Posts in category: Labour Act

The much-discussed New Labour Codes which were to be implemented on 1st July 2022 has been postponed as of now. These 4 Labour Codes are an amalgamation of the 29 Labour laws. According to the Ministry for Labour and Employment, only 23 states and UTs have released the draft rules under the Code of Wages.

The introduction of the new Labour Codes brings about much-needed reforms in the working conditions of employees in the country. They bring about changes relating to wages, social security, labour welfare, health, safety, and working conditions of employees.

Let us now delve into a few takeaways from these new codes when they are implemented by the Government.

Capping of Daily Working hours

The new labour codes allow the capping of daily working hours from the current 8 to 12 hours. However, the weekly work hours remain capped at 48 hours. This means that if any employee prefers a 4-day work week, he or she can increase the daily working hours to 12 and generate the required working hours for the week.

The new code also allows an increase in maximum overtime hours from 50 hours (as per the Factories Act) to 125 hours in any quarter across industries. The law will enable companies to adopt the 4-day week and employ workers on the weekend, if necessary.

However, the 4 day week could also be a double-edged sword. On the one hand, the employees would benefit from a more extended rest period, but on the other hand, it entails longer working hours during the weekdays which may negatively affect the workers’ health. In the same vein, the increase n overtime may enhance the earnings but it will be at the expense of longer working hours or probably working on weekends as well.

Changes in take-home salary

The take-home salary may get reduced especially for employees of the private sector. On implementation of the new codes, the basic salary would be capped at 50% of the gross salary. However, it proposes to increase the PF contributions of both the employees and employers. The changes will also bring about an increase in the retirement corpus and gratuity amounts. This will be beneficial to all employees during their retirement days.

Changes in leave availed

The new codes hope to rationalize the leave an employee can avail of during the course of their employment, carry-forward of leave to a succeeding year, and encashment of leave during the period of employment. The new labour codes have reduced the eligibility requirement for leave from 240 days of work to 180 days of work in a year.

The effect on the unorganized sector

The New Labour codes allow workers of all sectors including the unorganized sector to avail the benefits of the ESIC scheme. A national database of workers in the unorganized sector will be created through registration on a portal under the new labour codes. This will provide medical care to the employees and their family members who work in the unorganized sector.

The ESIC infrastructure that includes the hospitals, dispensaries, and branches is being expanded up to the district levels. On implementation, all 740 districts will get this facility.

Any worker engaged in hazardous work would be given the benefit of ESIC.  Similarly, gig workers engaged in new technology will also become eligible to become ESIC members. Plantation workers will also be eligible for its benefits. Institutions involved in hazardous work have to compulsorily register for ESIC.

Conclusion

These reforms hope to empower the workers in the organized and unorganized sectors. This will herald a major change in labour laws in the country and bring in the much-needed changes that have been discussed about for decades.

GetifyHR is fully prepared to guide our valued clients about all aspects of the new labour codes as and when they are implemented.  Our professional team is fully knowledged about these changes and is capable of providing immediate solutions to any doubts and queries regarding these laws.  Our outsourcing payroll package will also be able to support these changes so that our associates can be fully compliant during the proposed changeover to the new laws.

Introduction:

The constitution of India ensures social-economic justice to the people and establishing of a Welfare State.  The inequalities in the society were slowly being dismantled by regulations brought in by the government.  One such regulation was to introduce a long-term savings scheme for employees, especially in the Private sector, that would support them in retirement or superannuation.  This regulation is the Employees Provident Fund & Miscellaneous Provisions Act, 1952.

With the view to provide further security to the employees in times of adversity like ill-health or accidents, the government introduced the Employees State Insurance (ESI) scheme in the year 1948. Both these acts have gone a very long way in supporting the employees in the organized sector when they are out of job and in times of adversity.

The EPF Act

EPF Act:  the EPF act ensures that all employees have to contribute a percentage of their basic salary to the EPF every month.  An equal is contributed by the employer towards the fund. The amount so contributed would earn interest and can be withdrawn under certain conditions.  The scheme is managed by the Employees Provident Fund Organization (EPFO).

Eligibility – for Employer

Any organization that has 20 or more employees is required to register with the EPFO and contribute towards EPF.  However, subject to certain conditions even organizations employing less than 20 employees are permitted to register and contribute to the fund.

Eligibility – for Employee

Any employee drawing a monthly salary of less than ₹15,000/- has to compulsorily become a member of the EPF.  If any employee drawing a monthly salary more than ₹15,000/- desires to become a member he may do so subject to getting the approval from the Asst. PF Commissioner and the Employer.

How to Register?

EPF Registration is mandatory for all organizations that meet the eligibility criteria of 20 or more employees.  The registration must be obtained within one month of the attaining the minimum strength.  Failure to register will attract penalties.

The registrations can be made offline or online through the official website of the Employees Provident Fund Organization.  Online registration is an early process when you have all the required documents/information readily available, the registration form can be downloaded from www.epfindia.gov.in.

