Select Labour Laws a Discussion

Transcription

1 Hyderabad Branch of SIRC of ICAI 09 th November, 2017 Select Labour Laws a Discussion by SV Ramachandra Rao Managing Director M/s Resource Inputs Limited svrr@resourceinputs.com

2 Employee Provident Fund Act

3 P M R P Y Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) Under the Scheme, new employees earning less than Rs.15,000/-per month, who was not working in any establishment registered with the EPFO in the past and did not have UAN prior to are covered. For such employees, the employer contribution of 8.33% will be paid by the government and a provision is made in the budget. This scheme is for 3 years. Textile Sector For Textile Sector total 12% employer contribution will be paid by the government. Further, on the union cabinet approved EPF contribution by employee will be optional in the textile sector for employees earning less than Rs /-. 3

4 Applicability E P F Act is applicable to the Industry engaged in the Manufacture of the products or class of Establishments listed in the SCHEDULE to the Act. Mineral water packing industry will not be covered under the PF Act, since it does not come within schedule of the Act. Shivam Aqua Industries Vs. EPFO 2007 LLR 323 Pat HC EPF Act is not applicable if the total coverable employees are less than 20. Jan Shiksha Prasar Samiti Vs APFC 2013 B LLR458 MP HC EPF Act is not applicable to Cooperative Societies employing below 50 employees. For exclusion from the purview of EPF Act, a cooperative society has to satisfy less than 50 employees and no use of power. Kottayam Dist Coop Hospital Vs. RPFC 2009 LLR 839 Ker HC 4

5 Applicability For applicability of the EPF Act to an establishment its profit or no profit motive is immaterial. Padiyur Sarvodaya Sangh Vs Union of India 1999 LLR 551 Mad HC A firm of Chartered Accountants with 16 employees and 12 Articled Clerks will be covered under E P F Act Chokshi & Co Vs. RPFO 2010 LLR 385 Guj HC Establishment having different department or branches at different places will constitute part of same establishment for the purpose of applicability of the Act. Eddy Current Control Vs RPFC 1993(67) FLR 928 5

6 Applicability - Employee The definition of employee under section 2(f) includes not only persons employed directly by the employer but also persons employed through a contractor, as also a home worker. PM Patel & Sons Vs Union of India 1987 AIR (SC) 447 For computation of 20 employees, Director of the company, cannot be taken into consideration for coverage of establishment when exclusive of directors there were less than 20 employees. Union of India Vs. Patna Tyre House 2004 LLJ 778 Pat HC 6

7 Applicability When the Principal employer is covered under the EPF Act every contractor or sub-contractor working for the Principal will be covered under the Act even though the contractor s establishment is employing below 20 employees. PF Act does not distinguish between regular employee or casual or those engaged through the contractor. Jaggi & Co Vs. EPFO 2008 LLR 126 Del HC The principal employer is liable to pay both the contributions on behalf of employees employed by him directly and engaged by or through the contractors, along with employer s share in accordance with the provision of Para 30 of EPF Scheme. Ram Singh & others Vs. Punjab State Coop & others 2007 II LLJ 631 (P & H DB) 7

8 Applicability Clubbing of Establishments When there is functional integrity between two firms both will be clubbed together for coverage under the act. Paramount Leathers Vs. RPFC 2010 LLR (SN) 326 Bom HC Restaurant and the hotel in the same premises will be clubbed together by applying the principle of functional integrity. Hotel Mahaveer Vs RPFS 2002 LLR 75 P & H HC Three concerns with different activity separately owned by three members of one family will not be clubbed to cover under EPF Act Khoja Lime Udyog Vs RPFC 1992 LLJ 903 8

9 Basic Wages The Act defined Basic Wages as all emoluments which are earned by an employee while on duty or on leave in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include The cash value of any food concession; Any house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment; Any presents made by the employer. 9

10 Basic Wage Coverable Employee Employees whose basic wages are Rs. 15,000/- per month and below at the time of joining the service are required to be covered under PF. Once covered, the employee will continue to get covered even after his Basic Wages have become more than Rs /- per month. Employees who were covered under PF and Pension Scheme in his / her previous organisation and joins a new organisation, will continue to get covered under PF and Pension provided he / she has not withdrawn his / her PF contributions. Employees whose wages at the time of joining is more than Rs /- and non a member of PF earlier are not required to be covered under PF. If the company admits such employees in the PF he / she will not be entitled to join Pension Scheme. 10

