ID ACT & LABOR LEGISLATION KETAN SOLANKI

MINIMUM WAGES ACT,1948

Introduction
In a labor surplus economy like India wages couldn’t be left to be determined entirely by
forces of demand and supply as it would lead to the fixation of wages at a very low level
resulting in exploitation of less privileged class. Keeping this in view, the Government of
India enacted the Minimum Wages Act, 1948. The purpose of the Act is to provide that
no employer shall pay to workers in certain categories of employments wages at a rate
less than the minimum wage prescribed by notification under the Act. In fact the sole
purpose of this act is to prevent exploitation of sweated and unorganized lab our,
working in competitive market.
The Act provides for fixation / periodic revision of minimum wages in employments
where the labour is vulnerable to exploitation. Under the Act, the appropriate
Government, both Central and State can fix / revise the minimum wages in such
scheduled employments falling in their respective jurisdiction.
The term ‘Minimum Wage Fixation’ implies the fixation of the rate or rates of minimum
wages by a process or by invoking the authority of the State. Minimum wage consists of
a basic wage and an allowance linked to the cost of living index and is to be paid in cash,
though payment of wages fully in kind or partly in kind may be allowed in certain cases.
The statutory minimum wages has the force of law and it becomes obligatory on the
part of the employers not to pay below the prescribed minimum wage to its employees.
The obligation of the employer to pay the said wage is absolute. The process helps the
employees in getting fair and reasonable wages more particularly in the unorganised
sector and eliminates exploitation of labour to a large extent. This ensures rapid growth
and equitable distribution of the national income thereby ensuring sound development
of the national economy.
It has been the constant endeavour of the Government to ensure minimum rates of
wages to the workers in the sweated industries and which has been sought to be
achieved through the fixation of minimum wages, which is to be the only solution to this
problem.

Object of the Act Fixation of Minimum Rates of Wages

← The appropriate government to fix minimum rates of wages. The
To provide for employees employed in Para 1 or B of Schedule either at 2 or either part
fixing minimum of notification u/s 27
rates of wages in
← To make review at such intervals not exceeding five years the minimum
certain
rates or so fixed and revised the minimum rates.
employments
Government can also fix Minimum Wages for
 Minimum Rates
of
Wages
Such as Basic rates
of wages etc.
Variable DA and (a) Time work (b) Piece work at piece rate (c) Piece work for the purpose
Value of other of securing to such employees on a time work basis (d) Overtime
concessions etc. work done by employees for piece work or time rate workers
Sec- 4 {Section 3}

Fixing Hours for Procedure for Composition of Payment of Minimum Rates of

Normal Working fixing and Committee Wages
revising
a. Shall constitute a Minimum Representation of Employer to pay to every
normal working day Rates of employer and employee negated in schedule
inclusive of one or Wages employee in employment at a rate not less
more specified schedule employer in than minimum rates of wages as
intervals. Appointing equal number and fixed by Notification by not making
Committee issue independent persons deduction other than prescribed.
b. To provide for a of Notification not exceeding 1/3rd {Section 12}
day of rest in every etc. {Section 5} or its total number
period of seven one such person to
days with be appointed by the
remuneration. Chairman. {Section
9}
c. To provide for
payment for work Overtime
on a day of rest at
a rate not less than To be fixed by
the overtime rate the hour, by the Wages of workers who works for less than normal
{Section 13} day or by such working days
a longer wage-
Save as otherwise hereinafter provided, be entitled to receive
period works on
wages in respect of work done by him on that day as if he
any day in
had worked for a full normal working day. {Section 15}
excess of the
number of
hours
constituting
normal working
day.

Payment for
every hour or
for part of an
hour so worked
in excess at the
overtime rate
double of the
ordinary rate of
(1½ times or
for agriculture
labour) {Section
5}

Wages for two class of work: Where an employee does two or more classes of work to each of which a
different minimum rate of wages is applicable, wages at not less than the minimum rate in respect of each
such class. {Section 16}
 Maintenance of registers and records Minimum time rate wages for
← Register of Fines - Form 1 Rule 21(4) piece work

← Annual Returns - Form III Rule 21(4-A) Not less than minimum rates
← Register for Overtime - Form IV Rule 25 wages as fixed {Section 17}
← Register of Wages - Form X, Wages Slip - Form XI,
Muster Roll - Form V Rule 26
← Representation of Register - for three year Rule 26-A
{Section 18}

Claims by employees
← To be filled by before authority constituted under the Act within 6 months.
← Compensation upto 10 times on under or non-payment of wages {Section 16}

Penalties Offences Punishment

Imprisonment upto 6 months or with

For paying less than minimum rates of wages
As per Section 20 fine upto Rs.500.00

