5thsem (FP) Charcuteri

STRICTLY PRIVATE AND CONFIDENTIAL
ATTORNEY WORK PRODUCT
Employment Law
Compliance Handbook
_______________________________
A Practical Compliance Reference
Evaluer I Employment Law Attorneys
SCO15, Sector 17/E, Chandigarh
Copyright Evaluer | all rights reserved
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TABLE OF CONTENTS
ABOUT THE FIRM - EVALUER 12
CONFIDENTIALITY 13
PURPOSE OF THIS HANDBOOK 14
CHAPTER 1 CONTRACT OF EMPLOYMENT
1. Legislations that must be considered while drafting an

appointment letter 16
2. Classification of employees 17
3. Sample contracts of employment
Temporary employee. 19
Probationer. 21
Apprentice / trainee. 23
Consultant. 25
Contract labour. 27
General manager of factory. 28
Managerial cadre (managers and senior executives). 32
Retainership contract. 35
CHAPTER 2 EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS 38
ACT, 1952
4. Introduction to the EPF Act 39

Once covered, the coverage of the establishment will
continue forever. 39
Contribution towards EPF. 39
Administrative charges. 39
Nomination to prevail over will. 40
Succession certificate not required for payment to nominee. 40
5. Definition of wages for EPF calculation 41
Items included in basic wages. 41
Items excluded in basic wages. 42
6. Important clarifications for EPF calculation 44
Definition of an excluded employee. 44
Can an employee contribute over and above the mandatory
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12 %, as voluntary contribution. 44
What is the salary limit towards EPF contribution. 44
What will be the treatment for EPF calculation when
an employees salary crosses the wage ceiling of
Rs 6,500. 44
Transfer of Provident Fund accumulations. 45
Will an employee hired afresh on higher than prescribed
salary be covered under the EPF Act. 45
Will an employee continue to be covered even
after his salary exceeds the prescribed limit . 44
Can an employer split minimum wages of a worker in order
to minimize provident fund contribution. 45
Can the employee withdraw a part of his PF accumulations
during employment. 46
Circumstances in which accumulations are paid to
the employee by way of final settlement. 49
What is the mode of payment of contribution. 49
Coverage of employees engaged by a contractor. 50
Will the arrears of wages, paid to an employee by virtue
of an award, attract provident fund
contributions. 50
Will the amount of commissions, as paid to the employees,
attract the applicability of EPF Act. 51
7. Pension Scheme
Contribution to the Pension Scheme. 52

Calculation of pensionable salary. 52
What are the conditions for receiving employee pension. 53
Pension when an employee retires before the
age of 58 years. 53
Pension if an employee has worked for less than
10 years. 53
Pension if an employee dies before retiring. 54
Pension when employee changes his job. 54
Benefits provided by pension scheme. 54
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What is family under Pension Scheme. 56

An employee who is a member of the employee Pension
Scheme and leaves employment at 48 years of age and
8 years of service. When shall he be eligible to
receive his pension. 56
8. Employee Deposit-Linked Insurance Scheme 57
Assurance benefits. 57
9. Obligation of the Company under the EPF Act 58
10. Returns, forms, records to be maintained and submitted 61
For an un-exempted establishment (i.e. Trident Ltd) 61
For an exempted establishment. 66
CHAPTER 3 EMPLOYEE STATE INSURANCE ACT, 1948 69
11. Introduction and applicability of the ESI Act 70

12. Definition of wages for ESI calculation 71
13. Benefits provided to an insured employee: 79
Medical benefits. 79
Sickness (Cash) benefits. 80
Disablement benefit. 81
Dependants benefits. 82
Maternity Benefit (paid in cash). 85
Other Benefits. 86
14. Benefits to the Company 87
15. Step-by-step procedure to ESI compliance 88
16. Returns, forms, records to be maintained and submitted 91
One time return on coverage. 91
Regular returns. 92
Record maintenance. 93
Occasional return. 94
Other miscellaneous forms. 97
17. FAQs 98
How to get medical benefit when an insured person
is leaving for another station for a temporary
period. 98
Is there any provision for exemption from
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payment of employers contribution. 98

Benefits not to be combined. 98
Authority for certifying eligibility of claimants. 99
Once covered, no getting out. 99
Contribution / deductions. 99
Will an employee continue to be covered
under the ESI Act even if he crosses the
wage ceiling as prescribed under the ESI Act. 100
Contribution periods and benefit period. 100
If the wages of an employee exceed Rs 15,000
per month, can he be treated as not covered. 101
What is the manner of payment of contribution. 101
Will delayed payment of contribution attract
any interest. 101
What is the effect of increase of wages from
retrospective date. 102
Voluntary coverage of an establishment not
Permissible. 102
Principal employer to pay contribution in the
first instance 102
Company not to dismiss or punish employee
during period of sickness. 102
Medical benefits to an insured person who
ceases to be in insurable employment
on account of permanent disablement. 102
Medical benefits to retired insured person. 102
Income limit of dependant parents for
eligibility to medical benefits. 103
Benefit payable up to and including day of death. 103
Availability of ESI benefits away from the place of work. 103
Availability of benefit even when contributions
are not paid. 103
Accidents happening while commuting to place
of work. 103
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Bar against receiving or recovering compensation

