Lesson 8 Payment of Gratuity Act 1972 Objectives The Payment of Gratuity Act, 1972 envisages to provide a retirement benefit to the workmen who have rendered long and unblemished service to the employer, and have thus contributed to the prosperity of the employer. Gratuity is a reward for long and meritorious service. The significance of this Act lies in the acceptance of the principle of gratuity as a compulsory, statutory retrial benefit. Scope and Coverage The Act extends to the whole of India except that it does not extend to the State of Jammu and Kashmir so far as it relates to plantations or ports. The Act applies to the following: Every factory, oilfield, plantation, port, railway company and mine. Every shop or establishment in which 10 or more persons are employed, or were employed on any day of the preceding 12 months. As per Section 3A, a shop or establishment to which the Act becomes applicable shall continue to be governed by the Act even if the number of employees falls below 10. The Central Government has specified Motor Transport undertakings, clubs, chambers of industries, inland water transport establishments, solicitor s office, local bodies, trusts and societies, circus industry in which 10 or more persons are employed or were employed on any day during the preceding 12 months to be covered under the Act. Exemption The appropriate government is empowered to exempt, by notification, any establishment, factory, mine, oilfield, plantation, port, railway company or shop to which this Act applies from the operation of the Act. If the government so opines that the employees of such establishment, etc. are in receipt of gratuity or pensionary benefits not less favourable than the benefits conferred under this Act. The appropriate government may also exempt any employee or class of employees, similarly. Employees Entitled Page 1
Employee as defined in section 2(e) means any person (other than an apprentice) who is employed on wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company or shop, other establishment to which the Act applies. Teachers are now covered under the Act in terms of the amendment of the Act in 2010 though teaches were not earlier covered under the Act. Employee does not include any person who holds a post under the Central or State Government and is governed by any other Act or rules providing for payment of gratuity. Employer [Section 2(f)] In relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop belonging to, or Under the control of the Central or a State Government: Any person or authority appointed by the appropriate government for the supervision and control of employees. Where no person or authority has been so appointed, the head of the Ministry or the Department concerned. In relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop belonging to, or under the control of any local authority. The person appointed by such authority for the supervision and control of employees' Where no person has been so appointed, the chief executive officer of the local authority.. In any other case : The person, who or the authority which has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop. Where the said affairs are entrusted to any other person, whether called a manager, managing director or any other name, such person. Family [Section 2(h)] Family in relation to an employee shall be deemed to consist of the following: (i) In the case of a male employee : himself, his wife, Page 2
his children, whether married or unmarried, his dependent parents, the dependent parents of his wife, and the widow and children of his predeceased son, if any. (ii) In the case of a female employee : herself, her husband, her children, whether married or unmarried, her dependent parents, the dependent parents of her husband, and the widow and children of her predeceased son, if any. (iii) Any child lawfully adopted shall be deemed to be included in his family. (iv) Where a child has been lawfully adopted by another person, such child shall be excluded from the family. Wages [Section 2(s)] Wages means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment which are paid or payable to him in cash. Wages includes dearness allowance. Wages does not include any bonus, commission, house rent allowance, overtime wages and any other allowance Continuous Service [Section 2A] Eligibility of an employee for gratuity depends upon his continuity of service An employee shall be in continuous servrce for a period if he has been in uninterrupted service for that period. Any interruption in service on account of sickness, accident, leave, absence from duty Without leave, layoff, strike or a lock-out or cessation of work not due to any fault of the employee shall be ignored. Any absence for which an order treating it as break in service has been passed as per the standing orders shall not be in continuous service. DEEMED CONTINUOUS SERVICE OTHER THAN IN SEASONAL ESTABLISHMENT SECTION 2A For one year Page 3
If he actually worked for not less than 190 days below the ground in a mine or In an establishment which works for less than 6 days in a week; In any other case, if he actually worked for not less than 240 days in a year. For six month if he actually worked under the employer for not less than 95 days (i) below the ground in a mine or (ii) in an establishment which works for less than 6 days in a week; ln any other case, if he actually worked for not less than 120 days. Consideration of days -The number of days on which an employee has actually worked include the following: The days on which he has been laid-off under an agreement or as permitted by standing orders. The days on which he has been on leave with full wages. The days on which he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment. In the case of a female, the days on which she has been on maternity leave not exceeding twelve weeks DEEMED CONTINUOUS SERVICE IN SEASONAL ESTABLISHMENT An employee employed in a seasonal establishment shall be deemed to be in continuous service if he has actually worked for not less than 75% of the number of days on which the establishment was in operation during period of one year or six month as the case may be. What is Gratuity Gratuity is a lump sum payment made by the employer to an employee when he retires or leaves service. Entitlement of Gratuity [Section 4] After 5 years of continuous service - On superannuation or retirement or resignation. Less than 5 years of continuous service - On death or disablement due to accident or disease. To WHOM GRATUITY BE PAID IN CASE OF DEATH In case of death gratuity shall be paid to the nominee of the employee. if no nomination has been made, gratuity shall be paid to his heirs. Where any such nominee or heir is a minor, the share of such minor shall be deposited with the controlling authority. Computation of Gratuity in Case of Monthly Wage Employee Page 4