For contravention of any provisions pertaining Imprisonment upto 6 months or with

to fixing hours for normal working day etc fine upto Rs.500.00

II Concepts
II(a)Minimum Wage
The Act under section 2(h) defines wages, but does not define “minimum wages”. As it is
not possible to bring down a uniform minimum wage for all the industries throughout
the country.
Section 2(h)"wages" means all remuneration capable of being expressed in terms of money which
would if the terms of the contract of employment express or implied were fulfilled be payable to a
person employed in respect of his employment or of work done in such employment and includes
house rent allowance but does not include -
(i) the value of -
(a) any house accommodation supply of light water medical attendance or
(b) any other amenity or any service excluded by general or special order of the appropriate
government;
(ii) any contribution paid by the employer to any person fund or provident fund or under any scheme
of social insurance;
(iii) any traveling allowance or the value of any traveling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of
his employment; or
(v) any gratuity payable on discharge;
II(a)(i)Essential Ingredient
1. Wage should be by way of remuneration
2. It should be capable of being expressed in terms of money.
3. It should be payable to a person employed in respect of his employment or of work
done in such employment.
4. It should be payable to a workmen.
5. It should be payable if the terms of employment, express or implied, are fulfilled.
6. It includes house rent allowance.
7. It does not include house accommodation, supply of light, water, medical attendance,
traveling allowance, contribution of employer towards provident fund, gratuity , any
scheme of social insurance etc.
II(b)Classification of Wages
The Supreme Court has classified “Wages” into three categories. They are:
1. The Living Wage ( highest standard of wage)
2. The Fair Wage (between living and minimum wage)
3. The Minimum Wage.( it is the lowest standard of wage)
The living and fair wages are acquired by workers with their “collective bargaining”.
When the workers have no unions and who have no capacity of collective bargain could
not demand the employers for their just and genuine wage. The State come to rescue
them through such legislations.

III Main provisions under the Act

1. Fixing of minimum rates of wages Section 3
a. The appropriate Government may fix the minimum rates of wages
payable to employees employed in an employment specified in Part - I or
Part - II of the Schedule and in an employment subsequently added to the
Schedule. The Government may review the minimum rates of wages and
revise the minimum rates at intervals not exceeding five years.
b. The appropriate Government may refrain from fixing minimum wages in
respect of any scheduled employment in which there are in the whole
State less than one thousand employees engaged in such employment.
c. The appropriate Government may fix separate minimum rates of wages
for time rate and for piece rate. Different wage rates may be fixed for
different scheduled employments, different classes of work in the same
scheduled employment, for adults, adolescents, children and apprentices
and for different localities and for any one or more of the wage periods,
viz., by the hour or by the day or by the month or by such larger wage
period as may be prescribed.

2. Minimum rate of wages (Section 4)

Any minimum rate of wages fixed or revised may
consist of

a. a basic rate of wages and a special allowance ; or

i. a basic rate of wages with or without cost of living allowance and the cash
value of concessions in respect of supplies of essential commodities at
concessional rates; or
ii. an all inclusive rate allowing for the basic rate, the cost of living allowance
and the cash value of concessions, if any.
3 Procedure for fixing and revising minimum wages (section 5)
The appropriate Government is required to appoint an Advisory Board for advising it,
generally in the matter of fixing and revising minimum rates of wages.
The Central Government appoints a Central Advisory Board for the purpose of advising
the Central and State Governments in the matters of the fixation and revision of
minimum rates of wages as well as for co-ordinating the work of Advisory Boards.
The Central Advisory Board consists of persons to be nominated by the Central
Government representing employers and employees in the scheduled employments, in
equal number and independent persons not exceeding one third of its total number of
members. One of such independent persons is to be appointed the Chairman of the
Board by the Central Government.
4 Wages in kind (section 11)
Minimum wages payable under this Act are to be paid in cash. However, the payment of
minimum wages can be made wholly or partly in kind, by notifying in the official Gazette,
where it is customary to pay wages either wholly or partly in kind.
5 Payment of minimum rate of wages (Section 12)
The employer is required to pay to every employee, engaged in a scheduled
employment under him, wages at a rate not less than the minimum rate of wages
notified for that class of employees without any deduction except as may be authorised.
( see the Payment of Wages Act 1936 (4 of 1936) for permissible deduction)
6. Fixing hours for normal working day (section 13)
In regard to any scheduled employment, minimum rates of wages in respect of which
have been fixed under this Act, the appropriate Government may
a. fix the number of hours of work which shall constitute a normal working
day, inclusive of one or more specified intervals;
b. provide for a day of rest in every period of seven days which shall be
allowed to all employees or to any specified class of employees and for
the payment of remuneration in respect of such days of rest;
c. provide for payment for work on a day of rest at a rate not less than the
overtime rate.
7. Overtime (Section 14)
If any employee whose minimum rate of wages is fixed under the Act works on any day
in excess of the number of hours constituting normal working day, the employer is
required to pay him for excess hours at the overtime rate fixed under this Act or under
any law of the appropriate Government for the time being in force, whichever is higher.
8. Wages for two or more classes of work (Section 16)
If an employee does two or more classes of work, to each of which a different rate of
wages is applicable, the employer is required to pay to such employee in respect of the
time respectively occupied in each such class of work, wages at not less than the
minimum rate in force in respect of each such class.
9. Maintenance of registers and records(Section 18)
Every employer is required to maintain registers and records giving particulars of
employees, the work performed by them, the wages paid to them, the receipts given by
them and any other required particulars.
10 Inspections(Section 19)
The appropriate Government may, by notification in the official Gazette, appoint
inspectors for the purpose of this Act and define the local limits for their functions.
11. Claims (Section 20)
The appropriate Government may, by notification in the official Gazette, appoint Labour
Commissioner or Commissioner for Workmen’s Compensation or any officer not below
the rank of Labour Commissioner or any other officer with experience as a judge of a
civil court or as a Stipendiary Magistrate, to hear and decide for any specified area, all
claims arising out of the payment of less than the minimum rates of wages as well as
payment for days of rest or for work done.
12. Penalties for Offences(Section 22)
Any employer who contravenes any provision of this Act shall be punishable with
imprisonment for a term, which may extend to six months or with fine, which may
extend to five hundred rupees or with both.

