an appropriate authority to the effect that his
property (movable or immovable) has been damaged as a result of the calamity; and
(iii) The application for advance is made within a period of 4 months from the date of declaration

Grant of advance to members affected by cut in the supply of Electricity


A member may be allowed a non-refundable advance from his account in the fund, if there is a
cut in the supply of electricity to a Factory or establishment in which he is employed on the
following conditions, namely:-
a) The advance may be granted only to a member whose total wages for any one month
commencing from the month of January, 1973 were three-fourths or less than three-fourths of
wages for a month.
b) The advance shall be restricted to the amount of wages for a month or rupees three hundred or
the amount standing to the credit of the member in the fund as his own share of contribution with
interest thereon, whichever is less;
c) No advance shall be paid unless the State Govt. certify that the cut in the supply of electricity
was enforced in the area in which the Factory or Establishment is located and the employer
certifies that the fall in the member¶s pay was due to cut in the supply in electricity;
d) Only one advance shall be admissible under this rule.
Explanation: "Wages" means, for the purpose of this rule, basic wages and dearness allowance
excluding lay-off compensation, if any -
Grant of advance to members who are physically handicapped
(1) A member, who is physically handicapped, may be allowed a non-refundable advance from
his account in the Fund, for purchasing an equipment required to minimize the hardship on
account of handicap.
(2) No advance shall be paid unless the member produces a medical certificate from a competent
medical practitioner to the satisfaction of the Board of Trustees to the effect that he is physically
handicapped.
(3) The amount advanced under this rule shall not exceed the member¶s basic wages and
dearness allowance for six months or his own share of contributions with interest thereon or the
cost of the equipment, whichever is the least.
(4) No second advance under this rule shall be allowed within a period of three years from the
date of payment of an advance allowed under this rule.

Withdrawal within one year before the retirement


The Board of Trustees may on an application form a member in such form as may be prescribed,
permit withdrawal of up to 90% of the amount standing at his credit at any time after attainment
of the age of 54 years by the member or within one year before his actual retirement on
superannuation whichever is later.

Option for Withdrawal for investment in Varishtha Pension Bima Yojana


The Board of Trustees may as an application from a Member is such form as may be prescribed
permit withdrawal up to 90% of the amount standing at his credit at any time after attaining the
age of 55 years by the Member to be transferred to LIC of India for investment in Varishtha
pension Bima Yojana.

Computation of period of Membership:-


In computing the period of Membership of the Fund his total service exclusive of periods of
breaks under the same employer or other Factory / Establishments before the Fund came into
existence as well as the period of his Membership whether of the Employees¶ Provident Fund
Established under EPF Scheme, 1952 or Private Provident Fund is exempted
Provident Fund & Misc. Provisions Act 1952 as the case may be, immediately preceding the
current Membership of the Fund shall be included. Provided that the member has not served his
membership by withdrawal of his Provident Fund during such period.

Payment on death of members:-


On the death of any member before the amount standing to his credit has become payable or
where the amount has become payable before payment has been made:
a) if a nomination made by the member, the amount standing to his credit in the Fund or that part
thereof to which the nomination relates, shall become payable to his nominee or nominees in
accordance with such nomination or
b) if no nomination subsists or if the nomination relates only to a part of the amount standing to
his credit in the Fund, the whole amount or the part thereof to which the nomination does not
relate, as the case may be, shall become payable to the members of his family in equal share;
Provided that no share shall be payable to -
rp Sons who have attained majority;
rp Sons of a deceased son who have attained majority;
rp Married daughters whose husbands are alive;
rp Married daughters of a deceased son whose husbands are alive; if there is any member of
the family other than those specified above

Provided further that the widow or widows and the child or children of a deceased son shall
receive between them in equal parts only the share which that son would have received if he had
survived the member and had not attained the age of majority at the time of member¶s death.
c) For the purpose of this rule a member¶s posthumous child, if born alive, shall be treated in the
same way as a surviving child born before the member¶s death.
Payment of Provident Fund:
(1) When the amount standing to the credit of a member becomes payable, it shall be the duty of
the Board of Trustees to make prompt payment as provided in the rule. In case there is no
nominee in accordance with this rule or there is no person entitled to receive such amount. The
Board of Trustees may, if the amount to the credit of the Fund does not exceed Rs.10,000/- and if
satisfied after enquiry about the title of the claimant, pay such amount to the claimant.
(2) If any portion of the amount which has become payable, is in dispute or doubt, the Board of
Trustees shall make prompt payment of that portion of the amount in regard to which there is no
dispute or doubt, the balance being adjusted as soon as may be possible.
(3) If the person to whom any amount is to be paid under these rules is a lunatic for whose estate
a Manager under the Indian Lunacy Act, 1912 (4 of 1912) has been appointed, the payment shall
be made to such Manager. If no such manager has been appointed, the payment shall be made to
the natural guardian of the lunatic and in the absence of any such natural guardian, such person
as the officials authorized to make the payment (where the amount does not exceed Rs.20,000/-)
or the Chairman of the Board of Trustees (if the amount exceeds Rs.20,000/-) consider to be the
proper person representing the lunatic and the receipt of such person for the amount paid shall be
a sufficient discharge thereof.