11 P F Contributions The section 6 of the Act provides for payment of provident fund contribution by the employer, both employer s and employee s share as the requisite percentage of basic wages, dearness allowance and retaining allowance, if any, for the time being payable to each of the employees, whether employed by him directly or by or through a contractor. Present rate of contribution is 12% on Basic Wages, Dearness Allowance and Retaining Allowance. Seasonal Industry during off season ( like Sugar Industry ) make payment of retaining allowance to its employees even though they are not working during that period. On such allowance also PF contributions are to be remitted. 11

12 P F Contributions Both employer and employee are permitted to contribute PF contributions over and above the limit of Rs /- per month. Employer contributing PF over and above the prescribed limit (Rs. 6500/- at that time) discontinued and restricted the contributions to Rs. 6500/-. Payment over and above the statutory limits are only gratuitous concession and its withdrawal required no notice and this cannot be challenged. Vijayan Vs. Secretary to Government 2006(3) LLJ 337 Ker HC DB 12

13 Basic Wages Case Law The Hon ble Madhya Pradesh High Court Division Bench in the matter of Montage Enterprises Pvt Ltd Vs EPFO, Indore [2011 LLR 867] held that the conveyance allowance and Special Allowance will fall within the definition of Basic Wages. The rationale taken by the Hon ble bench is that the Conveyance Allowance and Special Allowance is paid to all non-executive category of employees and it is not a case that some of the employees are not getting the same. It is a settled law that if such wages are paid universally, necessarily and ordinarily to all across the board, the same will fall under the definition of basic wages. 13

14 Basic Wages Case Law In the year 2005, the Hon ble Calcutta High Court Division Bench in the matter of RPFC (II), WB Vs. Vivekanadnda Vidya Mandir [2005 LLR 339] held that contributions are payable on Special Allowance when it is revised from time to time and the company has not adopted the system of payment of Dearness Allowance. The detailed view of the court in the matter is as under: The said allowance was paid in terms of contract of employment and was upwardly revised every 2 years and there is no system of payment of dearness allowance, hence it was held to be dearness allowance though described differently (Special Allowance) and therefore has to be treated as a part of pay and hence order passed by PF Authority that special allowance was subject to liability of contributions under section 6 of the Act is upheld. 14

15 Basic Wages Case Law - In the year 2004, the Hon ble High Court of Gujarat in the matter of Gujarat Cypromet Ltd Vs APFC [2004 III CLR 485] also held that the contribution to Provident Fund made on basic wages includes all emoluments earned by the employee and allowances like lunch allowance, medical allowance, conveyance allowance etc., except those which are specifically excluded by the legislature, such as house rent allowance which is clearly excluded from the definition of basic wages by virtue of Section 2(b). 15

16 Basic Wages Case Law The Supreme Court [1963 II LLJ 490] in the matter of Bridge & Roof Co (India) Ltd Vs Union of India interpreted the intent of the legislature as under : Whatever is payable in all concerns and is earned by all permanent employees is included for the purpose of contribution, but whatever is not payable by all concerns or may not be earned by all employees of a concern is excluded for the purposes of contribution. It is a settled law that if such wages are paid universally, necessarily and ordinarily to all across the board, the same will fall under the definition of basic wages. 16

17 PF Contributions Minimum Wages The Division Bench P&H [2011 LLR 943] in the matter of APFC Vs G4S Security held that Minimum Wages Act provides for a definition of wage which is distinct from that of the basic wages given under E P F Act. Both the statutes are manifestly different. Hence excluding certain allowances such as H R A, Washing Allowance and Conveyance Allowance from Basic Wages for payment of EPF contributions is permissible. On this decision of the Division Bench, the EPFO filed an appeal and sought for Stay of this order. The Apex Court has not granted stay on this order. 17

18 Basic Wages - Contributions Now many these matters are pending before the Hon ble Supreme Court as Delhi High Court and PF Tribunal have passed orders holding that PF contributions are not required to be paid on conveyance allowance, special allowance etc., 18