THE PAYMENT OF WAGES ACT, 1936

Many States have carried out exhaustive amendments to the Act to widen its scope and
application as far as practicable. The State of Maharasthra has extended the provisions of the Act
to all establishments covered by the Bombay Shops and Establishments Act, 1948.

CHECK LIST
Object of the Act

To regulate the payment of

Applicability of Act wages of certain classes of Wages to be paid in current
Factory industrial Establishment employed persons coins or currency
Tramway service or motor notes
Time of payment of wages
transport service engaged in
carrying passengers or good or a. All wages shall be paid in
The wages of every person
both by road for hire or reward. current coins or currency notes
employed is paid. When
Air transport service Dock, Wharf or in both.
less than 1000 persons
or Jetty, Inland vessel, are employed shall be
mechanically propelled paid before the expiry b. After obtaining the
Mine, quarry or oil-field of the 7th day of the authorization, either by
plantation following month. When Cheque or by crediting the
Workshop or other establishment more than 1000 wages in employees banks
etc. workers, before the Account {Section 6}
expiry of the 10th day of
the following month.
{Section 5}

Coverage of Employees Deduction made from Deduction for absence from

wages duties for
Drawing average wage upto Rs.6500 pm unauthorized absence
as amended with effect from 6th Deductions such as, fine,
September 2005 deduction for amenities and Absence for whole or any part
services supplied by the of the day – If ten or more
 Fines as prescribed by

Not to imposed unless the employer is

given an opportunity to show cause employer, advances paid,
to record in the register {Section 8} over payment of wages,
loan, granted for house-
building or other purposes,
income tax payable, in
pursuance of the order of persons absent without
the Court, Provident Fund reasonable cause, deduction of
contributions, cooperative wages upto 8 days {Section 9}

Deduction for damage

or loss
Deductions for Service Rendered
For default or negligence of
When accommodation amenity or service
an employee resulting into
has been accepted by the employee.
loss. Show cause notice has
{Section 11}
to be given to the
employee. {Section 10}

PENALTIES

Fine not less than Rs. 1000, which may extend to

Rs. 5000. On subsequent conviction fine not less
On contravention of Section 5 (except Subsection .4),
than Rs. 5000, may extend to Rs. 10000. On
Section 7, Section 8 (except Subsection 8), Section 9,
contravention Section 4, 5(4), 6, 8 (8), 10(2) or
Section 10 (except Subsection 2) and Section 11 to
Section 25 fine not less than Rs. 1000. - may
Section 13
extend to Rs. 5000. On subsequent on conviction
fine not less.

← For failing to maintain registers or records; or

← Willfully refusing or without lawful excuse
← Fine which shall not be less than Rs.
neglecting to furnish information or return; or
1000 but may extend to Rs. 5000 – On
← Willfully furnishing or causing to be furnished record conviction fine not less than Rs.
any information or return which he knows to be 5000, may extend to Rs. 10000.
false or
← For second or subsequent conviction,
← Refusing to answer or willfully giving a false fine not less than Rs. 5000 but may
answer to any question necessary for obtaining extend to Rs. 10000.
any information required to be furnished under
this Act.
← Willfully obstructing an Inspector in the
discharge of his duties under this Act; or
← Refusing or willfully neglecting to afford an
Inspector any reasonable facility for making any Fine not less than Rs.1000 extendable upto
entry, inspection etc. Rs.5000 – On subsequent conviction fine not less
← Willfully refusing to produce on the demand of than Rs.5000 – may extent to Rs.10,000
an inspector any register or other document
kept in pursuance of this Act; or preventing any
person for appearance etc.
 ← Imprisonment not less than one month
← On conviction for any offence and again guilty of extendable upto six months and fine not
Contravention of same provision. less than Rs.2000 extendable upto
← Failing or neglecting to pay wages to any Rs.15000.
employee ← Additional fine upto Rs. 100 for each
day

Employee's Provident Fund and Miscellaneous Provisions

Act, 1952
Objectives:
The Employees' Provident Funds and Miscellaneous Provisions Act provides for the
compulsory institution of contributory provident funds, pension funds and deposit
linked insurance funds for employees. The act aims to ensure a retiral benefit to secure
the future of the employee after retirement.

