MATERNITY BENEFIT ACT, 1961

Amended in 2017

An Act to regulate the employment of women in certain establishments for certain periods before and after childbirth and to
provide for maternity benefit and certain other benefits.

Object.— The Maternity Benefit Act, 1961, aims to protect the job security of working women. If employers dismiss employees
after maternity leave, it undermines the Act's purpose. To prevent such actions and discourage employers from doing this,
penalties must be imposed, Shri Swami Vivekanand Shikshan Sansthechya Sevakanchi Sahakari Patsanstha Maryadit v.
Kumari Deepa Narayan Jadhav, 2016 , See also Dr Baba Saheb Ambedkar Hospital v. Krati Mehrotra, (2022)

 Health Protection: To provide pregnant women with adequate rest and health care to safeguard their health and that of their
child during pregnancy, childbirth, and the postnatal period.
 Job Security: To secure employment during the maternity period, ensuring women can return to their jobs after maternity
leave without fear of dismissal or discrimination.
 Economic Security: To provide financial support through paid maternity leave, ensuring women can maintain themselves and
their children without economic hardship during and after childbirth.
 Workplace Equality: To promote gender equality in the workplace by providing equal opportunities and protections for
pregnant women, thereby reducing gender-based discrimination.
 Breastfeeding Support: To facilitate continued breastfeeding after returning to work by ensuring provisions for breastfeeding
breaks and suitable facilities at the workplace.

Raising a family is a cherished for many working ppl yet pregnancy and maternity are and especially vulnerable time for working
women and their families. Expectant and nursing mothers require special protection to prevent harm to their or their infants’
health and they need adequate time to give birth, recover and nurse their children, at the same time they are require protection to
ensure that they do not lose their job simply because of their pregnancy. Such protection not only ensure equal access to women in
employment, it also ensures the continuation of often vital income which is necessary for the well-being of their entire family.

Safeguarding the health of expectant and nursing mothers and protecting them against job discrimination is a pre-condition of
achieving equality of opportunity and treatment for men and women at work and enabling workers to raise family in condition of
economic security.

ILO Instrument on Maternity

1. Maternity Protection Convention, 2000 (No. 183):
 Maternity Leave Duration: At least 14 weeks, with a recommendation to extend it to at least 18 weeks.
 Cash Benefits: Should be at least two-thirds of the woman's previous earnings, preferably up to the full amount.
 Source of Benefits: Funded through social insurance or public funds to prevent discrimination by individual employers.
 Job Protection: Ensures that women cannot be dismissed during maternity leave and should have job security upon
returning to work.
2. Maternity Protection Recommendation, 2000 (No. 191):
 Encourages higher standards than Convention No. 183, such as extending maternity leave to at least 18 weeks and
ensuring full wage replacement during the leave. Advocates for breastfeeding breaks and facilities at the workplace.
3. Other ILO Instruments:
 Convention No. 3 (1919): The first convention on maternity protection, setting the foundation for later standards.
 Recommendation No. 95 (1952): Focuses on health protection for pregnant and nursing women, prohibiting night work
and overtime to minimize health risks.

Applicability- Section 2
The Maternity Benefit Act, 1961, initially applies to:
1. Establishments:
- Factories, mines, and plantations, including those under government control.
- Establishments employing individuals for equestrian, acrobatic, and other performances.
- Shops or establishments employing ten or more people, on any day of the preceding twelve months.
2. State Government Authority:
- The state government, with central government approval, can extend the Act's provisions to other industrial, commercial, or
agricultural establishments by notifying in the Official Gazette after a two-month notice period.
3. Exclusions:
- The Act does not apply to factories or establishments covered by the Employees' State Insurance Act, 1948, except as specified
in Sections 5-A and 5-B.

 Provisions of the Act entitle maternity leave even to women engaged on casual basis or on muster-roll basis on daily
wages and not only those in regular employment, held, are wholly in consonance with the Directive Principles of State
Policy contained in Articles 39, 42 and 43 of the Constitution of India, Municipal Corporation of Delhi v. Female
Workers (Muster Roll), (2000) 3 SCC 224, See also Management, Glem Brook Estate v. Plantation Officer, Plantation
Office, 2012 SCC OnLine Mad 5276.
  Benefits of maternity leave with full salary cannot be denied to a female employee appointed on contractual basis,
Anuradha Arya v. Govt. Girl Sr. School, 2017 SCC OnLine CAT 1851, also Dr Baba Saheb Ambedkar Hospital v. Krati
Mehrotra, (2022) 2 HCC (Del) 566.
 When the firm has only three persons, it will not come under the Maternity Benefit Act, 1961, Thomas John Muthoot v.
Labour Officer, Punalu, 2014 SCC OnLine Ker 10569.

Definitions- Section 3

(b) “child” includes a stillborn child.

(ba) “commissioning mother” means a biological mother who uses her egg to create an embryo implanted in any other woman.

(c) “delivery” means the birth of a child.

(h) “maternity benefit” means the payment referred to in sub- section (1) of Section 5.

(ha) “medical termination of pregnancy” means the termination of pregnancy permissible under the provisions of the Medical
Termination of Pregnancy Act, 1971.

(j) “miscarriage” means the expulsion of the contents of a pregnant uterus at any time before or during the twenty-sixth week of
pregnancy. However, it excludes any miscarriage that is punishable under the Indian Penal Code (45 of 1860).

(n) “wages” means all remuneration paid or payable in cash to a woman, if the terms of the contract of employment, express or
implied, were fulfilled and includes—

(1) such cash allowances (including dearness allowance and house rent allowance) as a woman is for the time being entitled to;
(2) incentive bonus; and
(3) the money value of the concessional supply of foodgrains and other articles, but does not include—
(i) any bonus other than incentive bonus;
(ii) overtime earnings and any deduction or payment made on account of fines;
(iii) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the woman under
any law for the time being in force; and
(iv) any gratuity payable on the termination of service.
 Expression “wages” is not restricted to contractual wages but extends to cover all remunerations in the nature of cash
allowances, incentive bonus and money value of concessional supply of foodgrains and other articles, B. Shah v. Labour
Court, (1977) 4 SCC 384 : 1977 SCC (L&S) 560.

(o) “woman” means a woman employed, whether directly or through any agency, for wages in any establishment.

4. Employment of, or work by, women prohibited during certain period.—(1) No employer shall knowingly employ a woman
in any establishment during the six weeks immediately following the day of her delivery, miscarriage or medical termination of
pregnancy.
(2) No woman shall work in any establishment during the six weeks immediately following the day of her delivery, miscarriage or
medical termination of pregnancy.
(3) Without prejudice to the provisions of Section 6, no pregnant woman shall, on a request being made by her in this behalf, be
required by her employer to do during the period specified in sub-section (4) any work which is of an arduous nature or which
involves long hours of standing or which in any way is likely to interfere with her pregnancy or the normal development of the
foetus or is likely to cause her miscarriage or otherwise to adversely affect her health.
(4) The period referred to in sub-section (3) shall be—
(a) the period of one month immediately preceding the period of six weeks, before the date of her expected delivery;
(b) any period during the said period of six weeks for which the pregnant woman does not avail of leave of absence under Section
6.

5. Right to payment of maternity benefit.—(1) Subject to the provisions of this Act, every woman shall be entitled to, and her
employer shall be liable for, the payment of maternity benefit at the rate of the average daily wage for the period of her actual
absence, that is to say, the period immediately preceding the day of her delivery, the actual day of her delivery and any period
immediately following that day.
Explanation.—For the purpose of this sub-section, ‘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 three calendar months immediately preceding the date from which
she absents herself on account of maternity, the minimum rate of wage fixed or revised under the Minimum Wages Act, 1948 (11
of 1948), or ten rupees, whichever is the highest.
(2) 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 eighty days in the twelve months immediately preceding the date
of her expected delivery:
Provided that the qualifying period of eighty days aforesaid shall not apply to a woman who has immigrated into the State of
Assam and was pregnant at the time of the immigration.
Explanation.—For the purpose of calculating under this sub-section 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 for the time being in force to be
holidays with wages, during the period of twelve months immediately preceding the date of her expected delivery shall be taken
into account.
(3) The maximum period for which any woman shall be entitled to maternity benefit shall be twenty-six weeks of which not more
than eight weeks shall precede the date of her expected delivery :
Provided that the maximum period entitled to maternity benefit by a woman having two or more than two surviving children shall
be twelve weeks of which not more than six weeks shall precede the date of her expected delivery :
Provided further that where 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:
Provided also that where 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 for the maternity benefit for that 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.
(4) A woman who legally adopts a child below the age of three months or a commissioning mother shall be entitled to maternity
benefit for a period of twelve weeks from the date the child is handed over to the adopting mother or the commissioning mother,
as the case may be.
(5) In case where the nature of work assigned to a woman is of such nature that she may work from home, the employer may
allow her to do so after availing of the maternity benefit for such period and on such conditions as the employer and the woman
may mutually agree.

1. Entitlement to Maternity Benefit:

- Every woman is entitled to maternity benefit at the rate of her average daily wage for the period of her actual absence. This
includes the period before and after delivery, and the day of delivery itself.
- "Average daily wage" is calculated as the higher of the following:
- Average wages for the days worked in the three months before maternity leave.
- Minimum wage as per the Minimum Wages Act, 1948.
- Ten rupees.

2. Eligibility Criteria:
- A woman must have worked for at least 80 days in the 12 months before her expected delivery date.
- This 80-day requirement does not apply to women who immigrated to Assam while pregnant.
- Days of paid leave or holidays are counted as days worked.

3. Maximum Benefit Period:

- Up to 26 weeks of maternity leave, with a maximum of 8 weeks before the expected delivery date.
- If a woman has two or more surviving children, the maximum is 12 weeks, with a maximum of 6 weeks before delivery.
- If a woman dies during the maternity period, the benefit is paid up to her death.
- If a woman dies after delivery but leaves behind a surviving child, the benefit is paid for the entire period. If the child dies
during this period, the benefit is paid up to the child's death.

4. Adoption and Commissioning Mothers:

- Women who legally adopt a child under three months old or commissioning mothers are entitled to 12 weeks of maternity
benefit from the date the child is handed over.

5. Work from Home Option:

- Employers may allow women to work from home after maternity leave, based on mutual agreement on the duration and
conditions.

 Eligibility for maternity leave.—The provisions of the Act which have been set out above would indicate that they are
wholly in consonance with the Directive Principles of State Policy, as set out in Article 39 and in other articles,
especially Article 42. A woman employee, at the time of advanced pregnancy cannot be compelled to undertake hard
labour as it would be detrimental to her health and also to the health of the foetus. It is for this reason that it is provided
in the Act that she would be entitled to maternity leave for certain periods prior to and after delivery, Municipal Corpn.
of Delhi v. Female Workers (Muster Roll), (2000) 3 SCC 224 : 2000 SCC (L&S) 331.

 There is no difficulty with regard to working of Ss. 4 and 5 of the Maternity Benefits Act, 1961 in regard to maternity
benefits to ‘women’ employed in an establishment, Mangalore Ganesh Beedi Works v. Union of India, (1974) 4 SCC 43.

 Entitlement to benefit.—An employee entitled to benefit of the Maternity Benefit Act cannot claim for payment of
wages under Section 5(1) of the Kerala Industrial Establishments National and Festival Holidays Act, 1958, Tata Tea
Ltd. v. Inspector of Plantations, 1990 SCC OnLine Ker 264.
  Calculation of maternity benefit.—Actual absence includes wageless holidays falling within the period of seven days
week to be computed, B. Shah v. Labour Court, (1977) 4 SCC 384 : 1977 SCC (L&S) 560.

8. Payment of medical bonus.—(1) Every woman entitled to maternity benefit under this Act shall also be entitled to receive
from her employer a medical bonus of one thousand rupees, if no pre-natal confinement and post-natal care is provided for by the
employer free of charge.
(2) The Central Government may before every three years, by notification in the Official Gazette, increase the amount of medical
bonus subject to the maximum of twenty thousand rupees.

9. Leave for miscarriage, etc.—In case of miscarriage or medical termination of pregnancy, a woman shall, on production of
such proof as may be prescribed, be entitled to leave with wages at the rate of maternity benefit, for a period of six weeks
immediately following the day of her miscarriage or, as the case may be, her medical termination of pregnancy.

12. Dismissal during absence or pregnancy.—(1) When a woman absents herself from work in accordance with the provisions
of this Act, it shall be unlawful for her employer to discharge or dismiss her during or on account of such absence or to give notice
of discharge or dismissal on such a day that the notice will expire during such absence, or to vary to her disadvantage any of the
conditions of her service.
(2) (a) The discharge or dismissal of a woman at any time during her pregnancy, if the woman but for such discharge or dismissal
would have been entitled to maternity benefit or medical bonus referred to in Section 8, shall not have the effect of depriving her
of the maternity benefit or medical bonus: (If a woman is discharged or dismissed during her pregnancy but would have been
entitled to maternity benefits or a medical bonus if not dismissed, she retains these entitlements.)
Provided that where the dismissal is for any prescribed gross misconduct, the employer may, by order in writing communicated to
the woman, deprive her of the maternity benefit or medical bonus or both.
(b) Any woman deprived of maternity benefit or medical bonus, or both, or discharged or dismissed during or on account of her
absence from work in accordance with the provisions of this Act, may, within sixty days from the date on which order of such
deprivation or discharge or dismissal is communicated to her, appeal to such authority as may be prescribed, and the decision of
that authority on such appeal, whether the woman should or should not be deprived of maternity benefit or medical bonus or both,
or discharged or dismissed shall be final.
(c) Nothing contained in this sub-section shall affect the provisions contained in sub-section (1).

 Once lady employee fulfils entitlement criteria specified in S. 5(2), she would be eligible for full maternity benefits even
if such benefits exceed duration of her contract. Any attempt to enforce contract duration term within such period
constitute “discharge” and attract embargo specified in S. 12(2)(a), which creates fiction by treating her to be in
employment for sole purpose of availing maternity benefits. Thus, maternity benefits not coterminous with employment
tenure. Expression “discharge” is of wide import and includes “discharge on conclusion of contractual period”, Kavita
Yadav v. State (NCT of Delhi), (2024) 1 SCC 421.

18. Forfeiture of maternity benefit.—If a woman works in any establishment after she has been permitted by her employer to
absent herself under the provisions of Section 6 for any period during such authorised absence, she shall forfeit her claim to the
maternity benefit for such period.

21. Penalty for contravention of Act by employer.—(1) If any employer fails to pay any amount of maternity benefit to a
woman entitled under this Act or discharges or dismisses such woman during or on account of her absence from work in
accordance with the provisions of this Act, he shall be punishable with imprisonment which shall not be less than 3 months but
which may extend to 1 year and with fine which shall not be less than 2000 rupees but which may extend to 5000 rupees:
Provided that the court may, 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 this Act or the rules made thereunder, he shall, if no other penalty is elsewhere
provided by or under this Act for such contravention, be punishable with imprisonment which may extend to 1 year, or with fine
which may extend to 5000 rupees, or with both:
Provided that 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 thereto.

23. Cognizance of offences.—(1) Any aggrieved woman, an office- bearer of a trade union registered under the Trade Unions
Act, 1926 (16 of 1926) of which such woman is a member or a voluntary organisation registered under the Societies Registration
Act, 1860 (21 of 1860), or an Inspector, may file a complaint regarding the commission of an offence under this Act in any court
of competent jurisdiction and no such complaint shall be filed after the expiry of one year from the date on which the offence is
alleged to have been committed.
(2) No court inferior to that of a Metropolitan Magistrate or a Magistrate of the first class shall try any offence under this Act.

Dr. Rachna Chaurasiya v. State of U.P. and others passed (2017)

In this case, the state government was ordered by a division bench of the High Court of Madras to provide 180 days of paid
maternity leave to all women, regardless of the type of employment they hold, permanent, temporary/ad hoc, or on a contractual
basis. All female employees who are hired regularly, contractually, ad hoc, or temporarily and who have minor children who must
be 18 years of age or younger and must be granted a 730-day childcare leave, according to supplementary instructions given to the
state response. Maternity leave shouldn’t be separated from or excluded from a woman employee’s employment term.

Mrs. Savita Ahuja v. State of Haryana & others (1998)

In this case, the Hon’ble Punjab and Haryana High Court ruled that the petitioner should not be denied the right to maternity leave
just because her job was solely temporary or ad hoc in nature. She is entitled to maternity leave with full pay for the duration of
her confinement, and it was illegal to fire her from her job due to her pregnancy. Therefore, these female government workers
who were hired on an as-needed basis should also be eligible for maternity leave.

In Air India v. Nargesh Mirza [AIR 1981 SC 1829; 1981 (4) SCC 335], the Supreme Court struck down the provision of rules
which stipulated termination of service of an air hostess on her first pregnancy as it arbitrary and abhorrent to the notions of a
civilized society.

6. Notice of claim for maternity benefit and payment thereof

1. A woman entitled to maternity benefits can notify her employer in writing, stating that she wants her benefits paid to her or a
nominated person and that she won't work during the maternity leave period.

2. If she's pregnant, the notice should mention the date she'll start her maternity leave, which must be at least six weeks from her
expected delivery date.

3. If the woman didn't give notice during pregnancy, she should do so as soon as possible after delivery.

4. Upon receiving the notice, the employer must allow the woman to take maternity leave.

5. The employer should pay the maternity benefit in advance for the period before the expected delivery date, upon providing
proof of pregnancy. For the period after delivery, the payment should be made within 48 hours of providing proof of childbirth.

6. If the woman fails to give notice, she can still receive maternity benefits if she's otherwise entitled. An inspector can order the
payment of benefits upon request or on their own initiative within a specified period.

MINIMUM WAGES ACT, 1948

Wage Concept
Wage is a reward for the services rendered or remuneration for the work done and it is as old as the society itself. In the primitive
days, wages were paid in kind, most common of them was grains and the food. But with the advent of industrialisation wages
form a complex problem and in almost all industrialised countries it became a sensitive area of public policy. Very soon the
quantum of wages assumed a common cause of friction between the employers and the wage-earners. Frequent disputes between
employer and wage-earners resulted in strikes over the demand for wage-increase. The determination of adequate wages that
should be justifiably payable to the workmen by the employer, was not merely an economic problem but a multidimensional
phenomenon, necessarily involving relevant factors like place of industry, prices of the product, living standards, basic needs of
die wage-earner and the governmental policy in a given society. The natural instinct of the employer to keep the wage-bill to a
minimum and workers struggle to secure a wage-increase to meet both ends, created a chaotic situation which demanded an
immediate State’s intervention to protect the weaker section of the society, namely, workers, in view of its low bargaining
capacity.
How much and on which basis wages should be paid to the workers for services rendered by them has been a subject matter of
great concern and debate among economic thinkers for a long time.
Minimum Wages Act 1948 came into force in India when India had recently gained its freedom. Labor laws made by the
Britishers were exploitative in nature. Wages were low and different in every part of the country. There was no such thing as
“Minimum Wages” and times were pretty bad for sweat labor.

Meaning and Definition

In the ordinary language the term wages implies ‘reward’ to the labourers for the services rendered by them. It may be paid daily,
weekly, fortnightly, monthly, per hour or per unit. Services rendered by the labourer include both physical and mental services.
In the words of Benham, “Wages are a sum of money paid under contract by an employer to a worker for services rendered”.
According to ILO “Wages refer to that payment which is made by the employers to the labourer for his services hired on the
conditions of payment per hour, per day, per week or per fortnight.” We can sum up the wages by referring to that reward which is
received from the employer for the services rendered by the labourer per week, per month, per fortnight or per unit, it includes
allowances also.

Scope and Applicability of the Minimum Wages Act, 1948

1. Objective: The primary aim of the Act is to provide a statutory fixing of minimum wages to protect workers in the unorganized
sector and ensure they receive fair wages for their labor.

2. Applicability:
 - The Act applies to the whole of India.
- It is applicable to scheduled employments, which are specified by the central and state governments. These employments
typically include industries and occupations where workers are vulnerable to exploitation.
- The government periodically reviews and revises the list of scheduled employments based on the economic conditions and the
labor market.

3. Employers' Obligations:
- Employers must pay their employees no less than the minimum wage fixed by the government for the respective scheduled
employment.
- Wages must be paid in cash, though payments in kind may be permissible in some cases, subject to specific conditions.
- The Act also mandates timely payment of wages and outlines provisions against deductions from wages.

4. Categories of Workers:
- The Act covers both skilled and unskilled workers.
- It distinguishes between different categories of work such as part-time, full-time, temporary, and permanent employees.

5. Fixing and Revision of Minimum Wages:

- Minimum wages are fixed by the appropriate government (either central or state) and may vary across regions, sectors, and
skills.
- The Act provides guidelines for the fixation and revision of wages, taking into account factors such as the cost of living, type
of work, and industry capacity to pay.
- Revisions must occur at intervals not exceeding five years.