or damages under any other law. 103
18. Critical evaluation of the ESI Act 104
CHAPTER 4 THE PAYMENT OF BONUS ACT, 1965 105
19. Introduction to the Bonus Act 106
20. Eligibility of bonus and definition of an employee 107
21. Wages for calculation of bonus 110
22. Payment of bonus and calculation thereof 113
23. Returns, forms to be maintained and submitted to authorities 116
24. FAQs
Bonus to employees engaged through contractor. 118
Time limit for payment of bonus. 118
Penalty under the Bonus Act. 118
Disqualification of an employee for bonus. 118
Bonus not to be remitted or deposited. 119
Piece-rate employees. 119
Can a Company adjust voluntary bonus against
bonus payable under the Bonus Act. 119
Entitlement of bonus to a suspended employee. 119
Can the bonus payable to an employee in an accounting
year be reduced if the employee has not
worked for all working days in that year. 119
Establishments to include departments,
undertakings and branches. 120
Special provision with respect to payment of
bonus linked with production or productivity. 120
CHAPTER 5 THE MATERNITY BENEFIT ACT, 1961 122
25. Introduction to the Maternity Benefit Act 123

26. Wages for calculating maternity benefit 124
27. Dos and Donts for the Company 126
28. Returns, forms to be maintained and submitted to authorities 129
Annual Return. 129
Record maintenance. 129
Display of the Maternity Benefit Act. 129
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Miscellaneous. 130
CHAPTER 6 THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970 131
29. Introduction 132
30. Applicability and definition of workman under the
Contract Labour Act 133
31. Applicability of other labour laws on contract labour 134
The Factories Act, 1948. 134
Employee Provident Fund and Miscellaneous
Provisions Act, 1952. 134
Employee State Insurance Act, 1948. 134
The Payment of Bonus Act, 1965. 135
Payment of Gratuity Act, 1972. 135
The Minimum Wages Act, 1948. 135
Workmens Compensation Act, 1923. 135
32. Step-by-step procedure for obtaining license (for contractor)
and registration (for the Company) 137
33. Returns, forms, records, to be maintained and submitted
to authorities 142
Obligations of the company / principal employer 142
Obligations of contractor. 142
Registers and records to be maintained and filed
by contractor. 143
Welfare facilities to be provided by contractor. 146
Display of notices. 147
Penalties. 147
34. FAQs
Liability of principal employer in case of
sub-contracting. 149
Responsibility of payment of wages to
contract labour. 149
Terms and conditions of employment of contract
labour vis--vis regular employees. 149
Ratio of regular employees and workers through
Contractor. 149
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Laws, agreement or standing orders inconsistent with

the Contract Labour Act not permissible. 150
Payment of wages. 150
Wage rate for contract labour and permanent
Workers. 150
License not renewed but contractor continues to
work legal implication. 150
What is the legal implication of a contractor changing
but contract labour not changing. 150
What happens to contract labour when the contract between
a contractor and principal employer is terminated
due to unsatisfactory performance. 151
What is the liability of principal employer if contractor
runs away leaving behind his workforce. 151
Who is responsible for payment of wages to
contract labour. 151
CHAPTER 7 THE PAYMENT OF GRATUITY ACT, 1972 152
35. Introduction to the Gratuity Act 153
Applicability. 153
Employees eligible for gratuity. 153
Can every employee claim gratuity under the
Gratuity Act. 154
Will a director of a company be entitled to gratuity
under the Payment of Gratuity Act. 154
36. Calculation of Gratuity 155
Wages for the gratuity calculation. 155
Amount of gratuity payable. 155
37. Important clarifications 157
Payment of gratuity when no nomination has
been made. 157
Interest on late payment. 157
Calculation of gratuity when an employee has
been working for 22 days in a month. 157
Claiming gratuity before 5 years of service. 157
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Gratuity to employees engaged through a contractor. 157

Completed year of service. 158
Gratuity to a retrenched employee. 158
Will a trainee having worked for 5 years be entitled
to gratuity. 158
Can gratuity be adjusted against loan taken by
an employee. 158
Attachment of gratuity payable to legal heirs. 159
Will an employee be entitled to gratuity on
his re-employment. 159
Forfeiture of gratuity. 159
Gratuity on resignation. 159
Retirement on attaining the age of 58. 159
Mode of payment of gratuity. 160
Nomination. 160
to authorities 161
Notice of opening, change and closure of factory
/ establishment. 161
Nomination. 162
Application for gratuity by employee. 162
Notice for payment of gratuity. 163
Display of the Act / Rules. 164
Penalty. 164
CHAPTER 8 THE INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946 166
39. Introduction to the Standing Orders Act 167
40. Salient features of the Standing Orders Act 168
Applicability of the Standing Order Act. 168
Workman under the Standing Order Act. 168
Certification of Draft Standing Orders. 168
Temporary application of model standing orders. 169
Date of operation of Standing Orders. 169
Inconsistence between contract of employment
and certified standing orders latter will prevail. 169
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Display of standing order. 169