Applicability:
The Employees' Provident Funds and Miscellaneous Provisions Act extends to whole of
India except State of Jammu and Kashmir.
The Act Applies to industries specified in Schedule I employing 20 or more persons and
any other class of establishments employing 20 or more persons notified by the
Government.
The Government may apply the Act to establishments employing less than 20 people.
Employees covered under the act include contract labour but exclude apprentices,
trainees, directors, working partners, domestic servants and contractors.
Establishments can seek exemption from any or all the provisions of the act.

The main provisions of the Act are:-

 The Act aims to provide for institution of provident funds, family pension
funds and deposit linked insurance funds for the employees in the factories
and other establishments. Accordingly, three schemes are in operation
under the Act. These schemes taken together provide to the employees an
old age and survivorship benefits, a long term protection and security to
the employee and after his death to his family members, and timely
advances including advances during sickness and for the purchase/
construction of a dwelling house during the period of membership. These
three schemes are as follows:-

 Employees' Provident Fund Scheme, 1952

  Employees' Deposit Linked Insurance Scheme, 1976

 Employees' Pension Scheme, 1995 (replacing the Employees' Family

Pension Scheme, 1971)

 The Central Government may by notification in the Official Gazette

constitute a Central Board of Trustees for the territories to which this Act
extends. Also, the Government may constitute an Executive Committee to
assist the Board in the performance of its functions.

 The contribution which shall be paid by the employer to the fund shall be
eight and one-third per cent of the basic wages, dearness allowances and
retaining allowance (if any) for the time being payable to each of the
employees. While, the employees' contribution shall be equal to the
contribution payable by the employer in respect of him and may if any
employee so desires and if the Scheme makes provision therefore be an
amount not exceeding eight and one-third per cent of his basic wages,
dearness allowances and retaining allowance (if any), subject to the
condition that the employer shall not be under an obligation to pay any
contribution over and above his contribution payable under the Act.

 The Central Government may by notification in the Official Gazette

constitute one or more Employees' Provident Funds Appellate Tribunal to
exercise the powers and discharge the functions conferred on such Tribunal
by this Act and every such Tribunal shall have jurisdiction in respect of
establishments situated in such area as may be specified in the notification
constituting the Tribunal.

 No employer in relation to an establishment to which any scheme applies,

shall by reason only of his liability for the payment of any contribution to
the fund, or any charges under this Act or the scheme, reduce whether
directly or indirectly, the wages of any employee to whom the scheme
applies or the total quantum of benefits in the nature of old age pension
gratuity provident fund or life insurance to which the employee is entitled.

 Whoever for the purpose of avoiding any payment to be made by himself

under this Act or of enabling any other person to avoid such payment,
knowingly makes or causes to be made any false statement or false
representation, shall be punishable with imprisonment or with fine or with
both.
THE MATERNITY BENEFIT ACT, 1961
The object of the Maternity Benefit Act, 1961: The Object of the Act is (1) to provide for
maternity benefit to women workers in certain establishments; (2) to regulate the
employment of women workers in such establishments for certain period before and
after child birth.

Establishments are covered by the Act: The Act applies to (1) every establishment being
a factory, mine, plantation or circus; (2) every shop in which 10 or more persons are
employed; (3) any other establishment to which the Act is applied by the State
Government under the proviso to Section 2(1)

Note: (1) The Act applies to a factory, mine or plantation belonging to Government. (2)
The Act does not apply to any factory or other establishment to which the provisions of
the Employees' State Insurance Act apply. {Section 2}

Is there any justification for denying the benefits of the Maternity Benefit Act to women
workers on the ground that they are not regular employees but they are on the muster
roll?: The Supreme Court, in Municipal Corporation of Delhi v. Female workers (Muster
Roll) & Anr. (2000 I C.I.R. 879) has said; "We have scanned the different provisions of the
Act, but we do not find anything contained in the Act which entitles only regular woman
employees to the benefit of maternity leave and not those who are engaged on casual
basis or on muster roll on daily wage basis."

Restrictions placed by the Act on the employment of women: The restrictions placed by
the Act on the employment of women are as follows:
i. The employer is prohibited from knowingly employing a woman in any
establishment during the six weeks immediately following the day of her delivery
or her miscarriage;
ii. A woman also, on her part, is required to abstain from working in any
establishment during the said period;
iii. A pregnant woman can also request her employer not to give her any work which
is of an arduous nature or which involves long hours of standing, etc. during the
period of one month immediately preceding the period of six weeks, before the
date of her expected delivery or any period during the said period of six weeks
for which the pregnant woman does not avail of leave of absence, under the Act.
On such a request being made by her, the employer shall not give her such work
during such period. {Section 4}
To whom maternity benefit is payable in case of death of a woman?: If a woman entitled
to maternity benefit dies before receiving such benefit, the employer shall pay such
benefit to the person nominated by the woman and in case there is no such nominee, to
her legal representative. {Section 7}