6. Enforcement:
- Inspectors appointed under the Act are responsible for ensuring compliance.
- Employers failing to pay the minimum wages are subject to penalties, including fines and imprisonment.

Constitutional Perspective

The constitutional perspective of the Minimum Wages Act, 1948, is rooted in the principles of social justice and equity as
enshrined in the Indian Constitution.

1. Fundamental Rights:
- Article 14: Ensures equality before the law. The Act helps achieve this by aiming to reduce wage disparity.
- Article 19(1)(g): Provides the right to practice any profession or to carry on any occupation, trade, or business. The Act, while
ensuring minimum wages, also maintains a balance so as not to infringe upon this right unduly.
- Article 21: Guarantees the right to life and personal liberty. Ensuring a minimum wage aligns with the right to live with
dignity.

2. Directive Principles of State Policy:

- Article 38: Directs the state to strive to promote the welfare of the people by securing a social order in which social, economic,
and political justice informs all institutions of life.
- Article 39: Mandates that the state shall direct its policy towards securing that citizens have the right to an adequate means of
livelihood and that there is equal pay for equal work for both men and women.
- Article 41: Specifies the right to work, to education, and to public assistance in certain cases.
- Article 43: Emphasizes living wages, conditions of work ensuring a decent standard of life and full enjoyment of leisure and
social and cultural opportunities.

Article 23: Prohibition of Traffic in Human Beings and Forced Labor

1. Article 23(1):
- It explicitly prohibits traffic in human beings, begar (a form of forced labor without payment), and other similar forms of
forced labor.
- Any contravention of this provision is an offense punishable by law.

2. Article 23(2):
- The state can impose compulsory services for public purposes, but it must not discriminate on grounds only of religion, race,
caste, or class, or any of them.

1. Preventing Forced Labor:

- The Minimum Wages Act is a legislative measure that supports the mandate of Article 23 by ensuring that workers are paid at
least a minimum wage for their labor.
- By mandating minimum wages, the Act helps in reducing the instances of exploitation where workers might be forced to work
for wages below the subsistence level, effectively curbing forced labor practices.

2. Economic Exploitation:
 - The Act aims to eliminate economic exploitation, which is a subtle form of forced labor where workers, due to their economic
vulnerabilities, might be compelled to accept any wages offered.
- By setting legal wage floors, the Act ensures that even the most vulnerable workers receive fair compensation, thus protecting
their rights and dignity.

3. Legal Enforcement:
- Violations of the Minimum Wages Act can lead to legal action against employers, which aligns with Article 23's provision
against forced labor. Employers who pay below the minimum wage are effectively engaging in economic exploitation, which the
Act seeks to penalize and correct.

- Social Justice: Article 23, combined with the Minimum Wages Act, reinforces the broader constitutional mandate of social
justice. By protecting workers from forced labor and ensuring fair wages, these provisions collectively work towards the
upliftment of the socio-economically disadvantaged sections of society.
- Dignity of Labor: Ensuring minimum wages is also about respecting and upholding the dignity of labor, which is a fundamental
aspect of human rights. It ensures that workers can live with dignity and their labor is not undervalued.

Classification of Wages
The basic ‘minimum wage’ which provides bare subsistence and is at poverty line-level, a little above is the ‘fair wage’ and
finally the ‘living wage’ which comes at a comfort level. It is not possible to demarcate these levels of wage structure with any
precision.

 Subsistence Wage (Need based minimum wage) :- The wage that can meet only bare physical needs of a worker and
his family is called subsistence wage. The key components that influence the computation of this wage are:
Food Requirements: Calculated based on the caloric and nutritional needs of an average family.
Clothing: An adequate provision for clothing for the entire family.
Housing: Shelter costs which include rent, utilities, and other associated expenses.
Other Essentials: This includes education, medical expenses, and other miscellaneous needs.

The 15th Indian labour conference held in 1957 discussed the problem of min. wages, it fixed certain norms and criteria for
determining a need-based min. wages.
Norms- unanimously accepted in the conference-
1. A standard working class family should be taken to comprise 3 units – husband, wife and 2 children for 1 earner. Earning
of women and children should be ignored.
2. Food requirements: 2,700 calories per average Indian adult per day; per capita- 18 yards per year
3. Clothing requirements: 72 yards per year per family
4. Rent: Rent corresponding to the minimum area provided for under Government's Industrial Housing Scheme; subsidied
5. Other expenditure: 20% of minimum wage should be the cost of fuel, lighting and miscellaneous items of expenditure.

 Minimum Wage: - Justice Higgin propounded the concept of minimum wages as the irreducible level of wage paid to an
unskilled worker, considering him a human being living in a civilized society. In this single sentence, he indicated three
important considerations, namely:
1. That minimum wage is an irreducible level which cannot be further reduced;
2. It is paid to an unskilled worker who has not undergone any expensive training to acquire skill;
3. The worker is to be considered a “human being living in a civilized society and therefore he is entitled to same
basic needs of food clothing and shelter which any other human being requires. Thus according to Justice
Higgins a minimum wages is that irreducible wage, which should enable the worker to get three basic
necessities of life, i.e., food, clothing and shelter.
The expression “minimum wages” is not defined in the Act presumably because it would not be possible to lay down a uniform
minimum wages for all industries throughout the country on account of different and varying conditions prevailing from industry
to industry and from one part of the country to another.

 Fair Wage: - Fair Wages is an adjustable step that moves up according to the capacity of the industry to pay and the
prevailing rates of wages in the area of industry. In case of fair wage, the company’s capacity to bear the financial burden
must receive due consideration.

 Living Wage: - The Fair Wage Committee in its report published by Government of India, Ministry of Labour in 1949
defined the ‘living wage’ as under: “The living wage should enable the male earner to provide for himself and his family
not merely the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for
children, protection against ill-health, requirements of essential social needs, and a measure of insurance against the more
important misfortunes including old age.”

It is pertinent to note that the above concept of living wage, as described by Justice Higgins is also endorsed by Supreme
Court in the Express Newspaper (P) Ltd. V. Union of India – Therefore die living wage should enable the wage-earner
to provide for himself and his family not only for the three basic necessities of life, namely, food, clothing and shelter,
but also for frugal comforts, good education to children, protection against ill-health and a measure of insurance against
the more important misfortune including old-age. In any event the minimum wage must be paid irrespective of the extent
 of profits, the financial condition of the establishment or the availability of workmen at lower wages. The wages must be
fair, i.e., sufficiently high to provide standard family with food, shelter, clothing, medical care and education of children
appropriate to the workmen. A fair wage lies between the minimum wage and the living wage which is the goal. Wages
must be paid on an industry wise and region basis having due regard to the financial capacity of the unit.

The Minimum Wages Act 1948 is an Act of Parliament concerning Indian labour law that sets the minimum wages that must be
paid to skilled and unskilled labours. The Indian Constitution has defined a 'living wage' that is the level of income for a worker
which will ensure a basic standard of living including good health, dignity, comfort, education and provide for any contingency.
However, to keep in mind an industry's capacity to pay the constitution has defined a 'fair wage'. Fair wage is that level of wage
that not just maintains a level of employment, but seeks to increase it keeping in perspective the industry's capacity to pay.
To achieve this in its first session during November 1948, the Central Advisory Council appointed a Tripartite Committee of Fair
Wage. This committee came up with the concept of a minimum wage, which not only guarantees bare subsistence and preserves
efficiency but also provides for education, medical requirements and some level of comfort.

India introduced the Minimum Wages Act in 1948, giving both the Central government and State government jurisdiction in
fixing wages. The act is legally non-binding, but statutory. Payment of wages below the minimum wage rate amounts to forced
labour. Wage boards are set up to review the industry's capacity to pay and fix minimum wages such that they at least cover a
family of four's requirements of calories, shelter, clothing, education, medical assistance, and entertainment. Under the law, wage
rates in scheduled employments differ across states, sectors, skills, regions and occupations owing to difference in costs of living,
regional industries' capacity to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across the
country and the structure has become overly complex.
Fair wage committee report published by GOI, 1949 has been approved by the SC in
1. Express newspaper pvt. Ltd vs UOI, 1958
2. Standard vacuum refining co. india, vs its workmen, 1969

Difference between code on wages and minimum wages act

Earlier a schedule was given now CG decides wages. The Code makes minimum wages universally applicable across
employments and thus moves ahead from restrictive applicability of minimum wages limited to scheduled employments as
provided for under the Minimum Wages Act, 1948.

Object of the Act.—What the Act purports to achieve is to prevent exploitation of labour and for that purpose authorises the
appropriate Government to take steps to prescribe minimum rates of wages in the scheduled industries. What is being prescribed is
minimum wage rates which a welfare State assumes every employer must pay before he employs labour. The Act contemplates
that minimum wage rates should be fixed in the scheduled industries with the dual object of providing sustenance and
maintenance of the worker and his family and preserving his efficiency as a worker, Airfreight Ltd. v. State of Karnataka, (1999)
6 SCC 567 : 1999 SCC (L&S) 1185 : (1999) 4 LLN 1.

The object of the Act is to prevent exploitation of the workers and for that purpose it aims at fixation of minimum wages which
the employers must pay. It is true that while construing the provisions of a statute like Minimum Wages Act a beneficial
interpretation has to be preferred which advances the object of the Act, Haryana Unrecognised Schools' Assn. v. State of
Haryana, (1996) 4 SCC 225.

The Code on Wages Act, 2019- Section 3

(f) "contractor", in relation to an establishment, means a person, who —
(i) undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such
establishment, through contract labour; or
(ii) supplies contract labour for any work of the establishment as mere human resource and includes a sub-contractor.

(g) "contract labour" refers to a worker considered employed in or related to the work of an establishment when engaged in such
work through a contractor, regardless of whether the principal employer is aware, and includes inter-State migrant workers but
does not include a worker (other than a part-time employee) who —
(i) is regularly employed by the contractor for any activity of the contractor's establishment, with employment governed by
mutually agreed conditions (including permanent employment), and
(ii) receives periodic pay increases, social security coverage, and other welfare benefits as per the applicable law during such
employment.

(z) "worker" means any person (except an apprentice as defined under clause (aa) of section 2 of the Apprentices Act, 1961)
employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or
reward, whether the terms of employment be express or implied, and includes—
(i) working journalists as defined in clause (f ) of section 2 of the Working Journalists and other Newspaper Employees
(Conditions of Service) and Miscellaneous Provisions Act, 1955; and
(ii) sales promotion employees as defined in clause (d) of section 2 of the Sales Promotion Employees (Conditions of Service)
Act, 1976, and for the purposes of any proceeding under this Code in relation to an industrial dispute, includes any such person
who has been dismissed, discharged or retrenched or otherwise terminated in connection with, or as a consequence of, that
dispute, or whose dismissal, discharge or retrenchment has led to that dispute; but does not include any such person––
(a) who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957; or
(b) who is employed in the police service or as an officer or other employee of a prison; or
(c) who is employed mainly in a managerial or administrative capacity; or
(d) who is employed in a supervisory capacity drawing wage of exceeding fifteen thousand rupees per month or an amount as may
be notified by the Central Government from time to time.

9. Power of Central Government to fix floor wage.

(1) The Central Government shall fix floor wage taking into account minimum living standards of a worker in such manner as
may be prescribed:
Provided that different floor wage may be fixed for different geographical areas.
(2) The minimum rates of wages fixed by the appropriate Government shall not be less than the floor wage and if the minimum
rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall
not reduce such minimum rates of wages fixed by it earlier.
(3) The Central Government may, before fixing the floor wage under sub-section (1), obtain the advice of the Central Advisory
Board constituted under sub-section (1) of section 42 and consult State Governments in such manner as may be prescribed.

MINIMUM WAGES ACT, 1948

2(d) “cost of living index number”, for employees in scheduled employment with fixed minimum wages means— the index
number determined and announced by the competent authority through a notification in the Official Gazette as the applicable cost
of living index number for those employees.

2(e) “employer” refers to any person who employs one or more employees, either directly or through another person, for any
scheduled employment where minimum wages have been set under this Act, and includes, except in sub-section (3) of Section 26,
— (i) in a factory with scheduled employment, the person named as the manager under clause (f) of sub-section (1) of Section 7 of
the Factories Act, 1948;
(ii) in scheduled employment controlled by any Government in India, the appointed person or authority for supervising and
controlling employees, or if none is appointed, the head of the department;
(iii) in scheduled employment under any local authority, the appointed person for supervising and controlling employees, or if
none is appointed, the chief executive officer of the local authority;
(iv) in any other case, the person responsible to the owner for supervising and controlling employees or for paying wages.

 The person who engages workers through a contractor would also be employer under the Minimum Wages Act, Surya
Rau V.V., E.D. Nocil v. S.R. Tendulkar, (1998).
 Neither the Principal nor the contractor can be liable to pay minimum wages if it is not notified under the Minimum
Wages Act, Linge Gowda Detective v. Authority under Minimum Wages Act, (1998)

2(g) “scheduled employment” means an employment specified in the Schedule, or any process or branch of work forming part of
such employment;

2(h) “wages” means all payments that can be expressed in money and are payable to an employee if the terms of the employment
contract are met, including house rent allowance, but excluding—
(i) the value of—
(a) any housing, light, water, medical care, or
(b) any other benefit or service excluded by order of the appropriate Government;
(ii) any contribution by the employer to a Pension Fund, Provident Fund, or social insurance scheme;
(iii) any travel allowance or travel concession;
(iv) any sum paid to cover special expenses due to the nature of the job; or
(v) any gratuity payable on discharge.

 A minimum wage is a wage, which, in any event must be paid irrespective of the extent of profits, the financial condition
of the establishment or the availability of workmen on lower wages, A.P. Hotels Assn. v. Govt. of A.P., (2002)
 The minimum wage is a figure which is to be taken as a whole and when bonus is paid on the same, the
petitioner/management is not entitled to break up this figure of minimum wage by stating that the minimum wage
includes the figure of house rent allowance which should be deducted from the minimum wage and bonus is then payable
only on such reduced figure of wages after removing the alleged figure of house rent allowance, Globe Detective Agency
(P) Ltd. v. Presiding Officer Industrial Tribunal No. III, ILR (2011)

3. Fixing of minimum rates of wages-

(1) The appropriate Government shall, as specified below:
(a) Set minimum wage rates for employees in jobs listed in Part I or Part II of the Schedule, and for jobs added to either Part by
notification under Section 27:
 For jobs in Part II, the Government may set different wage rates for different parts of the State or for specific classes of
employment, rather than the entire State.
(b) Review and, if necessary, revise these minimum wage rates at intervals not exceeding five years:
  If the Government does not review the rates within five years, it can still do so after the period, and the existing rates will
remain in effect until revised.
(1-A) Regardless of sub-section (1), the Government may not set minimum wages for jobs with fewer than one thousand
employees in the entire State:
 If the number of employees in such a job rises to one thousand or more, the Government will set minimum wages as soon
as possible.
(2) The appropriate Government may establish:
(a) A minimum wage rate for time work (a “minimum time rate”);
(b) A minimum wage rate for piece work (a “minimum piece rate”);
(c) A minimum rate for employees on piece work to ensure they receive a minimum time-based wage (a “guaranteed time rate”);
(d) A minimum rate for overtime work, either time-based or piece-based (an “overtime rate”).
(2-A) If there is an ongoing industrial dispute about wage rates for scheduled employment before a Tribunal or similar authority,
or an award is in effect, and a notification to set or revise minimum wages is issued during this time:
 The new minimum wage rates will not apply to the affected employees while the dispute or award is active.
(3) In setting or revising minimum wages:
(a) Different rates may be set for:
(i) Different scheduled jobs;
(ii) Different types of work within the same job;
(iii) Adults, adolescents, children, and apprentices;
(iv) Different localities.
(b) Minimum wages may be set for different periods: (i) By the hour, (ii) By the day, (iii) By the month, or (iv) By other longer
periods as prescribed:
 When setting daily or monthly rates, the method for calculating wages for these periods may be specified.
 If wage periods are already set under Section 4 of the Payment of Wages Act, 1936, minimum wages must align with
these periods.

 Section 3 of the Act empowers the Government to fix minimum rates of wages from time to time. While fixing minimum
rates of wages, different minimum rates of wages could be fixed for different scheduled employment, for different
classes of work for same scheduled employment and for different localities, Secunderabad Club v. State of A.P., (1997)

 ‘Learners’ in an industry are entitled to minimum wage prescribed for an unskilled worker in that industry, Kanta Devi v.
State of Haryana, 1994

 The Minimum Wages Act does not cast a statutory obligation upon the State Government to fix or revise the rates of
minimum wages strictly according to the cost of living index. Therefore, if the cost of living index in a particular locality
is not strictly followed while fixing or revising the rates of minimum wages, there is no breach of statutory duty
committed,Bhikusa Yumasa Kshatriya v. Sangamner Akola Taluka Bidi Kamgar Union, (1959)

 The fixation of minimum rates of wages in respect of any scheduled employment by the appropriate Government is an
administrative act which is final and not subject to judicial review on the question of the quantum of wages fixed on
humanitarian ground, A.P. Hotels Assn. v. Govt. of A.P., (2002)

 The State Government is not bound to accept the recommendations of the advisory board while fixing minimum wages,
Rurmal Jhawaramal v. State of Bihar, 1995

 Factors for consideration.—Capacity of the employer to pay, held, is not a relevant consideration in fixing of minimum
wage, Airfreight Ltd. v. State of Karnataka, (1999) 6 SCC 567 : 1999 SCC (L&S) 1185; A.P. Hotels Assn. v. Govt. of
A.P., (2002) 4 LLN 642 (AP)(DB).

 When bare minimum wages structure is prescribed, which is necessary for the survival of a family, the consideration
which weighed with the State Government as to what is the bare minimum requirement of a family, is a relevant
consideration, Vibha Synthetics (P) Ltd. v. State of Maharashtra, (2005).

 Children engaged in match factories to sort out the manufactured product and to process it for packing should be given at
least 60 per cent of the prescribed minimum wage for an adult doing the same job, C. Mehta v. State of T.N., (1991)

4. Minimum rate of wages.— (1) The minimum wage rate set or revised by the appropriate Government for scheduled
employments under Section 3 may include:
(i) A basic wage rate and a special allowance, adjusted periodically as directed by the Government to reflect changes in the cost of
living index (called the “cost of living allowance”); or
(ii) A basic wage rate, with or without the cost of living allowance, plus the cash value of essential commodities provided at
concession rates if authorized; or
(iii) An all-inclusive rate that includes the basic wage, the cost of living allowance, and the cash value of concessions, if any.
(2) The cost of living allowance and the cash value of concessions for essential commodities at concession rates will be calculated
by the competent authority at intervals and in accordance with directions specified by the appropriate Government.

Object.—The object of Section 4 is to see that minimum wage can be linked with increase in cost of living so that increase in cost
of living can be neutralised or all inclusive rates of minimum wages can be fixed, A.P. Hotels Assn. v. Govt. of A.P., (2002)

 Minimum wage, meaning.—Minimum wage is not mere sustenance wage enabling coverage of physical needs. It
should ensure preservance of the efficiency of the worker by providing some measure of education, medical requirements
and other amenities, Kerala Hotel and Restaurant Assn. v. State of Kerala, 1989
 The concept of minimum wages, held, implies wages ensuring not only sustenance of the employee and his family but
also preservation of his efficiency as a worker, Airfreight Ltd. v. State of Karnataka, (1999)

5. Procedure for fixing and revising minimum wages.—(1) When setting or revising minimum wage rates for the first time for
any scheduled employment, the appropriate Government shall:either-
(a) Appoint as many committees and sub-committees as necessary to conduct enquiries and provide advice on the wage setting or
revision, or
(b) Publish its proposals in the Official Gazette to inform affected persons, specifying a date at least two months from the
notification date for considering the proposals.
(2) After considering the advice from the committees (if appointed) or the representations received by the specified date, the
Government shall publish the final wage rates in the Official Gazette. These rates will come into effect three months after the
notification date unless stated otherwise:
If the Government chooses the method in clause (b) of sub-section (1), it must also consult the Advisory Board.

 Minimum Wages Act, 1948 contemplates that minimum wage rates should be fixed in the scheduled industries with the
dual object of providing sustenance and maintenance of the worker and his family and preserving his efficiency as a
worker, Kala Devi v. State of H.P., (2009)

 The scope of judicial review in the matters like fixation of minimum wages is limited. Under Article 226 of the
Constitution, the Court cannot sit in appeal over the rates fixed by the State Government. The scope is limited to finding
out whether the considerations that weighed with the State Government while fixing the minimum rates of wages were
relevant or not, Vibha Synthetics (P) Ltd. v. State of Maharashtra, (2005) 4 Mah LJ 1111. ; Chotanagpur Small Scale
Industries Assn. v. State of Bihar, 2002 Lab IC 284 (Jhark).