The employer shall pay gratuity to an employee at the rate of 15 day8 wages based on last drawn wages for every completed year of service or part thereof in excess of six months. The 15 days' wages shall be calculated by dividing the last drawn wages by 26 and multiplying the quotient by 15 Gratuity = Last drawn wages x (15/26) x completed year of service Computation of Gratuity in the Case of a Price Rated Employee Daily wages shall be computed on the average of the total wages received by him for a period of 3 months immediately preceding the termination of his employment. The wages paid for overtime work shall not be taken into account. Gratuity shall be computed at the rate of 15 days wages for completed years of service. Gratuity = Average daily wages x 15 x completed year of service Computation of Gratuity in the case of Seasonal Establishment The employer shall pay the gratuity at the rate of 7 days' wages for each season. Maximum Amount of Gratuity The amount of gratuity shall not exceed Rs. 10,00,000/-. An employee may receive better terms of gratuity under any award or agreement or contract. Forfeiture or Gratuity (season: 4(6)]; If the services of an employee have been terminated for any act, willful omission or negligence causing any damage or loss or destruction of the property of the employer gratuity shall be forfeited to the extent of the damage or loss caused If the service of such employee is terminated for his riotous or disorderly conduct or any other act of violence gratuity may be wholly or partially forfeited. If the service of any employee is terminated for any offence involving moral turpitude gratuity may be wholly or partially forfeited. Intimation of Gratuity Becoming Payable As soon as gratuity becomes payable, the employer should determine the amount of gratuity and give a notice in the prescribed form to the payee viz. the employee or his nominee or legal hair and to the controlling authority of that area. Application for Payment of Gratuity A person shall make application in Form I, within 30 days from the date the gratuity is payable for payment of gratuity. Page 5
A nominee shall apply ordinarily within 30 days from the date of gratuity became payable to him, in Form 'J'. An application in plain paper with relevant particulars shall also be accepted. A legal heir shall apply ordinarily within one year from the date of gratuity became payable to him, in Form K. An application filed after the expiry of the specified periods shall be entertained on sufficient ground. No claim shall be invalid merely because the claimant failed to present his application within the specified period. Duty of Employer to Pay Gratuity [Section 7] The employer shall whether application has been made or not determine the amount of gratuity and pay within 30 days from the date it becomes payable. If the amount is not paid within 30 days. the employer shall pay simple interest. NO interest shall be payable if the delay is due to the fault of the employee. Insurance and Registration Section 4A Every employer, other than under the control of the Central or State Government, shall have insurance for its liability for payment of gratuity with the Life Insurance Corporation of India or any other prescribed insurer. The appropriate government may exempt any employer employing 500 or more persons who establishes an approved gratuity fund. Every such employer shall get his establishment registered with the controlling authority. Where an employer fails to make any payment of premium to the insurance company or contribution to an approved gratuity fund, he shall be liable to pay gratuity (including interest, if any, for delayed payments) forthwith to the controlling authority. Whoever contravenes the aforesaid provisions shall be punishable with fine up to (10,000 and for continuing offence with a further tine up to?1,000 for each day during which the offence continues. Nomination [Section 6] Each employee, who has completed one year of service, shall make nomination (in Form F) for receiving gratuity. An employee may distribute the amount of gratuity amongst more than one nominee. If an employee has a family at the time of making a nomination, the nomination shall be made in favour of one or more members of his family. Any nomination made in favour of a non-family member shall be void. If at the time of making a nomination the employee has no family, the nomination may be made in favour of any person. On subsequently acquiring a family, such nomination shall Page 6