The following information has to be furnished:

Name and address of the Organization

Details of Head Office and Branches if any

Date of Incorporation/Registration of Firm

Details of ownership:  Designation and address of Directors or Partners

PAN details

GST details

Contact details:  email ID and mobile number of authorised person

Name of contact person, Address, Date of Birth, Gender, PAN, Designation and date        of joining

In addition to these, details regarding the type of company have to be furnished.

For Proprietorship Firm

Registration of Firm with date of registration

Name of the Employer

PAN details

Identify proof

Address of the Proprietor (Official)

Address of the Proprietor (Residential)

Contact Number

For Co-operative Societies (Trusts/Societies)

Certificate of Incorporation

Memorandum of Association

Articles of Association

PAN

Address Proof

For Partnership Firm

Name and address

Identity proof of Partners

Certificate of Registration

Details of Partners

For Limited Liability Partnership firm (LLP)

Certificate of Incorporation

Identify proof of Directors

Details of all Directors

Address Proof and ID Proof of all Directors

Memorandum of Association

Article of Association

Other Businesses

If Factory, then the Factory license and date have to given

First Sale Bill

First Purchase Bill towards machinery

Bank name, account Number, IFSC, address

Salary details

Employee details

Number of employees employed, Gender, Type of work

Salary details

Documents Required for ESI Registration

1. Company Pan Card (Scan Copy & Hard Copy)
2. Partners/Directors Pan Card (Scan Copy & Hard Copy)
3. Current Account Cancelled Cheque Leaf (Scan Copy & Hard Copy)
4. Company Registration Copy (ROC / Partnership Deed)
5. Partners Details (Name, DOB, Father Name, Partnership starting date)
6. Employees Aadhaar Card Copy
7. Employees Bank Passbook Copy
8. Digital Signature of Authorized Signatory
9. Specimen Signature
10. EPF & ESI Application forms
11. GST Registrations Copy
12. Rental/Lease Agreement

Steps for Online Registration

Be prepared with all the required documents

Login to the EPF website @ epfindia.gov.in

Read the instructions thoroughly

Fill in the required information

A Digital Signature Certificate of the Authorised Signatory – Proprietor/Partner/Director

Verify their correctness and then submit the form online

Type in the CAPTCHA code and click on “GET PIN” option

Enter the PIN that you receive on your registered mobile or email ID

Click on the SUBMIT button

Download the PDF

Save and take a printout of the PDF

This has to be submitted to the EPF Office.

The ESI Act, 1948

The Employees State Insurance (ESI) scheme is a welfare scheme for the benefit of employees in the organized sector.  The scheme was introduced by the Government under the ESI Act, 1948 with the objective of providing social-economic protection to employees during adverse situations brought on by ill-health or accidents.  The funding for the scheme comes from the contribution from the employee and employer.  Under this scheme, the employer contributes 3.25% of the monthly salary + dearness allowance, whereas the employees contribute only 0.75% of the salary.  Any establishment employing more than 10 employees (20 in some states) have to register with the Employees State Insurance Corporation (ESIC), an autonomous body under the Ministry of Labour & Employment, Government of India.

Eligibility

Any organization that employs 10 or more (20 or more in some states) is required to register with the ESIC and contribute towards ESI.  The Act however applies for both the employer and the employee.  In case the wage of the employee is less than Rs:176/- per day then the employee is exempted from contributing to the fund.  All employees whose salary does not exceed Rs:21,000/- are eligible to be beneficiaries to the scheme.

The ESI Act covers the following establishments:

• Shops, Road Transport organizations, Cinema Houses/Theatres, Newspaper Establishments, Non-seasonal Factories, Hospitals & Medical Institutions, Educational Institutions, Restaurants & Hotels. If any of these establishments employ 10 or more persons, they have to register with ESIC.

How to Register?

Registration can be manual or online.  However, now the ESIC registration is fully online.  The steps involved in online registration are given below:

Step 1:  Here you have to login to the ESIC portal @ www.esic.in.  Click on the “Employer Login” option on the home screen.  On the next page click on “Signup” button and fill in the details called for and then submit the form.

Step 2:  The employer will receive a confirmation mail to the email address and mobile number provided earlier at the time of sign-up.  This email will contain the username and password details for registering as an employer under the scheme.

Step 3 :  In this step you have to fill-up the Registration Form-1.  For this you have to login to the ESIC portal and click on the “Employer Login” option and enter the User name and password received in your email or mobile.  You will get redirected to the “New Employer Registration” option.  Click on the option and you will be asked to select the “Type of Unit” from the dropdown list and click on the “Submit” button.

The Employer Registration Form_1 will appear on the screen and all the details required have to be filled in.  The details include Employer details, establishment details, and employee details.  Once this is completed, click on the “Submit” button.

Step 4 :  In this step you have to make the Payment for Registration.  Once the Registration Form is submitted, the “Payment of Advance Contribution” page will be open.  Fill in the amount to be paid and select the payment mode.  Payment of advance contribution for 6 months is required to be remitted.

Step 5 :  This is where you will be sent a system generated “Registration Letter”.  This will contain a 17 digit Registration Number and is a valid proof of registration of the employer under the ESI Scheme.