 Where the final notification mentioned that representations had been received and considered, held, it was not necessary
that it should have contained a discussion of the pros and cons of points taken in the representations, Arbuda Bhuvan v.
State of Maharashtra, 1991

 The advice of the committee or advisory board is not binding on the Government, State of A.P. v. Narayana Velur
Beedi Manufacturing Factory, 1973

 If no advice is given or if inadequate advice is given by the committee, Section 5 does not deprive the Government of its
power and duty to fix or revise the minimum rates of wages, Tourist Hotel v. State of A.P., (1975).

 The cost of living allowance can be fixed by the competent authority on the basis of data available with such authority
without following the elaborate procedure of Section 5 including publication, Champawati Yantramag Audyogik
Sahkari Sanstha Maryadit v. State of Maharashtra, (1993)

 No procedure is prescribed in the Act for the Board to function. It can devise its own procedure, State of Rajasthan v.
Hari Ram Nathwani, (1975)

 Different minimum wages can be fixed in different industries and different places, Chandra Bhavan Boarding &
Lodging, Bangalore v. State of Mysore, (1969) 3 SCC 84.

 Minimum wages are not contractual but statutory. Failure to fix or revise is not only a statutory violation but is a breach
of fundamental right in Article 23 of the Constitution of India. If a workman is paid less than the minimum wages it can
be legitimately presumed that he is acting under the force of some compulsion as he has no choice, Assn. of Planters of
Kerala v. State, (1996)

 The State Government can give retrospective effect to the notification revising the wages, Mizar Govinda Anappa Pai v.
State of Karnataka, 1986, Assn. of Planters of Kerala v. State, (1996)

11. Wages in kind.—(1) Minimum wages payable under this Act shall be paid in cash.
(2) Where it has been the custom to pay wages wholly or partly in kind, the appropriate Government being of the opinion that it is
necessary in the circumstances of the case may, by notification in the Official Gazette, authorise the payment of minimum wages
either wholly or partly in kind.
(3) If the appropriate Government is of the opinion that provision should be made for the supply of essential commodities at
concession rates, the appropriate Government may, by notification in the Official Gazette, authorise the provision of such supplies
at concession rates.
(4) The cash value of wages in kind and of concession in respect of supplies of essential commodities at concession rates
authorised under sub-sections (2) and (3) shall be estimated in the prescribed manner.

(A/c to code- All wages shall be paid in current coin or currency notes or by cheque or by crediting the wages in the bank account
of the employee or by the electronic mode)

 Unless authorised by a notification u/s. 11(3), the supply of essential commodities at concessional rates cannot form part
of minimum wages, Manganese Ore (India) Ltd. v. Chandi Lal Saha, 1991

12. Payment of minimum rates of wages.—(1) Where in respect of any scheduled employment a notification under Section 5 is
in force, the employer shall pay to every employee engaged in a scheduled employment under him wages at a rate not less than the
minimum rate of wages fixed by such notification for that class of employees in that employment without any deductions except
as may be authorised within such time and subject to such conditions as may be prescribed.
(2) Nothing contained in this section shall affect the provisions of the Payment of Wages Act, 1936 (4 of 1936).

 The employer may fix any reasonable norm specifying the quantity of work which must be turned out by the workman
during the day, but if the workman does not turn out work in conformity with such norm, the employer may take
disciplinary action against the workman and dismiss him, but cannot pay him anything less than the minimum wage,
Sanjit Roy v. State of Rajasthan, (1983) 1 SCC 525 : 1983 SCC (L&S) 217.
 Payment of wages less than the minimum wage on the ground of less performance or output is illegal, Bandhua Mukti
Morcha v. Union of India, (1984) 3 SCC 161 : 1984 SCC (L&S) 389, para 20.

13. Fixing hours for a normal working day, etc.—(1) 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 day of rest;
(c) provide for payment for work on a day of rest at a rate not less than the overtime rate.
(2) The provisions of sub-section (1) shall, in relation to the following classes of employees, apply only to such extent and subject
to such conditions as may be prescribed: —
(a) employees engaged on urgent work, or in any emergency which could not have been foreseen or prevented;
(b) employees engaged in work in the nature of preparatory or complementary work which must necessarily be carried on outside
the limits laid down for the general working in the employment concerned;
(c) employees whose employment is essentially intermittent;
(d)employees engaged in any work which for technical reasons has to be completed before the duty is over;
(e) employees engaged in a work which could not be carried on except at times dependent on the irregular action of natural forces.
(3) For the purposes of clause (c) of sub-section (2), employment of an employee is essentially intermittent when it is declared to
be so by the appropriate Government on the ground that the daily hours of duty of the employee, or if there be no daily hours of
duty as such for the employee, the hours of duty, normally include periods of inaction during which the employee may be on duty
but is not called upon to display physical activity or sustained attention.

 Hours of work.—There is no provision in the Act which breaks up the hours of work by interposing a compulsory
period of rest as is done by the latter part of Section 55 of the Factories Act. If an employer takes actual work for 8 hours
per day on 6 days in a week he complies with all the provisions and need not pay overtime. He may go up to 9 hours on
any day without paying any overtime : Provided he does not exceed 48 hours in the week. He can specify the intervals of
rest and spread the 8 or 9 hours, as the case may be, together with intervals of rest over 12 hours in a 12-hour shift,
Workmen v. Trustees of Port of Bombay, AIR 1966

14. Overtime.—(1) If an employee, whose minimum wage is determined under this Act on an hourly, daily, or longer period
basis as prescribed, works more hours than the normal workday, the employer must compensate them. This compensation should
be at the overtime rate set either by this Act or any current law of the appropriate government, whichever rate is higher, for every
hour or part thereof worked beyond the normal hours.
(2) Nothing in this Act shall prejudice the operation of the provisions of Section 59 of the Factories Act, 1948 (63 of 1948) in any
case where those provisions are applicable.

 Overtime under Section 14 is payable only to those employees who are getting a minimum rate of wages as prescribed
under the Act and not by those getting better wages, Municipal Council, Hata v. Bhagat Singh, (1998)
15. Wages of worker who works for less than normal working day.—If an employee whose minimum rate of wages has been
fixed under this Act by the day, works on any day on which he was employed for a period less than the requisite number of hours
constituting a normal working day, he shall, save as otherwise hereinafter provided, be entitled to receive wages in respect of
work done by him on that day as if he had worked for a full normal working day:

Provided, however, that he shall not be entitled to receive wages for a full normal working day—

(i) in any case where his failure to work is caused by his unwillingness to work and not by the omission of the employer to
provide him with work, and

(ii) in such other cases and circumstances as may be prescribed.

 Entitlement to full minimum wages.—The persons who cannot work for more than half a day are not entitled to receive
what others working a full day get. Sub-normal workers, commonly known as “lettera challans” are entitled to full
minimum wages without performance of a normal day's work, Pobbojan Tea Co. Ltd. v. Commr., (1967)

16. Wages for two or more classes of work.—Where an employee does two or more classes of work to each of which a different
minimum rate of wages is applicable, the employer shall 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.

17. Minimum time rate wages for piece work.—Where an employee is employed on piece work for which minimum time rate
and not a minimum piece rate has been fixed under this Act, the employer shall pay to such employee wages at not less than the
minimum time rate.

 Payment of less than minimum wage.—If the wages of an employee who incurs disability during employment are
protected without taking into account his output, then the disabled whose quality and quantity of work are not questioned
should not be denied dignity of labour by paying them less than the minimum wages merely on ground of their being
disabled, Delhi Administration v. Presiding Officer, (2004)

 Mere fact that employees are piece rated does not deprive them of benefits of provisions of Act. Minimum wages to be
paid, even if the enterprise is to help the handicapped, Delhi Administration v. Presiding Officer, (2004)

THE EMPLOYEES' COMPENSATION ACT, 1923

The growing complexity of industry in this country, with the increasing use of machinery and consequent danger to workmen,
along with the comparative poverty of the workmen themselves renders it advisable that they should be protected as far as
possible, from hardship arising from accidents. A legislation of this kind helps to reduce the number of accidents in a manner that
cannot be achieved by official inspection, and to mitigate the effect of accidents by provision for suitable medical treatment,
thereby making industry more attractive to labour and increasing its efficiency. The Act provides for cheaper and quicker disposal
of disputes relating to compensation through special tribunals than possible under the civil law.

Statement of Objects and Reasons of Amendment Act 11 of 2017.—The Employee's Compensation Act, 1923, provides for
payment of compensation to the employees and their dependants in the case of injury by industrial accidents including certain
occupational diseases arising out of and in the course of employment resulting in death or disablement.
2. The Law Commission of India, in its 62nd Report of 1974 and 134th Report of 1989, recommended to review or amend or
repeal various provisions of the Employee's Compensation Act, 1923. Some recommendations made by the Law Commission of
India have already been implemented.
3. Now, it has been decided to make the following further amendments to the Employee's Compensation Act, 1923, based on the
other recommendations of the Law Commission contained in the above reports, namely—
(a) making it obligatory on the employer to inform the employee of his rights to compensation under the Act, in writing as well as
through electronic means;
(b) to enhance the penalty amount for various violations under the Act from the existing amount of five thousand rupees to fifty
thousand rupees which may be extended to one lakh rupees;
(c) to make the employer liable to penalty for failure to inform the employee of his rights to compensation under the Act;
(d) to revise the minimum amount involved in the dispute for which appeal can be filed to the High Court, from the existing three
hundred rupees to ten thousand rupees or such higher amount as the Central Government may, by notification, specify;
(e) to omit Section 30-A of the Act which empowers the Commissioner to withhold payment to an employee of any sum in
deposit with him where an appeal is filed in the High Court by an employer. This omission will provide relief to the employees as
the amount can now be withheld only when there is a stay or order to that effect by the High Court in cases where the appeal has
been filed by the employer.
4. The Bill seeks to achieve the above objects.
Aim, Legislative intent and Object- An Act to provide for the payment by certain classes of employers to their Employees of
compensation for injury by accident. Hanil Era Textiles Ltd. v. Namdeo Mukund Deoghare, (2007) 4 Mah LJ 820.

With the growing complexity of the Indian industry, increasing use of machinery and consequent danger to workmen, a need was
felt to enact legislation to protect workmen from these hardships. The question of granting compensation for the fatal injuries or
serious accidents faced by the employees was first raised in India in 1884 and need for proper legislation for the compensation to
the workers was raised. In 1922, a small committee including Legislative assembly member, employer’s and worker’s
representatives and medical and insurance experts met and gave recommendation for framing legislation on compensation for
which was accepted a Workmen’s Compensation Act, 1923 was passed. This Act is based upon the Principle of employer’s
liability in which employer is liable for compensation in case of a personal injury that is caused by accident and also certain
occupational diseases arising out of and in the course of employment and resulting in disablement or death. The Employees
Compensation Act of 19232 is recognized as the first social security measure implemented in India. The legislation seeks to
relieve Employees and their family members who rely on them for support in the event of injury resulting from accidents that
culminate in either death or disability. The concept of notional extension of employment pertains to an imaginary extension of an
employee's working time, which enables them to avail temporary benefits under various laws provided by the employer.
Furthermore, employers may be held accountable for injuries caused to their workers under certain circumstances, even if they are
away from the premises at the time of the accident. In this document, we will understand the theory of notional extension through
case laws, essential sections of the act.

As the Act provides, there are certain circumstances and only in those cases compensation will be given to the workers, only when
there is an accident due to which personal injury is caused to any workmen and in the cases of occupational diseases arising out of
and in the course of employment and resulting in disablement or death. The aforesaid expression ‘arising out of and in the course
of employment’ is a general principle in case of compensation and restricted to the boundaries of course of employment but this
general principle has an exception which is known as ‘Doctrine of notional extension’ gives a wider interpretation of ‘arising out
of and in the course of employment’.

Doctrine of notional extension intends to extend the area of the place of employment and the time of employment under certain
circumstances and this is always the disputed fact before the courts to determine the correct area of the place of employment and
at what time the employment end, it gives an exception to the general principle which says ‘commencement of the employment is
when the workmen enters the place of employment and it ends when he left the place of employment and it excludes the journey
to and from the place of employment’, by extending area of place of employment and time of employment.

Concept of doctrine of notional extension:

The Employee's Compensation Act 1923 and the Employee's State Insurance Act 1948 are two laws that aim to protect workers. If
a work-related injury occurs, these laws make it the employer's responsibility to compensate the employee or their family. Some
job may also put workers at risk of getting certain diseases. If this happens, the laws require the employer to pay compensation for
occupational diseases.
Doctrine of notional extension is based upon the principle of justice and equity at the workplace. The main motive behind the
doctrine of notional extension is to provide fairness, accountability and protection to the vulnerable employees, giving knowledge
about the relationship between employer and employee and between the employee and employment, the law aims to prevent the
exploitation of the workers who were entitled to get the compensation for the damages they suffered.

Notional extension
The doctrine of notional extension is a theory that prescribes that compensation is to be paid to the workers in case of an accident
during the course of employment, but the actual cause of adopting this theory was to include within its scope, the injury and
danger originated due to employment but not necessarily at the workplace, during working hours or while coming or going to the
place of work.

Arising out of and in the course of employment

The expression ‘arising out of and in the course of employment’ made up of two phrases, ‘arising out of’ which focus upon the
cause of the injury and ‘in the course of employment’ which focus on the place and circumstances under which accident has been
done. This expression also focuses on the concept of casual connection between the injury and the employment, there must be
some relation between employment and the injury by accident. The burden of proof is on the claimant that the injuries arise out of
and in the course of employment. In case, Saurashtra salt manufacturing Co. v. Bai velu raja, the general principle applies to ‘in
the course of employment’ is that the employment commences when the employee entered the place of employment and the
employment will be end as he left the place of employment, but the interpretation of this principle extend by the doctrine of
notional extension in which time and place of employment extended in certain circumstances that were discussed by court in
various judgments. The facts and circumstances of each case shall be scrutinized very carefully to determine whether accident
arising out of and in the course of employment by keeping in view the theory of doctrine of notional extension.
The words ‘arising out of employment’ was defined in the Mackinnon Mackenzie & Co. Pvt. Ltd vs Ibrahim Mahommed
Issak on 14 August, 1969, that “during the course of employment, If the accident had occurred on account of a risk which is an
incident of the employment; the claim for compensation must succeed unless, of course, the employee has exposed himself to do
an added peril by his own imprudence”.
The concept of ‘arising out of’ and ‘in the course of employment’ was discussed by the Supreme Court in the case of Daya
kishan joshi v. Dyenmesh systems Pvt. Ltd.11. In this case, it was held that the ‘arising out of’ and ‘in the course of employment’
are two different phrases, first one talks about the casual connection between the injury and the employment and latter one talks
about time and place of the employment that the injury should be inflicted during the course of employment. There may be some
extension in the time and place of the employment and also the exception can be given against the general principle
‘commencement of the employment is when the workmen enters the place of employment and it ends when he left the place of
employment and it excludes the journey to and from the place of employment’, that a employee may be consider as in the course
of employment even though he has not enter the place of employment or has departed the employer’s premises.
When the workmen is on the public road or on public transport or at public place and somehow due to accident inflicted injury,
that will not be considered as in the course of employment because that workman is there as any other person and was not there in
the course of employment unless the very nature of the employment makes it necessary to be there at that place.

Case laws-
In the case of General manager, B.E.S.T undertaking, Bombay v. Mrs. Agnes, it was concluded that it is not necessary that only
the soul task for which an employee is hired is in the course of employment, it also includes the matter incidental to the task that
includes lunch break, periods of rest i.e. that are linked to that task.
In case, R.B. Moondra and Co. v. Mst. Bhanwari, the deceased was the truck driver on the appellant’s truck that was used for the
transportation of petrol. One day, the deceased reported to the employer about the leakage in the tank and to check the leakage, the
truck was half filled with water and the next day deceased went inside the tank to check leaking spot and due to dark inside the
tank, he lighted a matchstick due to which the truck caught fire and the deceased received burn injuries and later on he
succumbled to death. Even though lighting a match stick inside a tank that is used for carrying petrol is a negligent or rash act still
it will not debar the liability of employer to give compensation to the widow of deceased. The act was incidental to the task he
was hired to do and was in the interest of the employer, although that was a negligent act to lighting a matchstick in the tank of
petrol but because the tank was empty and was partly filled with water last night and the act was incidental to task, the deceased’s
widow wife entitle to get the compensation.
In case, National iron and steel Co. Ltd. v. Manorama, a boy was employed in a tea shop by the appellant and it was the duty of
the boy to serve the tea in the nearby factory. One day while coming back after serving tea to the workers in the factory, a violent
mob of factory workers was passed upon which police has to fire in self-defense, during this incident the boy was seriously
injured by a bullet injury and later on he died due to that injury. Mother of the deceased claimed compensation and the court
granted compensation and concluded that the injury arose in the course of employment as the nature of the employment that
makes it necessary for him to be there.
Leela bai vs Seema Chauhan (2019)- bus driver having lunch on the roof of bus, fell and died- liable for compensation- course
of employment.

Section 2(1) (c) “compensation” means compensation as provided for by this Act

2(1) (d) “dependant” means any of the following relatives of a deceased employee, namely—
(i) a widow, a minor legitimate or adopted son, an unmarried legitimate or adopted daughter, or a widowed mother; and
(ii) if wholly dependent on the earnings of 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;
(iii) if wholly or in part dependent on the earnings of the employee at the time of his death—
(a) a widower,
(b) a parent other than a widowed mother,
(c) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or illegitimate or adopted if married and a
minor or if widowed and a minor,
(d) a minor brother or an unmarried sister or a widowed sister if a minor,
(e) a widowed daughter-in-law,
(f) a minor child of a pre-deceased son,
(g) a minor child of a pre-deceased daughter where no parent of the child is alive, or
(h) a paternal grandparent if no parent of the employee is alive.
Explanation.—For the purposes of sub-clause (ii) and items (f) and (g) of sub-clause (iii), references to a son, daughter or child
include an adopted son, daughter or child respectively.
 Parents of the deceased who were partly dependant on him are entitled to compensation. Dhan Singh v. Pepsu Road
Transport Corpn., (1993) 1 Cur LR 750 : (1994) 1 LLN 800 : (1994) 68 FLR 329 (P&H).

2(1) (dd) “employee” means a person, who is—

(i) a railway servant as defined in clause (34) of Section 2 of the Railways Act, 1989 (24 of 1989), not permanently employed in
any administrative district or sub-divisional office of a railway and not employed in any such capacity as is specified in Schedule
II; or
(ii) (a) a master, seaman or other member of the crew of a ship,
(b) a captain or other member of the crew of an aircraft,
(c) a person recruited as driver, helper, mechanic, cleaner or in any other capacity in connection with a motor vehicle, (d) a person
recruited for work abroad by a company, and who is employed outside India in any such capacity as is specified in Schedule II
and the ship, aircraft or motor vehicle, or company, as the case may be, is registered in India; or
(iii) employed in any such capacity as is specified in Schedule II, whether the contract of employment was made before or after
the passing of this Act and whether such contract is expressed or implied, oral or in writing; but does not include any person
working in the capacity of a member of the Armed Forces of the Union; and any reference to any employee who has been injured
shall, where the employee is dead, include a reference to his dependants or any of them.
2(1) (e) “employer” includes anybody of persons whether incorporated or not and any managing agent of an employer and the
legal representative of a deceased employer, and, when the services of a employee are temporarily lent or let on hire to another
person by the person with whom the employee has entered into a contract of service or apprenticeship, means such other person
while the employee is working for him.
 Employer, where deceased employee was deputed, would be liable to pay compensation, District Animal Husbandry
Officer v. Chhaya, 2014 SCC OnLine Bom 2864 : (2014) 4 Mah LJ 815 (Bom).

2(1) (f) “managing agent” means any person appointed or acting as the representative of another person for the purpose of
carrying on such other person's trade or business, but does not include an individual manager subordinate to an employer.

2(1) (ff) “minor” means a person who has not attained the age of 18 years.

2(1) (g) “partial disablement”

Temporary Partial Disablement:
o This occurs when the disablement is temporary and affects the employee's earning capacity in the specific
employment they were engaged in at the time of the accident. Despite the disablement, the employee retains the
ability to work, albeit with reduced capacity or efficiency compared to their pre-accident state.
Permanent Partial Disablement:
o This type of disablement is permanent and affects the employee's earning capacity not just in their current
employment but in all types of work they were capable of undertaking at the time of the accident. The
permanent nature implies that the employee will permanently experience reduced earning capacity across all
potential employments.
Provision Regarding Schedule I:
 According to the provided definition, any injury specified in Part II of Schedule I automatically leads to a presumption of
permanent partial disablement.