(4) If the amount to whom, any amount is to be paid under this rule is a minor for whose estate a
Guardian under the Guardians and Wards Act, 1890 has been appointed, the payment shall be
made to such guardian, where no guardian under the Guardians and Wards Act, 1890, has been
appointed, the payment shall be made to the guardian, if any. Where no guardian under the
Guardians & Wards Act, 1890, has been appointed, the payment shall be made to the natural
guardian and in the absence of natural guardian, to such person as the officials authorized to
make payment (where the amount does not exceed Rs.20,000/-) or the Chairman of the Board of
Trustees (if the amount exceeds Rs.20,000/-) considers to be the proper person representing the
minor and the receipt of such person for the amount paid shall be a sufficient discharge thereof.
(5) If it is brought to the notice of the Board that a posthumous child is to be born to the deceased
member, it shall retain the amount which will be due to the child in the event of its being born
alive and distribute the balance. If subsequently no child is born or the child is still born, the
amount retained shall be distributed in accordance with the provisions laid down.
(6) Any amount becoming due to a member as a result of:
rp Supplementary contributions from the employer in respect of leave wages/arrears of pay,
installment of arrears contribution received in respect of a member whose claim has been
settled on account but which could not be remitted for want of latest address; or
rp Accumulation in respect of any member who has either ceased to be employed or died,
but no claim has been preferred within a period of
Three years from the date it becomes payable or if any amount remitted to a person, is received
back undelivered, and it is not claimed again within a period of three years from the date it
becomes payable, shall be transferred to an account to be called the "Unclaimed Deposits
Account".
Provided that in case of a claim for the payment of the said balance, the amount shall be paid by
debiting the "Unclaimed Deposits Account".

















 c*,!!
MUMBAI: The Hiranandani Group, the city's leading realty developers, on Wednesday hit back
at the provident fund (PF) department and the Central Bureau of Investigation (CBI) for
implicating it in what it claimed were "manipulated allegations".

The Central Bureau of Investigation (CBI) Tuesday said it had filed a charge sheet against realtor
Hiranandani brothers and 26 others in connection with a Rs.94 million employees provident fund
evasion case.

According to CBI's Deputy Inspector-General of Police Praveen Salunkhe, those named in the
charge sheet include Niranjan Hiranandani and his brother Surendra Hiranandani, both directors
in the Hiranandani Group.

The charge sheet, filed in a designated court, also names other employees of the group, retired
and serving officials of the Employees Provident Fund Organisation (EPFO) and contractors
working for the construction group.

The charge sheet comes in a case registered by the CBI March 29, 2008 against top officials of
the EPFO, Bandra, including the then regional provident fund commissioner K.S. Arya, who has
retired.

Another provident fund commissioner M.R. Yadav, who has retired and assistants Rajnikant and
K. Gopalan have also been named in the charge sheet.

The CBI said that the accused conspired with criminal intentions to prepare fraudulent EPF
details of five group companies -- Hiranandani Properties Pvt Ltd, Hiranandani Developers Pvt
Ltd, Hiranandani Constructions Pvt Ltd, Roma Builders Pvt Ltd and Lake Meadow Hotels and
Resorts Pvt Ltd -- although the provident fund contributions were not paid by them.

The government employees and the builders cheated the exchequer to get undue financial
benefits running into crores of rupees, the CBI said.

The EPFO officers had earlier investigated the case and detected default on provident fund
payments to the tune of Rs.84 million by the five companies in the financial year 2004-2005, the
CBI said.
The investigators also seized records from the offices of the EPFO, Hiranandani Group and their
18 contractors.

They included false wage records of site workers prepared by the Hiranandani brothers and their
officers in conspiracy with labour contractors to evade paying the provident fund dues.

Experts from the EPFO assessed the records and submitted that the Hiranandani Group had to
pay provident fund dues to the tune of nearly Rs.94 million, the CBI said.

In August this year, the CBI issued a look-out notice for the Hiranandani brothers for their
involvement in the same scam, after they did not succeed to respond to summons to appear
before it for investigations.



















  p

Gratuity in earlier days was rather arbitrary and completely hostage to the whims of the
employer. A wealthy, well-established employer would reward his dedicated employees and the
not so rich would refuse such generosities. This led to a lot of discord and finally the government
stepped in, passing the Payment of Gratuity Act, 1972, making it mandatory for all employers
with more than 10 employees to give them gratuity.
Employees, as defined here, are the ones hired on company payrolls. Trainees are not eligible
and gratuity is paid on the basis of the employee's basic plus dearness allowance if any.