19 Not Basic Wages The Supreme Court held that the Production Bonus / Incentive when paid in a sliding scale with due regard to the production made by each workman then no contribution is payable. Similarly if the production bonus is paid on an average to all workmen on the basis of extra production made by them, then also, no contribution need be paid. [Daily Pratap Vs RPFC 1999 I LLJ 1] The Madras, Delhi and Gujarat High Courts held in various matters that the ad-hoc allowance and ad-hoc payments made to employees does not form part of basic wages and hence no contributions are payable. The Hon ble High Court of Madras in the matter of Wipro Ltd Vs PO Employees PFAT [2007 LLR 624] held that the canteen subsidy is not equivalent to cash value of food concession and hence provident fund contributions are not payable on canteen subsidy. 19

20 Not Basic Wages The Hon ble High Court of Bombay held that payment made in lieu of notice for terminating the contract of employment of a permanent employee does not constitute basic wages and hence no contributions are payable. The Gujarat High Court in the matter of Swastik Textile Engineers Vs V M Rathod [2008 II LLJ 533] held that the back wages awarded by Court cannot be regarded as basic wages payable to the employee and it is in the form of damages or compensation and hence provident fund contributions are not required to be paid. The Supreme Court held that Leave Encashment should not be taken as part of basic wages and hence no provident fund contributions are payable. 20

21 International Worker The concept of International Worker was introduced with effect from Any employee other than an Indian Employee, holding other than an Indian Passport working for an Indian Establishment in India And Any Indian employee who has been deputed for working outside India will be IW until he / she worked/ are working without having obtained a certificate of coverage (COC), in a country with which India has a social security agreement (SSA). However, Indian employee upon repatriation to India, will re-acquire the status of Indian employee and will not be governed by the special provisions as are applicable to IW. 21

22 International Worker Excluded Employee An International Worker, who has been contributing to a social security program of his country of origin, either as a citizen or resident, with whom India has entered into a social security agreement (SSA) on reciprocal manner is an excluded employee. The workers who are Nepalese national or Bhutanese national shall be deemed to be an Indian Worker. 22

23 International Worker Basic Wages There is no change in the definition of Basic Wage between Indian Employee and International Worker. Unlike Indian employee even if the International Worker wages are above Rs.15000/- they are covered under the EPF Act. The contributions towards PF of an International Worker is on the total Basic Wage without restriction of Rs. 15,000/-. When the basic wages are paid in a currency other than in the Indian Rupee, the rate of conversion of that currency shall be the telegraphic transfer buying rate offered by SBI for buying such currency on the last working day of the month. 23

24 International Worker Pension Scheme & EDLI Prior to % of employer contribution on Rs. 6500/- was credited to the Pension Fund. From % of the total employer contribution was credited to the Pension Fund. International Workers who join the EPF Scheme from and thereafter are not covered under Pension Scheme and both the contributions will be credited only to the PF account. EDLI The contributions by the employer towards EDLI is restricted to Rs. 15,000/- only and not on the total Basic Wage. 24

25 EPF Act - Limitation Default in payment of PF dues is an economic offence for the simple reason that the workers are entitled for the provident fund benefit hence limitation is not applicable. HV Thimmegowda & others Vs State of Karnataka 2002 LLN 354 (Karn HC) Provident Fund contributions, when not determined for 14 years, the employer to produce only record which is statutorily maintainable and also available. HP State Forest Corp Vs. RPFC 2008 LLR 980 SC Once an inspection is done and recorded the inspection report or when once 7A Proceedings are concluded, the authorities cannot ask for records for the same period again unless there is a vigilance angle. Even in these cases employer can produce to the extent records available. 25

26 Penal Interest & Damages Default / delay in payment simple p.a. Damages Period of Delay / default If delay is less than 2 months If delay is 2 months and above but less than 4 months If delay is 4 months and above but less than 6 months If delay is 6 months and above Damages to be paid 5% per annum 10% per annum 15% per annum 25% per annum 26

27 7A Proceedings - The Assistant Commissioner will be discharging the Quasi Judicial Function. - PF Enforcement Officer will represent the PF Department. - Review of the Order given by him can be filed but it will go the same Officer. - The orders given by him can be challenged before Tribunal. - At the time of challenging the order to grant stay the Tribunal can ask for depositing an amount equivalent to 75% of the order passed by the Assistant Commissioner. The Tribunal has discretion to reduce the deposit amount. - Before the Tribunal no new issue can be agitated by the employer. Hence these proceedings are very crucial and important 27