Payment of subsistence allowance. 170
Procedure for certification of Standing Orders. 170
Penalty. 170
41. Forms to be prepared and maintained by the Company 172
42. Matters to be provided in the Standing Order 173
CHAPTER 9 THE MINIMUM WAGES ACT, 1948 174
43. Introduction to the Minimum Wages Act 175
44. Compliance checklist
Payment of wages. 176
Permissible deductions. 176
Total amount of deductions. 177
Maintenance of registers. 177
Annual returns. 178
Display of notice. 178
Weekly day of rest. 178
Number of hours of work which shall constitute a
normal working day. 178
Extra wages for overtime. 178
Maintenance of register of wages. 178
Muster roll. 179
Penalty and punishment for offences. 179
to authorities 180
Annual return. 180
Registers and records. 180
Display of Notice. 182
46. Minimum rates of wages w.e.f March 1, 2013
(Attached as annexure)
CHAPTER 10 THE APPRENTICES ACT, 1961 183
47. Objective of the Apprentices Act 184
48. Essential ingredients of contract of apprenticeship 184
49. Apprentice is not a workman 184
50. Bonus to an apprentice 185
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51. Apprentice and Employee Provident Fund 185

52. Apprentice and Employee State Insurance Act 185
53. Obligation of the Company 185
54. Payment of stipend 186
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About the firm Evaluer
Evaluer is a law firm, attorneys at which specializing in Company law and Indian Employment laws. At
Evaluer we provide legal advice to established and start-up companies, HR managers, entrepreneurs,
venture capital firms and private equity investors on various compliances that govern their company,
investments and employees. This inter-alia includes drafting and negotiation of contracts, service
agreements, confidentiality and non-compete arrangements, non-disclosure agreements, share-
purchase agreements, shareholders agreements, joint venture formalities, restructuring, creating
employee benefit trusts, including ESOP trusts etc. We also undertake and file documents, as when
required on behalf of our clients. In the face of a complex regulatory regime, our team offers proactive
and practical advice & implementation support.
Our advice is delivered by well-informed, accessible, teams, which strive to provide the highest quality
of service to our clients, by listening, understanding their needs, responding promptly and living up to
the commitments that we make. We use plain English to communicate verbally and in our
documentation.
In short we advise our clients in order to keep them compliant with laws applicable to their company
and employees that they hire from time to time. We at Evaluer understand and appreciate the
different challenges that our clients face in the current business environment as a result of
technological changes, evolving government regulations, and competitive pressures in the
marketplace.
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Chapter 1
CONTRACT OF EMPLOYMENT
Employer Employee
Contract of Employment
Employment Law
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CONTRACT OF EMPLOYMENT
The relationship between an employer and employee begins with the issuing of letter of appointment
and its acceptance by the employee and becomes a contract of employment between the two. Since
in general contracts, the parties are bound by the terms of contract and are liable for breach thereof,
so also in a contract of employment, the employer and the employee are governed by the terms of
employment, spelt in the letter of appointment and thus assumes great significance in determining
the rights and obligations of both parties. It is thus necessary to construct the terms of employment
and conditions of service in the letter of appointment with great diligence and prudence. Omissions
may cost the employer dearly in pecuniary terms at a later stage.
The following legislations must be considered while drafting an appointment letter
1. The Indian Contract Act, 1872 Regarding written and implied conditions of service
2. Specific Relief Act, 1963
3. Arbitration and Conciliation Act, 1996
4. Constitution of India, 1949 Article 14, 16, 19 & 21
5. General Clauses Act, 1956
6. The Employee Provident Fund and Miscellaneous Provisions Act, 1952
7. The Employee State Insurance Act, 1948
8. The Payment of Bonus Act, 1965
9. The Maternity Benefit Act, 1961
10. Industrial Statutes or Civil Procedure Code as may be applicable
11. Income Tax Act, 1961
12. Industrial Employment Standing Orders Act, 1946
13. Limitation Act, 1963
14. Indian Evidence Act, 1872
Viewed in the aforesaid context of legal position on the terms in the letter of appointment, it is
imperative that the Company draft a comprehensive letter of appointment incorporating the clauses
and framing the terms diligently, spelling the rights and obligations clearly.
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CLASSIFICATION OF EMPLOYEES
Employees are broadly classified into the following eight categories:
1. Temporary employee Means an employee who has been appointed for a

limited period for work which is of essentially
temporary nature and who is employed temporarily as
an additional employee in connection with temporary
increase in work of permanent nature.
2. Probationer Means an employee who is previously employed to fill

a permanent vacancy or post and who has not
completed 6 (Six Months) or 240 (Two Hundred Forty)
days of service in the aggregate in that post.
3. Apprentice / Trainee Means a learner who has been admitted for training.
4. Part-time employee Part-time employee means an employee who is

employed for less than the normal period of working
hours.
5. Permanent employees Means an employee who has been employed on a

permanent basis, or who, having been employed as a
substitute or a temporary employee has subsequently
been made permanent by an order in writing by the
Manager or any person authorized by him in that
behalf.
6. Fixed term employee Means a person employed for a specified period on the
expiry of which, the employment comes to an end.
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7. Substitute Means a person who is a reliever, being employed in

the place of any employee who is absent for any
reason.
8. Casual employees Means an employee who is employed for any work