A * (also called a )) is a voluntary extra payment made to certain service sector workers
in addition to the advertised price of the transaction. Such payments and their size are a matter of
social custom. Tipping varies among cultures and by service industry
In some other cultures or situations, giving a tip is not expected and offering one would be
considered at best odd and at worst condescending or demeaning. In some circumstances, such as
with U.S. government workers¶, receiving of tips is illegal.

Gratuity is a part of salary that is received by an employee from his/her employer in gratitude for
the services offered by the employee in the company. Gratuity is a defined benefit plan and is
one of the many retirement benefits offered by the employer to the employee upon leaving his
job. An employee may leave his job for various reasons, such as - retirement/superannuation, for
a better job elsewhere, on being retrenched or by way of voluntary retirement.

An employer may offer gratuity out of his own funds or may approach a life insurer in order to
purchase a group gratuity plan. In case the employer chooses a life insurer, he has to pay annual
contributions as decided by the insurer. The employee is also free to make contributions to his
gratuity fund. The gratuity will be paid by the insurer based upon the terms of the group gratuity
scheme.





The payment of gratuity bill was introduced in the lok sabha on December 10th 1971. The bill,
however, was defective in several respects and hence referred to a select committee of the lok
sabha. The gratuity bill underwent numerous far reaching changes in the select committee. It was
passed by parliament in the shape and form as recommended by the select committee. The act
came into force from September 16th 1972. The payment of gratuity central rules also came into
from September 16th 1972.

c 'c  

The act provides for the scheme of compulsory payment of gratuity to employees engaged in
factories, mines, oilfields, plantation, ports, railway companies, motor transport undertakings,
shops or other establishment and for matters connected therewith or incidental thereto.


((  

The act is applicable to:

rp Every factories, mines, oilfields, plantation, ports, railway companies;


rp 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, I which 10 or more persons are employed
or were employed on any day of the preceding 12 months
rp To every motor transport undertaking in which 10 or more persons are employed or were
employed on any day of the preceding 12 months;
rp Such other establishment or class of establishments in which 10 or more employees are
employed or were employed on any day of the preceding 12 months.

   

An employee who has completed one year of service has name his/her nominee in the prescribe
form. An employee in his nomination can distribute the amount of gratuity among more than one
nominee. If an employee has a family at the time of making the nomination, it has to be made in
favour of one or more members of the family. If nomination is made in favour of a person who is
not a member of his family the same is void. However if the employee ha no family at the same
time of making a nomination, he can make the nomination in favour of any person. But if such
employee acquires a family subsequently, then such nomination becomes invalid forthwith, and
thereafter the employee has to make a fresh nomination in Favor of one or more members of his
family. Nomination once made can be modified after giving due notice to employer. If a
nominee predeceased the employee, a fresh nomination is required to be made.

A person who is entitled to gratuity has to apply himself or through an authorized person to the
employer for gratuity within the prescribed time. Even if the application is made after the
prescribed time, the employer has to consider the same. Similarly, the employer has to give
notice to the person entitled to gratuity and ton the controlling authority immediately after it
became payable, specifying the amount of gratuity, and thereafter make arrangements for its
payment.


''cc (c c

The act declares certain acts as offences and prescribes penalties for them. Whoever, for the
purpose of avoiding any payment to be made under this act, makes or causes to be made any
false statement or false representation, is punishable with imprisonment up to six months and or
fine up to Rs 1000.

The act exempts the employer in certain cases from liability to be punished. If an employer is
charged with an offence punishable under this act, he will be entitled to lodge any other person
whom he charge as the actual offender before the court at time appointed for the hearing. In such
a case, the employer has to give to the complainant not less than three clear day¶s notice in
writing of his intentions to file a complaint.

   'c( c




(a) Pay gratuity to the employees as required by the provisions of the act and the rules framed
there under.

(b) Determine the gratuity as soon as it becomes payable, and give notice to the same to he
employee concerned and the controlling authority. In case of dispute regarding the amount
determined, the admitted of gratuity must be deposited with the controlling authority. If the latter
decides that any more gratuities is due to the employees, the same must also be deposited with
him.

(c) Obtain insurance in the prescribed manner for his liability for payment of gratuity under the
act, or establish an approved gratuity fund in the prescribed manner.