Restrictions placed by the Act on the termination of employment of a woman: When a

woman absents herself from work in accordance with the provisions of the Act, it shall
be unlawful for her employer to discharge or dismiss her during or on account of such
absence. {Section 12}

Time for payment of maternity benefit: The amount of maternity benefit for the period
preceding the date of her expected delivery shall be paid in advance to the woman on
production of proof that the woman is pregnant and the amount due for the subsequent
period shall be paid to the woman within 48 hours of production of proof that the
woman has been delivered of a child. {Section 6}
Period for which a woman is entitled to maternity benefit and the rate of the benefit: (i)
The maximum period for which any woman shall be entitled to maternity benefit shall
be 12 weeks of which not more than 6 weeks shall precede the date of her expected
delivery. If a woman dies during this period, the maternity benefit shall be payable only
for the days up to and including the day of her death. If a woman, having been delivered
of a child, dies during her delivery or during the period immediately following the date
of her delivery for which she is entitled for the maternity benefit, leaving behind in
either case the child, the employer shall be liable to the maternity benefit for the entire
period but if the child also dies during the said period, then, for the days up to and
including the date of the death of the child.

(ii) But no woman shall be entitled to maternity benefit unless she has actually worked
in an establishment of the employer from whom she claims maternity benefit, for a
period of not less than 80 days in the 12 months immediately proceeding the date of her
expected delivery.

For the purpose of calculating the days on which a woman has actually worked in the
establishment, the days for which she has been laid off or was on holidays declared
under any law to be holidays with wages during the period of 12 months immediately
preceding the day of her delivery, the actual day of her delivery and any period
immediately following that day. For the purpose of this provision, 'the average daily
wage' means the average of the woman's wages payable to her for the days on which
she has worked during the period of 3 calendar months immediately preceding the date
from which she absents herself on account of maternity, or the minimum rate of wage
fixed or revised or under the Minimum Wages Act, 1948 or 10 rupees, whichever is the
highest. {Section 5}

Is a woman entitled to maternity benefit, also entitled to any medical bonus?: A woman
entitled to maternity benefit under the Act shall also be entitled to receive from her
employer a medical bonus of 250 rupees, if no pre-natal confinement and postnatal care
is provided for by the employer free of charge. The medical bonus shall be paid along
with the second installment of the maternity benefit. {Section 8 & Rule 5}

Can a woman claim the maternity benefit from her employer if she works elsewhere
during the period for which she has been permitted to absent herself under the
provisions of the Act?: If a woman works in any establishment after she has been
permitted by her employer to absent herself under the provisions of the Act for any
period during such authorized absence, she shall forfeit her claim to the maternity
benefit for such period. {Section 18}

Is it permissible under the Act to exempt any establishment for the provisions of the
Act?: The appropriate Government can exempt any establishment from the operation of
all or any of the provisions of the Act or of any rule made under the Act if the benefits
provided by the establishment are not less favourable that those provided in the Act.
{Section 26}

Is a woman entitled to any leave with wages for illness in addition to the period of
absence allowed to her under the provisions of the Act?: A woman suffering from illness
arising out of pregnancy delivery, premature birth of child or miscarriage shall be
entitled, in addition to the period of absence allowed to her under the provisions of the
Act, to leave with wages at the rate of maternity benefit for a maximum period of one
month. {Section 10}
Is a woman entitled to any leave with wages for miscarriage?: In case of miscarriage, a
woman shall be entitled to leave with wages at the rage of maternity benefit, for a
period of 6 weeks immediately following the day of her miscarriage. {Section 9}

Is it necessary for a woman claiming leave with wages for miscarriage to satisfy the
condition that she had worked for a period of not less than 80 days in the 12 months
immediately preceding the date of miscarriage?: Such condition has to be satisfied for
claiming Maternity Benefit under Section 5 of the Act. There is no condition of any sort
to be satisfied for claiming leave wages for miscarriage under Section 9 of the Act.

What are the other obligations of the employer under the Act?: Under the Act the
employer is required: (a) to exhibit the abstract of the provisions of the Act and the rules
made thereunder in a conspicuous place in every part of the establishment in which
women are employed {Section 19 & Rule 5}; (b) to maintain a muster roll in the
prescribed form {Rule 3}; (c) to submit annual returns in the four prescribed forms. {Rule
16}

What is the punishment for the contravention of the provisions of the Act?: (1) If any
employer fails to pay any amount of maternity benefit to a woman entitled under the
Act or discharges or dismisses such woman during or on account of her absence from
work in accordance with the provisions of the Act, he shall be punishable with
imprisonment which shall not be less than three months but which may extend to one
year and with fine which shall not be less than two thousand rupees but which may
extend to five thousand rupees. The Court may, however, for sufficient reasons to be
recorded in writing, impose a sentence of imprisonment for a lesser term or fine only in
lieu of imprisonment. (2) If any employer contravenes the provisions of the Act or the
rules made thereunder, he shall, if no other penalty is elsewhere provided by or under
the Act for such contravention, be punishable with imprisonment which may extend to
one year, or with fine which may extend to five thousand rupees, or with both. Where
the contravention is of any provision regarding maternity benefit or regarding payment
of any other amount and such maternity benefit or amount has not already been
recovered, the Court shall, in addition, recover such maternity benefit or amount as if it
were a fine and pay the same to the person entitled hereto. {Section 21}

THE EMPLOYEES' STATE INSURANCE ACT, 1948

The Employees’ State Insurance Act, 1948, provides to workers not only accident benefit
but also other benefits such as sickness benefit, maternity benefit and medical benefit.