2(1) (m) “wages” includes any privilege or benefit which is capable of being estimated in money, other than a travelling
allowance or the value of any travelling concession or a contribution paid by the employer of an employee towards any pension
or provident fund or a sum paid to an employee to cover any special expenses entailed on him by the nature of his employment.

2(1) (l) “total disablement” means such disablement, whether of a temporary or permanent nature, as incapacitates an employee
for all work which he was capable of performing at the time of the accident resulting in such disablement:
Provided that permanent total disablement shall be deemed to result from every injury specified in Part I of Schedule I or from any
combination of injuries specified in Part II thereof where the aggregate percentage of the loss of earning capacity, as specified in
the said Part II against those injuries, amounts to one hundred per cent or more.

 Partial disablement” concerns loss of earning capacity while “total disablement” relates to total incapacitation for all
work the workman was capable of. Moti Lal v. Thakurdas, (1985) 2 LLN 951 (All). See also Punambhai v. G. Kenel
Construction, (1985).

 Where an employee becomes unfit for a particular class of job but is fit for another class which is offered to him by
employer, held that the workman was entitled to claim compensation on the basis of partial disablement and not total
disablement. General Manager, G.I.P. Railway v. Shanker, AIR 1950 Nag 301.

 Where a carpenter fell down during the course of his employment and suffered injuries resulting in amputation of his left
arm, held, the injury was of such a nature as to cause permanent disablement and it incapacitated him from performing all
work which he was capable of performing, viz., that of a carpenter. Pratap Narain Singh Deo v. Srinivas Sabata, (1976)
1 SCC 289.

 No compensation can be granted for any physical disability unless there was loss of earning capacity. It is only in the
case of a scheduled injury that such loss is presumed. Where the injury is not a scheduled injury the loss of earning
capacity must be proved by evidence. Calcutta Electric Supply Corpn. v. H.C. Das, (1968) 2 LLJ 169.

3. Employer's liability for compensation.—(1) If personal injury is caused to an employee by accident arising out of and in the
course of his employment, his employer shall be liable to pay compensation in accordance with the provisions of this Chapter:
Provided that the employer shall not be so liable—
(a) in respect of any injury which does not result in the total or partial disablement of the employee for a period exceeding three
days;
(b) in respect of any injury, not resulting in death or permanent total disablement, caused by an accident which is directly
attributed to—
(i) the employee having been at the time therefore under the influence of drink or drugs, or
(ii) the wilful disobedience of the employee to an order expressly given, or to a rule expressly framed, for the purpose of securing
the safety of employee, or
(iii) the wilful removal or disregard by the employee of any safety guard or other device which he knew to have been provided for
the purpose of securing the safety of employees.
(2) If an employee employed in any employment specified in Part A of Schedule III contracts any disease specified therein as an
occupational disease peculiar to that employment, or if a employee, whilst in the service of an employer in whose service he has
been employed for a continuous period of not less than six months (which period shall not include a period of service under any
other employer in the same kind of employment) in any employment specified in Part B of Schedule III, contracts any disease
specified therein as an occupational disease peculiar to that employment, or if a employee whilst in the service of one of more
employers in any employment specified in Part C of Schedule III for such continuous period as the Central Government may
specify in respect of each such employment, contracts any disease specified therein as an occupational disease peculiar to that
employment, the contracting of the disease shall be deemed to be an injury by accident within the meaning of this section and,
unless the contrary is proved, the accident shall be deemed to have arisen out of, and in the course of, the employment:
Provided that if it is proved—
(a) that an employee whilst in the service of one or more employers in any employment specified in Part C of Schedule III has
contracted a disease specified therein as an occupational disease peculiar to that employment during a continuous period which is
less than the period specified under this sub-section for that employment, and
(b) that the disease has arisen out of and in the course of the employment; the contracting of such disease shall be deemed to be
an injury by accident within the meaning of this section:
Provided further that if it is proved that a employee who having served under any employer in any employment specified in Part B
of Schedule III or who having served under one or more employers in any employment specified in Part C of that Schedule, for a
continuous period specified under this sub-section for that employment and he has after the cessation of such service contracted
any disease specified in the said Part B or the said Part C, as the case may be, as an occupational disease peculiar to the
employment and that such disease arose out of the employment, the contracting of the disease shall be deemed to be an injury by
accident within the meaning of this section].
(2-A) If an employee employed in any employment specified in Part C of Schedule III contracts any occupational disease peculiar
to that employment, the contracting whereof is deemed to be an injury by accident within the meaning of this section, and such
employment was under more than one employer, all such employers shall be liable for the payment of the compensation in such
proportion as the Commissioner may, in the circumstances, deem just.
(3) The Central Government or the State Government, after giving, by notification in the Official Gazette, not less than three
months' notice of its intention so to do, may, by a like notification, add any description of employment to the employments
specified in Schedule III, and shall specify in the case of employments so added the diseases which shall be deemed for the
purposes of this section to be occupational diseases peculiar to those employments respectively and thereupon the provisions of
sub-section (2) shall apply in the case of a notification by the Central Government, within the territories to which this Act extends
or, in case of a notification by the State Government, within the State] as if such diseases had been declared by this Act to be
occupational diseases peculiar to those employments.
(4) Save as provided by sub-sections (2), (2-A)] and (3), no compensation shall be payable to a employee in respect of any disease
unless the disease is directly attributable to a specific injury by accident arising out of and in the course of his employment.
(5) Nothing herein contained shall be deemed to confer any right to
compensation on a employee in respect of any injury if he has instituted in a Civil Court a suit for damages in respect of the injury
against the employer or any other person; and no suit for damages shall be maintainable by a employee in any court of law in
respect of any injury—
(a) if he has instituted a claim to compensation in respect of the injury before a Commissioner; or
(b) if an agreement has been come to between the employee and his employer providing for the payment of compensation in
respect of the injury in accordance with the provisions of this Act.

4. Amount of compensation.—(1) Subject to the provisions of this Act, the amount of compensation shall be as follows, namely:
—
(a) where death results from the injury - an amount equal to fifty per cent of the monthly wages of the deceased employee
multiplied by the relevant factor; or an amount of one lakh and twenty thousand rupees, whichever is more;
(b) Where permanent total disablement results from the injury - An amount equal to sixty per cent of the monthly wages of the
injured employee multiplied by the relevant factor; or an amount of one lakh and forty thousand rupees, whichever is more:
Provided that the Central Government may, by notification in the Official Gazette, from time to time, enhance the amount of
compensation mentioned in clauses (a) and (b).
Explanation I.—For the purposes of clause (a) and clause (b), “relevant factor”, in relation to a employee means the factor
specified in the second column of Schedule IV against the entry in the first column of that Schedule specifying the number of
years which are the same as the completed years of the age of the employee on his last birthday immediately preceding the date on
which the compensation fell due.
(c) Where permanent partial disablement results from the injury - (i) in the case of an 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 therein
as being the percentage of the loss of earning capacity caused by that injury, and
(ii) in the case of an injury not specified in Schedule I, such percentage of the compensation payable in the case of permanent total
disablement as is proportionate to the loss of earning capacity (as assessed by the qualified medical practitioner) permanently
caused by the injury;
Explanation I.—Where more injuries than one are caused by the same accident, the amount of compensation payable under this
head shall be aggregated but not so in any case as to exceed the amount which would have been payable if permanent total
disablement had resulted from the injuries;
Explanation II.—In assessing the loss of earning capacity for the purposes of sub-clause (ii), the qualified medical practitioner
shall have due regard to the percentages of loss of earning capacity in relation to different injuries specified in Schedule I;
(d) Where temporary disablement, whether total or partial results from the injury - a half-monthly payment of the sum equivalent
to twenty-five per cent of monthly wages of the employee, to be paid in accordance with the provisions of sub-section (2).
(1-A) Notwithstanding anything contained in sub-section (1), while fixing the amount of compensation payable to an employee in
respect of an accident occurred outside India, the Commissioner shall take into account the amount of compensation, if any,
awarded to such employee in accordance with the law of the country in which the accident occurred and shall reduce the amount
fixed by him by the amount of compensation awarded to the employee in accordance with the law of that country.
(1-B) The Central Government may, by notification in the Official Gazette, specify, for the purposes of sub-section (1), such
monthly wages in relation to an employee as it may consider necessary.
(2) The half-monthly payment referred to in clause (d) of sub- section (1) shall be payable on the sixteenth day—
(i) from the date of disablement where such disablement lasts for a period of twenty-eight days or more, or
(ii) after the expiry of a waiting period of three days from the date of disablement where such disablement lasts for a period of less
than twenty-eight days; and thereafter half-monthly during the disablement or during a period of five years, whichever period is
shorter: Provided that—
(a) there shall be deducted from any lump sum or half-monthly payments to which the employee is entitled the amount of any
payment or allowance which the employee has received from the employer by way of compensation during the period of
disablement prior to the receipt of such lump sum or of the first half-monthly payment, as the case may be; and
(b) no half-monthly payment shall in any case exceed the amount, if any, by which half the amount of the monthly wages of the
employee before the accident exceeds half the amount of such wages which he is earning after the accident.
Explanation.—Any payment or allowance which the employee has received from the employer towards his medical treatment
shall not be deemed to be a payment or allowance received by him by way of compensation within the meaning of clause ( a) of
the proviso.
(2-A) The employee shall be reimbursed the actual medical expenditure incurred by him for treatment of injuries caused during
the course of employment.
(3) On the ceasing of the disablement before the date on which any half-monthly payment falls due there shall be payable in
respect of that half-month a sum proportionate to the duration of the disablement in that half-month.
(4) If the injury of the employee results in his death, the employer shall, in addition to the compensation under sub-section (1),
deposit with the Commissioner a sum of not less than five thousand rupees for payment of the same to the eldest surviving
dependant of the employee towards the expenditure of the funeral of such employee or where the employee did not have a
dependant or was not living with his dependant at the time of his death to the person who actually incurred such expenditure.
Provided that the Central Government may, by notification in the Official Gazette, from time to time, enhance the amount
specified in this sub-section.

4A. Compensation to be paid when due and penalty for default.—(1) Compensation under section 4 shall be paid as soon as it
falls due.
(2) In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make
provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the
Commissioner or made to the employee, as the case may be, without prejudice to the right of the employee to make any further
claim.
(3) Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due,
the Commissioner shall—
(a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent.
per annum or at such higher, rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by
the Central Government by notification in the Official Gazette, on the amount due; and
(b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears
and interest thereon, pay a further sum not exceeding fifty per cent. of such amount by way of penalty:
Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to
the employer to show cause why it should not be passed.
Explanation.—For the purposes of this sub-section, “scheduled bank” means a bank for the time being included in the Second
Schedule to the Reserve Bank of India Act, 1934.
(3A) The interest and the penalty payable under sub-section (3) shall be paid to the employee or his dependant, as the case may
be.

17. Contracting out.— Any contract or agreement made before or after the start of this Act, where an employee gives up their
right to compensation for personal injury from the employer, is null and void. Such contracts cannot remove or reduce the
employer's liability to pay compensation under this Act.

20. Appointment of Commissioners.—(1) The State Government may, by notification in the Official Gazette, who is or has been
a member of a State Judicial Service for a period of not less than five years or is or has been for not less than five years an
advocate or a pleader or is or has been a Gazetted Officer for not less than five years having education qualifications and
experience in personnel management, human resource development and industrial relations appoint any person to be a
Commissioner for Workmen’s Compensation for such area as may be specified in the notification.

(2) Where more than one Commissioner had been appointed for any area, the State Government may, by general or special order,
regulate the distribution of business between them.
(3) Any Commissioner may, for the purpose of deciding any matter referred to him for decision under this Act, choose one or
more persons possessing special knowledge of any matter relevant to the matter under inquiry to assist him in holding the inquiry.
(4) Every Commissioner shall be deemed to be a public servant within the meaning of the Indian Penal Code (45 of 1860).

Powers of the Commissioner

Section 22A: Power to Require Further Deposit in Cases of Fatal Accident
(1): If the compensation deposited by an employer for an employee who has died from a workplace injury is deemed insufficient
by the Commissioner, the Commissioner can issue a written notice to the employer. This notice must state the reasons for the
insufficiency and ask the employer to show cause why an additional deposit should not be made within a specified timeframe.
(2): If the employer fails to satisfactorily show cause, the Commissioner can determine the total compensation amount payable
and require the employer to deposit the deficiency.

Section 23: Powers and Procedure of Commissioners

Civil Court Powers: The Commissioner possesses the powers of a Civil Court as per the Code of Civil Procedure, 1908, which
includes:
- Taking evidence on oath.
- Enforcing the attendance of witnesses.
- Compelling the production of documents and material objects.
Deemed Civil Court: The Commissioner is considered a Civil Court for purposes of Section 195 and Chapter XXVI of the Code
of Criminal Procedure, 1973.

Section 24: Appearance of Parties

- Parties can appear before the Commissioner through various representatives, including:
Legal practitioners, Officials of an Insurance Company, Officials of a registered Trade Union, Inspectors appointed under the
Factories Act, 1948, or the Mines Act, 1952, Any other officer specified by the State Government, authorized in writing by the
person, Any other person authorized, with the Commissioner’s permission.

Section 25: Method of Recording Evidence

- Memorandum of Evidence: The Commissioner must create a brief memorandum of the substance of the evidence for every
witness during their examination. This memorandum must be written and signed by the Commissioner.
- Exceptions: If the Commissioner is unable to write the memorandum, they must record the reason and dictate the memorandum,
which is then signed by the Commissioner.
- Medical Witnesses: Evidence from medical witnesses must be recorded as nearly as possible word for word.

Section 25A: Time Limit for Disposal of Compensation Cases- The Commissioner is required to resolve compensation matters
within three months from the date of reference and notify the decision within the same period.

Section 26: Costs- The Commissioner has discretion over all costs incidental to any proceedings, subject to the rules made under
the Act.

Section 27: Power to Submit Cases - The Commissioner can submit any legal question to the High Court and must decide the
question in accordance with the High Court’s decision.

Section 28: Registration of Agreements

Subsection (1): Agreements on lump-sum compensation or periodic payments must be sent to the Commissioner, who will record
it in a register if satisfied with its genuineness. This includes:
- Agreements for lump-sum payments.
- Agreements involving payments to women or legally disabled persons.

Section 29: Effect of Failure to Register Agreement

- If an agreement required to be registered under Section 28 is not sent to the Commissioner, the employer must pay the full
amount of compensation as per the Act. The employer is generally not entitled to deduct more than half of any amount already
paid as compensation unless directed otherwise by the Commissioner.

 Onus to prove that it was the work and the resulting strain which contributed to or aggravated the injury, is on the
workman, Shakuntala Chandrakant Shreshti v. Prabhakar Maruti Garvali, (2007) 11 SCC 668.

 The provisions of Section 4 as amended by Act 22 of 1984 are not retrospective. Singareni Collieries Co. Ltd. v. Commr.
for Workmen's Compensation, (1988) 1 LLN 80 (AP).

 The loss of earning capacity mentioned in Schedule I is the minimum and can be held to be higher on the basis of
evidence. Samir U. Parikh v. Sikandar Zahiruddin, (1984) 1 LLN 206 : 1984 Lab IC 521 : (1984) 2 LLJ 90 (Bom).
  Compensation becomes payable on the date of the accident and not on the date of determination of the amount thereof.
Pratap Narain Singh Deo v. Srinivas Sabata, (1976) 1 SCC 289 : 1976 SCC (L&S) 52.

EMPLOYEES’ STATE INSURANCE ACT, 1948

Object and scope—

 The Employees' State Insurance Act, 1948 is a beneficial piece of legislation intended to provide benefits to employees in
case of sickness, maternity, employment injury and for certain other matters in relation thereto, Transport Corpn. of
India v. ESI Corpn., (2000) 1 SCC 332.
 A narrow interpretation which will have the effect of defeating the objects of the Act not to be adopted, Delhi Gymkhana
Club Ltd. v. ESI Corpn., (2015).
 It is necessary that the Act should receive a liberal and beneficial construction so as to achieve legislative purpose,
Bangalore Turf Club Ltd. v. ESI Corpn., (2014).
 ESI Act and its provisions are significant and are meant to realise the State's obligation in safeguarding the rights
provided under Part IV of the Constitution. ESI Act provides a kind of social security and the employees concerned are
one of the most vulnerable and deprived sections of the society, who are in the constant need of protection, security and
assistance. Hence, provisions of the ESI Act must be construed along the lines of the objects of the Act so that the
benefits of welfare legislation are not curtailed, Delhi Gymkhana Club Ltd. v. ESI Corpn., (2015).
 Only such establishments are covered under the Employees' State Insurance Act, 1948 as are notified under Section 1(5)
in the Official Gazette, Bangalore Turf Club Ltd. v. ESI Corpn., (2009) 15 SCC 33.
 Unless there are 20 eligible employees, the ESI Act will not be applicable, M.M. Suri & Associates (P) Ltd. v. ESI
Corpn., (1997)

1(4) It shall apply, in the first instance, to all factories including factories belonging to the Government other than seasonal
factories:
Provided that nothing contained in this sub-section shall apply to a factory or establishment belonging to or under the control of
the Government whose employees are otherwise in receipt of benefits substantially similar or superior to the benefits provided
under this Act.
1(5) The appropriate Government may, in consultation with the Corporation and where the appropriate Government is a State
Government, with the approval of the Central Government, after giving one month's notice of its intention of so doing by
notification in the Official Gazette, extend the provisions of this Act or any of them, to any other establishment or class of
establishments, industrial, commercial, agricultural or otherwise.

Section 2- Definitions-
2 (1) - “appropriate Government” means, in respect of establishments under the control of the Central Government or a railway
administration or a major port or a mine or oilfield, the Central Government, and in all other cases, the State Government.

2 (3) - “confinement” means labour resulting in the issue of a living child or labour after twenty-six weeks of pregnancy resulting
in the issue of a child whether alive or dead.

2 (4) - “contribution” means the sum of money payable to the Corporation by the principal employer in respect of an employee
and includes any amount payable by or on behalf of the employee in accordance with the provisions of this Act.

2 (6) - “Corporation” means the Employees’ State Insurance Corporation set up under this Act.

2 (8) - “employment injury” means a personal injury to an employee caused by accident or an occupational disease arising out of
and in the course of his employment, being an insurable employment, whether the accident occurs or the occupational disease is
contracted within or outside the territorial limits of India.

2(10) - “exempted employee” means an employee who is not liable under this Act to pay the employee’s contribution.

2 (12) - “factory” means any premises including the precincts thereof whereon ten or more persons are employed or were
employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is
ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a railway
running shed.

2(13) - “immediate employer”, in relation to employees employed by or through him, means a person who has undertaken the
execution, on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal
employer or his agent, of the whole, or any part of any work which is ordinarily part of the work of the factory or establishment of
the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or
establishment, and includes a person by whom the services of an employee who has entered into a contract of service with him are
temporarily lent or let on hire to the principal employer; and includes a contractor.

2(14AA) - “manufacturing process” shall have the meaning assigned to it in the Factories Act, 1948 (63 of 1948);
2(14) - “insured person” means a person who is or was an employee in respect of whom contributions are or were payable under
this Act and who is by reason thereof, entitled to any of the benefits provided by this Act.

2 (17) - “principal employer” means—

(i) in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal
representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under 1[the
Factories Act, 1948 (63 of 1948)], the person so named;
(ii) in any establishment under the control of any department of any Government in India, the authority appointed by such
Government in this behalf or where no authority is so appointed, the head of the department;
(iii) in any other establishment, any person responsible for the supervision and control of the establishment.

2 (19A) - “seasonal factory” means a factory which is exclusively engaged in one or more of the following manufacturing
processes, namely, cotton ginning, cotton or jute pressing, decortication of groundnuts, the manufacture of coffee, indigo, lac,
rubber, sugar (including gur) or tea or any manufacturing process which is incidental to or connected with any of the aforesaid
processes and includes a factory which is engaged for a period not exceeding seven months in a year—
(a) in any process of blending, packing or repacking of tea or coffee; or
(b) in such other manufacturing process as the Central Government may, by notification in the Official Gazette, specify.

2(20) - “sickness” means a condition which requires medical treatment and attendance and necessitates abstention from work on
medical grounds;

2(22) - “wages” means all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment,
express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock-out,
strike which is not illegal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two months], but
does not include—
(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) any travelling allowance or the value of any travelling concession;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment;
(d) any gratuity payable on discharge;

2(23) “wage period” in relation to an employee means the period in respect of which wages are ordinarily payable to him
whether in terms of the contract of employment, express or implied or otherwise.

3. Establishment of Employees' State Insurance Corporation.—(1) With effect from such date as the Central Government
may, by notification in the Official Gazette, appoint in this behalf, there shall be established for the administration of the scheme
of Employees' State Insurance in accordance with the provisions of this Act a Corporation to be known as the Employees' State
Insurance Corporation.
(2) The Corporation shall be a body corporate by the name of Employees' State Insurance Corporation having perpetual
succession and a common seal and shall by the said name sue and be sued.