forthwith become invalid and the employee shall make a fresh nomination (in Form G) in favour of one or more members of his family. A nomination may be modified by an employee at any time giving notice in Form H. If a nominee predeceases the employee, the interest of the nominee shall revert to the employee. Attachment and Assignment of Gratuity [Section 13] Gratuity shall not be liable to attachment in execution of any decree or order of any civil, revenue or criminal court Disputes and Settlement [Section 7(4)] Where there is any dispute regarding the amount of gratuity or admissibility of any claim, or entitlement of the person to receive gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable. The employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding the dispute. The controlling authority shall, after giving the parties a reasonable opportunity of being heard, determine the matter. If any amount is payable to the employee, the controlling authority shall direct the employer to pay such amount. The controlling authority shall pay the amount deposited including the excess amount, if any, deposited by the employer to the person entitled it. Penalties Section 9 Whoever knowingly makes any false statement or false representation for avoiding payment of gratuity, he shall be punishable with imprisonment for a term upto 6 months, or with fine upto Rs. 10,000 or with both. An employer who contravenes any of the provisions of the Act, he shall be punishable with imprisonment not less than 3 months but which may extend to one year, or with fine which shall not be less than Rs. 10,000 but which may extend to 20,000. or with both. Where the offence relates to non-payment of any gratuity, the employer shall be punishable with imprisonment for a term which shall not be less than 6 months but which may extend to 2 years unless the court allows a lesser term. Page 7
1. The Payment of Gratuity Act, 1972 came into force on... (a) 01/04/1972 (b) 16/ 07/1972 (c) 16 /09/1972 (d) 01/ 10/1972 2. The Payment of Gratuity Act, 1972 applies to the following: (a) Every factory. Outfield, plantation, Port, Railway Company and mine (b) Every shop or establishment In With 10 or more persons is employed. or were employed on any day of the preceding 12 months. (c) Both (a) and (b) (d) None of the above 3. under the Payment of Gratuity Act. 1972 completed year of service means continuous service for... (a) one year (b) two year (c) five year (d) None of the above 4. Under the Payment of Gratuity Act, 1972 employee includes... (a) Any person working In a company's pay roll (b) Any person other than an apprentice (c) Teachers (d) Both (b) and (c) 5. Under the Payment of Gratuity Act, 1972 employee does not include any person who... (a) Holds a post under the Central government (b) Holds a post under the State Government (c) IS governed by any other Act or rules providing for payment of gratuity (d) All of the above 6. Under the Payment of Gratuity Act, 1972 wages means... (a) All emoluments which are earned by an employee payable to him in cash (b) Dearness allowance (c) Concessmns given to employee (d) Both (a) and (b) 7. Under the Payment of Gratuity Act, 1972 wages does not include (a) bonus, (b) Commission, (c) House rent allowance, (d) all of the above 8. Under the Payment of Gratuity Act, 1972 deemed continuous service for one year if he actually worked for not less than... days below the ground in a mine or in an establishment which works for less than days in a week. (a) 180, 7 (b) 180. 6 (c) 190. 6 (d) 190. 7 9. Under the Payment of Gratuity Act, 1972 deemed continuous service for one year if he actually worked for not less than... Days in establishments other than below the ground in a mine or in an establishment which works for 6 days in a week? (a) 120 (b) 180 (c) 240 (d) 265 10. Under the Payment of Gratuity Act, 1972 deemed continuous service for six months if he actually worked under the employer for not less than... days (i) below the ground in a mine or (ii) in an establishment which works for less than 6 days in a week. (a) 90 (b) 95 (c) 100 (d) 120 11. Under the Payment of Gratuity Act, 1972 deemed continuous service for six months if he actually worked for not less than days in establishments other than below the ground in a mine or In an establishment which works for 6 days in a week. (a) 120 (b) 180 (c) 240 (d) 265 Page 8
12. Under the Payment of Gratuity Act, 1972 the number of days on which an employee has actually worked includes the following: (a) The days on which he has been laid off under an agreement or as permitted by standing orders (b) The days on which he has been on leave with full wages (c) The days on which he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment (d) All of the above 13. Gratuity shall be payable on death of an employee even if he has rendered continuous service for less than... (a) two years (b) three years (c) five years (d) None of the above 14. Gratuity is payable if a person is in continuous service of less than 5 years in. case of... (a) Death (b) Disablement due to accident (C) Disablement due to disease d) Any of the above 15. The employer shall pay gratuity to an employee at the rate of... days wages based on last drawn wages for every completed year of service or part thereof in excess of six months. (a) 15 (b) 18 (c) 22 (d) 26 16. For piece rated employees daily wages shall be computed on the average of the total Wages received by him for a period of... immediately preceding the termination of his employment. (a) 2 months (b) 3 months (c) 6 months (d) 12 months 17. The amount of gratuity shall not exceed (a) Rs3.00.000! (b) Rs 350,000] (6) Rs 210.00.000/ ((1) None of the above 18. In seasonal establishments, the employer shall pay the gratuity at the rate of... Days' wages for each season. (a) 7 (b) 12 (c) 15 (d) 30 19. An employee is getting basic salary of? 8,000 per month at the time of retirement after completing 28 years 6 months of service. Gratuity shall be... (a) Rs. 1, 29,231I (b) Rs 1.35.2311 (c) Rs 1 3.50.000/ (d) None of the above 20. An employee is getting basic salary off 48,000 per month at the time of retirement after completing 35 years 8 months of service. He is also getting {35000 as DA and? 2000 as traveling allowance. His gratuity shall be... (a) Rs 3.50.000 (b) Rs 10.00.000 (c) Rs 17,213,826 (d) None of the above 21. Gratuity is forfeited... (a) If the services of an employee have been terminated for any act. Willful emission or negligence causing any damage or loss or destruction of the property of the employer. Gratuity shall be forfeited to the extent of the damage or loss caused (b) If the service of such employee.5 terminated for his riotous or disorderly conduct or any other act oi violence. Gratuity may be wholly or partially forfeited to (c) If the service of any employee is terminated for any offence involving moral turpitude. gratuity may be wholly or partially laddered (d) All oi the above 22. Gratuity... be withhold for not releasing quarter by the retired employee. Page 9