Wage Ceiling: Every employee drawing wages upto Rs. 15000.00 per month is required
to be insured under the Act.

Objective of the Act: The object of the Act is to secure sickness, maternity, disablement
and medical benefits to employees of factories and establishments and dependents’
benefits to the dependents of such employees.

Applicability:-Section 2(9) 'employee' under ESI means any person who is

engaged/employed for wages/salary in connection with the work of the establishment
to which this Act applies. But does not include any person whose wages (excluding OT)
exceed the limit prescribed by the Central Govt. (which is 15000 pm now with effect
from 1 May 2010).
Section 2(12) 'establishment/factory' under ESI means any premises whereon 20 or
more persons are employed or were employed for wages.
If you combine both, you understand that if the total employees are 25 but out of which
14 are drawing gross more than 15000 pm, then only 11 employees come under
ESIS and the criteria for 20 employees does not fulfill. Hence on above grounds it is not
covered.

CHECK LIST:Applicability of the Act & Scheme: Is extended in area-wise to factories using power and employing
10 or more persons and to non-power using manufacturing units and establishments employing 20 or more person upto
Rs.15,000/- per month with effect from 01-May-2010. It has also been extend-ed upon shops, hotels, restaurants, roads
motor transport undertakings, equipment maintenance staff in the hospitals.

Coverage The ESI Scheme Today Benefits to employees

of
Employees No. of implemented 677 Medical, sickness, extended sickness for
Rate of Centres 2.38 lacs certain diseases, dependents maternity,
Drawing contribution of No. of Employers 85 lacs besides funeral expenses, rehabilitation
wages upto the wages covered 330 lacs
allowance, medical benefit to insured
Rs. No. of Insured Persons 26
Employer's No. of Beneficiaries 183
person and his or her spouse.
15000.00
per month 4.75% No. of Regional 1453
engaged Employee's Offices/SRO’s 2950
either 1.75% No. of ESI
directly or Hospitals/Annexes
through No. of ESI Dispensaries
contractor No. of Panel Clinics

WAGES FOR ESI CONTRIBUTIONS Manner and Time Limit for making
Registers / Files to be maintained by the employers Payment of Contribution

To be deemed as wages Not to be deemed as Wages The total amount of contribution (employee's
← Basic pay ← Contribution paid by the share and employer's share) is to be deposited
employer to any pension / with the authorised bank through a challan in
← Dearness Allowance
provident of under ESI the prescribed form in quadruplicate on or
← House Rent Allowance before 21st of month following the calendar
Act.
← City Compensatory ← Sum paid to defray special month in which the wages fall due.
Allowance expenses entailed by the
 Contribution Period

If the person joined insurance employment for

the first time, say on 5th January, his first
contribution period will be from 5 th January to
31st March and his corresponding first benefit
will be from 5th October to 31st December.
← 1st April to 30th September
← 1st October to 31st March

← Overtime Wages (but nature of employment –

not to be taken into Daily allowance paid for
account for determining the period spent on tour.
the coverage of ← Gratuity payable on
employee) discharge
← Payment for day of rest ← Pay in lieu of notice of
← Production Incentive retrenchment
compensation
← Bonus other than
← Benefits paid under the
statutory bonus
ESI Scheme
← Night shift Allowance
← Encashment of leave
← Heat, Gas & Dust
Penalties: Different punishment have been prescribed for different types of offences in terms of Section 85:
(i) (six months imprisonment and fine Rs.5000), (ii) (one year imprisonment and fine), and 85-A: (five years
imprisonment and not less to 2 years) and 85-C (2) of the ESI Act, which are self explanatory. Besides
these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts
contributions from the wages of his employees but does not pay the same to the corporation which amounts
to criminal breach of trust.

BENEFITS UNDER THE ESI SCHEME:

The section 46 of the Act envisages following social security benefits:-
An interesting feature of the ESI Scheme is that the contributions are related to the
paying capacity as a fixed percentage of the workers wages and from employers,
whereas, they are provided social security benefits according to individual needs
without distinction.