4. Constitution of Corporation.—The Corporation shall consist of the following members, namely:—

(a) a Chairman to be appointed by the Central Government;
(b) a Vice-Chairman to be appointed by the Central Government;
(c) not more than five persons to be appointed by the Central Government
(d) one person each representing each of the States in which this Act is in force to be appointed by the State Government
concerned;
(e) one person to be appointed by the Central Government to represent the Union Territories;
(f) ten persons representing employers to be appointed by the Central Government in consultation with such organisations of
employers as may be recognised for the purpose by the Central Government;
(g) ten persons representing employees to be appointed by the Central Government in consultation with such organisations of
employees as may be recognised for the purpose by the Central Government;
(h) two persons representing the medical profession to be appointed by the Central Government in consultation with such
organisations of medical practitioners as may be recognised for the purpose by the Central Government;
(i) three members of Parliament of whom two shall be members of the House of the People (Lok Sabha) and one shall be a
member of the Council of States (Rajya Sabha) elected respectively by the members of the House of the People and the members
of the Council of States; and
(j) the Director-General of the Corporation, ex officio.

5. Term of office of members of the Corporation.—(1) Save as otherwise expressly provided in this Act, the term of office of
members of the Corporation, other than the members referred to in clauses (a), (b), (c), (d) and (e) of Section 4 and the ex officio
member], shall be four years commencing from the date on which their appointment or election is notified:
Provided that a member of the Corporation shall, notwithstanding the expiry of the said period of four years, continue to hold
office until the appointment or election of his successor is notified.
(2) The members of the Corporation referred to in clauses (a), (b), (c), (d) and (e) of Section 4 shall hold office during the pleasure
of the Government appointing them.

6. Eligibility for re-nomination or re-election.—An outgoing member of the Corporation, the Standing Committee, or the
Medical Benefit Council shall be eligible for re-appointment or re-election, as the case may be.

7. Authentication of orders, decisions, etc.—All orders and decisions of the Corporation shall be authenticated by the signature
of the Director-General of the Corporation and all other instruments issued by the Corporation shall be authenticated by the
signature of the Director-General or such other officer of the Corporation as may be authorised by him.

8. Constitution of Standing Committee.—A Standing Committee of the Corporation shall be constituted from among its
members, consisting of—
(a) a Chairman, appointed by the Central Government;
(b) three members of the Corporation, appointed by the Central Government;
(bb) three members of the Corporation representing such three State Governments thereon as the Central Government may, by
notification in the Official Gazette, specify from time to time;
(c) eight members elected by the Corporation as follows:—
(ii) three members from among the members of the Corporation representing employers;
(iii) three members from among the members of the Corporation representing employees;
(iv) one member from among the members of the Corporation representing the medical profession; and
(v) one member from among the members of the Corporation elected by Parliament;
(d) the Director-General of the Corporation, ex officio.

9. Term of office of members of Standing Committee.—(1) Save as otherwise expressly provided in this Act, the term of office
of a member of the Standing Committee, other than a member referred to in clause (a) or clause (b) or clause (bb) of Section 8,
shall be two years from the date on which his election is notified:
Provided that a member of the Standing Committee shall, notwithstanding the expiry of the said period of two years, continue to
hold office until the election of his successor is notified:
Provided further that a member of the Standing Committee shall cease to hold office when he ceases to be a member of the
Corporation.
(2) A member of the Standing Committee referred to in clause (a) or clause (b) or clause (bb) of Section 8 shall hold office during
the pleasure of the Central Government.

10. Medical Benefit Council.—(1) The Central Government shall constitute a Medical Benefit Council consisting of—
(a) the Director General, the Employees' State Insurance Corporation, ex officio as Chairman;
(b) the Director General, Health Services, ex officio as Co- Chairman;
(c) the Medical Commissioner of the Corporation, ex officio;
(d) one member each representing each of the States (other than Union Territories)] in which this Act is in force] to be appointed
by the State Government concerned;
(e) three members representing employers to be appointed by the Central Government in consultation with such organisations of
employers as may be recognised for the purpose by the Central Government;
(f) three members representing employees to be appointed by the Central Government in consultation with such organisations of
employees as may be recognised for the purpose by the Central Government; and
(g) three members, of whom not less than one shall be a woman,
representing the medical profession, to be appointed by the Central Government in consultation with such organisations of
medical practitioners as may be recognised for the purpose by the Central Government.
(2) Save as otherwise expressly provided in this Act, the term of office of a member of the Medical Benefit Council, other than a
member referred to in any of the clauses (a) to (d) of sub-section (1), shall be four years from the date on which his appointment
is notified:
Provided that a member of the Medical Benefit Council shall, notwithstanding the expiry of the said period of four years, continue
to hold office until the appointment of his successor is notified.
(3) A member of the Medical Benefit Council referred to in clauses (b) and (d) of sub-section (1) shall hold office during the
pleasure of the Government appointing him.

11. Resignation of membership.—A member of the Corporation, Standing Committee, or the Medical Benefit Council may
resign his office by notice in writing to the Central Government and his seat shall fall vacant on the acceptance of the resignation
by that Government.
12. Cessation of membership.—(1) A member of the Corporation, the Standing Committee, or the Medical Benefit Council shall
cease to be a member of that body if he fails to attend three consecutive meetings thereof:
Provided that the Corporation, the Standing Committee or the Medical Benefit Council, as the case may be, may, subject to rules
made by the Central Government in this behalf, restore him to membership.
(2) Where in the opinion of the Central Government any person appointed or elected to represent employers, employees or the
medical profession on the Corporation, the Standing Committee or the Medical Benefit Council, as the case may be, has ceased to
represent such employers, employees or the medical profession, the Central Government may, by notification in the Official
Gazette, declare that with effect from such date as may be specified therein such person shall cease to be a member of the
Corporation, the Standing Committee or the Medical Benefit Council, as the case may be.
(3) A person referred to in clause (i) of Section 4 shall cease to be a member on becoming a Minister or Speaker or Deputy
Speaker of the House of the People or Deputy Chairman of the Council of States or when he ceases to be a member of Parliament.

13. Disqualification.—A person shall be disqualified for being chosen as or for being a member of the Corporation, the Standing
Committee or the Medical Benefit Council—
(a) if he is declared to be of unsound mind by a competent Court; or
(b) if he is an undischarged insolvent; or
(c) if he has directly or indirectly by himself or by his partner any interest in a subsisting contract with, or any work being done
for, the Corporation except as a medical practitioner or as a shareholder (not being a Director) of a company; or
(d) if before or after the commencement of this Act he has been convicted of an offence involving moral turpitude.

18. Powers of the Standing Committee.—(1) Subject to the general superintendence and control of the Corporation, the
Standing Committee shall administer the affairs of the Corporation and may exercise any of the powers and perform any of the
functions of the Corporation.
(2) The Standing Committee shall submit for the consideration and decision of the Corporation all such cases and matters as may
be specified in the regulations made in this behalf.

22. Duties of Medical Benefit Council.—The Medical Benefit Council shall—

(a) advise the Corporation and the Standing Committee on matters relating to the administration of medical benefit, the
certification for purposes of the grant of benefits and other connected matters;
(b) have such powers and duties of investigation as may be prescribed in relation to complaints against medical practitioners in
connection with medical treatment and attendance; and
(c) perform such other duties in connection with medical treatment and attendance as may be specified in the regulations.

38. All employees to be insured.—Subject to the provisions of the Act, all the employees in factories or establishments to which
this Act applies shall be insured in the manner provided by this Act.

39. Contributions.—(1) The contribution payable under this Act in respect of an employee shall comprise contribution payable
by the employer (hereinafter referred to as the employer's contribution) and contribution payable by the employee (hereinafter
referred to as the employee's contribution) and shall be paid to the Corporation.
(2) The contributions shall be paid at such rates as may be prescribed by the Central Government:
Provided that the rates so prescribed shall not be more than the rates which were in force immediately before the commencement
of the Employees' State Insurance (Amendment) Act, 1989.
(3) The wage period in relation to an employee shall be the unit in respect of which all contributions shall be payable under this
Act.
(4) The contributions payable in respect of each wage period shall ordinarily fall due on the last day of the wage period, and where
an employee is employed for part of the wage period, or is employed under two or more employers during the same wage period,
the contributions shall fall due on such days as may be specified in the regulations.
(5)(a) If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has
become due, he shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be
specified in the regulations till the date of its actual payment:
Provided that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled
bank.
(b) Any interest recoverable under clause (a) may be recovered as an arrear of land revenue or under Section 45-C to Section 45-I.
Explanation.—In this sub-section, “scheduled bank” means a bank for the time being included in the Second Schedule to the
Reserve Bank of India Act, 1934.
 The contribution as defined in Section 2(4) is a tax and not a fee. Anil Textile Industry Case, (1992) 64 FLR 856 (Raj).

40. Principal employer to pay contributions in the first instance.—(1) The principal employer shall pay in respect of every
employee, whether directly employed by him or by or through an immediate employer, both the employer's contribution and the
employee's contribution.
(2) Notwithstanding anything contained in any other enactment but subject to the provisions of this Act and the regulations, if any,
made thereunder, the principal employer shall, in the case of an employee directly employed by him (not being an exempted
employee), be entitled to recover from the employee the employee's contribution by deduction from his wages and not otherwise:
Provided that no such deduction shall be made from any wages other than such as relate to the period or part of the period in
respect of which the contribution is payable, or in excess of the sum representing the employee's contribution for the period.
(3) Notwithstanding any contract to the contrary, neither the principal employer nor the immediate employer shall be entitled to
deduct the employer's contribution from any wages payable to an employee or otherwise to recover it from him.
(4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the
employee for the purpose of paying the contribution in respect of which it was deducted.
(5) The principal employer shall bear the expenses of remitting the contributions to the Corporation.

41. Recovery of contribution from immediate employer.—(1) A principal employer, who has paid contribution in respect of an
employee employed by or through an immediate employer, shall be entitled to recover the amount of the contribution so paid (that
is to say the employer's contribution as well as employee's contribution, if any), from the immediate employer, either by deduction
from any amount payable to him by the principal employer under any contract, or as a debt payable by the immediate employer.
(1-A) The immediate employer shall maintain a register of employees employed by or through him as provided in the regulations
and submit the same to the principal employer before the settlement of any amount payable under sub-section (1).
(2) In the case referred to in sub-section (1), the immediate employer shall be entitled to recover the employee's contribution from
the employee employed by or through him by deduction from wages and not otherwise, subject to the conditions specified in the
proviso to sub-section (2) of Section 40.

43. Method of payment of contribution.—Subject to the provisions of this Act, the Corporation may make regulations for any
matter relating or incidental to the payment and collection of contributions payable under this Act and without prejudice to the
generality of the foregoing power such regulations may provide for—
(a) the manner and time of payment of contributions;
(b) the payment of contributions by means of adhesive or other stamps affixed to or impressed upon books, cards or otherwise and
regulating the manner, times and conditions in, at and
under which, such stamps are to be affixed or impressed; (bb) the date by which evidence of contributions having been paid is to
be received by the Corporation;
(c) the entry in or upon books or cards of particulars of contributions paid and benefits distributed in the case of the insured
persons to whom such books or cards relate; and
(d) the issue, sale, custody, production, inspection and delivery of books or cards and the replacement of books or cards which
have been lost, destroyed or defaced.

45-B. Recovery of contributions.—Any contribution payable under this Act may be recovered as an arrear of land revenue.

46. Benefits.—(1) Subject to the provisions of this Act, the insured

persons their dependants or the persons hereinafter mentioned, as the case may be,] shall be entitled to the following benefits,
namely—
(a) periodical payments to any insured person in case of his sickness certified by a duly appointed medical practitioner or by any
other person possessing such qualifications and experience as the Corporation may, by regulations, specify in this behalf
(hereinafter referred to as sickness benefit);
(b) periodical payments to an insured woman in case of confinement or miscarriage or sickness arising out of pregnancy,
confinement, premature birth of child or miscarriage, such woman being certified to be eligible for such payments by an authority
specified in this behalf by the regulations (hereinafter referred to as maternity benefit);
(c) periodical payments to an insured person suffering from disablement as a result of an employment injury sustained as an
employee under this Act and certified to be eligible for such payments by an authority specified in this behalf by the regulations
(hereinafter referred to as disablement benefit);
(d) periodical payments to such dependants of an insured person who dies as a result of an employment injury sustained as an
employee under this Act, as are entitled to compensation under this Act (hereinafter referred to as dependants' benefit).
(e) medical treatment for and attendance on insured persons (hereinafter referred to as medical benefit); and
(f) payment to the eldest surviving member of the family of an insured person who has died, towards the expenditure on the
funeral of the deceased insured person, or, where the insured person did not have a family or was not living with his family at the
time of his death, to the person who actually incurs the expenditure on the funeral of the deceased insured person (to be known as
funeral expenses):
Provided that the amount of such payment shall not exceed such amount as may be prescribed by the Central Government and the
claim for such payment shall be made within three months of the death of the insured person or within such extended period as the
Corporation or any officer or authority authorised by it in this behalf may allow.
(2) The Corporation may, at the request of the appropriate Government, and subject to such conditions as may be laid down in the
regulations, extend the medical benefits to the family of an insured person.

49. Sickness benefit.—The qualification of a person to claim sickness benefit, the conditions subject to which such benefit may
be given, the rates and period thereof shall be such as may be prescribed by the Central Government.

50. Maternity benefit.—The qualification of an insured woman to claim maternity benefit, the conditions subject to which such
benefit may be given, the rates and period thereof shall be such as may be prescribed by the Central Government.

51. Disablement benefit.—Subject to the provisions of this Act

(a) a person who sustains temporary disablement for not less than three days (excluding the day of accident), shall be entitled to
periodical payment at such rates and for such period and subject to such conditions as may be prescribed by the Central
Government;
(b) a person who sustains permanent disablement, whether total or partial, shall be entitled to periodical payment at such rates and
for such period and subject to such conditions as may be prescribed by the Central Government.

52-A. Occupational disease.—(1) If an employee employed in any employment specified in Part A of the Third Schedule
contracts any disease specified therein as an occupational disease peculiar to that employment, or if an employee employed in the
employment specified in Part B of that Schedule for a continuous period of not less than six months contracts any disease
specified therein as an occupational disease peculiar to that employment or if an employee employed in any employment specified
in Part C of that Schedule for such continuous period as the Corporation may specify in respect of each such employment,
contracts any disease specified therein as an occupational disease peculiar to that employment, the contracting of the disease shall,
unless the contrary is proved, be deemed to be an “employment injury” arising out of and in the course of employment.
(2)(i) Where the Central Government or a State Government, as the case may be, adds any description of employment to the
employments specified in Schedule III to the Workmen's Compensation Act, 1923 (8 of 1923) by virtue of the powers vested in it
under sub-section (3) of Section 3 of the said Act, the said description of employment and the occupational diseases specified
under that sub-section as peculiar to that description of employment shall be deemed to form part of the Third Schedule.
(ii) Without prejudice to the provisions of clause (i), the Corporation after giving, by notification in the Official Gazette, not less
than three months' notice of its intention so to do, may by a like notification, add any description of employment to the
employments specified in the Third Schedule and shall specify in the case of employments so added the diseases which shall be
deemed for the purposes of this section to be occupational diseases peculiar to those employments respectively and thereupon the
provisions of this Act shall apply, as if such diseases had been declared by this Act to be occupational diseases peculiar to those
employments.
(3) Save as provided by sub-sections (1) and (2), no benefit shall be payable to an employee in respect of any disease unless the
disease is directly attributable to a specific injury by accident arising out of and in the course of his employment.
(4) The provisions of Section 51-A shall not apply to the cases to which this section applies.

60. Benefit not assignable or attachable.—(1) The right to receive any payment of any benefit under this Act shall not be
transferable or assignable.
(2) No cash benefit payable under this Act shall be liable to attachment or sale in execution of any decree or order of any Court.

61. Bar of benefits under other enactments.—When a person is entitled to any of the benefits provided by this Act, he shall not
be entitled to receive any similar benefit admissible under the provisions of any other enactment.

62. Persons not to commute cash benefits.—Save as may be provided in the regulations, no person shall be entitled to commute
for a lump sum any disablement benefit admissible under this Act.

63. Persons not entitled to receive benefit in certain cases.—Save as may be provided in the regulations, no person shall be
entitled to sickness benefit or disablement benefit for temporary disablement on any day on which he works or remains on leave
or on a holiday in respect of which he receives wages or on any day on which he remains on strike.

64. Recipients of sickness or disablement benefit to observe conditions.—A person who is in receipt of sickness benefit or
disablement benefit (other than benefit granted on permanent disablement)—
(a) shall remain under medical treatment at a dispensary, hospital, clinic or other institution provided under this Act and shall
carry out the instructions given by the medical officer or medical attendant in charge thereof;
(b) shall not while under treatment do anything which might retard or prejudice his chances of recovery;
(c) shall not leave the area in which medical treatment provided by this Act is being given, without the permission of the medical
officer, medical attendant or such other authority as may be specified in this behalf by the regulations;
(d) shall allow himself to be examined by any duly appointed medical officer or other person authorised by the Corporation in this
behalf.

65. Benefits not to be combined.—(1) An insured person shall not be entitled to receive for the same period—
(a) both sickness benefit and maternity benefit; or
(b) both sickness benefit and disablement benefit for temporary disablement; or
(c) both maternity benefit and disablement benefit for temporary disablement.
(2) Where a person is entitled to more than one of the benefits mentioned in sub-section (1), he shall be entitled to choose which
benefit he shall receive.

74. Constitution of Employees' Insurance Court.—(1) The State Government shall, by notification in the Official Gazette,
constitute an Employees' Insurance Court for such local area as may be specified in the notification.
(2) The Court shall consist of such number of Judges as the State Government may think fit.
(3) Any person who is or has been a judicial officer or is a legal practitioner of five years' standing shall be qualified to be a Judge
of the Employees' Insurance Court.
(4) The State Government may appoint the same Court for two or more local areas or two or more Courts for the same local area.
(5) Where more than one Court has been appointed for the same local area, the State Government may, by general or special
order, regulate the distribution of business between them.

75. Matters to be decided by Employees' Insurance Court.—(1) If any question or dispute arises as to—
(a) whether any person is an employee within the meaning of this Act or whether he is liable to pay the employee's contribution,
or
(b) the rate of wages or average daily wages of an employee for the purposes of this Act, or
(c) the rate of contribution payable by a principal employer in respect of any employee, or
(d) the person who is or was the principal employer in respect of any employee, or
(e) the right of any person to any benefit and as to the amount and duration thereof, or
(ee) any direction issued by the Corporation under Section 55- A on a review of any payment of dependants' benefits, or,
(g) any other matter which is in dispute between a principal employer and the Corporation, or between a principal employer and
an immediate employer, or between a person and the Corporation or between an employee and a principal or immediate employer,
in respect of any contribution or benefit or other dues payable or recoverable under this Act, or any other matter required to be or
which may be decided by the Employees' Insurance Court under this Act, such question or dispute subject to the provisions of
sub-section (2- A) shall be decided by the Employees' Insurance Court in accordance with the provisions of this Act.
(2)Subject to the provisions of sub-section (2-A), the following claims shall be decided by the Employees' Insurance Court,
namely,—
(a) claim for the recovery of contributions from the principal employer;
(b) claim by a principal employer to recover contributions from any immediate employer;
(d) claim against a principal employer under Section 68;
(e) claim under Section 70 for the recovery of the value or amount of the benefits received by a person when he is not lawfully
entitled thereto; and
(f) any claim for the recovery of any benefit admissible under this Act.
(2-A) If in any proceedings before the Employees' Insurance Court a disablement question arises and the decision of a medical
board or a medical appeal tribunal has not been obtained on the same and the decision of such question is necessary for the
determination of the claim or question before the Employees' Insurance Court, that Court shall direct the Corporation to have the
question decided by this Act and shall thereafter proceed with the determination of the claim or question before it in accordance
with the decision of the medical board or the medical appeal tribunal, as the case may be, except where an appeal has been filed
before the Employees' Insurance Court under sub -section (2) of Section 54-A in which case the Employees' Insurance Court may
itself determine all the issues arising before it.
(2-B) No matter which is in dispute between a principal employer and the Corporation in respect of any contribution or any other
dues shall be raised by the principal employer in the Employees' Insurance Court unless he has deposited with the Court fifty per
cent of the amount due from him as claimed by the Corporation:
Provided that the Court may, for reasons to be recorded in writing waive or reduce the amount to be deposited under this sub-
section.
(3) No civil court shall have jurisdiction to decide or deal with any question or dispute as aforesaid or to adjudicate on any liability
which by or under this Act is to be decided by a medical board, or by a medical appeal tribunal or by the Employees' Insurance
Court.

