Essential Employment Laws For Entrepreneurs

What is the meaning of industry under Industrial disputes act ?
Industry means any business, trade, undertaking, manufacture or calling of employers and includes any calling service, employment, handicraft, or industrial occupation or avocation of workmen. [Section 2(j)]
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What are the tests of industry ?

1. it should be well organised and systematic activity
2. there should be production and distribution of goods and services to satisfy human needs
3. there should be cooperation between employer and employee Profit motive is not necessary read : Bangalore Water Supply and Sewerage Board v. A Rajiappa, AIR 1978 SC 548
contd....
professions, clubs, educational institutions. cooperatives, research institutes, charitable projects and other kindred adventures, if they fulfil the triple tests listed in (1), cannot be exempted from the scope of Section 2(j)
Sovereign functions or functions not connected to others are not industry. So ATIRA is industry, but PRL is not an industry. Hosptial, municipality are industry, but purely voluntary services are not industry.
What is industrial dispute under Industrial disputes act?

Industrial Dispute means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or nonemployment or the terms of employment or with the conditions of labour, of any person. [Section 2(k)]
Are gardners looking after the garden attached to bungalows provided by the company to its officers and directors employees under Industrial dispute act?
Yes, they are engaged in operations incidentally connected with the main industry carried on by the employer. Read : J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. L.A.T., AIR 1964 S.C. 737
What type of work is performed by worker in Industrial disputes act?

1. skilled or unskilled 2. clerical 3. technical 4. supervisory work
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Is teacher a worker in Industrial disputes act. ?
No Sunderambal v. Government of Goa [AIR (1988) SC 1700. (1989)
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Is labour officer working in a textiles mill a worker ?
Yes superivisor work is also included as per Industrial disputes act so he is also a worker
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What is the meaning of strike in Industrial disputes act?

Strike means a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment. [Section 2(q)]
on the sudden death of a fellowworker, the workmen acting in concert refuse to resume work. Is it a strike?
Yes read : Textile Workers Union v. Shree Meenakshi Mills, (1951)
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What are the various types of strikes?

Sit down go slow hunger strike tool down work to rule stay in pen down etc.
If a strike is resorted to by the workers in support of their reasonable, fair and bona fide demands in peaceful manner, then can the strike be justified?
Yes read : Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Majdoor Sabha, AIR 1980 SC 1896
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What is the the doctrine of apportionment of blame?
According to this doctrine, when the workmen and the management are equally to be blamed, the Court awards half of the wages.
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What is lockout in Industrial disputes act?

Lock-out means the temporary closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him. [Section 2(l)]
What is lay off in Industrial disputes act ?

Lay-off means the inability of an employer to give employment due to : shortage of coal, power or raw materials, accumulation of stocks, break-down of machinery, natural calamity any other connected reason to an employee whose name appears on muster roll. [Section 2(kkk)]
What is retrenchment under Industrial disputes act ?

Retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and doesnt include VRS, superannuation, retirement due to ill health etc. (sec. 2(oo))
Is transfer / closure of a unit falling in Industrial disputes act?
Read : sec. 25F,25F,25FFF
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Can a company retrench its surplus employees under industrial disputes act?
Yes
read : Parry & Co. Ltd. v. P.C. Pal, (1970) II L.L.J. 429,
the Supreme Court observed that the management has a right to determine the volume of its labour force consistent with its business or anticipated business and its organisation. If for instance a scheme of reorganisation of the business of the employer results in surplusage of employees, no employer is expected to carry the burden of these employees.
What is Unfair Labour Practice
It means any of the practices specified in the Fifth Schedule. [Section 2(ra)] 21.
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Can dismissal of Individual employee be called an industrial dispute?
Yes read sec. 2A
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What are the main authorities under Industrial disputes act?

These are : Conciliation Officers. Boards of Conciliation. Court of Inquiry.Labour Tribunals. Industrial Tribunals National Works Committee
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What is a hazardous process in factories act?

any process or activity in relation to an industry specified in the First Schedule, which may raw material or use process which may cause harm to the health of the persons engaged in or connected therewith, or result in the pollution of the general environment; [Section 2(cb)]
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What is a factory in factories act?

Factory includes any premises including the precincts thereof whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on; or whereon twenty or more workers are working, or were working on a day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.
What is manufacturing process in factories act?

making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise, treating or adopting any article or substance with a view to its use, sale, transport, delivery or disposal pumping oil, water or sewage or any other substance; generating, transforming, transmitting power; composing types for printing, printing by letter-press, lithography, photogravure or other similar process, or book-binding; constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels
preserving or storing any article in cold storage. [Section 2(k)]

If the labourer is to produce bidies rolled in a certain form and how the labourer carried out the work is his own concern and is not controlled by the firm. The firm is concerned only with getting bidies rolled in a particular style with certain contents. Is it a factory ?
No read Shankar Balaji Waje v. State of Maharashtra, AIR 1963 Bom. 236,
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Is Munim in a factory a worker.
Yes
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Is a person employed by a gas manufacturing works as a coolie for excavating and digging trenches outside the factory for laying pipes for transporting gas to consumers a worker under factories act.
No
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Is a soap-works, a carpenter preparing the packing cases a worker under factories act?
Yes
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What is the test of ownership under factories act?
whether a person is an owner (occupier / manager) or not is the possession or vesting in of the ultimate control of the factory. The control should be an ultimate one.
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Is it necessary to give notice before starting a factory?