Cash benefits are disbursed by the Corporation through its Local Offices (Los) / Mini
Local Offices (MLOs) / Sub Local Offices SLOs) / pay offices, subject to certain
contributory conditions.
1. Medical Benefit:
Medical benefit consists of "full medical care" including hospitalisation, free of cost, to
the Insured Persons in case of sickness, employment injury and maternity.
2. Sickness benefit:
Sickness Benefit represents periodical cash payments made to an IP during the period of
certified sickness occurring in a benefit period when IP requires medical treatment and
attendance with abstention from work on medical grounds. Prescribed certificates are
Forms 8,9,10,11 & ESIC-Med.13. Sickness benefit is roughly 50% of the average daily
wages and is payable for 91 days during 2 consecutive benefit periods.

i) Temporary Sickness Benefit:

Sickness Benefit represents periodical cash payments made to an IP during the period of
certified sickness occurring in a benefit period when IP requires medical treatment and
attendance with abstention from work on medical grounds.
ii) Extended sickness Benefit:
In addition to 91 days of sickness benefit, insured persons suffering from certain long-
term diseases are entitled to extended sickness benefit for 34 diseases. The list of
diseases are enclosed in the Annexure.
iii) Enhanced Sickness Benefit:
The ESI Corporation has also extended additional cash incentive to insured persons to
promote acceptance of sterilization method by providing sickness cash benefit equal to
full wage for a period of 7 days for vasectomy and 14 days for tubectomy. The period for
which cash benefit is admissible is extended beyond the above limits in the event of any
complications after Family Planning operations.
3. Maternity benefit:
The benefit is payable in cash to an insured woman for confinement / miscarriage or
sickness arising out of pregnancy / confinement or premature birth of child or
miscarriage. For confinement, the duration of benefit is 12 weeks, for miscarriage 6
weeks and for sickness arising out of confinement etc. 30 days. The benefit is allowed at
about full wages.
4. Disablement benefit:
The Act provides for cash payment, besides free medical treatment, in the event of
temporary or permanent disablement as a result of employment injury as well as
occupational diseases. The rate of temporary disablement benefit is about 72% of the
wages as long as the temporary disablement lasts. In case of total permanent
disablement, the insured person will be given life pension at full rate i.e., about 72% of
his wages, while in cases of partial permanent disablement a portion of it will be granted
as life pension. Cases where daily pension is upto Rs.1.50, it is commutable.

5. Dependant’s benefit
In case of death, as a result of employment injury, the dependants of an insured person
are eligible for periodical payments. Pension at the rate of 40% more than the Standard
Benefit Rate will be paid periodically to widow (s) and children in accordance with the
prescribed share. An eligible son or daughter is entitled to dependant’s benefit up to the
age of 18 without any proof of education; the benefit is withdrawn if the daughter
marries earlier.
6. Funeral Expenses:
Funeral benefit is a cash payment payable on the death of an insured person towards
the expenses on his funeral, the amount not exceeding Rs.2,500/-.

7. OTHERS:
i) Rehabilitation allowance:
Disabled IPs who remain admitted in an Artificial Limb Centre for fixation or repair or
replacement of the artificial limb are entitled to a rehabilitation allowance for each day
on which they remain admitted at Artificial Limb Centre at double the Standard Benefit
rate. This is not subject to any contributory condition.
ii) Vocational Rehabilitation:
This scheme has been designed to provide financial assistance to IPs who are referred to
Vocational Rehabilitation Centre for training. Under the scheme, IPs aged not more than
45 years who are permanently disabled as a result of an employment injury (EI) with loss
of earning capacity of not less than 40% and are not in gainful employment subsequent
to EI are entitled to receive cash allowance equal to the expenditure charged by the
Vocational Rehabilitation Centre or Rs.45/- per day whichever is more during his stay at
the Vocational Rehabilitation Centre. Such IPs are also paid conveyance charges for the
journey undertaken by them from their normal residence to the centre and back.
iii) Medical Benefit to Retired IP’s and Permanent Disabled IP’s
On payment of Rs.10/- P.M. or Rs. 100/- Per annum in limp sum for one year in advance,
Medical Benefit can be provided to:
An Insured Person and his or her spouse who leaves insurable employment on attaining
the age of superannuation after being insured for not less than five years, till the period
for which contribution is paid.
ii) An Insured Person and his/her spouse who ceases to be in insurable employment on
account of permanent disablement due to employment injury shall be entitled to
medical benefit.

THE PAYMENT OF BONUS ACT, 1965

The Payment of Bonus Act, 1965, gives to the employees a statutory right to a share in
the profits of his employer. Prior to the enactment of the Act some employees used to
get bonus but that was so if their employers were pleased to pay the same.

The Act enables the employees to get a minimum bonus equivalent to one month's
salary or wages (8.33% of annual earnings) whether the employer makes any profit or
not. But the Act also puts a ceiling on the bonus and the maximum bonus payable under
the Act is equivalent to about 2 1/2 months' salary or wage (20% of annual earnings).