78. Powers of Employees' Insurance Court.—(1) The Employees' Insurance Court shall have all the powers of a civil court for
the purposes of summoning and enforcing the attendance of witnesses, compelling the discovery and production of documents and
material objects, administering oath and recording evidence and such Court
shall be deemed to be a civil court within the meaning of Section 195 and Chapter XXVI of the Code of Criminal Procedure,
1973.
(2) The Employees' Insurance Court shall follow such procedure as may be prescribed by rules made by the State Government.
(3) All costs incidental to any proceeding before an Employees' Insurance Court shall, subject to such rules as may be made in this
behalf by the State Government, be in the discretion of the Court.
(4) An order of the Employees' Insurance Court shall be enforceable as if it were a decree passed in a suit by a civil court.

81. Reference to High Court.—An Employees' Insurance Court may submit any question of law for the decision of the High
Court and if it does so, shall decide the question pending before it in accordance with such decision.

82. Appeal.—(1) Save as expressly provided in this section, no appeal shall lie from an order of an Employees' Insurance Court.
(2) An appeal shall lie to the High Court from an order of an Employees' Insurance Court if it involves a substantial question of
law.
(3) The period of limitation for an appeal under this section shall be sixty days.
(4) The provisions of Sections 5 and 12 of the Limitation Act, 1963 (36 of 1963), shall apply to appeals under this section.

EMPLOYEES’ PROVIDENT FUND, 1952

Act is a social security legislation. The amount of provident fund is payable in lump sum. Balbir Kaur v. Steel Authority of India
Ltd., (2000) 6 SCC 493 : 2000 SCC (L&S) 767.

Nature of.—The Act is a social welfare legislation. Otis Elevator Employees' Union S. Reg. v. Union of India, (2003) 12 SCC
68 : 2004 SCC (L&S) 988.

Since this Act is a social welfare legislation intended to protect the interest of a weaker section of the society i.e. the workers
employed in factories and other establishments, it is imperative for the courts to give a purposive interpretation to the provisions
contained therein keeping in view the Directive Principles of State Policy embodied in Articles 38 and 43 of the Constitution,
Maharashtra State Cooperative Bank Ltd. v. Provident Fund Commr., (2009) 10 SCC 123 : (2009) 2 SCC (L&S) 743.
It is a social welfare legislation, hence, it should be given liberal and purposive interpretation keeping in view provisions of
Articles 38 and 43 of Constitution, Employees Provident Fund Commr. v. Official Liquidator, (2011) 10 SCC 727.

Object.—The object of this Act is to provide security to workmen in organised industries in absence of any social security
scheme prevalent in country. Further held, object of excluding infancy period of five years (later reduced to three years) from
rigours of Act was only to provide new establishments, a period to establish their business and not to permit different routes to be
created for evading liability under the Act, Shree Vishal Printers Ltd. v. Provident Fund Commr., (2019) 9 SCC 508.

Operation of the statute.—The operation of the statute does not depend on any decision being taken by the authorities under the
statute. It depends on its own provisions. Kunhipaly v. R.P.F. Commr., Trivandrum, (1966) 1 LLJ 642 (Ker HC).

Scope of the Act.—Section 1(3)(b) empowers the Central Government to apply the Act to all trading or commercial
establishments, whether such establishment are factories or not. Varjivandas Hirji & Co. v. Regional P.F. Commr., (1968) 2 LLJ
744 (Bom).

Section 2 (aa) “authorised officer” means the Central Provident Fund Commissioner, Additional Central Provident Fund
Commissioner, Deputy Provident Fund Commissioner, Regional Provident Fund Commissioner or such other officer as may be
authorised by the Central Government, by notification in the Official Gazette;

(b) “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages
in either case] in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does
not include—
(i) the cash value of any food concession;
(ii) any 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), house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the
employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer.

(c) “contribution” means a contribution payable in respect of a member under a Scheme or the contribution payable in respect of
an employee to whom the Insurance Scheme applies;

(d) “controlled industry” means any industry the control of which by the Union has been declared by a Central Act to be
expedient in the public interest;

(h) “Fund” means the provident fund established under a Scheme;

(i-a) “Insurance Fund” means the Deposit-linked Insurance Fund established under sub-section (2) of Section 6-C;

(i-b) “Insurance Scheme” means the Employees' Deposit-linked Insurance Scheme framed under sub-section (1) of Section 6- C

(k-A) “Pension Fund” means the Employees' Pension Fund established under sub-section (2) of Section 6-A

(ll) “superanuation”, in relation to an employee, who is the member of the Pension Scheme means the attainment, by the said
employee, of the age of fifty-eight years.

5. Employees' Provident Fund Schemes-

1. The Central Government may create a scheme called the Employees' Provident Fund Scheme, announced in the Official
Gazette. This scheme will establish provident funds for employees or specific classes of employees and will specify
which establishments or classes of establishments the scheme will apply to. A Fund will be established as soon as
possible after the scheme is framed, in accordance with this Act and the scheme.
1-A. The Fund will be vested in and administered by the Central Board established under Section 5-A.
1-B. Subject to the provisions of this Act, the scheme created under subsection (1) may include any of the matters listed in
Schedule II.
2. The scheme created under subsection (1) may specify that its provisions will take effect either prospectively or
retrospectively from a date mentioned in the scheme.

5-A. Central Board.—

 The Central Government may establish a Board of Trustees, called the Central Board, for the regions covered by this Act,
through a notification in the Official Gazette. The Board will include the following members:
 A Chairman and Vice-Chairman appointed by the Central Government.
 The Central Provident Fund Commissioner, ex officio.
 Up to five officials appointed by the Central Government.
 Up to fifteen representatives from State Governments as specified by the Central Government.
  Ten employer representatives from applicable establishments, appointed by the Central Government after consulting
recognized employer organizations.
 Ten employee representatives from applicable establishments, appointed by the Central Government after consulting
recognized employee organizations.
 The terms, conditions, and procedures for appointing Central Board members and conducting meetings will be specified in the
Scheme.
 The Central Board will administer the fund vested in it as per the provisions of Sections 6-A and 6-C and as specified in the
Scheme.
 The Central Board will also perform other functions required by the Scheme, the Pension Scheme, and the Insurance Scheme.
 The Central Board must maintain proper accounts of its income and expenditure in the form and manner specified by the
Central Government, in consultation with the Comptroller and Auditor-General of India.
 The Comptroller and Auditor-General of India will audit the Central Board's accounts annually. Any expenses related to this
audit will be paid by the Central Board.
 The Comptroller and Auditor-General of India and any appointed auditors have the same authority and privileges as they do in
government account audits. They can demand the production of books, accounts, vouchers, documents, and papers and inspect
any Central Board offices.
 The audited accounts, along with the audit report certified by the Comptroller and Auditor-General or any appointed auditor,
will be forwarded to the Central Board. The Central Board will then send these documents, along with its comments, to the
Central Government.
 The Central Board must submit an annual report of its work and activities to the Central Government. The Central Government
will place a copy of this report, along with the audited accounts, the audit report, and the Central Board's comments, before each
House of Parliament.

6-A. Employees' Pension Scheme

 The Central Government can create a scheme called the Employees' Pension Scheme, announced in the Official Gazette, to
provide:
 Superannuation, retiring, or permanent total disablement pensions to employees of establishments covered by this Act.
 Pensions for widows, widowers, children, or orphans of such employees.
 After creating the Pension Scheme, a Pension Fund will be established. Payments into this fund will come from:
 A portion of the employer's contribution under Section 6, up to 8.33% of the employee's basic wages, dearness
allowance, and retaining allowance, as specified in the Pension Scheme.
 Contributions from employers of exempted establishments under Section 17(6).
 The net assets of the Employees' Family Pension Fund at the time of establishing the Pension Fund.
 Any additional sums specified by the Central Government after parliamentary approval.
 When the Pension Fund is established, the Family Pension Scheme will cease to operate. All assets and liabilities of the ceased
scheme will transfer to the Pension Fund. Beneficiaries of the ceased scheme will receive benefits from the Pension Fund, at least
equal to what they were entitled to under the ceased scheme.
 The Central Board will administer the Pension Fund as specified in the Pension Scheme.
 The Pension Scheme may include any matters listed in Schedule III of this Act.
 Provisions of the Pension Scheme can be made effective either prospectively or retrospectively from a date specified in the
scheme.
 Once the Pension Scheme is created, it must be presented to both Houses of Parliament for a total of 30 days. If both Houses
agree on modifications or annulment within the specified time, the scheme will take effect in the modified form or be nullified.
However, any actions taken under the original scheme before modifications or annulment will remain valid.

6-C. Employees' Deposit-linked Insurance Scheme-

1. The Central Government can create a scheme called the Employees' Deposit-linked Insurance Scheme, announced in the
Official Gazette, to provide life insurance benefits to employees of establishments covered by this Act.
2. After creating the Insurance Scheme, a Deposit-linked Insurance Fund will be established. Employers must contribute to
this fund for each employee, up to 1% of the employee's basic wages, dearness allowance, and retaining allowance, as
specified by the Central Government.
Explanation: For this subsection, 'dearness allowance' and 'retaining allowance' have the same meanings as in Section 6.
3. The employer must also pay additional amounts into the Insurance Fund, not exceeding one-fourth of their contribution
under subsection (2), as determined by the Central Government, to cover administrative expenses of the Insurance
Scheme, excluding the cost of benefits provided by the scheme.
4. The Insurance Fund will be managed by the Central Board in a manner specified in the Insurance Scheme.
5. The Insurance Scheme may include any matters listed in Schedule IV of this Act.
6. Provisions of the Insurance Scheme can be made effective either prospectively or retrospectively from a date specified in
the scheme.

EPS (Employee Pension Scheme)

EPS, or the Employee Pension Scheme, launched in 1995 to help employees in organised sectors save for retirement. All
employees eligible for the EPF scheme automatically qualify for EPS.
The Employees' Pension Scheme is a social security initiative offered by the Employees’ Provident Fund Organisation (EPFO).
This scheme aims to help employees in the organised sector, providing a pension post-retirement at 58. To avail benefits, an
employee must have completed at least 10 years of service. Both existing and new EPF members are eligible for EPS scheme.

Both the employer and the employee contribute 12% of the employee's pay, with the entire employee share going to EPF. Out of
the employer's share, 8.33% go towards Employees’ Pension Scheme (EPS), while 3.67% is allocated to EPF every month.

Benefits of Employee Pension Scheme

 Eligibility for pension benefits start when a member retires at the age of 58 years. A minimum service period of 10 years
by the age of 58 is mandatory for availing pension benefits.
 If a member can't complete 10 years of service before turning 58, they can withdraw the entire sum at the age of 58 years
using Form 10C. Monthly pension benefits are not available in this case.
 If an EPFO member becomes permanently disabled, they get a monthly pension, no matter their service period.
 In case of the member's unfortunate demise, it offers pension benefits to the member's family, whether it happens before
or after the pensionable service period.

How to calculate your pension under EPS

The pension amount depends on member’s pensionable salary and service duration. Here is the formula for calculating monthly
pension income:

Member’s Monthly Pension = (Pensionable salary x

Pensionable service)/70

Eligibility criteria applicable for EPS

1. Individual must be an EPFO member.

2. To get early pension, you should be at least 50 years old, and for regular pension, you need to be 58 years old.
3. You must complete at least 10 years of service to avail benefits of EPS.

Types of pensions in the Employees' Pension Scheme

The EPS 95 pension scheme offers various pensions, including those for widows, children, and orphans, providing support to the
deceased member's family.
1. Child pension
Surviving children receive a child pension, in addition to the monthly widow pension, until they turn 25. The amount is 25% of
the widow pension, and a maximum of two children can receive this benefit.
2. Widow pension
Widows are eligible for a pension under the Widow or Vridha pension, which continues until their death or remarriage. If there
are more than one widow, the pension is payable to the eldest widow.
3. Reduced pension
If an EPFO member completes 10 years of service and is between 50 and 58 years old, they can opt for early pension. However, If
the member is below 58 years of age, the pension amount is reduced by 4% for every year.
4. Orphan pension
If the member passes away without a surviving widow, the member's children can receive a monthly orphan pension, which is
75% of the monthly widow pension value. Up to 2 children can benefit from the orphan pension.

Types of pensions forms under EPS in India

1. Form 10C: Used for withdrawal funds before completing 10 years of service.
2. Form 10D: Used for monthly pension withdrawal after reaching 50 years of age and for other pensions like monthly widow
pension, child pension, etc.
3. Non-remarriage certificate: It is used to declares that the widow/ widower has not remarried.

THE PAYMENT OF GRATUITY ACT, 1972

► Nature and Object of.—The Act is a piece of welfare legislation and its provisions are in the nature of social-security
measures like employment insurance, provident fund and pension, Ahmedabad Pvt. Primary Teachers' Assn. v. Administrative
Officer, (2004) 1 SCC 755.
Payment of Gratuity Act, 1972 is a social welfare legislation, introduced for purpose of social control and necessitated social
interest. Aim of the act to achieve uniformity and reasonable degree of certainty, Indian Commerce and Industries Co. Ltd. v.
B.V.S.S. Mani, (2012) 1 MWN (Civil) 419 (Mad).

► Applicability.—Payment of Gratuity Act, 1972 must prevail over Rules on Payment of Gratuity framed by employer, Union
Bank of India v. C.G. Ajay Babu, (2018) 9 SCC 529.

► Liability of employer.—The payment of gratuity under the Payment of Gratuity Act, 1972, is the liability of the employer,
Empress Mills v. First Labour Court, (2011) 4 Mah LJ 753 (Bom).

Object.—Object of the Act is to ensure that a workman is rewarded for the honest, efficient and faithful service that he renders for
his employer's benefit. Any construction placed on the words and expressions used in this statute must advance the policy of the
Act which is the payment of gratuity to workman employed for not less than five years with an employer. Thus any provision
which seeks to impede this right of the workman must be construed by applying the principle of noscitur a sociis, Jaya Hind
Industries Ltd. v. Vilas Vithalrao Takale, (2011) 3 Mah LJ 199 (Bom).

 An educational institution is an establishment under Section 1(3)(b), Ramgopal v. Mahesh Shikshan Sansthan, Jodhpur,
(1997)

 U.P. Co-operative Union is an ‘establishment’, U.P. Co-operative Union v. Prabhu Dayal Srivastava, (1988)

 A Municipal Board is an establishment, Municipal Board v. Controlling Authority, (1987)

 A temple is an establishment, Administrator, Shri Jagannath Temple Puri v. Jagannath Padhi, 1992

 A solicitors' firm is not a commercial establishment, Dorab Pirojsha Siganporia v. Appellate Authority of I.T., (1986)

 High Court Bar Association is not an establishment under Section 1(3)(c), High Court Bar Association v. Dy. Labour
Commissioner, Allahabad, (2005).

Section 2 (b) “completed year of service” means continuous service for one year.
(c) “continuous service” means continuous service as defined in Section 2-A.
(e) “employee” means any person (other than an apprentice) who is employed for 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, shop or other establishment to which this Act applies, but does not include any such person
who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules
providing for payment of gratuity.
(r) “superannuation”, in relation to an employee, means the attainment by the employee of such age as is fixed in the contract or
conditions of service as the age on the attainment of which the employee shall vacate the employment.
(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 and which are paid or are payable to him in cash and includes dearness allowance but does not
include any bonus, commission, house rent allowance, overtime wages and any other allowance.

2-A. Continuous service.—For the purposes of this Act,—

1. An employee is considered to be in continuous service for a period if they have been in uninterrupted service during that period.
This includes interruptions due to sickness, accident, leave, absence without leave (unless officially recorded as a break in
service), lay-off, strike, lock-out, or cessation of work not caused by the employee's fault. This applies whether the service was
uninterrupted or interrupted, before or after the commencement of this Act.

2. If an employee (other than those in a seasonal establishment) is not in continuous service under the definition in clause (1) for
one year or six months, they are deemed to be in continuous service if:

(a) For a period of one year, if during the twelve months prior to the calculation date, the employee has worked:
- At least 190 days if employed underground in a mine or in an establishment operating less than six days a week.
- At least 240 days in any other case.

(b) For a period of six months, if during the six months prior to the calculation date, the employee has worked:
- At least 95 days if employed underground in a mine or in an establishment operating less than six days a week.
- At least 120 days in any other case.

Explanation: For clause (2), the days an employee is considered to have worked include:
- Days they were laid off under an agreement, permitted by standing orders, or applicable laws.
- Days of leave with full wages earned in the previous year.
 - Days absent due to temporary disablement caused by a work-related accident.
- Maternity leave for female employees, within the period specified by the Central Government.

3. If an employee in a seasonal establishment does not meet the continuous service definition in clause (1) for one year or six
months, they are deemed to be in continuous service if they have worked at least 75% of the days the establishment was
operational during that period.

 Public Holidays and Sundays have to be included in computing the period of employment, D.B.R. Mills v. Appellate
Authority, (1985)
 Mere absence from duty without leave cannot be said to result in breach of continuity of service for the purpose of the
Act, Kothari Industrial Corpn. v. Appellate Authority, (1998)

3. Controlling authority.—The appropriate Government, may, by notification, appoint any officer to be a controlling authority,
who shall be responsible for the administration of this Act and different controlling authorities may be appointed for different
areas.

4. Payment of gratuity
1. Eligibility and Conditions:
Gratuity is payable to an employee after completing at least five years of continuous service, upon:
(a) Superannuation.
(b) Retirement or resignation.
(c) Death or disablement due to an accident or disease.

Exceptions:
- The five-year continuous service requirement does not apply in cases of death or disablement.
- In the event of an employee's death, gratuity is paid to the nominee or heirs. If a nominee or heir is a minor, their share is
deposited with the controlling authority and invested until they reach adulthood.

Definition:
- Disablement refers to a condition that prevents an employee from performing their previous work.

2. Calculation of Gratuity:
- For every completed year of service or part thereof exceeding six months, the employer pays gratuity at the rate of fifteen days'
wages based on the last drawn wages.

Special Cases:
- For piece-rated employees, daily wages are computed based on the average wages of the last three months, excluding
overtime.
- For employees in seasonal establishments, gratuity is paid at the rate of seven days' wages for each season.

Explanation:
- For monthly rated employees, fifteen days' wages are calculated by dividing the last drawn monthly wages by twenty-six and
multiplying by fifteen.

3. Maximum Limit:
- The gratuity amount payable cannot exceed the limit specified by the Central Government.

4. Gratuity for Employees with Reduced Wages:

- If an employee is employed on reduced wages after disablement, their wages before disablement are considered for the
preceding period, and the reduced wages are considered for the subsequent period.

5. Right to Better Terms:

- This section does not affect an employee's right to better gratuity terms under any award, agreement, or contract with the
employer.

6. Forfeiture of Gratuity:
- Gratuity can be forfeited partially or fully under certain conditions:
(a) If terminated due to an act, omission, or negligence causing damage or loss to the employer's property, gratuity can be
forfeited to the extent of the damage or loss.
(b) Gratuity may be wholly or partially forfeited if:
(i) Terminated for riotous or disorderly conduct or any act of violence.
(ii) Terminated for an act constituting an offence involving moral turpitude, provided it was committed during the course of
employment.

 Gratuity under the Payment of Gratuity Act, 1972 is no longer in the realm of charity but a statutory right given to the
employee, Balbir Kaur v. Steel Authority of India Ltd., (2000) 6 SCC 493 : 2000 SCC (L&S) 767.
  An employee will be entitled to gratuity only when he has been in the uninterrupted service for certain period, Ramappa
Bhimappa v. Phoenix Mills Ltd., (1999) 81 FLR 151 (Bom).

 Gratuity cannot be forfeited unless the quantum of loss or damage caused to management was established by evidence,
Bharat Motors, N.R. Private, Ltd. v. Presiding Officer, Labour Court, (1998) 4 LLN 323 : (1998) 1 LLJ 907 (Mad).