28 Case Law on orders passed under 7A Non supply of report of Enforcement Officer will vitiate order under Section 7A of PF Act. WB Power Development Corp Vs Union of India 2012 LLR 835 Cal HC PF contributions wrongly levied for construction workers because of their being unidentifiable. Ahiana Housing Ltd Vs. PF Commissioner 2009 LLR 1270 Jhar HC Liability for EPF contributions cannot be saddled upon an establishment without identification of employees. Roxy Cinema Vs. EPFO 2013 LLR 241 P & H HC 28

29 7A Proceedings - Contractors Summoning of contractor by PF commissioner in 7A proceedings will be necessary to determine the status of employees. NTPC Vs. RPFC 1998 LLR 1084 Cal HC Rejection of the plea of principal employer to implead the contractors to determine PF contributions will not be valid. Chennai Petroleum Corp Vs. APFC 2006 LLR 507 Mad HC Determination and recovery of provident fund contributions from the principal employer on the basis of balance sheets only will not be tenable. Petro Pumps & Motors Vs PF Commissioner Guj HC 29

30 Readings of the Act ESI ACT 30

31 Applicability of the ESI Act The act is applicable to every establishment employing 10 or more employees. The act is applicable only in the notified areas. Now notification is issued for entire district. Entire Telangana and A P have been notified as covered areas. Act is not applicable to seasonal factories. Educational Institutions, Hospitals, Construction workers are also covered under ESI Act. Employees who are not covered under ESI Act will be covered under Employee Compensation Act and Maternity Benefit Act. 31

32 Employee Rate of contribution Persons employed directly or through immediate employer whose services are temporarily lent; apprentice and whose monthly wages are Rs. 21,000/- and below are covered under the Act. Wages shall mean gross monthly wages. Transport allowance and Washing allowance shall be excluded for the purpose of wage. The employer contribution is 4.75% and employee contribution is 1.75% Newly notified areas it is 3% and 1% during the first two years of implementation. Contributions are to be deposited on or before 15 th of the month. 32

33 Penal Interest & Damages Default / delay in payment simple p.a. Damages Period of Delay / default If delay is less than 2 months If delay is 2 months and above but less than 4 months If delay is 4 months and above but less than 6 months If delay is 6 months and above Damages to be paid 5% per annum 10% per annum 15% per annum 25% per annum 33

34 Applicability A godown away from the factory will come within the expression premises of the factory for applicability and coverage under the Act. Narasimha Mills Ltd Vs RD ESIC 2000LLR 784 Mad HC Use of LPG for manufacture of sweets will be treated as power for applicability of the Act. ESIC Bangalore Vs. Bhagatram & Sons 2001 LLR 1131 Kar HC ESI Act will apply on all branches of an establishment when total number exceeds 20. (now it is 10) Duvent Fans Pvt Ltd Vs. RD, ESIC 2001 LLR 783 Kar HC Storing milk in the cold storage, collected by a cooperative society, will be the manufacturing process for coverage under ESI Act Vellipalayam Co-op Milk Supply Society Vs. RD ESIC 2004 LLR 887 Mad HC Establishment of a Chartered accountant will not be treated as a shop for ESI purposes M/s. Singhvi Dev and Unni C As Vs RD ESIC, 2010 LLR 275 Karn HC 34

35 Applicability A petrol pump will be a factory to be covered under ESI Act, if 10 or more persons are employed. Choisons Vs. ESIC, 2005 LLR 1115 Ker HC ESI Act will be applicable upon a firm running bus transport when its partners engaged the employees and their total number exceeded 20. (now 10) ESIC Vs. Nirankari Bus Services, 2011 LLR 221 P&H HC ESI Act will be applicable upon an establishment when, in addition to 7 employees, there were three paid directors. ESIC Vs. Haryana Biological P Ltd 2010 LLR 38 P&H HC Consultancy services are covered under ESI Act as a shop. Consulting Engg Services I Pvt Ltd Vs. ESIC, 2011 LLR 687 Del HC 35

36 Applicability clubbing of establishments Three concerns will be clubbed together for ESI purposes when there is geographical unity and functional integrity. Madras Textiles Vs. ESIC (2000) 1 SCC 332 Employees of two establishments can be clubbed for coverage under ESI when there is functional integrity. Sumangali Vs RD ESIC, AIR 2009 SC (Supp) 1298 In the absence of functional integrity, two hotels cannot be clubbed for coverage under ESI Act. Dy RD ESIC Vs. Hotel Vijay 2007 LLR 895 SN Kar HC When father allows his son to use the premises for different type of business, their establishments cannot be clubbed for coverage under ESI Act. ESIC Vs. Ved Prakash Gupta, 2008 LLR 881 Del HC 36