which is not incidental to or connected with the main
work of manufacturing/service process carried on in an
establishment and which is essentially of a casual
nature.
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SAMPLE CONTRACT OF EMPLOYMENT
TEMPORARY EMPLOYEE
To, Date:
_________________
_________________
Dear Sir,
With reference to your application dated () for the post of () in our organization and subsequent
interview you had with us, the Company is pleased to appoint you on the post of () on the following
terms and conditions:
Terms and conditions
1. Your employment is purely of temporary nature with effect from () for a maximum period of
() months or till the completion of temporary work whichever is earlier.
1.1. If for any reason the temporary work is not completed within the expected time or company
gets more temporary work, period of your temporary employment may be accordingly
extended but your appointment will continue to be temporary only.
2. During the period of temporary employment, you will be entitled to a consolidated salary of
Rs () and you will not be entitled to any other benefits, privileges, concessions applicable to
permanent employees except the statutory benefits, if any. You will observe punctuality and
be regular in your attendance.
3. Your services are liable to be transferred to any other section/department in the same
establishment or to any other establishment (existing or which may be set-up in future)
anywhere in the county.
4. You may also be sent on deputation to any other organization under the same management
or under different management anywhere in the country.
4.1 You will keep us informed of any change in your residential address.
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CONSULTANT
Mr/Ms. ()
___________
Dear Mr/Ms (),
With reference to your application dated () and subsequent interview/ discussions you had with us,
you are appointed as a Consultant in our organization on the following terms and conditions which
are mutually agreed upon.
1. You will be engaged as a Consultant for () with the Company for all its locations in India for
a period of () commencing from (). On completion of the period, this arrangement will
automatically come to an end unless renewed for a period of () on mutually agreed terms
and conditions. You will provide consultancy service on all matters relating to the above
area/subject/ work.
2. During this tenure period you will be paid an all inclusive fixed consultancy charges of Rs ()
per month subject to taxes.
3. During the tenure of this agreement, the same can be terminated by giving () notice in
writing by either side or by paying amount equivalent to this notice period.
4. As a Consultant you will not divulge or make known any dealings, accounts, or any other
information relating to the companys current and future business without the written
consent by the company.
5. You will be responsible for safekeeping and return in good condition and order all our
property/documents which may be in your use, custody and charge. On termination or expiry
of the agreement, you will return the companys documents or property immediately.
6. You are requested to mention your PAN Number on all claims (where applicable).
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Employee Provident Fund

Miscellaneous Provisions
Act, 1961
CHAPTER
2
In this chapter we will
Evaluer on address the following:
Employment Law What the Employee Provident

Fund Act, Employee Pension
Scheme and Employee Deposit
Linked Insurance mean.
Meaning of wages for the

purpose of provident fund
deductions.
Checklist and Dos and Donts for

the Company.
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Can the employee withdraw a part of his PF accumulations during employment?

An employee can utilize his provident fund accumulation partially for specific occasions, such as:
(i) Medical Treatment:
Advance from the fund for illness viz. hospitalization for more than a month, major surgical
operation or suffering from T.B, leprosy, paralysis, cancer, heart ailment, etc. For self or
family (spouse, children, and dependent parents). The maximum amount that can be
drawn shall not exceed the members basic wages (and dearness allowance) for 6 (Six)
months or his own share of contribution with interest in the Fund till date, whichever is
less. The member has to show proof of hospitalization for 1 (One) month or more with
leave certificate for that period from the Company. He must also prove that he is not a
member of the Employee State Insurance Corporation.
Additionally, a physically handicapped employee can withdraw up to 6 (Six) months basic
salary and dearness allowance, or his share of provident fund contribution with interest or
the cost of equipment. He will have to submit a medical certificate to prove the same.
(ii) Marriage or education of self, children, sister or brother etc:
An employee should have completed a minimum of 7 (Seven) years of membership of the
Fund. The maximum amount he can draw is 50 (Fifty) percent of his contribution.
Withdrawal is permitted for his own marriage, the marriage of his or her daughter, son,
sister or brother or for the post- matriculation education of his or her son or daughter.
Proof to be submitted will be fee payable to the educational institute or the wedding invite
as the case may be. Not more than 3 (Three) advances shall be permissible under this head.
(iii) Damage to movable or immovable property of member due to natural calamity:
A member whose property (movable or immovable) has been damaged due to a natural
calamity such as earthquake, floods or riots can withdraw up to Rs 5,000 (Five Thousand
Only) or 50 (Fifty) percent of his total contribution including interest thereon whichever is
less to meet the unforeseen expenditure. The concerned member will have to will have to
apply within 4 (Four) months of the calamity. Proof to be submitted will be a certificate of
damage from the requisite authority and a calamity declaration by the State Government.
The EPF Act does not provide for any minimum service condition for the member in such a
scenario.
(iv) Employee physically handicapped:
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3rd Advance
5. Addition, alteration 10 years from 12 months basic (i) Proof of

or improvement in the date of or members own ownership.
the dwelling house. completion of share of (ii) Details of addition
dwelling house. contributions with / alteration to be
interest thereon. carried out along
with permission to
carry out additions
etc.
(iii) Estimate from the
appropriate
authority.
(v) Option for withdrawal for investment in Pension Beema Yojana:

The employee should be more than 55 (Fifty Five) years of age. Amount receivable is 90%
of both contributions. Payment to be made to Life Insurance Corporation directly.
Circumstances in which accumulations are paid to the member by way of final settlement:
Accumulation in the provident fund account of a member become payable for final settlement
under following circumstances:
(i) on retirement from service after attaining the age of 58 (Fifty Eight) years;
(ii) on retirement as a result of total and permanent disablement rendering incapable for
work;
(iii) immediately before migration from India for permanent settlement abroad or for taking
employment abroad;
(iv) termination of service upon mass or individual retrenchment;
(v) termination of service under voluntary retirement scheme; and
(vi) termination of job and remaining unemployed for over 2 (Two) months or leaving the job
from a covered establishment and joining the establishment not covered by the EPF Act.
What is the mode of payment of contribution?