7. Determination of the amount of gratuity

1. Application for Gratuity:
o A person eligible for gratuity or someone authorized by them must send a written application to the employer
within the prescribed time and form for payment of gratuity.
2. Employer's Responsibility:
o The employer must determine the gratuity amount and notify the recipient and the controlling authority as soon
as it becomes payable, regardless of whether an application has been made.
3. Payment Timeline:
o The employer must arrange to pay the gratuity amount within thirty days from the date it becomes payable.
3-A. Interest on Delayed Payment:
 If the employer fails to pay within the specified period, they must pay simple interest from the date the gratuity becomes
payable until the date it is paid. The interest rate will not exceed the rate notified by the Central Government for long-
term deposits. No interest is payable if the delay is due to the employee's fault and the employer has obtained written
permission from the controlling authority for the delay.
4. Dispute Resolution:
o (a) If there is a dispute about the amount of gratuity or its admissibility, or who is entitled to receive it, the
employer must deposit the admitted amount with the controlling authority.
o (b) The employer, employee, or any other person raising the dispute may apply to the controlling authority to
resolve it.
o (c) The controlling authority, after due inquiry and giving the parties a reasonable opportunity to be heard, will
determine the dispute and direct the employer to pay any additional amount found to be payable.
o (d) The controlling authority will pay the deposited amount, including any excess, to the entitled person.
o (e) The controlling authority will pay the deposited amount to the applicant if they are the employee or, if not, to
the nominee or guardian of the nominee or heir if there is no dispute about their right to receive it.
5. Inquiry Powers:
o The controlling authority has the same powers as a court under the Code of Civil Procedure, 1908, including:
 (a) Enforcing attendance and examining on oath.
 (b) Requiring document discovery and production.
 (c) Receiving evidence on affidavits.
 (d) Issuing commissions for witness examination.
6. Judicial Proceedings:
o Any inquiry under this section is considered a judicial proceeding within the meaning of Sections 193, 228, and
196 of the Indian Penal Code, 1860.
7. Appeals:
o A person aggrieved by an order under sub-section (4) may appeal to the appropriate Government or specified
authority within sixty days of receiving the order. This period may be extended by another sixty days if
sufficient cause is shown.
o An employer's appeal will not be admitted unless they produce a certificate of deposit from the controlling
authority or deposit the required amount with the appellate authority at the time of appealing.
8. Appellate Decision:
o The appropriate Government or appellate authority will hear the parties and may confirm, modify, or reverse the
controlling authority's decision.

8. Recovery of gratuity.—
If the amount of gratuity payable under this Act is not paid by the employer within the prescribed time to the person entitled
thereto, the following procedure will be followed:
1. Application to the Controlling Authority:
o The aggrieved person must make an application to the controlling authority for the recovery of the unpaid
gratuity amount.
2. Issuance of Certificate:
o Upon receiving the application, the controlling authority will issue a certificate for the unpaid gratuity amount to
the Collector. This certificate will include compound interest at a rate specified by the Central Government from
the date of expiry of the prescribed payment time.
3. Recovery and Payment:
o The Collector will recover the gratuity amount and the specified compound interest as arrears of land revenue.
The recovered amount will then be paid to the person entitled to it.
4. Employer’s Opportunity to Show Cause:
o Before issuing the certificate, the controlling authority must provide the employer with a reasonable opportunity
to show cause against the issuance of such a certificate.
 5. Limit on Interest Amount:
o The amount of interest payable under this section shall, in no case, exceed the amount of gratuity payable under
this Act.

11. Cognizance of offences.—(1) No court shall take cognizance of any offence punishable under this Act save on a complaint
made by or under the authority of the appropriate Government:
Provided that where the amount of gratuity has not been paid, or recovered, within six months from the expiry of the prescribed
time, the appropriate Government shall authorise the controlling authority to make a complaint against the employer, whereupon
the controlling authority shall, within fifteen days from the date of such authorisation, make such complaint to a Magistrate having
jurisdiction to try the offence.
(2) No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable
under this Act.
 Pension and gratuity are not any bounty to be distributed by Government to its employees on retirement but are valuable
rights in their hands, and any culpable delay in disbursement thereof must be visited with penalty of payment of interest,
State of U.P. v. Dhirendra Pal Singh, (2017)
 The expression “determine the amount of gratuity” includes the determination of any liability to pay gratuity, Madar
Union Sanitorium and Hospital v. M.B. Sathe, (1986)

THE CODE ON SOCIAL SECURITY, 2020

An Act to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and
workers either in the organised or unorganised or any other sectors and for matters connected therewith or incidental thereto.

Object and Reason behind enactment-

 Social security encompasses protective measures extended to employees, including unorganized workers, gig workers,
and platform workers. Its purpose is to ensure their access to healthcare and provide income security, especially in
situations such as old age, unemployment, sickness, invalidity, work-related injuries, maternity, or the loss of a
breadwinner. These rights and schemes are conferred under the Code on Social Security, 2020. The Indian Parliament
has made a significant move to streamline the country's labour codes by consolidating the existing 44 labour codes into
four comprehensive ones. These were enacted in 2020 and are known as the Code on Wages, 2019 ; Industrial Relations
Code, 2020; Code on Social Security, 2020; and Code on Occupational Safety, Health and Working Conditions, 2020.
 The Code on Social Security, 2020 aims to amend and consolidate laws related to social security in order to extend social
security benefits to all employees and workers, regardless of whether they are in the organised or unorganised or any
other sectors.
 Social security is a set of measures designed to protect workers by ensuring healthcare and income security in the event
of certain contingencies such as old age, maternity, or accidents.
 This act brings together nine central labour enactments related to social security.
 These include The Employees’ Compensation Act, 1923, The Employees’ State Insurance Act, 1948, The Employees’
Provident Funds and Miscellaneous Provisions Act, 1952, The Employment Exchanges (Compulsory Notification of
Vacancies) Act, 1959, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972, The Cine Workers Welfare
Fund Act, 1981, The Building and Other Construction Workers Welfare Cess Act, 1996, and the Unorganised Workers’
Social Security Act 2008.
 The Code broadens the definition of employees to include inter-state migrant workers, construction workers, film
industry workers and platform workers. It also provides for the registration of all three categories of workers –
unorganised workers, gig workers and platform workers.
 The Code also provides for the establishment of a 'National Social Security Board'. The Board's functions include
recommending schemes to the central government, monitoring the schemes for different types of workers, and advising
the Government on matters relating to the administration of the Code, among others.
 The Code is more than just a consolidation of previous legislations. It expands coverage, extends benefits to all workers
in the organised/unorganised sectors, introduces the concept of providing maximum benefits under minimum
governance, and reflects uniformity across the four labour codes.
Expanded coverage:
o The emergence of new-age businesses based on e-commerce has led to the creation of new types of jobs. Some workers
in these new businesses were not covered under any of the existing laws. The new Social Security Code broadens the
scope of social security by providing for the registration of all types of workers, including gig workers and platform
workers. The recognition of non-conventional forms of work outside the scope of the traditional employer-employee
arrangement is a positive step as there is a global trend towards self-employment, gig work, and platform work.
o Gig workers will now be eligible for life and disability coverage, maternity benefits, pension, etc.
o The Code expands coverage by including the unorganised sector, fixed-term employees, inter-state migrant workers, etc.,
in addition to contract employees.
o In terms of coverage, the scope has been significantly expanded.
o The Social Security Code, 2020 brings these workers under the ambit of social security schemes, including life insurance
and disability insurance, health and maternity benefits, provident fund, and skill up-gradation, among others.
Protecting the rights of fixed-term employees:
 o The code expands coverage to include fixed-term contract workers who will now be eligible for gratuity; previously, only
permanent employees were covered.
o Gratuity is given upon superannuation, retirement, resignation, death or disablement due to accident or disease,
termination of a contract under fixed-term employment, or on the occurrence of any event notified by the central
government.
o With the inclusion of 'expiration of fixed-term employment', fixed-term contract workers will become eligible for
gratuity, which is a positive development.
Penal provisions:
o The efficacy of a legislation lies in the ease of compliances as well as in the penalties that deter non-compliance. The
Code incorporates both these aspects.
o The Code contains penal provisions in case of failure to pay gratuity to employees or a failure to pay the contributions.
Digitisation:
o The Act mandates that all records and returns must be maintained electronically. The digitisation of data will facilitate
information exchange among various stakeholders/funds set up by the Government, ensure compliance, and facilitate
governance.
Uniform definitions:
o The Code brings uniformity in determining wages for the purpose of social security benefits, eliminating ambiguity in the
current regulations.
o A broad definition for wage has been provided. Specific exclusions with ceilings have been provided to discourage
inappropriate structuring of salaries to minimise social security benefits.
Consultative approach:
o The Code introduces a facilitating approach by the authorities. Unlike the existing role of inspectors, the Code provides
for an enhanced role of inspector-cum-facilitator whereby employers can seek support and advice to enhance
compliances.

2(78) "social security" means the measures of protection afforded to employees, unorganised workers, gig workers and platform
workers to ensure access to health care and to provide income security, particularly in cases of old age, unemployment, sickness,
invalidity, work injury, maternity or loss of a breadwinner by means of rights conferred on them and schemes framed, under this
Code.

2(79) "Social Security Organisation" means any of the following organisations established under this Code, namely:—
(a) the Central Board of Trustees of Employees' Provident Fund constituted under section 4;
(b) the Employees' State Insurance Corporation constituted under section 5;
(c) the National Social Security Board for Unorganised Workers constituted under section 6;
(d) the State Unorganised Workers' Social Security Board constituted under section 6;
(e) the State Building and other Construction Workers' Welfare Boards constituted under section 7; and
(f) any other organisation or special purpose vehicle declared to be the social security organisation by the Central Government.

2(35) "gig worker" means a person who performs work or participates in a work arrangement and earns from such activities
outside of traditional employer-employee relationship.

2(27) "employer" means a person who employs, whether directly or through any person, or on his behalf, or on behalf of any
person, one or more employees in his establishment and where the establishment is carried on by any department of the Central
Government or the State Government, the authority specified, by the head of such department, in this behalf or where no authority
is so specified, the head of the department and in relation to an establishment carried on by a local authority, the chief executive of
that authority, and includes,—
(a) in relation to an establishment which is a factory, the occupier of the factory;
(b) in relation to mine, the owner of the mine or agent or manager having requisite qualification under the law for the time being
in force and appointed by the owner or agent of the mine as such;
(c) in relation to any other establishment, the person who, or the authority which has ultimate control over the affairs of the
establishment and where the said affairs are entrusted to a manager or managing director, such manager or managing director;
(d) contractor; and
(e) legal representative of a deceased employer;

2(60) "platform work" means a work arrangement outside of a traditional employeremployee relationship in which organisations
or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific
services or any such other activities which may be notified by the Central Government, in exchange for payment.

2(61) "platform worker" means a person engaged in or undertaking platform work.

2(2) "aggregator" means a digital intermediary or a market place for a buyer or user of a service to connect with the seller or the
service provider;
2(36) "home-based worker" means a person engaged in, the production of goods or services for an employer in his home or
other premises of his choice other than the workplace of the employer, for remuneration, irrespective of whether or not the
employer provides the equipment, materials or other inputs.

2(75) "self-employed worker" means any person who is not employed by an employer, but engages himself in any occupation in
the unorganised sector subject to a monthly earning of an amount as may be notified by the Central Government or the State
Government, as the case may be, from time to time or holds cultivable land subject to such ceiling as may be notified by the State
Government;

2(86) "unorganised worker" means a home-based worker, self-employed worker or a wage worker in the unorganised sector and
includes a worker in the organised sector who is not covered by the Industrial Disputes Act, 1947 or Chapters III to VII of this
Code.

2(90) "wage worker" means a person employed for remuneration in the unorganised sector, directly by an employer or through
any contractor, irrespective of place of work, whether exclusively for one employer or for one or more employers, whether in cash
or in kind, whether as a home-based worker, or as a temporary or casual worker, or as a migrant worker, or workers employed by
households including domestic workers, with a monthly wage of an amount as may be notified by the Central Government and the
State Government, as the case may be.

45. Schemes for unorganised workers, gig workers and platform workers.
(1) Notwithstanding anything contained in this Chapter, the Central Government may, by notification, frame scheme for
unorganised workers, gig workers and platform workers and the members of their families for providing benefits admissible under
this Chapter by the Corporation.
(2) The contribution, user charges, scale of benefits, qualifying and eligibility conditions and other terms and conditions subject to
which the scheme may be operated shall be such as may be specified in the scheme.

110. Funding of State Government schemes.

(1) Any scheme notified by the State Government under sub-section (2) of section 109 may be— (a) wholly funded by the State
Government; or (b) partly funded by the State Government, partly funded through contributions collected from the beneficiaries of
the scheme or the employers as may be specified in the scheme by the State Government; or (c) funded from any source including
corporate social responsibility fund referred to in clause (iv) of sub-section (3) of section 109 or any other such source as may be
specified in the scheme.
(2) The State Government may seek financial assistance from the Central Government for the schemes framed by it.
(3) The Central Government may provide such financial assistance to the State Governments for the purpose of schemes for such
period and on such terms and conditions as it may deem fit.

113. Registration of unorganised workers, gig workers and platform workers.

(1) Every unorganised worker, gig worker or platform worker shall be required to be registered for the purposes of this Chapter,
subject to the fulfilment of the following conditions, namely:— (a) he has completed sixteen years of age or such age as may be
prescribed by the Central Government; (b) he has submitted a self-declaration electronically or otherwise in such form and in such
manner containing such information as may be prescribed by the Central Government.
(2) Every eligible unorganised worker, gig worker or platform worker referred to in sub-section (1) shall make an application for
registration in such form along with such documents including Aadhaar number as may be prescribed by the Central Government
and such worker shall be assigned a distinguishable number to his application: Provided that the system of electronic registration
maintained by the appropriate Government shall also provide for self-registration by any such worker in such manner as may be
prescribed by the Central Government.
(3) A registered unorganised worker, gig worker or platform worker shall be eligible to avail the benefit of the concerned scheme
framed under this Chapter.
(4) The Central Government, or as the case may be, the State Government shall make such contribution in a scheme as may be
specified therein. Explanation.—For the purposes of this section, the term "Aadhaar" shall have the same meaning as is assigned
to it in section 142.

114. Schemes for gig workers and platform workers.

(1) The Central Government may frame and notify, from time to time, suitable social security schemes for gig workers and
platform workers on matters relating to—
(a) life and disability cover;
(b) accident insurance;
(c) health and maternity benefits;
(d) old age protection;
(e) crèche; and
(f) any other benefit as may be determined by the Central Government.

(2) Every scheme framed and notified under sub-section (1) may provide for—
(a) the manner of administration of the scheme;
(b) the agency or agencies for implementing the scheme;
(c) the role of aggregators in the scheme;
(d) the sources of funding of the scheme; and
(e) any other matter as the Central Government may consider necessary for the efficient administration of the scheme.

(3) Any scheme notified by the Central Government under sub-section (1), may be—
(a) wholly funded by the Central Government; or
(b) partly funded by the Central Government and partly funded by the State Government; or
(c) wholly funded by the contributions of the aggregators; or
(d) partly funded by the Central Government, partly funded by the State Government and partly funded through contributions
collected from the beneficiaries of the scheme or the aggregators, as may be specified in the scheme framed by the Central
Government; or
(e) funded from corporate social responsibility fund within the meaning of Companies Act, 2013; or
(f) any other source.

(4) The contribution to be paid by the aggregators for the funding referred to in clause (ii) of sub-section (1) of section 141, shall
be at such rate not exceeding two per cent., but not less than one per cent., as may be notified by the Central Government, of the
annual turnover of every such aggregator who falls within a category of aggregators, as are specified in the Seventh Schedule:
Provided that the contribution by an aggregator shall not exceed five per cent. of the amount paid or payable by an aggregator to
gig workers and platform workers. Explanation.—For the purposes of this sub-section, the annual turnover of an aggregator shall
not include any tax, levy and cess paid or payable to the Central Government.

(5) The date of commencement of contribution from aggregator under this section shall be notified by the Central Government.

(6) The National Social Security Board constituted under sub-section (1) of section 6 shall be the Board for the purposes of the
welfare of gig workers and platform workers under the provisions of this Code:
Provided that while such Board serves the purposes of welfare of, or matters relating to, gig workers and platform workers, the
following members shall constitute the Board instead of the members specified in clauses (c) and (d) of sub-section (2) of section
6, namely:—
(a) five representatives of the aggregators as the Central Government may nominate;
(b) five representatives of the gig workers and platform workers as the Central Government may nominate;
(c) Director General of the Corporation;
(d) Central Provident Fund Commissioner of the Central Board;
(e) such expert members as the Central Government may consider appropriate;
(f) five representatives of the State Governments by such rotation as the Central Government may consider appropriate;
(g) Joint Secretary to the Government of India in the Ministry of Labour and Employment, who shall be the Member Secretary to
the Board.

(7) (i) The Central Government may provide that—

(a) the authority to collect and to expend the proceeds of contribution collected;
(b) the rate of interest to be paid by an aggregator in case of delayed payment, less payment or non-payment of contribution;
(c) self-assessment of contribution by aggregators;
(d) conditions for cessation of a gig worker or a platform worker; and
(e) any other matter relating to smooth functioning of the social security scheme notified under this section, shall be such as may
be prescribed by that Government.
(ii) The Central Government may by notification, exempt such aggregator or class of aggregators from paying of contribution
under sub-section (4), subject to such conditions as may be specified in the notification.
Explanation.—For the purposes of this section, an aggregator having more than one business shall be treated as a separate
business entity or aggregator.

122. Appointment of Inspector cum Facilitators and their powers.(Authorities) (1) The Central Government for the purposes
of Chapter III and Chapter IV and for the provisions in this Code relating to those Chapters, and the appropriate Government for
the purposes of other provisions of this Code, may, by notification, appoint Inspectorcum-Facilitators who shall discharge his
duties under this Code and exercise the powers conferred on them under sub-section (6) in accordance with the inspection scheme
referred to in sub-section (2).

(5) The Inspector-cum-Facilitator may—

(a) advice the employers and employees relating to compliance with the provisions of this Code; and
(b) inspect the establishments as assigned to him under the provisions of this Code, subject to the instructions or guidelines issued
by the appropriate Government from time to time.

(6) Subject to the provisions of sub-section (4), the Inspector-cum-Facilitator may,—

(a) examine any person who is found in any premises of the establishment, whom the Inspector-cum-Facilitator has reasonable
cause to believe, is an employee of the establishment;
(b) require any person whom the Inspector-cum-Facilitator has reasonable cause to believe, is an employer of the establishment, to
produce any document or to give any information, which is in his power with respect to any of the purposes for which the
inspection is made;
(c) search, seize or take copies of such register, record of wages or notices or portions thereof as the Inspector-cum-Facilitator
may consider relevant in respect of an offence under this Code and which the Inspector-cum-Facilitator has reason to believe has
been committed by the employer;
(d) bring to the notice of the appropriate Government defects or abuses not covered by any law for the time being in force; and
(e) exercise such other powers as may be prescribed by the appropriate Government.

(7) Any person required to produce any document or to give any information required by an Inspector-cum-Facilitator for the
purposes of sub-section (6) shall be deemed to be legally bound to do so within the meaning of section 175 and section 176 of the
Indian Penal Code.

(8) The provisions of the Code of Criminal Procedure, 1973 shall, so far as may be, apply to the search or seizure for the purposes
of sub-section (6), as they apply to the search or seizure made under the authority of a warrant issued under section 94 of the said
Code.

Offences and Penalties-

133. If any person,—
(a) being an employer, fails to pay any contribution which he is liable to pay under this Code or rules, regulations or schemes
made thereunder; or
(b) deducts or attempts to deduct from the wages of an employee, the whole or any part of employer's contribution; or
(c) in contravention of the provisions of this Code, reduces the wages or any privilege or benefits admissible to an employee; or
(d) in contravention of the provisions of Chapter IV or Chapter VI or rules, regulations or schemes made or framed under this
Code respectively, relating to such Chapters, dismisses, discharges, reduces in rank or otherwise penalises a woman employee; or
(e) fails or refuses to submit any return, report, statement or any other information required under this Code or any rules,
regulations or schemes made or framed thereunder; or
(f) obstructs any Inspector-cum-Facilitator or other officer or staff of the Central Board or the Corporation or other Social Security
Organisation or a competent authority in the discharge of his duties; or
(g) fails to pay any amount of gratuity to which an employee is entitled under this Code; or
(h) fails to pay any amount of compensation to which an employee is entitled under this Code; or
(i) fails to provide any maternity benefit to which a woman is entitled under this Code; or
(j) fails to send to a competent authority a statement which he is required to send under Chapter VII; or
(k) fails to produce on demand by the Inspector-cum-Facilitator any register or document in his custody kept in pursuance of this
Code or the rules, regulations or schemes made or framed thereunder; or
(l) fails to pay the cess for building workers which he is liable to pay under this Code; or
(m) is guilty of any contravention of or non-compliance with any of the requirements of this Code or the rules or the regulations or
schemes made or framed thereunder in respect of which no special penalty is provided in this Chapter; or
(n) obstructs executive officer in exercising his functions under Chapter XIII; or
(o) dishonestly makes a false return, report, statement or information to be submitted thereunder; or
(p) fails or makes default in complying with any condition subject to which exemption under section 143 was granted; or
(q) fails to pay any administrative or inspection charges payable under any of the schemes framed under Chapter III,

he shall be punishable,—
(i) where he commits an offence under clause (a), with imprisonment for a term which may extend to three years, but—

(a) which shall not be less than one year, in case of failure to pay the employee's contribution which has been deducted by him
from the employee's wages and shall also be liable to fine of one lakh rupees;
(b) which shall not be less than two months but may be extended to six months, in any other case and shall also be liable to fine of
fifty thousand rupees:
Provided that the court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of
imprisonment for a lesser term;

(ii) where he commits an offence under clause (g), with imprisonment for a term which may extend to one year or with fine which
may extend to fifty thousand rupees, or with both;

(iii) where he commits an offence under any of the clauses (d), (f), (i), (k), (l) or (o), with imprisonment for a term which may
extend to six months or with a fine which may extend to fifty thousand rupees, or with both;

(iv) where he commits an offence under any of the clauses (b), (c), (e), (h), (j), (m), (n), (p) or (q), with fine which may extend to
fifty thousand rupees.