   'c( cc

rp An employee eligible for payment of gratuity under the act, or any person authorized in
writing to act on his/her behalf has to apply to the employer within such time and in such
form as may be prescribed under the rules for payment of gratuity as soon as it becomes
due.
rp Every employee after completing one year of service, has to nominate members of his/her
family who may receive gratuity in case of his/her death.
Under the GRATUITY ACT 1972,
c"*%)" means any person (other than an apprentice) employed on wages, in any
establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any
skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether the
terms of such employment are express or implied, and whether or not such person is employed
in a managerial or administrative capacity, but does not include any such person who holds a
post under the Central Government or a State Government and is governed by any other Act or
by any rules providing for payment of gratuity.

"c"*%)" means, in relation to any establishment, factory, mine, oilfield, plantation, port,
Railway Company or shop -
rp Belonging to, or under the control of, the Central Government or a State Government, a
person or authority appointed by the appropriate Government for the supervision and
control of employees, or where no person or authority has been so appointed, the head of
the Ministry or the Department concerned,
rp Belonging to, or under the control of, any local authority, the person appointed by such
authority for the supervision and control of employees or where no person has been so
appointed, the chief executive office of the local authority,
rp In any other case, the person, who, or the authority which, has the ultimate control over
the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company
or shop, and where the said affairs are entrusted to any other person, whether called a
manager, managing director or by any other name, such person;

"'"%)", in relation to an employee, shall be deemed to consist of -


rp In the case of a male employee, himself, his wife, his children, whether married or
unmarried, his dependent parents and the dependent parents of his wife and the widow
and children of his predeceased son, if any,
rp In the case of a female employee, herself, her husband, her children, whether married or
unmarried, her dependent parents and the dependent parents of her husband and the
widow and children of her predeceased son, if any:






%%$)
The appropriate Government may, by notification, appoint any officer to be a controlling
authority, who shall be responsible for the administration of this Act and different controlling
authorities may be appointed for different areas.

()")7
(1) Gratuity shall be payable to an employee on the termination of his employment after he has
rendered continuous service for not less than five years, -
(a) On his superannuation, or
(b) On his retirement or resignation, or
(c) On his death or disablement due to accident or disease:

Provided that the completion of continuous service of five years shall not be necessary where the
termination of the employment of any employee is due to death or disablement:

Provided further that in the case of death of the employee, gratuity payable to him shall be paid
to his nominee or, if no nomination has been made, to his heirs, and where any such nominees or
heirs is a minor, the share of such minor, shall be deposited with the controlling authority who
shall invest the same for the benefit of such minor in such bank or other financial institution, as
may be prescribed, until such minor attains majority.

Explanation
For the purposes of this section, disablement means such disablement as incapacitates an
employee for the work which he was capable of performing before the accident or disease
resulting in such disablement.

(2) For every completed year of service or part thereof in excess of six months, the employer
shall pay gratuity to an employee at the rate of fifteen days wages based on the rate of wages last
drawn by the employee concerned:
Provided that in the case of a piece-rated employee, daily wages shall be computed on the
average of the total wages received by him for a period of three months immediately preceding
the termination of his employment, and, for this purpose, the wages paid for any overtime work
shall not be taken into account.:

Provided further that in the case of an employee who is employed in a seasonal establishment
and who is riot so employed throughout the year the employer shall pay the gratuity at the rate of
seven days wages for each season.
Explanation:
In the case of a monthly rated employee, the fifteen days wages shall be calculated by dividing
the monthly rate of wages last drawn by him by twenty-six and multiplying the quotient by
fifteen.

(3) The amount of gratuity payable to an employee shall not exceed three lacs and fifty thousand
rupees.


















/ + !."*%

Varun had been working with an IT company since past 10 years, 7 months. He is retiring on
15th April, 2010. His current Basic = Rs 40,000 pm, DA = Rs 5,000 pm. He is going to receive a
gratuity amount of Rs 3 lakhs on retirement. Note: Varun¶s basic and DA have been the same
since past 1 year.

Let¶s consider 2 situations here ± (a) Varun¶s employer is O  under Payment of Gratuity
Act, 1972; and (b) Varun¶s employer is  O  under Payment of Gratuity Act, 1972.

rp Salary = Basic + DA = Rs 40,000 pm + Rs 5,000 pm = Rs 45,000 pm


rp Average salary = 10 months¶ salary (immediately preceeding the month of leaving the
job)/10 = (Rs 45,000 pm * 10)/10 = Rs 45,000 pm. Therefore, half-month¶s average
salary is = Rs 45,000/2





c  
One can become entitled to a gratuity on resignation or on retirement after five years or more of
service. As per the Act, the gratuity amount is 15 days' wages multiplied by the number of years
put in by you. Here wage means your basic plus dearness allowance. Take the monthly salary
drawn by you last (basic plus dearness allowance) on resignation or retirement and divide it by
26, assuming there are four Sundays in a month. This is your daily salary. Multiply this amount
by 15 days and further with the number of years you have put into service.
For instance, if your average monthly salary is Rs 50,000, the gratuity payable to you after 10
years of service would be Rs 290,000. However your employer factors in another term:
'uninterrupted service'. The term covers the service period of the employee including leaves or
breaks, except periods notified as breaks in service by the employer.
For employees who do not fall under the Gratuity Act, the amount due for them is half of the
average ten months' salary multiplied by the number of years of service.