(a) Cannot (b) Can (c) May (d) May not 23. The appropriate government may exempt any employer employing... Or more persons who establish an approved gratuity fund from making insurance of the employees. (a) 100 (b) 300 (c) 500 (d) 1000 24. Each employee, who has completed... of service, shall make nomination in Form F for receiving gratuity. (a) 30 days (1)) 60 days (c) one month (d) one year 25. A person shall make application in Form 'l'. Within... Days from the date the gratuity is payable for payment of gratuity. (a) 7 (b) 15 (c) 30 (d) 60 26. The employer shall. Whether application has been made or not. determine the amount 0f gratuity and pay within... days from the date it becomes payable. (a) 7 (b) 15 (c) 30 (d) 60 27. Any person aggrieved by an order of the Controlling authority may. Within... Whoever knowingly makes any false statement or false representation for avoiding payment of gratuity? He shall be punishable with imprisonment for a term up to... Or with fine up to or with both. (a) 3 months, (10 000) (b) 6 months, {10 000) (c) 6 months, {1, 00 000) (d) 2 years. {10,000) 28. An employer who contravenes any 0! The provisions of the Act, he shall be punishable with imprisonment not less than... but which may extend to one year, or with fine which shall not be less than (10,000 but which may extend to 20,000), or with both. (a) 3 months (b) 7 months (c) 12 months (d) 2 years 29. Under the Payment of Gratuity Act, the rate of gratuity is... salary for every completed year of service (a) 20 days (b) 30 days (0) 15 days (d) 2 months 31. Gratuity is paid to the employee for every completed year of service or part thereof in excess of six months at the rate of 15 days wages based on last drawn wages by the employee. While calculating the 15 day's wages. the number 01 working clays in a month are taken as. V. (a) 30 (b) 31 (Cl 15 (d) 26 32. Under the Payment of Gratuity Act, 1972 where the services of an employee have been terminated for any act which constitutes an offence involving moral turpitude provided that such offence is committed by him in the course of his employment, the gratuity payable to the employee may be (a) Wholly or part ally forfeited (b) Only partially forfeited (c) Wholly forfeited (d) Forfeited in instalments (CS EP Dec 2008) 33. The maximum amount of gratuity payable under the Payment of Gratuity Act, 1972 is Page 10
(a) RS. 5.00.000 (b) RS. 10, 00,000 (c) RS. 2.50.000 (d) RS. 2.00.000 (cs EP Dec 2009) 34. The minimum number of employees required in an establishment for it to come under the purview of the Payment of Gratuity Act, 1972 is... (a) 10 (b) 15 (c) 20 (d) 25 (CS EP June 2012) 35. What is the minimum number of employees required in an establishment for it to come under the purview of the Payment of Gratuity Act, 1972...? (a) 10 (b) 15 (c) 20 (d) 25 (CS EP June 2013) 36. Under the Payment of Gratuity Act, 1972 where the services of an employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment, the gratuity Payable to the employee may be (a) Only partially forfeited (b) Wholly or partially forfeited (C) Only wholly forfeited (d) Withheld and distributed to other employee (CS EP Dec. 2014) 37. AS per section 13 of the Payment of Gratuity Act, 1972 no gratuity payable under this Act and no gratuity payable to an employee employed in any establishment. Every factory, Mine, Oilfield, Plantation, Port and Railway Company or shop exempted under section 5 of the Act. Shall be liable to attachment in execution at any decree or order of any (a) Curl, revenue or criminal court (b) Civil court only (c) Revenue court only (d) Revenue or criminal court only (CS EP Dec. 2014) 38. under the Payment of Gratuity Act. 1972 gratuity shall be payable to an employee on the termination 01 his employment it he has rendered continuous service for (a) Not less than three years (b) Not less than five years (c) Not less than seven years (d) Not less than ten years (CS EP June 2015) 39. If services of an employee have been terminated for riotous or disorderly conduct or any other act of violence on his part, the gratuity payable to him under the Payment of Gratuity Act, 1972 may (a) Be forfeited wholly or partially (b) Not to be forfeited wholly or partially (c) Be given at the discretion of employer (d) Be referred to the trade union (CS EP June 2015) 40. The Payment of Gratuity Act. 1972 does not apply to which of the following - (a) Every factory, Mine, Oilfield, Plantation, Port and Railway Company (b) Every shop or establishment Within the meaning of any law for the time being in force in relation to shops and establishments In a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months (c) Every shop or establishment Within the Meaning of any law for the time being In force in relation to shops and establishments In State, in which less than 10 persons are employed. or were employed on any day of the preceding twelve months (d) Such other establishments or class of establishments in which ten or more employees are employed. Or were employed. On any day of the preceding twelve months as the Central Government may. by notification specify in this behalf (CS EP June 2015) 41. In the event of any dispute relating to the amount of gratuity payable, the employer shall deposit such amount as he admits to be payable by him (a) With the Civil Court Page 11