Para 38 of the EPF Scheme provides that all remittances are remitted within 15 (Fifteen) days of
close of every month by separate bank drafts or cheques on account of contributions and
administrative charges. If the payment is made by cheque it should be drawn only on the local
bank of the place in which deposits are made. Where there is no branch of the Reserve Bank of
India (the RBI) or the State Bank of India (the SBI) at the station where the establishment or
factory is situated, the Company shall pay to the Fund the amount by RBI (Governments Drafts at
par) separately on account of contributions and administrative charges.
Employer E-Sewa Scheme of EPFO:
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EPFO has introduced Electronic Challan cum Return (ECR) from April, 2012 for remittance of
contributions by all employers with a view to provide greater transparency, better quality of
service to employees and greater convenience and ease to employers. According to this Scheme:
(i) the employer can automatically update the accounts on receipt of contribution by EPFO;
(ii) the employer can download annual accounts slips for their employees for the year 2010-
2011 onwards from the website of EPFO;
(iii) there is no need to file returns in Form 5, 10, 12A, 3A, 6A by employer of un-exempted
establishment;
(iv) there is no need for annual updation of accounts;
(v) EPF contributions of individual members shall be credited to their respective accounts on
monthly basis;
(vi) members can get the detailed account statements with all credit and debit on request
through the EPFO website with effect from May 1, 2012
For this, an employer is required to register the establishment on EPFO website
(www.epfindia.gov.in) for their user ID and password for filing the Electronic Challan cum Return
(ECR) for wage month of March 2012 onward. For further details and steps to be followed for
depositing contributions through ECR, please visit EPFO website www.epfindia.gov.in (Link
Employer e-Sewa).
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EMPLOYEE DEPOSITLINKED INSURANCE SCHEME
The third scheme to operate under the EPF Act is the Employee Deposit Linked Insurance Scheme (the
EDILS). The purpose of this scheme is to provide for life assurance benefits to the employees of an
establishment to which the EPF Act applies. According to the EDLI Scheme, the Company is required
to contribute 0.5 % percent of the employees monthly basic pay, capped at Rs 6,500 (Six Thousand
Five Hundred), as premium. This contribution is deposited in a Deposit-Linked Insurance Fund
established under the EPF Act. The employees are not required to make any contribution.
The EDLI Scheme provides for payment of assurance benefits upon death of the member while in
service. On the death of an employee, who is a member of the Fund the persons entitled to receive
the provident fund accumulations of the deceased member, shall in addition to such accumulation be
paid an amount equal to the average balance in the account of the deceased in the Fund, during
preceding 12 (Twelve) months, except where the average balance exceeds Rs 50,000 (Fifty Thousand)
the amount payable shall be Rs 50,000 (Fifty Thousand) plus 40 % of the amount in excess of Rs 50,000
(Fifty Thousand) subject to of ceiling of Rs 1,00,000 (One Lac)
Assurance Benefits:
Assurance benefit means a payment linked to the average balance in the Provident Fund Account of
an employee, payable to a person belonging to his family or otherwise entitled to it in the event of
death of the employee. On the death of the employee while in service, the nominee or any other
person entitled to receive the provident fund benefits will, in addition to the provident fund, receive
the assurance benefit under the Employees Deposit Linked Insurance Scheme.
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OBLIGATIONS OF THE COMPANY
Obtain employee
number of each
Obtain Code No for employee and
the establishment declaration by
person taking up
employment
Periodical returns
Payment of
to be sent by an
contribution and
employer to the
prepration of
Provident Fund
contribution cards
Office
Obtain code number for a new establishment:

In case of a new establishment, the Company must first obtain a code number. In order to obtain a
code number the Company needs to submit a form known as Performa for Coverage along with
documents mentioned in the form. The following particulars and documents must be furnished along
with the above mentioned Form:
Particulars of the establishment (to be submitted along with documents mentioned below):
(i) Name of establishment / factor and address;
(ii) Details of Head Office and branches with address;
(iii) Details of Code No, if any allotted to the Head Office;
(iv) Date of incorporation of the company, along with documentary proof of incorporation
(v) Employment strength at present; and month-wise employment strength from the date of set
up may be furnished in separate statement;
(vi) Nature of business activity / manufacturing activity;
(vii) Details of legal set-up of the establishment (i.e. whether it is a private / public limited company,
partnership, society or proprietary concern;
(viii) Ownership particulars: name, addresses and designation of managing director, directors,
partners, secretary etc;
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Employee State Insurance