."
As per the formula under the Act, gratuity up to Rs 350,000 is exempt from taxes. In the above
example, the entire money is tax-free. However, for government employees any amount is non-
taxable.
The employer could choose voluntarily to pay you more gratuities; but any extra benefit that he
pays, not coming under the formula, will be taxable. For instance, in the above example, if the
employer pays you Rs 350,000, the entire money is not tax exempt; only the Rs 290,000 due
under the formula is.
In case of death of the employee, the heir is entitled to the gratuity immediately and the entire
amount is tax-exempt. However, if death occurs after the gratuity is due then any amount above
Rs 350,000 is taxable.
The employer could also offer you an extra gratuity by deducting a portion of your salary as the
cost to the company. At the time of joining the organization, ask your employer for all the details
concerning gratuity and how to calculate it.
To meet its liabilities towards gratuity, a company either funds the money from its own pocket,
or opens a trust and puts in money for the gratuity fund. This fund is then managed either by an
insurer or an actuarial company.


 ).1%A
Gratuity can be received by the employee at the time of his retirementor by his legal heir in the
event of death of the employee. Gratuity received by an employee on his retirement is taxable
under the head "Salary" and gratuity received by the legal heir is taxable under the head" Income
from Other Sources".

In both the above situations gratuity upto a specified limit is exempt under the provisions of
sec.10 (10) of the Income Tax Act, 1961.

For the purpose of exemption of gratuity under sec.10 (10) the employees are divided under three
categories: 

rp Govt. employees - In the case of govt. employees the entire amount of death-cum-
retirement gratuity is exempt from tax and nothing is therefore taxable under the head
Salaries.

op The amount of gratuity actually received.


op Fifteen days' salary (7 days in the case of seasonal employment) for every
completed year of service provided the employment is more than six months.

rp Employees covered under the Payment of Gratuity Act, 1972 - The employees covered
under the Gratuity Act who receive gratuity have been given exemption which is the
minimum of the following amounts. Gratuity received in excess of the minimum of the
amounts mentioned below is included in the gross salary for the purposes of taxation.

op Actual amount of gratuity received.


op Half month's average salary for every completed year of service. (Average salary
means the average of the salary drawn by the employee for 10 months
immediately preceding the month in which he retires)
rp Other employees - In the case of other employees the gratuity received or receivable on
his retirement or on his becoming incapacited prior to such retirement or termination of
his employment or any gratuity received by his heirs is exempt to the extent of the
minimum of the following amounts. The amount received in excess of the sums
mentioned below is included in the gross salary of the employee for the purposes of
taxation.

!, )
Gratuity is a lump sum payment made based on the total service of an employee either on
retirement or death. It is calculated as so many months pay with reference to his service.
rp The amount paid into scheme remains untouched by its creditors. In other words despite
the changing fortunes of the employers, the gratuity to the extent funded through the
scheme is secured and available for payment of gratuity to employees.

rp The fund can be invested most profitably, keeping the need for security of the fund in
mind, by LIC which has years of specialized knowledge in the field of investment.

rp Unless funded with LIC, for the payment of gratuity to the employees, in the absence of
sufficient cash fund it may become necessary to sell away valuable investment at a loss.
Thus funding with LIC has the dual benefit of liquidity as well as high yielding long term
investment.









)+  
NEW DELHI: The Supreme Court has ruled that teachers are not entitled to gratuity at the end of
their service as they cannot be classified as "employee" under the provisions of the Payment of
Gratuity Act, 1972.

The ruling was given by a Bench comprising Justices Shivaraj V Patil and D M Dharmadhikari
on a petition filed by the Ahmedabad Private Primary Teachers Association challenging a
Gujarat High Court order.

Under Gratuity Act 1972, "employee means any person (other than an apprentice) employed on
wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to
do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work...
Whether or not such person is employed in a managerial or administrative capacity."

The government ² through a notification dated April 3, 1997 ² had extended the provision of
the gratuity Act to educational institutions employing 10 or more persons.

However, the apex court said: "The teaching staff, being not covered by the definition of
'employee', can get no advantage merely because by notification educational institutions as
establishments are covered by the provisions of the Act."

Writing for the Bench, Justice Dharmadhikari said: "We are of the view that even on plain
construction of the words and expressions used in definition of the Gratuity Act, 'teachers' who
are mainly employed for imparting education, are not intended to be covered for extending
gratuity benefits under the Act."