(b) With the Revenue Court (c) With the Labour Inspector (d) With the Controlling Authority (CS EP June 2015) 42. An employee who is employed in a seasonal establishment and who is not so employed throughout the year. The employer shall pay the gratuity under the Payment of Gratuity Act. 1972 at the rate of (a) Three days' wages for each season (b) Five days" wages for each season (c) Seven day's wages for each season (d) Ten days' wages for each season (CS EP June 2015) 43. Under section 13 of the Payment of Gratuity Act, 1972, gratuity' is exempted from attachment in execution of any decree or order of any: 1. Civil Court 2. Revenue court 3. Criminal court Which of the above is incorrect? (a) Only (1) (b) Only (2) (C) Only (3) ((1) None of the above (CS EP Dec. 2015) 44. Gratuity is payable to an employee engaged in factories mines, oil fields, etc. if he has rendered continuous service for not less than five years on his (a) Superannuation (b) Retirement (c) Resignation (d) All of the above (CS EP Dec. 2015) 45. According to the Payment of Gratuity Act, 1972. Gratuity shall be payable to an employee - (a) On his superannuation after completion of continuous service for not less than 5 years (b) On his retirement or resignation alter completion of continuous service (or not less than 5 years (c) On his becoming disabled due to accident even though unable to complete 5 years of continuous service (d) All of the above (CS EP June 2016) 46. Which one of the following statements is true under the Payment of Gratuity Act? 1972 (a) Gratuity IS payable only to the employee himself (b) The maximum amount of gratuity allowed under the Act is 1' 3 5 lakh (c) An employee is not required to make nomination (d) is payable only to those employees who are engage3d in factories and mine. (d) An employer has the right of forfeiture of gratuity, but the right of forfeiture of gratuity is limited to the extent of damage (CS EP June 2016) 47. Under the Payment of Gratuity Act. 1972, gratuity' (a) Is payable only in case of death of an employee (b) Shall be paid by the employer at the rate of thirty days wages on the rate of wages last drawn by the employee for every completed year of service (c) Is a lump sum payment made by the employer as a mark of recognition of the service rendered by the employee when he retires or leaves service? (d) Is payable only to those employees who are engaged in factories and mines (CS EP June 2016) 48. Consider the following statements under the Payment of Gratuity Act. 1972: (a) In a seasonal establishment, an employee shall be deemed to be in continuous service it he has actually worked for not less than seventy-five percent of the number of days on which ("9 establishment was in operation (b) Service is not continuous in case of legal termination of service and subsequent reemployment In a sessional establishment, an employee shall be deemed to be in continuous service if he has actually worked for one hundred and ninety days. (d) Service is deemed to be continuous in case of legal termination of service and subsequent e-employment. Page 12
Select the incorrect answer from the options given below: (a) And (11) (b) (ii) and (iii) (c) (iii) ad (iv) (d) (iv) and (i) (CS EP June 2016) 1. C 2. C 3. A 4. D 5. D 6. D 7. D 8. C 9. C 10. B 11. A 12. B 13. C 14. D 15. A 16. B 17. C 18. A 19. A 20. B 21. D 22. A 23. C 24. D 25. C 26. C 27. B 28. B 29. A 30. C 31. D 32. A 33. B 34. A 35. A 36. B 37. A 38. B 39. A 40. C 41. D 42. C 43. D 44. D 45. D 46. B 47. C 48. A Page 13
Lesson 9 Employee s Compensation Act 1923 Objectives The Employees' Compensation Act, 1923 is an Act to provide for payment of compensation by certain classes of employers to their employees for injury due to accident. The Act was originally enacted as the Workmen's Compensation Act, 1923. By the Workmen s Compensation (Amendment) Act, 2009 which came into force on 18.01.2010, the word Workmen' was replaced by the word Employee'. Scope and Coverage The Act extends to the whole of India. It applies to factories, mines, docks, construction establishments, plantations, oilfields and other establishments listed in Schedule ll and III to the Act. The Act covers workers of newspaper establishments, drivers, cleaners, etc. working in connection with a motor vehicle, workers employed by lndian companies abroad, persons engaged in spraying or dusting of insecticides or pesticides in agricultural operations, mechanised harvesting and thrashing, horticultural operations and doing other mechanical jobs. Every employee including those employed through a contractor, except casual employees, who is engaged for the purposes of employer's business and who suffers injury in any accident arising out of and in the course of his employment, shall be entitled for compensation under the Act. Exceptions The Act does not cover establishments covered by the Employees State Insurance Act it also does not apply to the Armed Forces. Employees Entitled As delined in SectIon 2(dd), employee means a person, who Is - a railway servant not permanently employed in any administrative district or subdivisional office of a railway and not employed In any such capacity as is specified In Schedule II; or a master seaman or other members of the crew of a ship, a captain or other member of the crew of an aircraft, a person recruited as driver, helper, mechanic, cleaner or in any other capacity in a motor vehicle, Page 14
a person recruited for work abroad by a company, and who is employed outside India in any such capacity as is specilied in Schedule II and the ship, aircraft or motor vehicle, or company, as the case may be, is registered in lndia; or employed in any such capacity as is specified in Schedule ll, and whether such contract is express or implied, oral or in writing. Exceptions: Employee does not include any person working in the capacity of a member of the Armed Forces of the Union. lt also does not include 3 employee whose employment is of casual nature and his work not connected with the employer s trade or business. Definitions Dependent Section 2 (1) (d) Dependent means any of the following relatives of a deceased employee A widow, a minor legitimate son, and unmarried legitimate daughter, or a widowed mother, If wholly dependent on the employee at the time of his death, a son or a daughter who has attained the age of 18 years and who is infirm. If wholly or partly dependent on the employee at the time of death, a widower, a parent other than a widowed mother, a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or illegitimate if married and a minor or if widowed and a minor, a minor brother or a unmarried sister or a widowed sister if a minor, a widowed daughter-in-law, a minor child of a pre-deceased son, a minor child of a pre-deceased daughter where no parent of the child is alive, or a paternal grandparent if no parent of the employee is alive. Son, daughter and child include adopted son, daughter and adopted child. Temporary Partial Disablement Section 2 (1)(g) Where the disablement is of such a nature that it reduces the earning capacity of the employee in which he was engaged at the time of the accident. Every injury specified in Part ll of Schedule I. Permanent Partial Disablement Section 2 (1)(g) Where the disablement is of such a nature that it reduces the earning capacity of the employee in every employment which he was capable of undertaking at the time of the accident resulting in the disablement. Total Disablement Section 2(1)(I) Page 15