Act, 1948
CHAPTER
3
Evaluer on In this chapter we will
address the following:
Employment Law
What the Employee State
Insurance Act mean.
Meaning of wages for the

purpose of ESI calculation.

the Company.
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INTRODUCTION
Employees State Insurance Act, 1948 (the ESI Act) is a social security legislation enacted to
provide health insurance cover for workers. The ESI Act is applicable to workers / employees earning
Rs 15,000 (Fifteen Thousand) or less per month. Like most of the social security schemes the world
over, this too is a self financing health insurance scheme, contributions to which are raised from
employees and their employers as a fixed percentage of wages. As of now, employees contribute 1.75
% of their wages, whereas and the employer contributes 4.75% of the wages, payable to an
employees.
The fund (the ESI Fund) in which contributions are deposited is managed by the Employee State
Insurance Corporation (the ESIC or ESI Corporation or Corporation) according to rules and
regulations stipulated under the ESI Act. ESI Corporation is an autonomous corporation under Ministry
of Labour and Employment, Government of India.
Additionally, the Employee State Insurance Regulation (the ESI Regulations, Scheme or the ESI
Scheme) has been enacted under the ESI Act in order to clearly outline modalities of registration of
factories / establishments, collection of contributions, filing of returns / forms and claims with respect
to sickness, maternity or death and disablement benefits due to employment injury.
APPLICABILITY OF THE ESI ACT
The ESI Act is applicable to factories which employ 10 (Ten) or more persons on any day of the
preceding 12 (Twelve) months and for an establishment the Supreme Court in ESI Corporation Vs M.M
Suri and Associates (P) Limited1 has clarified that there must be at least 20 (Twenty) eligible
employees. The Supreme Court has made it clear that unless there are 20 (Twenty) or more eligible
employees drawing less than Rs 15,000 (Fifteen Thousand) per month remuneration, the ESI Act will
not apply to an establishment. The ESI Act however, does not apply to employees drawing salary /
wages exceeding Rs 15,000 (Fifteen Thousand). The ESI Act shall also not apply to a factory or
establishment if employees of that factory or establishment are receiving benefits similar or superior
to benefits outlined in the ESI Act.
1 1998 LLR 1105 (SC): 1999 AIR SCW 429: (1998) 8 SCC 111
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RETURNS FORMS RECORDS TO BE MAINTAINED AND S

UBMITTED
S.No Compliance Requirements Source Due Date Responsibility

Verification for
Compliance
Total Number of employees

____________
Total Number of Apprentices

___________
Total Number of employees drawing

wages of Rs. 15,000 and below
_______________
ONE TIME RETURN ON COVERAGE
1. Registration of factory / Form 01 Company

establishment: Not later than
15 days after the
(In order to obtain Employers Code ESI Act becomes
Number). applicable to the
factory or
(Section 2A of the ESI Act and
establishment.
Regulation 10 B of the Employee State
Insurance (General) Regulations, 1950)
2. Any change in particulars in the above To be submitted

mentioned form should be intimated to within 2 weeks Company
the regional office of the ESI of such change.
Corporation.
(Regulation 10 C of the Employee State

Insurance (General) Regulations, 1950)
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The Payment of Bonus

Act, 1965
CHAPTER
4
In this chapter we will
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Employment Law What the Payment of Bonus Act

means
Important definitions for

calculation of bonus including the
definition of wages
Concept of set-on and set-off
Exemption from payment of bonus
Returns, forms to be maintained
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The following case study explains the concept of set-on and set-off:
In the following illustration minimum statutory bonus (8.33% of annual salary / wage of an employee)
is assumed to be Rs 1,04,167 (One Lac Four Thousand One Hundred Sixty Seven) and maximum
statutory bonus is assumed to be 2,50,000 (Two Lac Fifty Thousand) (20% of annual salary of all
employees).
Year Allocable surplus Amount payable as Set on or set off the Total set on or Of
bonus year carried forward set off carried (year)
Forward
1. Rs 1,04,167 Rs 1,04,167** Nil Nil
2. Rs 6,35,000 2,50,000* set on 2,50,000* set on 2,50,000* (2)
3. 2,20,000 2,50,000* (inclusive Nil Set on 2,20,000 (2)

of 30,000 from year-
2)
4. 3,75,000 2,50,000* Set on 1,25,000 Set on 2,20,000 (2)

1,25,000 (4)
5. 1,40,000 2,50,000* (inclusive Nil Set on 1,10,000 (2)

of 1,10,000 from 1,25,000 (4)
year-2)
6. 3,10,000 2,50,000* Nil Set on Nil + (2)

1,25,000 (4)
60,000 (6)
7. 1,00,000 2,50,000* (Inclusive Nil Set on 35,000 (6)

of 1,25,000 from
year-4 and 25,000
from year-6)2
8. Nil 1,04,167** (inclusive Set off 69,167 Set off 69,167 (8)
(due to loss) of 35,000 from year-
6)
9. 10,000 1,04,167*** Set off 94,167 Set off 69,167 (8)