Documents Required for ESI Registration

The following documents have to be scanned and uploaded

1. Company Pan Card (Scan Copy & Hard Copy)
2. Partners/Directors Pan Card (Scan Copy & Hard Copy)
3. Current Account Cancelled Cheque Leaf (Scan Copy & Hard Copy)
4. Company Registration Copy (ROC / Partnership Deed)
5. Partners Details (Name, DOB, Father Name, Partnership starting date)
6. Employees Aadhaar Card Copy
7. Employees Bank Passbook Copy (If Gross is below 21 thousand)
8. Digital Signature of Authorized Signatory
9. Specimen Signature
10. EPF & ESI Application forms
11. GST Registrations Copy
12. Rental/Lease Agreement

These two Acts have provided the employees and their dependents in the organized sector solace during times of adversity like ill-health and accidents and when they are in retirement.  They have been a great boon for such employees.

Compliance is a generalized term that indicates adherence to varying rules and laws passed by the Government. Statutory Compliance is complying with or adhering to rules and laws about labour and human resource.

Organizations that employ people are required to follow a set of guidelines that fall under statutory compliance. Penalties include fines and in some cases imprisonment if companies fail to fully comply with these rules and regulations. Following these rules and laws is, therefore, very important for the organization if it needs to function smoothly. In this article, we will discuss how companies can avoid compliance penalties.

What are the risks of non-compliance?

Statutory compliance is vital for any company and their HR teams have to be on their toes to frequently update the new regulations and see that the company is fully compliant. Let us first understand the consequences of failing to comply with the rules and regulations.

Fines

The first risk of non-compliance is the possibility of fines.  Governing bodies have put in place stringent penalties to compel companies to comply with the rules and regulations, and fines are their first line of penalties.  Thousands of rupees are collected as fines for non-compliance and the amounts would vary based on the seriousness of the offense. This entails that you not only have to pay the fines but will also have to spend for legal costs.

Imprisonment

For very serious lapses in complying with the Statutory Compliance rules and regulations, imprisonment of up to 6 months with or without fines is enforced.

Loss of Reputation

One of the serious outcomes of non-compliance is the loss of reputation suffered by the company and this, in turn, will amount to a loss of customers.

Dissatisfaction of Employees

When penal action is taken against a company for non-compliance it also brings in dissatisfaction within the employees as non-compliance of any degree would also affect them. This would in turn bring about unwanted tension and would provide enough fodder for potential employees to stay away from joining the company. Employee retention would suffer and it also curtails the entry of new employees. Overall this would harm the company’s working.

Loss of Productivity

Non-compliance would also result in loss of production due to the stoppage of production brought about by unscheduled inspections and audits by the authorities. This would lead to a waste of time and money. In cases where non-compliance is serious, the authorities can even order companies to suspend operations.

What are the Acts businesses have to comply with?

Before we venture into the penalties of non-compliance with Statutory Compliance rules and regulations, let’s have a look at what these Acts are that all businesses have to comply with.  We can divide these Acts into 5 sections.  They are:

1. Acts that control Wages
2. Acts that provide for Social Security
3. Acts that control Industrial Relations
4. Acts to benefit Women and
5. Acts that control other aspects of the employees

1.  Acts that control Wages

1.1  Payment of Wages Act, 1936

1.2  Minimum Wages Act, 1948

1.3  Payment of Bonus Act, 1965

1.4  Equal Remuneration Act, 1976

2.  Acts that provide for Social Security

2.1  Employees’ Provident Fund Act, 1952

2.2  Employees’ State Insurance Act, 1948

2.3  Payment of Gratuity Act, 1972

2.4  Labour Welfare Fund Act, 1965

3.  Acts that control Industrial Relations

3.1  Industrial Disputes Act, 1947

3.2  Industrial Employment (Standing Orders) Act, 1946

3.3  Trade Unions Act, 1926

3.4  Factories Act, 1948

3.5  Shops and Establishment Act, 1947

3.6  The Industrial Establishment Act, 1963

4.  Acts for the benefit of Women

4.1  Equal Remuneration Act, 1976

4.2  Maternity Benefit Act, 1961

4.3  Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

5.  Other Acts

Apart from these a group of Acts is in force to take care of other aspects of the employee that does not find representation in the above mentioned Acts. They are:

5.1  The Professional Tax Act, 1975

5.2  The Child Labour (Prohibition & Regulation Act, 1986

5.3  The Contract Labour (Regulation and Abolition) Act, 1970

5.4  The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959

5.5  The Apprentice Act, 19651

5.6  The Employees Compensation Act, 1923

5.7  The Interstate  Migrant Workmen (Regulation and Conditions of Services) Act, 1979

What are the penalties for non-compliance?

Statutory Compliance is a critical aspect of any business or organization. Failure to comply with these statutory requirements can pose immense problems. These include penalties in the form of fines and imprisonment when the non-compliance issue is serious. We shall briefly discuss the penalties under the various important Acts pertaining to Payment of Wages and Social Security in the following paragraphs.