37 ESI Contractor s Employees Primary liability to pay ESI contribution is of the principal employer and not the contractor. ESIC Vs Dharwad Coop Milk Producers Societies Union Ltd 2000 LLR 348 Karn HC Loaders and unloaders engaged by the employer will be covered by ESI Act. Soft Beverage Pvt Ltd Vs. ESIC FLR 370 Mad HC Assigning washing of empty bottles to one contractor and packing to another by the principal employer, (job contract) the whole amount will be treated as wages for ESI contributions. Mohan Meakins Ltd Vs. ESIC 2006 LLR 195 HP HC 37

38 Contributions Construction of an office building or maintenance of existing building is a work incidental to the purpose of the establishment and as such ESI s contributions will be payable. - RD ESIC Vs. Kerala Wheat Flour Roller Mill 1997 II 839 Ker HC Demand of contributions not tenable in the absence of identification of employees and their wages. - ESIC Patna Vs. RK Tekriwal, 2012 LLR 842 Pat HC Overtime wages for extra work done by the insured employees will be liable for deduction of ESI Contributions. - IDPL Vs ESIC 1997-I CLR 193 SC 38

39 Contributions Not required to be paid Production incentives paid to the employees under Production Incentive Scheme in addition to normal wages when being paid quarterly ie. Exceeding two months will not be treated as wages to attract ESI contributions. Whirlpool of India Ltd Vs. ESIC (2000) 3 SCC 185 SC Attendance Bonus scheme as announced, voluntarily by the employer will not be wages to attract ESI contributions. Accumax Ltd 2001 LLR 411 Guj HC Grant of canteen subsidies to the employees will not be wages for the purpose of ESI contributions. ESIC Vs. Aluminium Industires Ltd 2003 LLR 23 Ker HC Washing allowance would not be wages for ESI contributions. RD ESIC Vs. Mercury Travels Ltd, 2007 LLR 953 Mad HC 39

40 Limitation & Consumer Forum The ESI corporation can ask for records up to a maximum of 5 years only. The Supreme Court in the case of Kishori Lal Vs Chairman, ESIC reported in 2007 (114) FLR page no.219 SC held that medical services rendered by ESI hospitals are covered by Consumer Protection Act. 40

41 SECTION 45-A DETERMINATION OF CONTRIBUTIONS IN CERTAIN CASES The Corporation is empowered to claim the contributions where no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the Act or if any official of the corporation is prevented from discharging his duties. Provided that no order shall be passed by the Corporation unless a reasonable opportunity is given to the employer. When the employer fails to give break-up of the amount spent, and construction repair etc., 25% of it will be treated as wages for ESI s contribution purpose. Shree Sivakami Mills Ltd Vs. ESIC 2001 LLR 370 Mad HC 41

42 Penal Action In case the contributions are not paid, the corporation have got the power for;- Attachment and sale of moveable or immoveable property of the factory or establishment. Arrest of the employer and his detention in prison. Appointing a receiver for the management of the properties of the factory. Provided the properties of the factory or establishment shall be effected first. 42

43 Recent Amendment Payment of Bonus Act 43

44 Bonus Act Amendment 2015 The amendment Section 2 Clause 13 as per the amended Act employee means any person (other than an apprentice) employed on a salary or wages not exceeding Twenty One Thousand per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied; 44

45 Bonus Act Amendment 2015 Section 12 Calculation of bonus Where the salary or wage of an employee exceeds Seven Thousand or the minimum wage for the scheduled employment as fixed by the appropriate Government, whichever is higher per mensem, the bonus payable to such employees under section 10 or as the case may be, under section 11, shall be calculated as if his salary or wage were Seven Thousand or the minimum wage for the scheduled employment as fixed by the appropriate Government, whichever is higher per mensem. Explanation : For the purpose of this section, the expression scheduled employment shall have the meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act, Minimum Wages Act : Scheduled employment means an employment specified in the schedule or any process or any branch of work forming part of such employment; 45

46 Salary or Wages Salary or Wages 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 (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include Any other allowance which the employee is for the time being entitled to;. Explanation : where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee; 46