"Teachers do not answer description of being employees who are 'skilled', 'semi-skilled' or
'unskilled'," the Bench said, rejecting the plea that teachers should be treated as included in the
expression "unskilled" or "skilled".




! !)! %% 
Labor relations are fragile in the country and they often break, unable to withstand even the
slightest pressure. While being more flexible remains the motto of every industrial establishment
globally, in India, things take an unfavorable twist. The labor laws which are basically meant to
enforce the acts which are age ± old are not strong enough, as there are a lot of loopholes.
Following are few acts that state the flaws in it7

'  
rp $! %! * +?345<@
According to central legislation of India, The Trade Union (Amended) Act 2001, a
registered trade union in India needs to have atleast 10% or 100 of the workers as its
members. Out of this, a minimum of seven people must be engaged or employed in the
establishment. The rest can be outsiders. The act concentrates on the organized labor and
has arguably restricts the rights of the organization to hire and fire the workers. This
rigidity has forced many of the organized players not to hire on the first hand foreseeing
the future difficulty of off loading a worker, even if he is useless. The jobless growth of
economy in India was a result of it.

rp $+1 +?34<>@
It is said that contract labor allows flexibility and permits outsourcing but provisions of
the Contract Labor Act was never meant to protect contract labor. The supreme court in
1072 which says ³if the contract labor essential to the main activity then it should be
abolished´, spoiled the flexibility of contract labor. Employees still cry out that the law is
often disobeyed by the employers. Employers argue that they should be allowed to
contract the peripheral work in order to increase the efficiency.

rp ! +?348;@
The Trade Union Act, which allows outsiders to be the office bearers and members, is
heavily criticized. Through this, employees who are not directly working under the
company would also turn against the company when disputes arise. An act that allows
outsiders to intervene in the company matters does not exist in any other countries in the
world. Lack of democracy in the trade unions is also a problem in India. While trade
union policies in countries like Singapore aims at the overall development of the country,
in India, these policies restrict the economic growth and productivity.



  
Industrial Relations has become an inevitable part of any business organization. Today,
organizations face multiple challenges. The problem that HR manager are facing vary from
micro-level issues, where an individual employee is involved, to macro level issues concerning a
global workforce and effective teams.
In organizations, 'work' is a matter of instructions given by managers and following them is the
duty of workers. A variety of procedures in the form of laws and agreements regulate the
conduct of the parties involved, making the instruction and their execution uncomplicated. The
role of the government is to ensure that the 'weak' workers are not exploited by the 'stronger'
employers in the matter of wages, discrimination, standards of safety, health and hygiene
condition at workplace and strives to prevent the abuse of authority by either party.
Despite the clear definition, either side sometimes ignores its role and responsibilities and
indulges in destructive practices. In one of the goriest incidents in the recent times of internal
conflicts, Roy J George, vice president (HR), Coimbatore-based auto instruments maker, Pricol,
died after being brutally assaulted with iron rods by some of the company workers. The reason
was the dismissal of 42 workers, working at the Kuniamthur unit, on the grounds of indiscipline.
In another incident, Honda Motorcycle and Scooter India have threatened to shut its factory at
Manesar in Haryana and move to an alternate location. The reason is that the production has
come down by 50% due to the go - slow strike by the workers as the long term agreement
between the labor and the management had expired and the parties involved were renegotiating
the terms and condition, involving the Haryana labor commissioner as the government
representative.
Organization should create an environment of trust and confidence, so that incidents like the
above can be avoided. The current labor laws not only promote inefficiency causing damage to
our growth in terms of employment, output and lead time, but also overlook investment
opportunities, creating a pessimistic atmosphere for entrepreneurship.
The labor laws need to be amended according to the changing times, so that the stakeholders
involved in industrial relations think objectively and work for the betterment, rather than having
a 'relationship with suspicion' and acting against each other. 






 c
+ 3
  !)
c 
 # 
 c ''
The case study deals with the labor laws in India and its effect and influence in modern day trade
unions and businesses. By explaining the case of Jet Airways labor dispute in 2009, the case
brings in the issue of increasing labor discontent and makes a case for why a major reform in
labor legislations is required.