1.  Penalty for non-compliance with the EPF Act, 1952

Any person who fails to pay the contribution towards EPF or makes false statements or representation is liable to be punished with imprisonment for a period that may extend up to 1 year or with a fine of ₹5000/- or with both. The Act also enforces penalties for non-payment of inspection charges or administrative charges. The penalty for such non-compliance is punishable with imprisonment for a period that is not less than 6 months and may extend up to 1 year and a fine of ₹5000/-.

However, if the employee contribution is also not paid then the punishment may extend to a term of 3 years but not less than 1 year and a fine of ₹10000/-.

The filing date for the Monthly EPF returns is 25th of each month, and for the Annual Return under Form 3A and 6A it is on or before the 30th of April every year. The Act also requires the filing of Form 2, Form 5, and Form 10 as and when required.

2.  Penalty for non-compliance with the ESI Act, 1948

Penalties for non-payment, delayed payment, or falsifying payments and returns include imprisonment for a period extending up to 2 years and a fine of ₹5,000/-. For non-payment, simple interest @ 12% per annum for each day of delay is collected.

Filing of return for the half-year from April to September is on or before 12th November, and for  the period October to March is on or before 12 May.

3.  Penalty for non-payment of Gratuity under the Payment of Gratuity Act, 1972

Failure to make the gratuity payment or providing false statement or giving false representation is punishable with imprisonment for a term which may extend to six months or with a fine of ₹1000/- or with both. As soon as the Gratuity is due, the employer shall determine the amount due to the employee. The amount has to be paid to the employee within 30 days from the date it becomes payable.

4.  Penalty under Labour Welfare Fund Act, 1965

In Tamilnadu, if any person who willfully fails to produce any document required by the Board or fails to furnish any information called for by the Board or fails to comply with any directions issued by the Board is liable to be imprisoned for a term or 3 months or with fine of five hundred rupees or with both.

The rules vary from state to state. The Labour Welfare Fund requires the filing of an annual return and the dates vary from state to state. In Tamil Nadu, the due date is 31st January of every year.

5.  Penalty for non-payment of wages under the Payment of Wages Act, 1936

Wages have to be disbursed to the employees on the dates mentioned in the state’s Payment of Wages Act. For non-payment of wages on time by the employer a penalty in the form of a fine not less than ₹1000/- that may extend to ₹5000 is enforced.  For subsequent convictions the fine will not be less than ₹5000/- and may extend up to ₹10000/-.

Similarly, for failing to maintain the register or not furnishing the required information or giving false information, the fine shall not be less than ₹1000/- and may extend up to ₹5000/-. For repeat conviction of non-payment of wages, imprisonment not less than one month which may extend up to 6 months, and fine not less than ₹2000/- and extendable up to ₹15000/- may be collected. There is also provision for collecting additional fine up to ₹100/- per day.

This is a state subject and therefore varies from state to state. In Tamil Nadu, an Annual Return in Form IV has to be filed with the Inspector within the jurisdiction of the factory or industrial establishment not later than 31st January of each year.

6.  Penalty for non-payment of minimum wages under the Minimum Wages Act, 1948

Non-payment of minimum wages as per the Minimum Wages Act, 1948 is punishable under section 22 of the Act by imprisonment up to 6 months or fine or both. This may differ from state to state. Incidentally, the Delhi Government has increased the fine from ₹500/- to ₹50000/- for non-payment of Minimum wages and the imprisonment has been increased from 6 months to 3 years.

This is state-specific and varies from state to state. In Tamil Nadu, filing of an Annual return in Form III is mandatory, and the Government will notify the dates.

7.  Penalty for non-compliance with the Payment of Bonus Act, 1965

If any person does not comply with the provisions of the Bonus Act 1965 or any rule made thereunder or fails to meet the direction or requisition, shall be punishable for a term which may extend up to 6 months or with a fine of ₹1000/- or with both. However, if there is a dispute and the employer and employees are not in agreement with the terms, then the issue comes under the purview of the Industrial Disputes Act.

The annual return under Form D for payment under the Bonus Act has to be filed for every calendar year before 1st February of the following year irrespective of the financial year that an employer follows.

8.  Penalty for non-compliance with the Equal Remuneration Act, 1976

If an employee contravenes the provisions of the Act by not paying equal remuneration to men and women workers for the same work or work of similar nature, or discriminates between men and women, he shall be punishable with a fine which shall not be less than ₹1000/- which may extend to ₹ 20000/- or with imprisonment for a term which shall be not less than 3 months but which may extend for 1 year or with both. For subsequent offenses, the imprisonment may extend to two years.

If the employer omits or fails to maintain any registers or other documents, or fails to produce when called for, or refuses to produce the same, he will be punishable with simple imprisonment for a term which may extend to one month or with a fine which may extend to ₹ 10000/- or with both.

The Act does not require the submission of any return. However, the employer has to maintain a Register of employed in Form D that has to be produced before the Inspector appointed under the Act.

How do you avoid the risks of non-compliance?