47 Example of Minimum Wages Chemicals and Pharmaceuticals Designation to to Sr. Chemist / Chemist / A O Accountant / Cashier Manager Asst. Chemist / Asst. Mgr Supervisor etc Boiler Attn / welder / DEO Packer Bottle Filler Bottle Washer Helper etc

48 Example 2 (Pharma) Minimum Bonus of 8.33% Name Desig Basic +DA Yadv Reddy Bottle filler Bottle washer Other Allow Salary PM Min Wage1 Min Wage2 Bonus1 Bonus2 TTL Bonus Raju Helper As the salary or wage has not exceeded Rs. 7000/- or the minimum wage, the bonus has to be calculated based on actual wage or salary.

49 Example wage above 7000 & below minimum wage Bonus of 8.33% Name Desig Basic +DA Yadv Reddy Bottle filler Bottle washer Other Allow Salary PM Min Wage1 Min Wage2 Bonus1 Bonus2 TTL Bonus Raju Helper As the salary / wage is exceeded Rs. 7000/- the bonus has to be calculated as if his salary / wage is Rs. 7000/- or the minimum wage whichever is higher. It could be seen from the above, the wage / salary is above 7000 and below the minimum wage. Hence the actual wage has to be taken as the celling for calculation of bonus.

50 Example wage above 7000 & above minimum wage Bonus of 8.33% Name Desig Basic +DA Yadv Reddy Bottle filler Bottle washer Other Allow Salary PM Min Wage1 Min Wage2 Bonus1 Bonus2 TTL Bonus Raju Helper As the salary / wage is exceeded Rs. 7000/- the bonus has to be calculated as if his salary / wage is Rs. 7000/- or the minimum wage whichever is higher. The salary / wage is more than the minimum wage. Hence the minimum wage should be taken as the celling for calculation of bonus.

51 Retaining Allowance Seasonal Industry The seasonal industry like sugar will have seasonal employees and permanent employees. The seasonal employees normally work 4 to 5 months and remaining period they will not attend to duties but receive retaining allowance which may be 40% or so of the actual Basic + DA. The Mumbai High Court in the matter of Sangammer Bhag Sahakari Sakhar Karkhana Ltd Vs Rashtriya Sakhar Kamgar Union [2001 II LLJ 707] held that retention allowance paid to seasonal employees will form part of wages under Payment of Bonus Act and such employees will be entitled to Bonus. For determination of ceiling limit of minimum wage 40% ( the applicable %) of the minimum wage should be taken. 51

52 Bonus Contract Workers The contractor s workmen are not covered under the definition of employee of Payment of Bonus Act. However, Companies normally make payment of bonus to contractor s workman through the contractor to maintain harmonious industrial relations. The Karnataka High Court [2013 LLR 595] held that Principal employer is not liable to pay bonus to contractor s employees. Launching prosecution of principal employer for non-payment of bonus to the workers of contractor is to be quashed. Contractor is liable to pay bonus to his employees and principal employer is not liable for the default of the contractor. 52

53 BOCWA - CESS The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 & BOCW Welfare Cess Act 53

54 BOCW Welfare CESS Act The activities covered under BOCW Act will attract cess. The Act is applicable to an establishment with 10 or more building workers in any building or other construction work Building and Other Construction Works means : The construction, alteration, repairs, maintenance or demolition..but does not include any building or other construction work to which the provisions of Factories Act 1948 or Mines Act, 1952 apply. The Supreme Court held that during the period of construction of green field factory the provisions of Factories Act are not applicable. Hence BOCW Welfare Cess Act is applicable and cess is payable. 54

55 BOCW Welfare CESS Act The cess amount is 1% of the cost of construction. Even individual house construction exceeds 10 lakhs, cess is payable. Cess is payable on the cost of construction which include all expenditure incurred by an employer. But shall not include cost of land and compensation paid under workmen compensation act. 55

56 BOCW Welfare CESS Act Who is responsible to pay cess The owner of the establishment for whom or whose benefit construction activity is carried on and who employs building workers is included and is required to comply with the provisions of the act. ADANI AGRI LOGISTICS LTD VS. THE STATE OF HARYANA & OTHERS (P & H HC 2010 LLR 752) 56

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59 Thank you!!! S V Ramachandra Rao Managing Director M/s Resource Inputs Ltd. svrr@resourceinputs.com Hyderabad Branch of SIRC of ICAI 09 th November,