94, 1267 (9)
10. 2,15,000 1,04,167** (after Nil Set off 52,501 (9)

setting off 69, 167
from year-8 and
41,666 from year-9)
2 The balance of Rs1,10,000 set-on from year-two lapses.
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RETURNS FORMS TO BE MAINTAINED AND SUBMITTED
Section 26 of the Bonus Act provides for maintenance of registers, records, and other documents by
an Company in certain prescribed form and manner. Payment of Bonus Rules, 1975 (the Bonus
Rules) makes it obligatory for the Company to maintain the following registers:
(i) a register showing the computation of the allocable surplus in form A (section 2).
(ii) a register showing the set-on and set-off of the allocable surplus in form B (under section 15).
(iii) a register showing the details of the amount of bonus due to each of the employees, the
deductions under sections 17 and 18 and the amount actually disbursed, in Form C.
Additionally, the Company shall send a return in Form D to the Inspector within 30 (Thirty) days after
the expiry of the time limit specified in section 19 of the Bonus Act for payment of bonus.
S. Compliance Requirement Source Due Date Responsibility

Verification for Compliance
No.
Total number of
employees___________
Total number of employees drawing

salary of Rs. 10,000 and
below____________
ANNUAL RETURN
1. Annual return: an annual return of Form D Within 30 Company

bonus paid to employees in an days after the
accounting year must be sent to the payment of
Inspector. bonus.
(Rule 5 of the Payment of Bonus Rules)
RECORD MAINTENANCE
2. Allocable Surplus: A register showing Form A Company

the computation of the allocable
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surplus referred to in clause (4) of

section 2.
[Rule 4 (a) of the Payment of Bonus

Rules]
3. Set-on and set-off of allocable Form B Company

surplus: Register showing the set-on
and set-off of the allocable surplus,
under section 15.
[Rule 4 (b) of the Payment of Bonus

Rules]
4 Bonus Paid: Register showing the From C Company

amount of bonus paid to each
employee and the deductions under
section 17 and 18 made.
[Rule 4 (c) of the Payment of Bonus

Rules]
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Maternity Benefit Act,

1961
CHAPTER

Employment Law
What the Maternity Benefit Act
means.
Meaning of wages explained for

calculation of maternity benefit

the Company
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The Maternity Benefit Act, 1961 (the Maternity Benefit Act)

applies to every factory, mine or plantation and to every shop
or establishment wherein 10 (Ten) or more people were
employed in the preceding 12 (Twelve) months. One of the
primary objectives of the Maternity Benefit Act is to maintain
the health of a pregnant female employee and her unborn
child.
To be eligible to receive maternity benefit, a pregnant female
One of the primary employee must have worked for at least 80 (Eighty) days
objectives of the Maternity within 12 (Twelve) months immediately preceding her date of
Benefit Act is to maintain the delivery. Pregnant female employees are eligible to receive
health of a pregnant female payment at the rate of average daily wage3 of up to 6 (Six)
employee and her child. weeks of leave before delivery, and payment of up to 6 (Six)
weeks of leave after delivery. The maximum period for which
any women shall be entitled to maternity benefit is 12
(Twelve) weeks of which not more than 6 (Six) weeks shall
precede the date of her expected delivery.
In addition to maternity benefit, an eligible woman employee

shall also be entitled to receive from the establishment a
medical bonus of Rs 2,500 (Two Thousand Five Hundred)4, if
no pre-natal, confinement and post-natal care is provided for
by the establishment, free of charge. The medical bonus shall
be paid along with the second installment of the maternity
benefit.
3Average daily wage means the average of the womens wages payable to her for the days on which she has worked during the
period of three calendar months immediately preceding the date from which she absents herself on account of maternity.
4 Increased from Rs 1,000 vide S.O. 2016 (E), dated 11th August, 2008, published in the Gazette of India, Extra., Pt. II, Sec, 3 (ii),
dated 11th August, 2008.
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The Industrial Employment

(Standing Orders) Act, 1946
CHAPTER

Employment Law
What the Standing Orders Act
Means
Registers to be maintained by the

Company

the Company
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There are various labour legislations that disregard the

concept of private contract of service between an Employer
and employee. Standing Order Act is one of them. The
Standing Orders Act provides for provision to define the
contract of service between an employer and employee. The
scheme of the Standing Order Act requires an employer to
formally define the conditions of employment for workmen.
In other words, define in writing the conditions of service and
rule of discipline under which workers have to work. In fact,
The Industrial Employment it is a statuary contract of service between the employer and
Standing Order Act, 1946 employee. A Company cannot enter into an agreement with
(Standing Order Act) a workman which is inconsistent with the Standing Order. The
terms of the Standing Orders will prevail over the
corresponding terms in the contract of service. An employer
additionally cannot enforce simultaneously the Standing
Orders regulating the classification of workmen and a special
agreement with an individual workman settling his
categorization. Provisions of Certified Standing Orders and
the terms specified, become service conditions of the
workmen.
It is mandatory for the employer to get standing orders
certified. In case an employer fails to get the Standing Orders
certified, the Model Standing Orders will be applicable. It is
therefore advisable that instead of applying the Model
Standing Orders, the Company should get the Standing
Orders certified.
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The Minimum Wages Act,

1948
CHAPTER

Employment Law
What the Minimum Wages Act
Means
Registers to be maintained by the