Payroll is a vital part of any organization that employs people. Businesses generally maintain their payroll function in-house either manually or by relying on a do-it-yourself payroll application. Whether you perform this task manually using a desktop with customized software or an online solution, there are serious issues especially when it comes to statutory compliance. Doing it in-house may not be able to keep you fully updated on the changes and this would pose serious problems in the working of the business.

Payroll and Statutory Compliance tasks are time-consuming and complicated. Any mistakes in payslip generation or filing the compliance reports would have serious consequences. The best option is to outsource this task to a reputed concern whose payroll module and expertise in statutory compliance would help to drastically reduce the burden and the risks.

The present crop of high-tech firms offers a lasting solution to this vexing problem. This would not only help to reduce the in-house workload but also help to generate the regular reports more accurately and in full compliance with the rules and regulations. The present-day payroll packages using cloud technology provide the ideal solution.

Outsourcing to a company like GetifyHR helps the organization to mitigate risks and lessens the in-house workload. This can help the company to regularly identify compliance obligations and act accordingly. GetifyH, with its vast experience in managing Payroll and Statutory Compliance issues, has the right tools and trained professionals to handle this task with ease. This will enable the company to focus fully on developing the business.

Conclusion

Statutory Compliance is a highly complicated function and companies should be on their toes to keep themselves fully updated on the changes in rules and regulations. When you get the assistance of professional service providers, you get the required expertise to guide you and keep you fully updated. You will not only be able to mitigate the risks but would also be able to:

• Identify the compliance obligations and keep abreast of the changes.
• Meet all compliance rules and regulations.
• Ensure filing of returns, and remittance of dues to the department on time, without any mistakes.
• Ensure that the employees get their share of remittances regularly under prevailing rates.
• Streamline the workflow and help the HR team to focus more on managing the staff and employees.
• Storing the information in an organized manner for future use by the accounts department.
• Providing adequate security to vital data.

Failure to comply with government rules and regulations can endanger your profitability. As an employer, you are duty-bound to comply with these rules and regulations and the best option is to outsource these operations to a company like GetifyHR. You not only reduce your stress levels but will also be able to free time for your HR teams in particular. This will help you to focus more on business development.

Introduction

The economic development of a country can be correlated to the efforts they take for the welfare of the workers both in the organized and unorganized sectors. The need to protect the rights of the workers and ensure safe working conditions and regulate the actions of the employers regarding the workforce has resulted in various Labour laws being passed over the years. Since Independence, India has enacted several Acts to streamline and protect the rights of employees during the period of employment and also protect their interests post-retirement.

Accordingly, the Shops and Establishment Act was enacted by each state based on a common model code.  The Act has provisions to regulate the payment of wages, working hours, leave entitlements, holidays, terms of service, and other work conditions of workers in shops and commercial establishments.

The Shops and Establishment Act applies to all shops and commercial establishments namely, business centers, stores, offices, warehouses, hotels, eateries, theatres, amusement parks, and other entertainment centers throughout the country. This is a very important labour regulation and all establishments coming under the purview of the Act have to strictly comply with the rules and regulations.

Objectives of the Act

The Shops and Establishment Act’s main objective is to protect employees’ rights by defining the benefits to them, regardless of the industry and type of establishment they are employed in. The Act is designed to regulate the Payment of wages, fix the terms of service, leave entitlements, holidays, working hours, overtime work, maternity leave and benefits, and rules regarding the employment of women and children.

Scope of the Act

• The Labour Department governs the Shops and Establishment Act and regulates the premises wherein any trade, business, or profession is carried out.
• The Shops and Establishment Act regulates most of the trade and businesses in India.
• Separate Acts govern the 28 States and 9 Union Territories.
• The Act regulates working conditions in Shops, Commercial Establishments, and also residential premises that are run for business gain.

What are the areas that the Shops and Establishment Acts regulate?

• The Act regulates working hours and overtime.
• Rest intervals for employees
• Opening and closing hours are notified
• National and religious holidays and the days when the establishment remain closed
• Leave Policy; annual leave, Maternity leave, Sick leave, and Casual leave entitlement
• Schedule for Payment of Wages; time and conditions.
• Policies regarding wage deductions.
• Termination of employment.
• Cleanliness, lighting, and ventilation of the premises.
• Precautions to be taken against fire.
• Reporting accidents during working hours and maintaining the records.
• Maintenance of various Registers.
• Display of notices and Certificates in prominent locations.
• Rules for the employment of children.

Key Definitions

Shop

Shop refers to any premises where goods are sold, either by retail or wholesale, or where services are rendered to customers. An office, a store room, a godown, a warehouse, or a workplace whether in the same premises or elsewhere that is used to conduct such trade or business is also referred to as a shop.

Commercial Establishment

Any premises where trade, business, profession, or any other work is undertaken is considered a commercial establishment.

This may include a registered society or trust, a charitable trust, a journalistic or printing establishment, a contractor or auditor, educational institutions, premises where banking, insurance, stock, shares, and brokerage is undertaken, hotels & eateries, lodges, resorts, clubs, theatres and other places like amusement parks and entertainment halls.