Section 7 imposes an obligation on the occupier of a factory to send a written notice, containing prescribed particulars, to the Chief Inspector at least 15 days before an occupier begins to occupy or use a premises as a factory and at least 30 days before the date of resumption of work in case of seasonal factories
What is certificate of fitness?

Under Section 69 of the Act, before a young person is employed in the factory, a Certifying Surgeon has to certify that such person is fit for that work in the factory. To get this certificate, an application to a Certifying Surgeon has to made by employer / employee / guardian of the worker.
Under sec. 79, how many leaves are available to a worker under factories act?
One day for every 20 days (for adults , for children it is 15) of work performed by them during the
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Can a worker carry forward leaves to next year under factories act?
Yes, If any worker does not avail any earned leave entitled to him during the calendar year, it can be carried forward to the next calendar year subject to the maximum of 30 days for an adult worker and 40 days for a child worker.
What types of safety provisions are there in factories act?

Have fencing of factories check self acting machines check hoists, lifts etc. Protect eyes of workers have adequate space & working condicitions for worker have clean, neat, and safe factories
What types of safety provisions are there in factories act for childern and women?
Dont employ during night shift dont appoint near cotton opener or other such dangerous factories Give proper leave / holidays
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What is injury under ESI Act?

a personal injury to an employee caused by accident or an occupational disease arising out of and in the course of his employment, being an insurable employment, whether the accident occurs or the occupational disease is contracted within or outside the territorial limits of India. [Section 2(8)]
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CAN MINIMUM WAGE BE PAID IN CASH OR KIND ?
Only in Cash (read sec. 11 of minimum wages act)
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Should casual workmen should be included for the purpose of ascertaining the strength of workmen in terms of Section 1(3) of Employee PF & MP act 1952 No, it was held by the Rajasthan High Court in Bikaner Cold Storage Co. Ltd. v. Regional P.F. Commissioner, Rajasthan, 1979 Lab. I.C. 1017, that persons employed in the normal course of the business of the establishment should be considered as the persons employed for the purposes of Section 1(3)(a) and persons employed for a short duration or on account of some urgent necessity or abnormal contingency, which was not a regular feature of the business of the establishment cannot be considered as employees for the purpose of determining the employment strength
Is an employee appointed through a contractor an employee within the meaning of Employee PF & MP Act 1952
YES Employee means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets his wages directly or indirectly from the employer and includes any person 1. employed by or through a contractor in or in connection with the work of the establishment; 2. engaged as an apprentice, not being an apprentice engaged under Apprentices Act, 1961 or under the standing orders of the establishment. [Section 2(f)]
What is manufacturing process as per Employee PF and MP act 1952? It is similar to meaning as given in Factories
act. It means any process for making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal. [Section 2(i-c)]
Does the payment of gratuity act apply to factories also ?

Yes , According to Section 1(3), the Act applies to: 1. every factory, mine, oilfield, plantation, port and railway company 2. every shop or establishment in which ten or more persons are employed, or were employed, on any day of the preceding twelve months; 3. such other establishments or class of establishments in which ten or more employees are employed, or were employed, on any day of the preceding twelve months
Who is an employee under payment of gratuity act?

Section 2(e) defines employee as any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semiskilled, or unskilled, manual, or supervisory, technical or clerical work, whether the terms of such employment are express or implied and whether or not such person is employed in a managerial or administrative capacity but does not include any such person who holds a post under the Central or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.
What are the cases when employee is not in continuous service under payment of gratuity act?
Service is not continuous, in case of legal termination of service and subsequent reemployment.
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How is gratuity calculated under payment of gratuity act ?

Gratuity is calculated on the basis of continuous service as defined above i.e. for every completed year of service or part in excess of six months, at the rate of fifteen days wages last drawn. The maximum amount of gratuity allowed under the Act is Rs. 3,50,000/.
If a person dies, and his nominee is a minor, who will get gratuity ?
in the case of death of the employee, it shall be paid to his nominee and if no nomination has been made, to his heirs and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority
What is the time limit for payment of gratuity under payment of gratuity act?
Section 7(3) of the Payment of Gratuity Act says that the employer shall arrange to pay the amount of gratuity within thirty days from the date of its becoming payable to the person to whom it is payable. In case of delay, simple interest at the rate of 10 per cent per annum has to be paid alongwith.
After how much years of service, is an employee eligible for gratuity ?

An employee is eligible for receiving gratuity payment only after he has completed five years of continuous service. This condition of five years is not necessary if the termination of the employment of an employee is due to death or disablement.
What is the penalty in case of false statement under payment of gratuity act?
If any person makes a false statement for the purpose of avoiding any payment to be made by him under this Act, he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to ten thousand rupees or with both.
What is the time limit for payment of bonus under payment of bonus act?
the bonus should be paid within a period of eight months from the close of the accounting year.
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Can a company adopt productivity linked bonus instead of profit linked bonus under payment of bonus act?
Yes, employees and employers can develop and operate a scheme of bonus payment linked to production or productivity in lieu of bonus based on profits
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Which types of companies are covered by Payment of Bonus Act?
every factory and to every establishment where 20 or more workmen are employed on any day during an accounting year
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Which employee can get bonus under payment of bonus act?