It is to be noted that employees drawing salary or wage exceeding Rs. 10000.00 per
month are not entitled to get any bonus under the Act. (w.e.f. 1 April 2006)

Applicability of Act
Establishment
Every factory where in 10 or more persons are employed with the aid
Establishment includes
of power or an establishment in which 20 or more persons are
Departments, undertakings and
employed without the aid of power on any day during an accounting
branches, etc.
year

Computation of available
Separate establishment
surplus
Components of Bonus
If profit and loss accounts are
a. Income taxes and direct
prepared and maintained in respect
taxes as payable. Salary or wages includes dearness
of any such department or
b. Depreciation as per section allowance but no other allowances
undertaking or branch, then such
32 of Income Tax Act. e.g. overtime, house rent, incentive
department or undertaking or
c. Development rebate, or commission. {Section 2(21)}
branch is treated as a separate
investment or development
establishment. {Section 3}
allowance. {Section 5}

Disqualification & Deduction of Bonus

On dismissal of an employee for; Computation of gross profit

← Fraud; or
← riotous or violent behavior while in the premises of the For banking company, as per First
establishment; or Schedule.
← theft, misappropriation or sabotage of any property of the
establishment or Others, as per Second Schedule
← Misconduct of causing financial loss to the Employer to the {Section 4}
extend that bonus can be deducted for that year {Section 9
& 18}
 Eligibility of Bonus Payment of Minimum Bonus
Eligible Employees
An employee will be entitled 8.33% of the salary or Rs.100 (on
only when he has worked for completion of 5 years after 1st
Employees drawing wages upto
30 working days in that year. Accounting year even if there is no
Rs.10000.00 per month or less.
{Section 8} profit) {Section 10}
For calculation purposes
Rs.3500.00 per month
Time Limit for Payment of
maximum will be taken even if
Bonus Set-off and Set-on
an employee is drawing upto
Rs.10000 per month. {Section
Within 8 months from the As per Schedule IV
12}
close of accounting year {Section 15}
{Section 19}

Maintenance of Registers and Records etc.

← A register showing the computation of the allocable surplus referred to in clause (4) of section 2, in form
A. A register showing the set-on and set-off of the allocable surplus, under section 15, in form B.
← A register showing the details of the amount of bonus due to each of the employees, the deductions under
section 17 and 18 and the amount actually disbursed, in form C. {Section 26 Rule 4}

Act not applicable to certain employees of Life Insurance Corporation, General Insurance, Dockyards, Red Cross,
Universities & Educational Institutions, Chambers of Commerce, Social Welfare Institutions, Building Contractors, etc.
{Section 32}

PENALTY
For contravention of any provision of the Act or the Rule, imprisonment upto 6 months or with fine upto Rs.1000

Social security & Social Assistance

Social security is a concept enshrined in Article 22 of the Universal Declaration of

Human Rights which states that Everyone, as a member of society, has the right to social
security and is entitled to realization, through national effort and international co-
operation and in accordance with the organization and resources of each State, of the
economic, social and cultural rights indispensable for his dignity and the free
development of his personality. In simple term, this means that the signatories agree
that society in which a person lives should help them to develop and to make the most
of all the advantages (culture, work, social welfare) which are offered to them in the
country.[1]
Social security may also refer to the action programs of government intended to
promote the welfare of the population through assistance measures guaranteeing
access to sufficient resources for food and shelter and to promote health and wellbeing
for the population at large and potentially vulnerable segments such as children, the
elderly, the sick and the unemployed. Services providing social security are often called
social services.
Terminology in this area in the United States is somewhat different to that in the rest of
the English speaking world. The general term for an action program in support of the
well being of the population in the United States is welfare program and the general
term for all such programs is simply welfare. In American society, the term welfare
arguably has negative connotations. The term Social Security in the United States refers
to a specific social insurance program for the retired and the disabled.
Social security may refer to:
 social insurance, where people receive benefits or services in recognition of
contributions to an insurance program. These services typically include provision
for retirement pensions, disability insurance, survivor benefits and
unemployment insurance.
 services provided by government or designated agencies responsible for social
security provision. In different countries this may include medical care, financial
support during unemployment, sickness, or retirement, health and safety at
work, aspects of social work and even industrial relations.
 basic security irrespective of participation in specific insurance programs where
eligibility may otherwise be an issue. For instance assistance given to newly
arrived refugees for basic necessities such as food, clothing, housing, education,
money, and medical care.
This policy is usually applied through various programs designed to provide a population
with income at times when they are unable to care for themselves. Income maintenance
is based in a combination of five main types of program:
 Social insurance, considered above
 Means-tested benefits. This is financial assistance provided for those who are
unable to cover basic needs, such as food, clothing and housing, due to poverty
or lack of income because of unemployment, sickness, disability, or caring for
children. While assistance is often in the form of financial payments, those
eligible for social welfare can usually access health and educational services free
of charge. The amount of support is enough to cover basic needs and eligibility is
often subject to a comprehensive and complex assessment of an applicant's
social and financial situation. See also, Income Support.
 Non-contributory benefits. Several countries have special schemes, administered
with no requirement for contributions and no means test, for people in certain
categories of need - for example, veterans of armed forces, people with
disabilities and very old people.
 Discretionary benefits. Some schemes are based on the discretion of an official,
such as a social worker.
 Universal or categorical benefits, also known as demogrants. These are non-
contributory benefits given for whole sections of the population without a test of
means or need, such as family allowances or the public pension in New Zealand
(known as New Zealand Superannuation). See also, Alaska Permanent Fund
Dividend.