Registration under the Shops and Establishment Act

• Since each State and Union Territory has its Shops and Establishment Act, they may follow separate regulations. The process of registration, registration-fee structure, and documentation required may be different in each state.
• Upon starting a shop or establishment one needs to apply for the Shops & Establishment registration within the stipulated period enacted by the state regulation.

The application is to be submitted to the Chief Inspector in the form prescribed in the state. The following details have to be furnished.

1. Name of the employee.
2. Name, address, and category of the establishment.
3. The number of employees.
4. Other relevant details as called for.
5. The registration fee is calculated based on the number of employees.

The Department of Labour of each state is authorized for the registration process. Most of the states are now following a 100% online registration process, leaving only a few states that still follow the manual filing of registration.

Documentation

Since every state has its specific requirements, the documents may slightly vary from state to state. However, the following documents are required across every state for registration under the Shops and Establishment Act.

• Certificate of Incorporation of the company/LLP
• List of Directors or Partners with ID and Address proof
• Partnership Deed in case of Partnership Firm
• Copy of PAN Card or Aadhar Card
• Address proof like on the electricity bill of the premises
• The registration fee as prescribed by the government

Procedure for closure of the shop or establishment

If for any reason the occupier decides to close the shop or establishment, the Chief Inspector should be informed, in writing within 15 days of the proposed date of closure. The Chief Inspector will cancel the registration and remove the name from the register.

Benefits of Registration

• Registration provides proof of legal entity and allows the conduct of business within the limits of that particular state.
• Since it provides proof of legal entity, it helps in opening a Bank Account.
• Registration helps to facilitate the Inspection process whenever the authorities inspect the premises.
• Can benefit under the various schemes of Central and State governments.

Self-Certification Schemes and how it enables ease of doing business?

• Many State governments have implemented Voluntary Compliance/Self-Certification Schemes to assist employers to overcome the complications due to the plethora of laws to be complied with, registers to be maintained, and returns to be filed.
• The employers are free to join the scheme at any time.
• They are motivated to comply with the rules and regulations of the Act without compromising the worker’s safety and social security.

Registration under the scheme enables automatic cover of a set of labour laws and the benefit of these laws can be availed. They include:

1. The Minimum Wages Act, 1948
2. Payment of wages Act, 1936
3. Payment of Bonus Act, 1956
4. Contract Labour (Regulation and Abolition) Act, 1970
5. Payment of Gratuity Act, 1972
6. Maternity Benefit Act, 1961
7. Equal Remuneration Act, 1976
8. Child Labour (Prohibition and Regulation) Act, 1986

All rules as per the Central Acts and their respective State rules will apply. Those registering for the scheme are exempted from surprise inspections under the various laws. One consolidated register is required to be maintained instead of multiple registers. Only a few annual returns need to be filed instead of several returns under the various labour laws.

Penalties

Complying with the rules and regulations of the Shops and Establishment Act is mandatory for all establishments. In case of failure in obtaining registration and non-compliance with the rules and regulations of the Act, the establishment would be liable to pay a fine. This varies from state to state. Repeat offenses could be liable for imprisonment and there is also the risk of receiving closure notices.

Conclusion

The Shops and Establishment Act is a vital piece of legislation to address the health and safety of employees. All registered establishments the Act have to strictly follow the rules and regulations. It is, therefore, important that these businesses are fully aware of the provisions of the Act and the changes that are brought in from time to time.

GetifyHR, one of the leading outsourcers of Payroll processing in the country is in its element when it comes to handling the Shops and Establishment Act, across the country. We have a high-end cloud-based package that can seamlessly handle all aspects of payroll processing, and this is backed by a team of highly experienced professionals who will assist clients in all aspects of this Act and all the other Acts about labour laws. You are just a click away from an association that would be highly beneficial in not only keeping the business fully compliant but also promoting growth.

Introduction

The Government has enacted The Payment of Bonus Act, 1965 for making it statutory for establishments to reward their employees.This Act provide benefits to all employees who have put in a certain period of service. In this article, we highlight the basic features of this Act and the eligibility to receive these benefits.

The Payment of Bonus Act, 1965

The government enacted this Act to provide for payment of Bonus to all employees based on profit or productivity. The Act provides for payment of minimum Bonus or maximum bonus as decided by the employer. The objective is to reward the employee by sharing a part of the profit earned by the company..

Applicability and Eligibility

All establishments with 10 or more employees are eligible to pay a Bonus to their employees. From the employee’s point of view, every employee drawing Rs:21,000/- or less ( Basic + DA excluding other allowances) per month is eligible to receive a bonus. All allowances like HRA, Overtime, TA, commissions, etc are excluded from the calculation of Bonus.

The minimum rate of Bonus is 8.33% of the salary and the maximum is 20% of the salary. The establishment has to pay a Bonus within 8 months from the close of the financial year. The minimum salary for calculating bonus has been raised to Rs:7,000/- per month from the earlier Rs:3,500/-. Therefore, as of now, the minimum bonus payable will be based on the minimum salary i.e., Rs:7,000/- per month or the rate of minimum wages, whichever is higher.

