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Friday, 23 March 2018

Payment of Gratuity Amendment Bill

The Central Government of India introduced the Payment of Amendment (Gratuity) Bill in a move to make benefits to Government and organised sector workers uniform. The bill was proposed and met with unanimous support before it was passed. While the notification is official, circulation of the official gazetted copy is awaited.

Salient Features:

Through this amendment, there are two main highlights that come to the fore:

-          Increase of tax free limit from ten lakhs to 20 lakhs

-          Consideration of maternity leave period as continuous service


The Payment of Gratuity Act applies to:

-          Workers in establishments with 10 or more persons

-          Workers in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments

-          Workers having completed at least five years of continuous service


Workers fulfilling the eligibility criteria will now be allowed tax free gratuity of upto 20 lakhs at the time of leaving, or at the time of superannuation. Women on maternity leave will be considered to be in continuous service for the purpose of gratuity. This move is bound to benefit lakhs of people, as measures to give better opportunities, improved working conditions and uniform benefits to all continue to be put in place.

Tuesday, 20 March 2018

The Key to Helping New Businesses and Startups Stay Compliant

Getting a startup going is not easy. Building a business from scratch never was. For someone who has never managed or owned a business before it is an uphill task trying to put in place strategy and logistics. Having to look into the legalities is another critical aspect, one that few are equipped to handle.

To make life for startups a little easier, we put together the basic requirements covered under the most important central Acts. This should make a great starting point.

Contract Labour (Regulation & Abolition) Act

The applicability of this Act extends to an establishment where twenty or more workmen are employed on any day of the preceding twelve months as contract labour; or to a contractor employing twenty or more workmen on any day of the preceding twelve months. (This is subject to change by a notification by the Government allowing 2 months’ notice)

Maharashtra Shops and Establishments Act, 1948

Through the latest amendment applicable to the whole state of Maharashtra, the Act applies to any establishment employing 10 or more workers. Establishments with under ten employees must submit an online application with an intimation to the Facilitator within 60 days of commencement of business or commencement of the Act.

The Payment of Gratuity Act, 1972

The act applies to all factories, mines, oilfield, plantation, port and railway company. But in case of shops or establishments other than those stated before, it applies to those organizations with 10 or more persons are employed on any day of the preceding 12 months. In case of any shop and establishment to which the act applies the number of employees reduces below 10, it shall continue to be governed by the act irrespective of the number of employees. Thus no employer can escape liability under this act by reducing the number of employees.

Maternity Benefit Act, 1961

The Act applies to all factories, mines and plantations – whether owned by the Government or otherwise; establishments engaged in equestrian exhibition, acrobatics;  shops or establishments wherein 10 or more persons are employed or were employed on any day of the preceding 12 months.

To claim benefits: The Act lays down that any women employed, whether directly or through any agency, for wages in any establishment is eligible to claim maternity benefits if she is expecting a child and has worked for her employer for at least 80 days in the 12 months immediately preceding the date of her expected delivery. 

Factories Act,1948

Rules are framed by the State Government, where submissions of plans of any class or description of factories is made to the Chief Inspector or the State Government:

i.                      requiring the previous permission in writing of the State Government or the Chief Inspector to be obtained for the site on which the factory is to be situated and for the construction or extension of any factory or class or description of factories;

ii.                   requiring for the purpose of considering applications for such permission the submission of plans and specifications;

iii.                 prescribing the nature of such plans and specifications and by whom they shall be certified;

iv.                 requiring the registration and licensing of factories, or any class or description of factories, and prescribing the fees payable for such registration and licensing and for the renewal of licences;

v.                   Requiring that no licence shall be granted or renewed unless the notice specified in section 7 has been given.

If on an application for permission, accompanied by the plans and specifications sent to the State Government or Chief Inspector by registered post, no order is communicated to the applicant within three months from the date on which it is so sent, the permission applied for in the said application shall be deemed to have been granted.

In cases where a State Government or a Chief Inspector refuses to grant permission to the site, construction or extension of a factory or to the registration and licensing of a factory, the applicant may within thirty days from the date of such refusal, appeal to the Central Government if the decision appealed for was of the State Government, and to the State Government in any other case.

Payment of Bonus Act,1965

Payment of Bonus applies where a company is at least 5 years old, has at least 20 employees, made a profit in that year, and where the employee’s wages are not more than 21,000 every month.

The Maharashtra Labour Welfare Fund Act, 1953

The provisions of the Act shall is restricted to establishments employing five or more persons, applicable to employees except those working in the managerial or supervisory capacity and drawing wages exceeding Rs.3500/- only per month.

Labour Welfare Fund Act

Labour welfare fund is a statutory contribution managed by individual state authorities to provide social security to workers. This act has been implemented only in 15 states out of 34 states including union territories. The contribution and periodicity of remittance differs with every state. In some states the periodicity is annual (Andhra Pradesh, Haryana, Karnataka, Tamil Nadu etc) and in some states it is to be contributed during the month of June & December (Gujarat, Madhya Pradesh, Maharashtra etc).

Employees' Provident Fund and Miscellaneous Provisions Act, 1952

The Act applies to every establishment engaged in one or more of the industries specified in Schedule I of the Act or any activity notified by Central Government in the Official Gazette; which employs 20 or more persons, and cinema theatres employing 5 or more persons. It does not cover co-operative societies employing less than 50 persons and working without the aid of power. Applicability also extends where the number of employees falls below 20 at a later date. It includes establishments under the control of state or central Government and employees who are getting benefits including contributory P.F. or old age pension as per government rules, and establishment set up under any central, provincial or state act and the employees who are getting benefits in the nature of contributory P.F. or old age pension as per rules. The Act also applies to establishments not satisfying the above two conditions for coverage and if the employer and majority of the employees are willing.

Employees' State Insurance Act '1948

This Act is applicable to non-seasonal factories employing 10 or more persons. The Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 10 or more persons. The Scheme has been extended to Private Medical and Educational institutions employing 10 or more persons in certain States and Union Territories.

The Employees’ Compensation Act, 1923

The Object of the Act is to provide for the payment of compensation by certain employers to their employees for injury caused to them by accident while in employment. If an employee contracts an occupational disease while in employment, it is also treated under the Act as injury caused by accident. In case of Maharashtra, The Employees’ Compensation Act is applicable to all shops & Establishments.

Sexual Harassment Act 2013

It is applicable to all establishments less than 10 workers are employed.

Payment of Wages Act 1936

The act applies to every person employed in any factory, railway or through sub-contractor in a railway and a person employed in an Industrial or other establishment. The state government may extend the provisions to any class of persons employed in any establishment or class of establishments.

Payment of Minimum Wages Act 1948

The Act applies to people in scheduled employments or in specified class of work in respect of which minimum wages have been fixed. No employee can give up by contract or agreement his rights in so far as it purports to reduce the minimum rates of wages fixed under the Act. Hence, any contract or agreement made less than the minimum rates of wages fixed shall be null and void.

Apprentice Act 1961

This Act is applicable to the industries and trades which were informed by the Central Government in the Official Gazette. Almost all the industries fall under the purview of the act. It may not be applicable to the special Apprenticeship programs of the government unless informed by the Central Government in the Official Gazette. The act applies to those categories of apprenticeship where the practical education is necessary to the trade. Internships are not covered under this act.