Friday, December 16, 2011

Labour law proposed ammendment and my comments

Proposed amendment in the labour laws and my view


Note:

Updates:
The Payment of Wages (Amendment) Act, 2005 (41 of 2005) incorporating the changes as mentioned below has come into effect on the 9th of November, 2005.
As of March 2007, none of the other acts had been applied.

TABLE OF AMENDMENTS

Act

Section

Title

Details of the proposed ammendment

My views/ comments

Industrial Dispute Act

2(s)

Change in definition of workman

Section 2(s) defines a workman. Earlier the definition of a workman excluded any person employed in a supervisory capacity drawing wages more than Rs 1600 per month (Section 2(s)(iv)). The bill seeks to remove this ceiling on wages in the definition, thus bringing all workmen employed in a supervisory capacity under the purview of the act, regardless of their wages.

It depend upon certain factors whether this is a welcoming move or not. In our country, most of the organisations are involved in unfair employment practice and fighting a cour cases through civil court is time consuming and a useless process. In this case, this amendment may help to resolve employment dispute at faster pace. I even suggest to include even people on managerial grade under this.

ID Act

2(a)

Change in definition of Appropriate Government

Section 2(a) defined the Central Government as the appropriate government for various industries including Banks, Insurance Companies, Air Transport Companies, Mines, Oilfields and many others. This meant that all disputes would be resolved through Central Government machinery leading to a fair degree of inconvenience to all concerned. Now "appropriate Government" means, 'the Government of the State or Union Territory, as the case may be, in relation to all the industrial disputes concerning any industry or its unit in whose territorial jurisdiction that industry or its unit is situated" i.e. everybody deals with the machinery of the state the unit is situated in.

I do not see if it is going to make any changes in the current scenario. No further comments

Contract
Labour
Act

2(a)

Change in definition of Appropriate Government

Section 2(a) - Has the same effect as under the similar change in the ID Act

Already commented above

Contract
Labour
Act

Expl.
to
S.10

Change in explanation of work of perennial nature

Section 10 - regarding the prohibition of contract labour states that 'If a question arises whether any process or operation or other work is of a perennial nature, the decision of the appropriate government thereon shall be final'. It is seeked to modify this to provide for automatic grant of permanent employment to the workers when the government decides that work is of a perennial nature.

I see the contract labour (R & A) Act is nothing more than an employee welfare legislation. The Act indirectly tells you that whether you employ them on your payroll or through a third party, you have to pay them everything from PF, ESIC, Bonus, Gratuity and so on and additionally, a company has to pay admin charges to the contractor.

Bonus
Act

2(13)

Removal of ceiling for eligibility for bonus

Section 2(13) - defines employees eligible for a bonus as those drawing a wage below Rs 6500 per month. This wage ceiling is now to be removed thus bringing all employees under the purview of the act.

It does not affect any further. Many companies pay bonus by default irrespective of the salary of an employee so it seems government does not have any work other than amending the useless points.

Bonus
Act

12

Removal of ceiling on wages for calculating bonus

Section 12 decrees that for employees covered under the act, bonus will be calculated as if wages were Rs 2500. This ceiling of Rs 2500 is now proposed to be removed.

It has no effect, whatever it may be

Employee's
Compensation
Act

2(n)

Inclusion of casual workers under the purview of the Act

Section 2(n) excludes people who are employed in a casual nature and those who are employed 'otherwise than for the purpose of the employers trade or business. This exclusion is sought to be removed.

Indeed a good move. A good initiative by the Government.

Employee's
Compensation
Act

4

Increase in minimum amounts payable for death and permanent total disablement

Section 4 sets the minimum amount payable for death and permanent total disablement as Rs 50,000 and Rs 60,000 respectively. These are sought to be enhanced to Rs 80,000 and Rs 90,000 respectively

Good decision

Employee's
Compensation
Act

Expl II to Sec 4(1)

Increase in ceiling of monthly wages to calculate compensation

Explanation to Section 4 set a ceiling of Rs 2000 for the purpose of calculating wages. This ceiling is sought to be enhanced to Rs 4000

Good decision. It will save the employee and their family members from hardship.

Employee's
Compensation
Act

4(4)

Increase in funeral expenses

Section 4(4) requires the employer to deposit Rs 1000 with the commissioner as funeral expenses payable to the workman. This amount is sought to be increased to Rs 2,500

For the funeral, the cost comes more than 2,500. Death of an employee rarely occurs so the limit could be enhanced to Rs. 10,000/-

Workmen's
Compensation
Act

4(A)

Payment of penalty on late payments to the workman

Section 4(A) specifies that the penalty on late payments is to be credited to the State Government. It is sought to credit the penalty amount to the workman

Good one so the useless state government will not get the wrong money.