To become eligible for bonus in a particular year, an employee has to work for not less than 30 working days in that accounting year. Any employee who has been dismissed from service for fraud, violent behavior, theft or misappropriation of funds or for damaging the property, or who has caused financial loss to the company is not eligible to receive bonus.

The employee has to pay the bonus by A/c. Payee cheque or by direct transfer to the Account. As mentioned earlier, the bonus has to be paid within 8 months from the close of the accounting year. However, the government may extend this.

Records/Registers to be maintained

The employer has to maintain the following records or registers:

• A register in Form A that shows the allocable surplus.
• A register in Form B showing set on and set off of the allocable surplus.
• A register in Form C showing details of bonus disbursed.
• Submission of a return in Form D to the authorities within 30 days of the time limit specified under Section 19.

The employer has to make available all the records/registers as sought by the concerned authorities.

Penalty

Any contravention of the provisions of the Act will bring about legal action in the form of imprisonment up to 6 months or with a fine up to Rs:1,000/-or both.

Conclusion:

The Payment of Bonus Act, 1965 was enacted by the government to enable the employees to receive a form of reward for their service to the establishment. All establishments that employ 10 or more employees have to comply with the rules and regulations of these Acts. The onus is on the establishment to maintain all the employee-related records efficiently and accurately. The ideal solution to maintain these records efficiently and in an error-free manner is to outsource the entire payroll process to an efficient service provider.

GetifyHR with its vast experience in the industry and use of the latest high-end technology is a front-runner in all aspects of Payroll Processing. Their cloud-based application can handle Payroll, Attendance & Leave Management, and Statutory Compliance requirements in a most efficient manner. Handling Bonus and Gratuity issues in association with GetifyHR will naturally reduce the burden on the HR team and provide for better functioning of the organization.

Introduction

Labour Laws have been enacted since Independence to improve the livelihood of the employees. The need to provide due remuneration to the employees and to prevent exploitation by the employers prompted the Government to enact a law that ensures payment of minimum wages to the employees. The need for such an act was extremely critical as it aims to usher in social justice for the workers and also provide them with the rate of wages fixed by the statute.

As per the Indian Constitution, labor laws fall under the Concurrent List, which gives power to both the Central and State Governments to legislate and frame rules. Over the years legislations such as the Industrial Disputes Act, 1947, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, Maternity Benefit Act, 1961, etc., have been enacted by the Government. These enactments play a significant role in protecting the rights and interests of the employees, protecting employees from exploitation by employers, providing better employment opportunities to the workers, and creating a healthy work environment.

The Minimum Wages Act, 1948

The Government of India, to ensure that the employees were provided bare subsistence so that they could maintain a decent standard of living, enacted the Minimum Wages Act, 1948.  The Act ensures that all workers secure wage that is adequate to provide for their family to maintain a decent standard of living. Importantly it ends the exploitation of the workers by the employers.

The Act seeks to protect the rights of the employees by establishing advisory boards to resolve disputes between the employees and employers concerning the payment of minimum wages to the employees.

The Act aims to expand the concept of social justice to the workers and also provide them with minimum wages as fixed by the statute.

The objectives of the Minimum Wages Act, 1948

The objectives of the Minimum Wages Act, 1948 are many and varied, and these are listed below:

1. The objective is to fix the Minimum Wages that are to be provided to the employees. These rates are revised every 5 years.
2. To secure adequate age for all workers to maintain a decent standard of living.
3. To standardize the daily working hours of the employees.
4. To prevent exploitation of the workers by the employers.
5. To enable the worker to satisfy basic needs, maintain good health and live in comfort.
6. To penalize the employers when they contravene the Act by paying lesser wages than the announced minimum wages.
7. To bring equality between men and women in both the wages and working hours

Applicability

The Minimum Wages Act, 1948 applies to the whole of India. Any employer who employs workers in any scheduled employment is liable to pay minimum wages. However, the government may refrain from fixing minimum wages in respect of any scheduled employment in which there are in the whole state less than 1000 employees engaged in such employment.

Important provisions under the Minimum Wages Act, 1948

The Government, under Section 3 of the Act, fixes the minimum wages payable to the workers under the scheduled employment. This section also mentions that these rates are subject to revision every 5 years.

The provisions of the Act are:

Fixing the Minimum rate of wages

1. Provision for fixing minimum wages for time work.
2. Provision for fixing minimum wages for piece work.
3. Minimum rate of wages for overtime work.
4. Fixing minimum rates of wages for different classes of work, different scheduled employment, work in different locations, and for different age groups.
5. Fixing minimum wages by the day or by the month as the case may be.

Appointment of Advisory Board

The Government can appoint Advisory Boards for coordinating the work of committees and sub-committees, and also for advising the government in fixing and revising the rate of wages.

Appointment of Central Advisory Board

The Central Government shall appoint a Central Advisory Board to oversee the matters like fixation and revision of minimum rates of wages of the employees. This Board shall consist of:

1. Members to be nominated by the Central government to represent both the employers and employees in the scheduled employment.

The number of such members for each side will be equal.