Disablement, whether temporary or permanent that incapacitates an employee for all work which he was capable of performing at the time of the accident. Permanent Total Disablement Section 2(1)(I) Every injury specified in Part I of Schedule I. Any combination of injuries specified in Part II where the aggregate percentage of the loss of earning capacity specified in the said Part II against those injuries is 100% or more. Wages Section 2(1)(m) Wages includes any privilege or benefit which is capable of being estimated in money. Wages does not include the following: Any travelling allowance or the value of any travelling concession. Contribution paid by the employer towards any pension or provident fund. Any sum paid to an employee to cover any special expenses entailed on him by the nature of his employment. Liability for Compensation [Section 3] The employer is liable for payment of compensation it personal injury is caused to an employee by accident arising out of and in the course of his employment. Accident arising out of and in the course of employment Accident arising out of employment An accident arising out of employment means that at the time of injury the employee has been engaged in the business of the employer and not doing something for his personal benefit. The accident occurs at the place where the employee is performing his duties. The injury has resulted from some risk incidental to his duties or inherent in the nature of condition of employment. Accident arising in the course of employment Accident in the course of employment refers to the accident suffered when the employee is on duty at or about the place of his work. Statutory provisions for accident arising out of and in the course of employment Section 3(2) provides the following provisions: Page 16
If an employee is in employment specified in Part A of the Schedule III contacts any disease, it is accident arising out of and in the course of employment. If an employee is in employment specified in Part B of the Schedule III contacts any disease for not less than 6 months, it is accident arising out of and in the course of employment. If an employee is in employment specified in Part C of the Schedule III contacts any disease, it is accident arising out of and in the course of employment. Non-liability of Employer The employer shall not be liable to pay compensation under the following circumstances: In respect of any injury which does not result in total or partial disablement exceeding 3 days. In respect of any injury, not resulting in death, caused by an accident directly due to the employee under the influence of drink or drugs, or wilful disobedience of an order expressly given or to a rule expressly framed, for the purpose of securing the safety of employee, or wilful removal or disregard by the employee of any safety guard or other device which he knew to have been provided for safety of employees. In respect of any disease if the disease is not directly attributable to the injury by accident arising out of and in the course of employment. In respect of any injury for which he has instituted in a Civil Court a suit for damages. Amount of Compensation [Section 4] Nature of injury, his monthly wages and the Factor provided in Schedule IV to the Act with respect to his completed year of age. Such compensation may be for death, disablement whether total or partial or temporary or permanent. ' The amount of compensation shall be as follows: In case of death Where death results from the injury, an amount equal to 50% of the monthly wages of the deceased employee multiplied by the relevant factor as given in Schedule IV; or an amount of Rs. 1,20,000 whichever is more. In case of permanent total disablement Where permanent total disablement results from the injury, an amount equal to 60% of the monthly wages of injured employee multiplied by the relevant factor; or an amount of Rs. 1,40,000, whichever is more. In case of Permanent partial disablement Page 17
Where permanent partial disablement results from injury specified In Part II of Schedule I, such percentage of the compensation which would have been payable in the case of permanent total disablement as is specified in the schedule. Where more than one injury is caused by the same accident, the amount of compensation payable shall be aggregated. Such amount shall not exceed the amount which would have been payable if permanent total disablement had resulted from the injuries. In case of temporary disablement In case of temporary disablement, whether total or partial result from the injury, a half-monthly payment at the monthly wages or sum equivalent to Rs. 25,000 to be paid. Time of Payment and Distribution of Compensation [Section 4A(1)] Compensation to employees shall be paid as soon as it falls due. In cases where the employer does not accept the liability for compensation to the extent claimed, he shall t bound to make provisional payment based on the extent of liability which he accepts. Such payment shall be deposited with the Commissioner or made to the employee. Where any employer is in default in paying the compensation due within one month from the date it fell (ill! the Commissioner shall direct that, in addition to the amount of the arrears, simple interest at the rate of 12% per annum on the amount due together with, if in the opinion of the Commissioner there is no justification fc the delay, a further sum not exceeding 50% of such amount. shall be recovered from