Payment of
Wages Act

1(6)

Increase in Ceiling of Wages for applicability of the Act

As per Section 1(6) nothing in this act applies to workers whose wages are more than Rs 1,600 a month. This ceiling is sought to be increased to Rs 6,500 thus bringing more workers under the coverage of the Act.

Hardly anybody takes the Act serious. Most of the employers pay salary by 1st day of the enxt month and deduction rarely occurs so I do not see it is making any changes,

Payment of
Wages Act

2(i) - New

Addition of definition of Appropriate Government

A new definition is to be added for"Appropriate Government" - in relation to railways, air transport services, mines and oilfields, the Central Government and, in relation to all other cases, the State Government. Also, the expressions 'Central Government' and 'State Government' will be modified to read 'Appropriate Government'

It does not affect the employer and employee

Payment of
Wages Act

3

Changes in authorities responsible for payment of wages

Section 3 specifically excluded defining a person apart from the employer responsible for the payment of wages for contract employees ( proviso to S.3 - ' in the case of persons employed (otherwise than by a contractor)'.
The amendment proposes to extend the responsibility for contractors to 'a person designated by the contractor who is directly under his charge'. Also adds a new sub-section which covers any establishments not explicitly mentioned in S.3, and extends the responsibility to any person designated by the employer as responsible for compliance with the act

It will increase more paper work and the head HR or the person processing payroll may need to be scared but as I said earler, there is hardly any violation of the payment of Wages Act so no need to worry..

Payment of
Wages Act

7

Certain deductions to be governed by employment contract rather than State Rules

Section 7 defines permissible deductions. Most of these are governed by state rules. It is now proposed to govern the following deductions through the employment contract instead.
Deductions for amenities and services supplied by the employer - 7(e)
Deductions for recovery of loans made from any fund constituted for the welfare of labour - 7(ff),
Deductions for recovery of loans granted for house building, and interest thereon 7(fff)
Deductions for subscriptions to, and for repayment of advances from any provident fund - 7(i)
Deductions for payments to cooperative societies or to a scheme of insurance maintained by the Indian Post Office - 7(j)
Deductions authorised by employee for payment of contribution to any fund constituted by the employer or a trade union for the welfare of the employed persons or the members of their families, or both 7(kk)

Good one, employers will have more choices to deduct salary for an employee’s wrongdoing/ lapse.

Payment of
Wages Act

8(6)

Fines not to be recovered beyond 90 days

Section 8 prescribes that fines cannot be recovered by installments after a period of 60 days. It is proposed to change this to 90 days.

Who cares, it does not affect

Payment of
Wages Act

15

Changes in authorities and procedures to hear claims

Section 15 The proposal Redefines the authorities who are authorised to hear claims, increases the maximum compensation payable to an employee from 25 Rs to Rs 2000, Sets a period of 3 months to dispose of claims, and increases the compensation payable to the employer by an employee who has filed a malicious claim from Rs 50 to Rs 250.

OK OK, neither too good nor too bad

Payment of
Wages Act

20

Changes in Penalties and Fines

Section 20 Standard Fines earlier were between Rs 200 to Rs 1000. This is proposed to be increased to between Rs 5000 to 10000. Repeat Offences - Rs 15,000 to Rs 30,000. New Fine: Rs 2000 - Failing to nominate or designate a person responsible for payment of wages (S.3)

It does not have any much more implication. Even the labour officer does not take this Act seriously and most of the companies comply with this Act.

Payment of
Wages Act

24

Delegation of Powers to State Government

Section 24 is proposed to be deleted and replaced by a new section which allows the appropriate government to delegate its powers to a sub-ordinate officer or authority

Does not make much difference and an employer point of view, no much more value.

Payment of
Wages Act

26

State Government's power to make rules

Section 26 - Maximum penalty/fine imposable by the state government changed from Rs 200 to between Rs 500-1000, and adds a new sub-section 7 which specifies that all rules made by the state government should be laid before the state legislature.

Good but nobody will be serious to enact the Act

Disclaimer: I do not have any clue whether these amendment is already passed in the parliament or the current status. All the view I have expressed here is of my personal opinion. The readers are advised to verify the content at maximum extent possible through all available resources.

Regards

Govind

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