2. Nominating independent members whose numbers will not exceed one-third of the total members. The Chairperson of the Central Advisory Board will be a member of this group.

Payment of Wages under this Act

1. Minimum Wages under this Act shall be paid in cash.
2. The concerned government can notify in the official gazette, of the payment of minimum wages either wholly or partially in kind.
3. By a notification in the gazette, the government can authorize the supply of essential commodities at concessional rates.

Fixing working hours for the day

These are as per section 13 of the Act.

1. Provision to fix the working hours for a normal working day with the specified intervals.
2. Provisions for a day of rest in a seven-day work schedule.

This has to be extended to all classes of employees and adequate remuneration be provided to the worker during the rest day.

3. Provide payment to the employees who work on a rest day.

This shall not be less than the overtime wages.

4. An employee is eligible to get overtime pay if he/she works for more than the specified hours. The employer will be liable to pay for every hour or part of the hour worked at the overtime rate fixed.

As per section 15 of the Act, if an employee has worked for fewer hours than the specified hours in a day he/she is entitled to receive the wages as though he/she has worked for a full day.

However, under certain circumstances, he/she may not receive the wages for a full day.

Maintenance of Registers and Records

This comes under section 18 of the Minimum Wages Act, 1948. Every employer is mandated to maintain registers and records relating to the number of employees employed, the work done by them, the wages paid to them, and maintain the wage receipts and any other relevant information.

Appointment of Inspectors

The Act provides appointment of Inspectors and this is notified in the official gazette. The inspectors are tasked to discharge their duties within the jurisdiction allotted to them.

1. They are authorized to enter such premises where employees are employed and examine the registers and records of wages paid and hours worked.
2. They are empowered to take copies of registers, records of wages paid, or any other required documents maintained under the Act.

Provisions for Claims

The Commissioner of Workmen Compensation will decide any claims made by employees for non-payment of minimum wages or an officer designated as Labour Commissioner by the Central Government. They are bound to decide cases in a particular region about matters relating to non-payment or payment of lesser amounts than the minimum wages to the employees.

Petitions have to be filed under Section 20 of the Minimum Sages Act, 1948 to the concerned authorities. They are directed to give adequate opportunities to both the employees and employers to voice their concerns.

The ruling of the authorities will be final and binding on both parties. The authorities appointed by this Act are vested with the powers of a civil court under the Code of Civil Procedure, 1908. They are empowered to take evidence, enforce the attendance of witnesses, call upon for production of documents, etc.

In case the employer is found to have not paid the wages or has delayed the payment of wages, or paid less than the specified wages, the authority will direct the employer to pay the dues along with compensation for damages suffered by the employee. In case the authority is satisfied that the non-payment or delay in payment to the employee was a bona fide error then no compensation is paid.

Penalties for Offences

Under Section 22 of the Minimum Wages Act, 1948an employer who defaults in payment of minimum wages to the employees or who contravenes any rule or order made under Section 13 of the Act shall be punished with imprisonment for a term which may be extended to 6 months or fine not less than ₹ 500/- or both.

The authority of the Central and State Governments to frame rules

Under Section 29 of the Minimum Wages Act, 1948, the Central Government is authorized to make rules by notification in the Official Gazette. All matters relating to terms of office of members, the pattern of voting, the mode of conducting business by the Central Advisory Board, and other relevant matters can be notified under this section.

Section 30 of the Act authorizes State Governments to make rules for carrying out the provisions of the Act, and these have to be notified in the Official Gazette.

The constitutional validity of the Minimum Wages Act, 1948

Employers have challenged the constitutional validity of the Minimum Wages Act 1948 before various courts. Employers have approached the courts on the ground that the provisions of the Act are illegal as it puts unreasonable restrictions on the employer. This deters the employer from continuing the trade or business as the provisions of the Act mandate paying minimum wages to the workers. This also limits the right of the employee as they are unable to work in a trade or business unless there is an agreement between them and the employer. Therefore, the contention was that the Act was a violation of article 19(1)(g) of the Indian Constitution which guarantees freedom of trade and business.

However, the court played a critical role in determining that the Ac was constitutionally valid and it protects the interests of the workers so that they have access to food, shelter, clothing, education, medical assistance, etc. Though the employer may find certain provisions of the Act difficult to carry on business or start a business, these provisions are enacted to protect the interests of the general public.

Conclusion

The Minimum Wages Act, 1948 was enacted to safeguard the rights and interests of the workers employed in scheduled employment. The very purpose of the Act is to provide equal employment opportunities and adequate remuneration to maintain a decent standard of living. The Act prevents exploitation of the workers and provides revision of wages every 5 years and fixing of working hours in a normal working day.

GetifyHR has played a crucial role in enabling its clients to be fully compliant with all the rules and regulations of the Minimum Wages Act, 1948. This has enabled both the employers and employees to co-exist in a harmonious work atmosphere. Our cloud-based payroll outsourcing module has enabled our clients to handle all Payroll related operations like generating Payslips, maintaining Leave and Attendance, complying with all Statutory requirements, and Recruitment. Get in touch with us for a complete solution for all your Payroll needs.