the employer. Time of Payment and Distribution of Half-monthly Compensation [Section 4A(2)] Half-monthly payment shall be payable on the 16 1 day from the date of disablement where such disablement lasts for a period of 28 days or more. Where such disablement lasts for a period of less than 28 days, half-monthly payment shall be payable on the 16th day alter the expiry of a waiting period of 3 days from the date of disablement. Thereafter, the payment shall be made half-monthly during the disablement or during a period of 5 years whichever period is shorter. The amount of any allowance which the employee has received from the employer by way of compensation during the period of disablement prior to the receipt of lump sum or of the first half-monthly payment, shall be deducted from the lump sum or half-monthly payments. Any payment received from the employer towards medical treatment shall not be deemed to be a payment by way of compensation. Payment of Compensation to Contract Labour The principal employer is liable to pay compensation to contract labour in the same manner as his departmental labour. He is entitled to be indemnified by the contractor. The principal employer shall not however be liable to pay any interest and penalty leviable under the Act Page 18
Calculation of Monthly Wages [Section 5} Monthly wages means the amount of wages deemed to be payable for a month s service. whether the wages are payable by the month or by whatever other period or at piece rates. Such wages is to be calculated as follows : In case of monthly wages Where the employee is liable to compensation during a continuous period of not less than 12 months immediately preceding the accident, monthly wages of the employee shall be one-tweth oi the total wages in the last twelve months of that period. In case of less than a month s wages Where the whole of the continuous period of service immediately preceding the accident is less than one month. the monthly wages shall be the average monthly amount during the twelve months immediately preceding the accident earned by any employee employed on the same work by the same employer, or, if there was no employee so employed, by an employee employed on similar work in the same locality. In case of insufficient information ln other cases, the monthly wages shall be 30 times of the total wages earned in respect of the last continuous period of service immediately preceding the accident from the employer who is liable to pay compensation, divided by the number of days comprising such period. Review of Half-monthly Payment [Section 6] Any half monthly payment may be reviewed by the Commissioner on the application of the employer or the employee. Such application shall be accompanied by certificate of a qualified medical practitioner that there has been a change in the condition of the employee or rules. Any half-monthly payment may on review be continued, increased, decreased or ended. If the accident is found to have resulted in permanent disablement, half-monthly payment may be converted to the lump sum. Computation of Half-monthly Payment [Section 7] Any right to receive half-monthly payments may, by agreement between the parties or, if the parties by the parties or determined by the Commissioner. Distribution of Compensation in case of Death of the injured Employee [Section 8] Page 19
Compensation amount shall be deposited with the Commissioner. Payment made directly shall not be a payment of compensation. An employer may make advance not exceeding (100 but the amount shall be deducted from such compensation. The Commissioner shall deduct the actual cost of the employee's funeral expenses not exceeding 5,000 and pay the same to the person who incurred the same. If the Commissioner is satisfied that no dependant exists, the balance money be paid to the employer. No Assignment and Attachment of Compensation [Section 9] Any lump sum or half-monthly payment shall not be assigned or charged or be liable to attachment or pass to any person other than the employee by operation of law. Any claim shall not be set off against the compensation. Procedure for Claiming Compensation [Section 10] Notice of the accident to be given as soon as practicable after the happening of the accident. The claim is to be made within two years of the occurrence of the accident or death. " The Commissioner may entertain any claim even if the notice has not been given or the claim has not been preferred in due time on sufficient cause. The Commissioner shall dispose of the matter within a period of three months from the date of reference and intimate the decision within the said period to the employee. Penalties [Section 18A] Whoever fails (a) to maintain a notice-book, or (b) to send to the Commissioner a statement or (c) to send a report under Section 108, or (d) to make a return under section 16, shall be punishable with fine up to 5,000. No prosecution shall be instituted except previous sanction of the Commissioner. No Court shall take cognizance of any offence, unless complaint is made within six months of the date on Which the alleged offence came to the knowledge of the Commissioner. Page 20
1.Where death results from the injury, compensation is payable for an amount equal to 50% of the monthly wages of the deceased employee multiplied by the relevant factor as given in Schedule IV; or an amount of... whichever is more. (a) Rs.60.000 0)) Rs.100000 (c) Rs.1.20.000 (d) Rs.50.000 2.Where permanent total disablement results from the injury, compensation is payable for an amount equal to 60% of the monthly wages of injured employee multiplied by the relevant factor; or an amount of?..., whichever is more? (3) 100.000 (b) 1.40.000 (c) 1.75.000 (d) 2.40.000 3.Under the Employees' Compensation Act. 1923 in case of temporary disablement. Whether total or partial results from the injury, Compensation is payable as a half monthly payment of the monthly wages or sum equivalent to... (a) Rs.25.000 (b) Rs.50.000 (c) Rs. 1.00.000 (d) Rs. z 2.50.000 4.Under the Employees Compensation Act, 1923 compensation to employees shall 110 paid... (a) Within 3 days (b) Within 7 days (c) Within 10 days (d) as soon as It falls due 5.Under "to Employees' Compensation Act. 1923 a period of service shall be deemed to be continuous which has not been interrupted by a period of absence from work exceeding... (a) 7 days (b) 10 days (c) 14 days (d) 21 days 6.In case of insufficient information, me monthly Wages shall be...... Of the total wage; earned in respect of the last continuous Period of service immediately preceding the accident from the employer who is liable to pay compensation. Divided by the number of days comprising such period. (a) 10t mes (b) 20 times (c) 30times (d) 60times 7.An employee drawing a monthly wages of Rs.1000 meets with an accident while working and died on 10.02.2009. His date of birth was 02.07.1972. Relent factor is Page 21