Every employee shall be entitled to be paid by his employer in an accounting year, bonus provided he has worked in the establishment for not less than thirty working days in that year.
Can surplus profit be carried forward to next years for payment of bonus under payment of bonus act?
Yes, Sec. 15 & IV schedule : if allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under Section 11, then, the excess shall, subject to a limit of twenty per cent of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year
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What is the minimum bonus under payment of bonus act?
Section 10 : 8.33 per cent of the salary
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A person is guilty of committing fraud in a company. Can he still claim bonus under payment of bonus act?
No No bonus in the case of : 1. fraud; 2. riotous or violent behaviour while on the premises or the establishment; 3. theft, misappropriation or sabotage of any property of the establishment. (Section 9)
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How is available surplus calculated under payment of bonus act?
gross profits for the accounting year after deducting therefrom the sums referred to in Section 6 & section 7 .
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What are the sums deductible under sec. 6 of Payment of bonus act ?
1. direct tax 2. development rebate 3. depreciation applicable 4. any other sum as specified in schedule III
How is gross profit calculated under payment of bonus act?
The process is given in schedule I & II in details.
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How is bonus computed under payment of bonus act?

First, Gross Profit is calculated as per First or Second Schedule. From this Gross Profit, the sums deductible under Section 6 are deducted. To this figure, we add the sum equal to the difference between the direct tax calculated on gross profit for the previous year and direct tax calculated on gross profit arrived at after deducting the bonus paid or payable to the employees. The figure so arrived will be the available surplus. Of this surplus, 67% in case of company (other than a banking company) and 60% in other cases, shall be the allocable surplus which is the amount available for payment of bonus to employees.
If a company opens a branch, is that a separate establishment under payment of bonus act?
Yes if there is separate balance sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch then such department, undertaking or branches shall be treated as a separate establishment for the purpose of computation of bonus ; otherwise no,
What is salary under payment of bonus act ?

Sec. 2(21) : The salary or wage means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance , it includes all cash payments but doesnt include commission, TA, retirement benefits, and reimbursements
Who is an employee under payment of bonus act?

Employee means any person (other than an apprentice) employed on a salary or wages not exceeding Rs. 10,000 per month in any industry to do any skilled or unskilled, manual, supervisory, managerial, administrative, technical or clerical work of hire or reward, whether the terms of employment be express or implied. [Section 2(13)]
Who is employer under payment of bonus act ?

1. in relation to an establishment which is a factory, the owner or occupier of the factory/ agent of such owner /the legal representative of a deceased owner /manager of the (named as manager under Clause (f) of Sub-section 7(1) of the Factories Act, 1948)
2. in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment / manager/ managing director / managing agent [Section 2(14)]
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What is the meaning of industry under Industrial disputes act ?

What are the tests of industry ?

What is industrial dispute under Industrial disputes act?

What type of work is performed by worker in Industrial disputes act?

Is teacher a worker in Industrial disputes act. ?

No Sunderambal v. Government of Goa [AIR (1988) SC 1700. (1989)

Is labour officer working in a textiles mill a worker ?

What is the meaning of strike in Industrial disputes act?

What are the various types of strikes?

What is the the doctrine of apportionment of blame?

What is lockout in Industrial disputes act?

What is lay off in Industrial disputes act ?

What is retrenchment under Industrial disputes act ?

Is transfer / closure of a unit falling in Industrial disputes act?

Read : sec. 25F,25F,25FFF

What is Unfair Labour Practice

Can dismissal of Individual employee be called an industrial dispute?

Yes read sec. 2A

What are the main authorities under Industrial disputes act?

What is a hazardous process in factories act?

What is a factory in factories act?

What is manufacturing process in factories act?

preserving or storing any article in cold storage. [Section 2(k)]

Is Munim in a factory a worker.

What is the test of ownership under factories act?

Is it necessary to give notice before starting a factory?

What is certificate of fitness?

What types of safety provisions are there in factories act?

What is injury under ESI Act?

CAN MINIMUM WAGE BE PAID IN CASH OR KIND ?

Only in Cash (read sec. 11 of minimum wages act)

Does the payment of gratuity act apply to factories also ?

Who is an employee under payment of gratuity act?

How is gratuity calculated under payment of gratuity act ?

After how much years of service, is an employee eligible for gratuity ?

Which types of companies are covered by Payment of Bonus Act?

Which employee can get bonus under payment of bonus act?

What is the minimum bonus under payment of bonus act?

Section 10 : 8.33 per cent of the salary

How is available surplus calculated under payment of bonus act?

How is gross profit calculated under payment of bonus act?

The process is given in schedule I & II in details.

How is bonus computed under payment of bonus act?

What is salary under payment of bonus act ?

Who is an employee under payment of bonus act?

Who is employer under payment of bonus act ?

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