On September 8, 2009, around 650 pilots of Jet Airways, indie¶s largest private airline company,
took a mass sick leave as a protest against the management that sacked two of its pilots for
joining a union. The pilots¶ union named National Aviators Guild (NAG) was formed in august
2009. Thousands of passengers were stranded because of the flash strike which lasted five days
and forced the management to cancel around 900 flights.
Aviation industry is not the only industry which suffered from labor discontent in recent times.
Multinational companies in India- nestle, Hyundai and others- also suffered from similar labor
disputes adversely affecting their operations.

 c

The rift between the jet airways management and the pilots started with the formation of NAG,
which is a union of Jet Airways pilots. The services of two senior jet airways pilots, D
BALARAMAN and Sam Thomas, were terminated without any explanations by the jet airways
management at the end of 2009. NAG said that the termination was only because of the pilots¶
active participation in the formation of the union.
On august 22, 2009, the management received a strike notice from the union, NAG. The same
notice was also sent to the labor commissioner. ³The pilots were sacked because they formed the
guild. The guild is not illegal and is registered with the labor commissioner¶s office. Our only
demand is they the two pilots back. Otherwise there will be definite strike,´ said Captain Girish
Kaushik, president of NAG. But the management remained undeterred about their decision. The
labor commissioner, who received the strike notice, called both the parties for a conciliation
meeting on August 31, 2009.
The labor commissioner asked the management to come with a satisfactory reply for terminating
the eservices of the pilots by September 7, 2009. The commissioner also directed the NAG not to
go on strike while the hearing was on. However, the NAG was persisting they get a satisfactory
reply, possibly that favors them, by September 7 else they would continue with their plan to go
on strike, though it is illegal to go on strike when the talks are on.
When there was no favorable move from the management, the pilots went on with the strike, but
in a legally acceptable way. The pilots went on a massive sick leave, which led to high chaos in
airports especially in Delhi and Mumbai. The chairman of Jet Airways, Naresh Goyal (Goyal)
said he was open to talks but blamed pilots for the massive troubles the airlines caused the
passengers. ³They are behaving like terrorists. They cannot hold the country, passengers and the
airline hostage,´ said Goyal. The management sacked two more pilots.
On September 9,2009, nine central trade unions ±Hindu Mazdoor Sabha, center for Indian trade
unions, union center, United Trade Union Congress, All India Central Council of Trade Unions
and Self ±Employed Women¶s Association ± extended their to the striking Jet Airways pilots. In
a letter to Jet Airways CEO, Wolfgang Prock Schauer, the unions said, ³By preventing the pilots
to form a union, you are violating their legal right to pursue legitimate trade union activities and
infringing their fundamental right to freedom of association guaranteed to them and all citizens
of India by the constitution.´
The mass sick leave continued till the management and the NAG reached an agreement on late
night of September 12, 2009. The management agreed to take back the dismissed pilots on board
and a consultative group was formed to resolve the issues.
Though the strike ended, it left the ailing airline with more damages. Cancellation of the
scheduled flights led to massive loss. Even after the flights were resumed, a reduction in the
average daily revenue and the number of passengers clearly indicated that the damage was
difficult to repair. The company lost INR 20 cr ($4.5 mn) on an average on the days of strike
owing to the cancellation and a drop of 30%in the ticket bookings. The developments were
deepening the troubles as the company had lost INR 225.3 cr in the quarter ending June 2009.

After the 5-day¶ dispute, jet airways daily revenue of $8 mn reduced considerably and the
number of passengers dropped from 23000 per day to 7500. The 5 day long protest of pilots has
created new problems for the struggling company. All that jet airways got was bad publicity,
cancelled flights, angry and upset passengers and a deep hole in the already draining pocket.
The strange fact is that even after repeated advice and appeal to not to go on strike, both from the
labor commissioner and the management, even after an order from the Mumbai high court
calling the strike illegal, the pilots have not retreated from their stand. They continued to be on
sick leave, leaving no chances for the management or government to claim it to be a strike. No
law could blame the pilots as they were doing nothing against the law and still it was a strike and
everyone including the legislating bodies, the management, and the pilots participating in the
strike knew it, still there was nothing that the legislation could do.


  
rp Indian labor new nothing about rights except duties, spending long years under British
rule.
rp In a way, the global financial crisis and the reaction of firms towards it subtly contributed
to the growth of labor unrest in indie.
rp The contradictory fact is that it was the Indian labor laws which gave power to the labor
unions by supporting their activities.
rp The lack of maintaining proper labor relation had become a curse on India
rp More than 10 unions in a single plant or industry, fighting for recognition is not a rare
scene in the modern day scenario.
rp There is a tremendous increase in the number of unregistered unions that have nothing to
do with interest of the organization.
rp Problem such as ;growth of unorganized sector, alarming increase in lost work days,
tensed relation between employers and employees, lack of trust, political interventions,
overlapping labor acts, lack of proper enforcing bodies, increase in labor unrest, µjobless¶
economic growth and many more.
rp The plethora of problems stem majorly from the labor relations and the governing labor
legislation. For example, while there are only a handful of inspections in factories of
china, often not more than five Indian factories are inspected by 30 inspectors on an
average, under various laws and rules and regulations. The inspector  should end if the
industries are to prosper.
rp Creating awareness about the benefits of labor reforms is one option. But until the parts
of labor legislation that actually hurt the working class interests¶ are changed,
investments¶ in labor - intensive sectors would be discouraged.







+  !)
  