Company
Mandatory filing of certain forms

the Company
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the wage period, indicating also in precise terms the wage period to which the nil entry relates.
Annual Returns:
The Company shall send annually a return in Form III so as to reach the Inspector not later than
the February 1 following the end of the year to which it relates.
Display of notice:
Notices in Form IX-A containing the minimum rates of wages fixed together with abstracts of the
Minimum Wages Act and the name and address of the Inspector shall be displayed in English and
in a language understood by the majority of the workers at the main entrance to the factory /
establishment. Such notices shall also be displayed on the notice boards of all sub-divisional and
district offices.
Weekly day of rest:
Every worker shall be allowed a day of rest every week (Rest Day) which shall ordinarily be
Sunday, but the Company may fix any other day of the week as the rest day for any worker. Where
any worker works on a rest day he / she shall be granted for rest day wages calculated at the rate
applicable to the next preceding day.
Number of hours of work which shall constitute a normal working day:
The number of hours which shall constitute a normal working day shall be, in the case of an adult5,
9 (Nine) hours and in the case of a child6, 4 (Four and Half) hours.
Extra wages for overtime:
When a worker works in an employment for more than 9 (Nine) hours on any day or for more
than 48 (Forty Eight) hours in any week, he shall in respect of overtime work, be entitled to wages
at double the ordinary rate of wages7. Additionally, a register of overtime shall be maintained by
the Company in Form IV in which entries under the columns specified therein shall be made as
and when overtime is worked. Where no overtime has been worked in any wage period, a nil
entry shall be made across the body of the register at the end of the wage-period indicating also
in precise terms the wage period to which the nil entry relates.
Maintenance of register of wages:
A register of wages shall be maintained by the Company at the work-spot in Form X. A wage slip
in Form XI shall be issued by the Company to every worker at least a day prior to the disbursement
of wages.
5 Adult means a person who has completed his 18th year of age.
6 A child means a person who has not completed his 14th year of age.
7 The expression ordinary rate of wages means the basic wages plus such allowances including the cash equivalent of the advantages
accruing through the concessional sale to the person employed of food grains and other articles as the person employed is for the
time being entitled to, but does not include a bonus.
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For further information please contact:
Info@evaluer.co.in
Disclaimer:
This Handbook is not an advertisement or any form of solicitation. This
Handbook has been compiled for general information of the client and does
not constitute professional guidance or legal opinion. Readers should
obtain appropriate professional advice.
Evaluer I Employment Law Attorneys
SCO 15, Sector 17/E, Chandigarh
Info@evaluer.co.in | 9814666141
Evaluer

5thsem (FP) Charcuteri

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STRICTLY PRIVATE AND CONFIDENTIAL

ATTORNEY WORK PRODUCT

A Practical Compliance Reference

Evaluer I Employment Law Attorneys

SCO15, Sector 17/E, Chandigarh

Copyright Evaluer | all rights reserved

ABOUT THE FIRM - EVALUER 12

PURPOSE OF THIS HANDBOOK 14

CHAPTER 1 CONTRACT OF EMPLOYMENT

1. Legislations that must be considered while drafting an

4. Introduction to the EPF Act 39

Contribution to the Pension Scheme. 52

What is family under Pension Scheme. 56

11. Introduction and applicability of the ESI Act 70

payment of employers contribution. 98

Bar against receiving or recovering compensation

25. Introduction to the Maternity Benefit Act 123

Laws, agreement or standing orders inconsistent with

Gratuity to employees engaged through a contractor. 157

Display of standing order. 169

51. Apprentice and Employee Provident Fund 185

About the firm Evaluer

The following legislations must be considered while drafting an appointment letter

Employees are broadly classified into the following eight categories:

1. Temporary employee Means an employee who has been appointed for a

2. Probationer Means an employee who is previously employed to fill

4. Part-time employee Part-time employee means an employee who is

5. Permanent employees Means an employee who has been employed on a

7. Substitute Means a person who is a reliever, being employed in

8. Casual employees Means an employee who is employed for any work

SAMPLE CONTRACT OF EMPLOYMENT

Terms and conditions

Dear Mr/Ms (),

Employee Provident Fund

Employment Law What the Employee Provident

Meaning of wages for the

Checklist and Dos and Donts for

Can the employee withdraw a part of his PF accumulations during employment?

5. Addition, alteration 10 years from 12 months basic (i) Proof of

(v) Option for withdrawal for investment in Pension Beema Yojana:

What is the mode of payment of contribution?

EMPLOYEE DEPOSITLINKED INSURANCE SCHEME

OBLIGATIONS OF THE COMPANY

Obtain code number for a new establishment:

Employee State Insurance

Meaning of wages for the

Checklist and Dos and Donts for

APPLICABILITY OF THE ESI ACT

RETURNS FORMS RECORDS TO BE MAINTAINED AND S

S.No Compliance Requirements Source Due Date Responsibility

Total Number of employees

Total Number of Apprentices

Total Number of employees drawing

ONE TIME RETURN ON COVERAGE

1. Registration of factory / Form 01 Company

2. Any change in particulars in the above To be submitted

(Regulation 10 C of the Employee State

The Payment of Bonus

Employment Law What the Payment of Bonus Act

Important definitions for

Concept of set-on and set-off

Exemption from payment of bonus

Returns, forms to be maintained