192.14. Amount of compensation payable is... (a) Rs. 1.15.284 (b) I Rs. 1.20.000 (c) Rs.1.27.319 (d) Rs.1.51.725 8.An employee drawing a monthly wages of Rs.1000 meets with an accident while working which results in his permanent total disablement. His date of birth was 02.07.1972. Relevant factor is 192.14. He is entitled to compensation of... (a) Rs. 96.070 (b) Rs. 1.15.284 (c) Rs. 1.40.000 (d) Rs. 2.15.284 9.As provided in section 4(1) (d). in case a temporary disablement resulting from injury. half-monthly payment of the monthly wages or... is paid as compensation. (a) Rs.5.000 (b) Rs.15.000 (c) Rs.120.000 (d) Rs.25.000 10.Where the disablement lasts for less than 28 days, the payment is made after expiry of... days waiting period from the date of disablement. (a) 3 (b) 5 (C) 7 (d) 10 11.Where the disablement lasts for a period at 28 days or more, Half monthly compensation ls payable on the... From the date of disablement (a) 7th day (b) 14th day (c) 16th day (d) 30th day 12.The Commissioner shall deduct the actual cost of the employee s funeral expenses not exceeding... And pay the same to the person who incurred the same. (a) Rs.1, 000 (b) Rs.5.000 (c) Rs.7, 500 (d) Rs.10, 000 13.Where a Commissioner receives information from any source that an employee has died as a result of an accident arising out of and in the course of his employment. he may send a notice to the employer requiring him to submit a statement giving the circumstances of the death of the employee within... of the service of the notice and Whether the employer is liable to deposit 00mpensation. (a) 7 days ('3) 10 days Page 22
(C) 21 days (d) 30 days 14.Where notice is required to be given to any authority by an employer of any accident occurring on his premises which results in death. Or serious bodily injury, the person shall, within... of the death or serious bodily injury. send a report to the Commissioner giving the circumstances of the death or serious bodily injury. (a) 7 days (b) 10 days (c) 21 days (d) 30 days 15.A cart man was engaged by a rice mill to carry rice bags from the mill to railway station. The cart-man met with an accident on a public road while returning back and died. The rice mill owner claimed that there was no need to pay compensation as Par section 12. (1) and 12(4) of the Workmen s Compensation Act. 1923. (a) The employer is liable (b) The employer is not liable (c) The employer may be liable (d) Any of the above 16.Whoever fails (a) to maintain a noticebook. or (b) to send to the Commissioner a statement or (c) to send a report under Section 108. or (d) to make a return under section 16, shall be punishable with Fine up to (a) Rs.5, 000 (b) Rs.5,000 (c) Rs.25, 000 (d) Rs.50.000 17.An appeal shall lie to the High Court against the order of the authority. The appeal shall be made within... of the order. (a) 30 days (b) 60 days (c) 90 days (d) 120 days 18.The Employees' Compensation Act, 1923 shall apply to employees who are masters of ships or seamen subject to certain modifications as provided in... (a) Section 15 (b) Section 15A (c) Section 158 (d) Section 150 19.The Employees' Compensation Act, 1923 shall apply to captains or other members of the crew of aircrafts subject to certain modifications as provided in... (a) Section 15 (b) Section 15A Page 23
(c) Section 158 (d) Section 150 1. C 2. B 3. B 4. D 5. C 6. C 7. B 8. C 9. D 10. A 11. C 12. B 13. D 14. A 15. A 16. A 17. B 18. A 19. B Page 24
Lesson 10 Contract labour 1970 Objectives Contract labours suffer from lack of job security, poor economic conditions, casual nature of employment low payment etc. To regulate the conditions of these labours, the Contract Labour (Regulation and Abolition) Act, 1970 was passed The Act came into force from 10.02.1971. The main objective of the Act is to stop the exploitatlon of the contract labours and to abolish the practice of contract labour under the following circumstances: if the work is of perennial nature. o If the work is incidental to and necessary for the work of the factory. if the work is of the nature that it can employ considerable number of whole time workmen. If the work can be done by ordinary or regular workmen. Scope and Coverage The Act extends to the whole of India. The Act applies to the following: To every establishment in which 20 or more workmen are employed or were employed on any day of the preceding twelve months as contract labour. To every contractor who employs or who employed on any day of the preceding twelve months 20 or more workmen. The appropriate Government may, after giving not less than two months' notice apply the provisions of the Act to any establishment or contractor employing less than 20 workers. The Act does not apply to establishments in which work of an intermittent or casual nature is performed. Work of intermittent nature As provided in explanation to section 1. work is intermittent nature if it was performed for not more than 120 days in the preceding twelve months. In case of a seasonal establishment. the work performed is not more than 60 days in a year. Workman Entitled Workman means any person employed in or in connection with the work of any establishment to do any skilled. Semi-skilled or un-skilled, manual, supervisory, or clerical work for hire or reward, whether the terms of employment be express or implied. [Section Page 25