  B,%*%*"#"%!2

It was official in September 2008 - the financial service industry, led by major global (and US)
banks, wrecked the global economy with their engulfing and enveloping features. Soon, the crisis
spread like fire and assumed the form of global financial crisis, plunging the entire world into
recession. As the economic activity slowed down, many companies collapsed and many others
suffered revenue losses that forced them to resort them to cost cutting measures. It also resulted
in reduced amount of work at companies, which meant that the companies did not need surplus
workforce. Consequently, one of the immediate effects of the crisis was massive job cuts across
industries, particularly in the developed countries of the world. the interesting dimension of these
job cuts was that these decisions had ripple effects, causing many countries (as companies in
these countries were directly or indirectly were associated with US companies) to scale back
economic activity, leading to huge job losses.
However, job cuts in India due to recession were limited as a large percentage of Indian
population was engaged in agricultural activities - a sector not affected by the global financial
crisis. Yet, as the Indian IT industry was hit by the global crisis, Indian IT companies resorted to
employees layoffs as a cost cutting measure. Meanwhile Satyam computers service Ltd.(now
renamed as Mahindra Satyam after Tech Mahindra bought a controlling stake in the company),
faced unique problem along with the global financial crisis. it was hit by an internal financial
scam due to the fraudulent activities of its founder and former chairman, B Ramalinga Raju
(Raju).
Post - revelation of the fraud by Raju, India's Ministry of Corporate Affairs disbanded Satyam's
Board and appointed an interim board in a move to restore confidence in shareholders,
employees and clients in India and abroad. However, as the future of the company hung in a
dilemma, the company suffered revenue losses and a cash crisis ensued. Consequently, it was
decided to sell off the stakes of the company and in April 2009, Tech Mahindra bought a
controlling stake in the organization. After the takeover, there were speculations of massive
layoffs. However, Satyam (under Tech Mahindra) launched the Virtual Pool Program (VPP),
terming it as an innovative scheme to cut costs while retaining talent. However, is VPP the right
strategy for talent management in the downturn? To what extent will the VPP help Mahindra
Satyam emerge out of crisis? Notably, VPP and layoffs in the Indian IT companies have put a
question mark on the future of the IT professionals in India. 





  

rp The issue of layoffs in IT companies also points towards some broader issues. With the
Indian industry being unable to provide employment to the already existing IT
professionals, the future of aspiring youngsters who are being nurtured and groomed in
numerous engineering colleges of the country remains uncertain. Notably, the job offers
of many engineers, who were offered jobs and were supposed to join the IT companies
after completion of their studies, have been withdrawn, without being given any concrete
reason for the withdrawal of the offer.

rp However, if the IT companies are to be squarely blamed for the chaos. Due to frequent
change of the jobs by the IT professionals, the IT companies perennially suffered from
high rates attrition. Also, as the IT professionals spend very little time in each company,
they could not gather enough experience. As a result, the workforce deteriorated in
quality but increase on cost.

rp Moreover, the extra workforce that the IT companies had piled up was not actually the
skilled workforce. The extra workforce generally comprised of low-skilled programmers
skilled only in using some programming tools or languages. They had been able to make
it to the IT companies because earlier there was a demand for them.

rp However, with businesses declining, the balance between demand and supply of
workforce has been distributed and the IT companies no longer need these people. Thus,
layoffs whether direct or indirect such as the VPP, have put to test an IT professional¶s
employability. If an IT professional has the required skills, he may not have to part with
his IT dream. However, if the required skills are not there, then it makes sense for an IT
professional to look for some other greener pastures.
  
( Cc  
( 

rp C.B. MAMORIA

rp HRM REVIEW (IUP PUBLICATIONS)


-Human Resource Information Systems, dated July 2010
-Industrial Relations, dated February 2010

rp ALL MAHARASHTRA SUPREME COURT CASES REPORTER , MARCH 2010


VOL.1 PART 3

rp INDUSTRIAL RELATION& LABOUR LAWS

-A.M. SHARMA-Himalaya Publication House

rp WWW.CHRM.COM

rp WWW.GOOGLE.COM

rp http://timesofindia.indiatimes.com

3@p
 +$$!%)

Research will be more of descriptive research. Purpose of the


research is to bring out facts that will prove that Industrial
Relations can be used to improve the services of the
employees working in industries in many ways. Employees
look for better amenities from his employer. Any
unnecessary delay in payment of say wages, remuneration or
any compensation in any department or improper treatment
of employees will dissatisfy the employees.

The significance of this project is to study the effectiveness


of Industrial Relations in industries. This research will be
useful for all the industries in implementing various labor
laws effectively and development of present situation based
on the research.

The data is collected to achieve above-mentioned objectives.


This data is collected as:

Secondary data:
Published Material
Magazines
Internet Search
p