THE PAYMENT OF BONUS ACT, 1965

Bonus—Meaning.—‘Bonus’ is not defined under the Act, nor there exists any definition of ‘Bonus’ under any other enactment.
One of the terms of reference to ‘Bonus Commission’ was to define the concept of bonus. The Commission in its report said:“It is
difficult to define in rigid terms the concept of bonus but it is possible to urge that once profits exceed a certain base, labour
should legitimately have a share in them. In other words, the concept of bonus as sharing by the workers in the prosperity of the
concern in which they are employed. This has also the advantage that in the case of low-paid workers such sharing in prosperity
augments their earnings and so helps to bridge the gap between the actual wage and need-based wage. If it is not feasible to better
the standard of living of all the industrial and agricultural workers as aimed at in Article 43 of the Constitution, there is nothing
wrong in endeavouring to do so in respect of at least those workers whose efforts have contributed to the profits of the concern in
which they have worked. The validity of such a conception of bonus is not affected by the difficulty of determining or qualifying
precisely the ‘living wage’ or even the ‘need-based’ wage at any given time and place.”

Constitutionality and Object of.—The Bonus Act is a piece of welfare legislation enacted for the benefit of a large category of
workmen seeking a living wage to make their lives more meaningful and for fructifying the benevolent guarantee of Article 21 of
the Constitution, State of T.N. v. K. Sabanayagam, (1998)

‘Wages’ do not include bonus, Hamdard (Wakf) Laboratories v. Dy. Labour Commr., (2007) 5 SCC 281 : (2007) 2 SCC (L&S)
166.

4. Computation of gross profits.—The gross profits derived by an employer from an establishment in respect of any accounting
year shall—

(a) in the case of a banking company, be calculated in the manner specified in the First Schedule;

(b) in any other case, be calculated in the manner specified in the Second Schedule.

5. Computation of Available Surplus:

 The available surplus for any accounting year is the gross profits of that year after deducting the amounts specified in
Section 6.

For the year 1968 onwards:

 The available surplus is calculated by adding:

o (a) The gross profits for that year after deducting the amounts specified in Section 6.
o (b) The difference between:
 (i) The direct tax on the gross profits of the previous year (calculated as per Section 7).
 (ii) The direct tax on the gross profits of the previous year after deducting the bonus paid or payable to
employees for that year (calculated as per Section 7).

NOTES ► Once gross profits are calculated as under Section 4 of the Act, the figure for available surplus out of which bonus is
to be paid, is to be calculated after deducting certain amounts under items known as prior charges, detailed under Section 6.

6. Sums Deductible from Gross Profits: The following amounts should be deducted from the gross profits:

(a) Depreciation:

 Deduct the depreciation amount as allowed under Section 32(1) of the Income Tax Act or the Agricultural Income Tax
Law.
 Employers paying bonuses based on notional normal depreciation under a settlement/agreement before May 29, 1965,
can continue using this method if they choose within one year from that date.

(b) Development Rebate/Allowance:

 Deduct any development rebate, investment allowance, or development allowance permissible under the Income Tax
Act.

(c) Direct Tax:

 Deduct any direct tax the employer must pay for the accounting year on income, profits, and gains, according to Section
7.

(d) Other Deductions:

 Deduct any other sums specified for the employer in the Third Schedule.
7. Calculation of Direct Tax Payable by the Employer: The direct tax payable by the employer for any accounting year should
be calculated at the applicable rates for that year, with the following considerations:

(a) Exclusions:

 Do not include:
o (i) Losses from previous years carried forward.
o (ii) Depreciation arrears that can be added to future years.
o (iii) Exemptions under Section 84 or deductions under Section 101(1) of the Income Tax Act before the Finance
Act, 1965.

(b) Religious/Charitable Institutions:

 If exempt from tax, treat the exempt income as if the institution were a publicly held company.

(c) Individuals/Hindu Undivided Families:

 Calculate tax as if the income from the establishment is their only income.

(d) Export Profits:

 Ignore any rebates on profits from exports.

(e) Other Rebates/Credits:

 Ignore any other rebates, credits, reliefs, or deductions (except development rebate, investment allowance, or
development allowance) allowed under current tax laws or Finance Acts for industry development.

8. Eligibility for bonus.—Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in
accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in
that year.

9. Disqualification for bonus.—Notwithstanding anything contained in this Act, an employee shall be disqualified from
receiving bonus under this Act, if he is dismissed from service for—

(a) fraud; or

(b) riotous or violent behaviour while on the premises of the establishment; or

(c) theft, misappropriation or sabotage of any property of the establishment.

10. Payment of Minimum Bonus: Every employer must pay each employee a minimum bonus for the accounting year starting in
1979 and for every year after. This minimum bonus should be:

 8.33% of the employee's salary or wage for the year, or

 100 rupees, whichever is higher.

This applies even if the employer has no allocable surplus that year.

For Employees Under 15 Years Old:

 The minimum bonus is 60 rupees instead of 100 rupees.

11. Payment of Maximum Bonus:

1. Proportional Bonus:
o If the allocable surplus exceeds the minimum bonus, the employer must pay a bonus proportional to the
employee's salary or wage, up to a maximum of 20% of their salary or wage.

2. Calculating Allocable Surplus:

o Include amounts set on or set off under Section 15 when calculating the allocable surplus.
12. Calculation of Bonus for Certain Employees:

 If an employee's salary or wage exceeds 7,000 rupees or the minimum wage for scheduled employment (whichever is
higher), their bonus is calculated based on 7,000 rupees or the minimum wage (whichever is higher).

Explanation:

 "Scheduled employment" refers to the definition in Section 2(g) of the Minimum Wages Act, 1948.

13. Proportionate reduction in bonus in certain cases.—Where an employee has not worked for all the working days in an
accounting year, the minimum bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than
8.33 per cent of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced.

15. Set on and set off of allocable surplus.—(1) Where for any accounting year, the allocable surplus exceeds the amount of
maximum bonus payable to the employees in the establishment under Section 11, then, the excess shall, subject to a limit of
twenty per cent of the total salary or wage of the employees employed in the establishment in that accounting year, be carried
forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be
utilised for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.

(2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the
amount of minimum bonus payable to the employees in the establishment under Section 10, and there is no amount or sufficient
amount carried forward and set on under sub-section (1) which could be utilised for the purpose of payment of the minimum
bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the
succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner illustrated in the Fourth
Schedule.

(3) The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other cases not covered by sub-section
(1) or sub-section (2) for the purpose of payment of bonus under this Act.

(4) Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating
bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall
first be taken into account.

18. Deduction of certain amounts from bonus payable under the Act.— Where in any accounting year, an employee is found
guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss
from the amount of bonus payable by him to the employee under this Act in respect of that accounting year only and the employee
shall be entitled to receive the balance, if any.

19. Time-limit for payment of bonus.—All amounts payable to an employee by way of bonus under this Act shall be paid in
cash by his employer—

(a) where there is a dispute regarding payment of bonus pending before any authority under Section 22, within a month from the
date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute;

(b) in any other case, within a period of eight months from the close of the accounting year:

Provided that the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon
an application made to it by the employer and for sufficient reasons, by order, extend the said period of eight months to such
further period or periods as it thinks fit; so, however, that the total period so extended shall not in any case exceed two years.

21. Recovery of bonus due from an employer.—Where any money is due to an employee by way of bonus from his employer
under a settlement or an award or agreement, the employee himself or any other person authorised by him in writing in this behalf,
or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an
application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government or such
authority as the appropriate Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate
for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue:

Provided that every such application shall be made within one year from the date on which the money became due to the
employee from the employer:

Provided further that any such application may be entertained after the expiry of the said period of one year, if the appropriate
Government is satisfied that the applicant had sufficient cause for not making the application within the said period.
22. Reference of disputes under the Act.—Where any dispute arises between an employer and his employees with respect to the
bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute
shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), or of any
corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act
or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly.

26. Maintenance of registers, records, etc.—Every employer shall prepare and maintain such registers, records and other
documents in such form and in such manner as may be prescribed.

27. Inspectors.—(1) The appropriate Government may, by notification in the Official Gazette, appoint such persons as it thinks fit
to be Inspectors for the purposes of this Act and may define the limits within which they shall exercise jurisdiction.

(2) An Inspector appointed under sub-section (1) may, for the purpose of ascertaining whether any of the provisions of this Act
has been complied with—

(a) require an employer to furnish such information as he may consider necessary;

(b) at any reasonable time and with such assistance, if any, as he thinks fit, enter any establishment or any premises connected
therewith and require any one found in charge thereof to produce before him for examination any accounts, books, registers and
other documents relating to the employment of persons or the payment of salary or wage or bonus in the establishment;

(c) examine with respect to any matter relevant to any of the purposes aforesaid, the employer, his agent or servant or any other
person found in charge of the establishment or any premises connected therewith or any person whom the Inspector has
reasonable cause to believe to be or to have been an employee in the establishment;

(d) make copies of, or take extracts from, any book, register or other document maintained in relation to the establishment;

(e) exercise such other powers as may be prescribed.

(3) Every Inspector shall be deemed to be a public servant within the meaning of the Indian Penal Code (45 of 1860).
(4) Any person required to produce any accounts, book, register or other document or to give information by an Inspector under
sub-section (1) shall be legally bound to do so.

(5) Nothing contained in this section shall enable an Inspector to require a banking company to furnish or disclose any statement
or information or to produce, or give inspection of, any of its books of account or other documents, which a banking company
cannot be compelled to furnish, disclose, produce or give inspection of, under the provisions of Section 34-A of the Banking
Regulation Act, 1949 (10 of 1949).

28. Penalty.—If any person—

(a) contravenes any of the provisions of this Act or any rule made thereunder; or

(b) to whom a direction is given or a requisition is made under this Act fails to comply with the direction or requisition,
he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one
thousand rupees, or with both.

29. Offences by companies.—(1) If the person committing an offence under this Act is a company, every person who, at the time
the offence was committed, was in charge of, and was responsible to, the company for the conduct of business of the company, as
well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished
accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the
offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and
it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of,
any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be
deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.—For the purposes of this section,—

(a)“company” means any body corporate and includes a firm or other association of individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.

30. Cognizance of offences.—(1) No court shall take cognizance of any offence punishable under this Act, save on complaint
made by or under the authority of the appropriate Government or an officer of that Government (not below the rank of Regional
Labour Commissioner in the case of an officer of the Central Government, and not below the rank of a Labour Commissioner in
the case of an officer of the State Government) specially authorised in this behalf by that Government.

(2) No court inferior to that of a presidency magistrate or a magistrate of the first class shall try any offence punishable under this
Act.

PAYMENT OF WAGES ACT,1936

An Act to regulate the payment of wages to certain classes of employed persons.

2(vi) “wages” means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or
capable of being so expressed which would, if the terms 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—

(a) any remuneration payable under any award or settlement between the parties or order of a court;

(b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period;

(c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name);

(d) any sum which by reason of termination of employment of the person employed is payable under any law, contract or
instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time
within which the payment is to be made;

(e) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force; but
does not include—

(1) any bonus (whether under a scheme of profit-sharing or otherwise) which does not form part of remuneration payable under
the terms of employment or which is not payable under any award or settlement between the parties or order of a Court;

(2) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service
excluded from the computation of wages by a general or special order of appropriate Government;

(3) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;

(4) any travelling allowance or the value of any travelling concession;

(5) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or (6) any
gratuity payable on the termination of employment in cases other than those specified in sub-clause (d).

3. Responsibility for payment of wages- Employer Responsibility: Every employer must ensure that all wages due under the
Act are paid to their employees.

1. Specific Cases:
o Factories: The manager named under the Factories Act is responsible.
o Industrial or other establishments: A person responsible for supervision and control designated by the
employer is accountable.
o Railways: The railway administration's nominee for the local area is accountable.
o Contractors: The person designated by the contractor who directly oversees the work is responsible.
o Other cases: A person designated by the employer to comply with the Act is accountable.

2. Fallback Responsibility: If the designated person (like a manager or contractor) fails to pay wages, the ultimate
responsibility still lies with the employer to ensure wages are paid.

4. Fixation of wage-periods.—(1) Every person responsible for the payment of wages under Section 3 shall fix periods (in this
Act referred to as wage-period) in respect of which such wages shall be payable.
(2) No wage-period shall exceed one month.

5. Time of payment of wages-

 Payment Schedule Based on Establishment Size:
 Railways, factories, or industrial establishments with less than 1,000 employees: Wages must be paid before the 7th
day after the end of the wage period.
 Other railways, factories, or industrial establishments: Wages must be paid before the 10th day after the end of the
wage period.
 Dock, wharf, jetty, or mine workers: The balance of wages due after completing loading or unloading tasks must be
paid before the 7th day from completion.
 Termination of Employment:
 When an employee’s employment is terminated:
o Wages earned must be paid before the 2nd working day from the termination.
o If the establishment closes (not due to a holiday):
 Wages must be paid before the 2nd day from the termination due to closure.
 Government Exemptions:
 The appropriate government can exempt certain categories of workers (like daily-rated workers in railways or public
works departments) from these payment timelines under specific conditions specified in the exemption order.
 General Requirement:
 All wage payments must be made on a working day, unless otherwise specified.

6. Wages to be paid in current coin or currency notes or by cheque or crediting in bank account.— All wages shall be paid
in current coin or currency notes or by cheque or by crediting the wages in the bank account of the employee:

Provided that the appropriate Government may, by notification in the Official Gazette, specify the industrial or other
establishment, the employer of which shall pay to every person employed in such industrial or other establishment, the wages only
by cheque or by crediting the wages in his bank account.

7. Deductions which may be made from wages.— Basic Rule: Wages of an employed person must be paid without
deductions, except those specifically authorized by or under the law.
 Definitions and Explanations:
 Explanation I: Any payment made by the employed person to the employer or agent is considered a deduction from
wages.
 Explanation II: Loss of wages due to specified penalties (like withholding of increments, suspension) as per employer
rules is not considered a deduction.
 Authorized Deductions:
 Fines: Imposed as per disciplinary rules.
 Absence from Duty: Deductions for unauthorized absences.
 Damage/Loss of Goods: Deductions for damage or loss directly caused by neglect or default.
 House-Accommodation: Deductions for accommodation provided by employer, government, or housing boards.
 Amenities and Services: Deductions for services approved by appropriate government orders.
 Recovery of Advances and Loans: Including interest payments.
 Income Tax: Deductions for income tax payable by the employed person.
 Court Orders: Deductions mandated by courts or competent authorities.
 Provident Fund: Deductions towards provident fund contributions.
 Cooperative Societies: Deductions for payments to approved cooperative societies.
 Insurance Schemes: Deductions for contributions to insurance schemes approved by the appropriate government.
 Life Insurance Premiums: Deductions for premiums towards life insurance policies.
 Trade Union Contributions: Deductions for contributions to trade union funds or membership fees.
 Fidelity Guarantee Bonds: Deductions for insurance premiums related to fidelity guarantee bonds.
 Railway Losses: Deductions for losses incurred by railway administration due to specified reasons.
 Government Relief Funds: Deductions for contributions to specified government relief funds.
 Central Government Insurance Schemes: Deductions for contributions to insurance schemes framed by the Central
Government.
 Limitations on Deductions:
 Total deductions in any wage period should not exceed a specified percentage of wages:
o 75% if deductions include payments to cooperative societies.
o 50% in all other cases.
 Excess deductions beyond these limits can be recovered as prescribed.
 Exceptions:
 The Act does not prevent recovery of amounts due under other laws, except those specified under the Railways Act,
1989.
8. Fines- Approval and Specification of Acts/Omissions:
 o Fines can only be imposed for specific acts or omissions specified by the employer with prior approval from the
appropriate government or prescribed authority.
Notice Requirement:
o A notice specifying these acts and omissions must be displayed in the workplace or at designated places for
employees on railways.
Procedure for Imposition:
o No fine can be imposed without giving the employed person an opportunity to show cause against it or
following prescribed procedures.
Limit on Fine Amount:
o The total amount of fine imposed in any wage period cannot exceed three percent of the wages payable to the
employee for that period.
Protection for Minors:
o No fine can be imposed on an employed person who is under the age of fifteen years.
Recovery and Time Limit:
o Fines must be imposed promptly and cannot be recovered through installments or after ninety days from the date
of imposition.
Recording and Utilization of Fines:
o All fines and their realizations must be recorded in a prescribed register.
o Realized fines can only be used for purposes beneficial to the employees, as approved by the prescribed
authority.
o In establishments with multiple staff under the same management (like railways or factories), fines can be
credited to a common fund for the staff, subject to similar approval restrictions.

9. Deductions for absence from duty.—(1) Deductions may be made

under clause (b) of sub-section (2) of Section 7 only on account of the absence of an employed person from the place or places
where, by the terms of his employment, he is required to work, such absence being for the whole or any part of the period during
which he is so required to work.

(2) The amount of such deduction shall in no case bear to the wages payable to the employed person in respect of the wage-period
for which the deduction is made a large proportion than the period for which he was absent bears to the total period, within such
wage-period, during which by the terms of his employment, he was required to work:

Provided that, subject to any rules made in this behalf by appropriate Government if ten or more employed persons acting in
concert absent themselves without due notice (that is to say without giving the notice which is required under the terms of their
contracts of employment) and without reasonable cause, such deduction from any such person may include such amount not
exceeding his wages for eight days as may by any such terms be due to the employer in lieu of due notice.

Explanation.—For the purposes of this section, an employed person shall be deemed to be absent from the place where he is
required to work if, although present in such place, he refuses, in pursuance of a stay-in strike or for any other cause which is not
reasonable in the circumstances, to carry out his work.

10. Deductions for damage or loss.—(1) A deduction under clause (c) or clause (o) of sub-section (2) of Section 7 shall not
exceed the amount of the damage or loss caused to the employer by the neglect or default of the employed person.

(1-A) A deduction shall not be made under clause (c) or clause (m) or clause (n) or clause (o) or sub-section (2) of Section 7 until
the employed person has been given an opportunity of showing cause against the deduction, or otherwise than in accordance with
such procedure as may be prescribed for the making of such deductions.

(2) All such deductions and all realisations thereof shall be recorded in a register to be kept by the person responsible for the
payment of wages under Section 3 in such form as may be prescribed.

11. Deductions for services rendered.—A deduction under clause (d) or clause (e) of sub-section (2) of Section 7 shall not be
made from the wages of an employed person, unless the house-accommodation amenity or service has been accepted by him, as a
term of employment or otherwise, and such deduction shall not exceed an amount equivalent to the value of the house-
accommodation amenity or service supplied and, in the case of a deduction under the said clause (e), shall be subject to such
conditions as appropriate Government may impose.

12. Deductions for recovery of advances.—Deductions under clause (f) of sub-section (2) of Section 7 shall be subject to the
following conditions, namely:—

(a) recovery of an advance of money given before employment began shall be made from the first payment of wages in respect of
a complete wage-period, but no recovery shall be made of such advances given for travelling expenses;
(aa) recovery of an advance of money given after employment began shall be subject to such conditions as the appropriate
Government may impose;

(b) recovery of advances of wages not already earned shall be subject to any rules made by appropriate Government regulating the
extent to which such advances may be given and the instalments by which they may be recovered.

12-A. Deductions for recovery of loans.—Deductions for recovery of loans granted under clause (fff) of sub-section (2) of
Section 7 shall be subject to any rules made by appropriate Government regulating the extent to which such loans may be granted
and the rate of interest payable thereon.

13. Deductions for payments to cooperative societies and insurance schemes.—Deductions under clause (j) and clause (k)] of
sub- section (2) of Section 7 shall be subject to such conditions as appropriate Government may impose.

EQUAL REMUNERATION ACT, 1976

An Act to provide for the payment of equal remuneration to men and women workers and for the prevention of discrimination, on
the ground of sex, against women in the matter of employment and for matters connected therewith or incidental thereto.

Statement of Objects and Reasons.—Article 39 of the Constitution envisages that the State shall direct its policy, among other
things, towards securing that there is equal pay for equal work for both men and women. To give effect to this constitutional
provision, the President promulgated on the 26th September, 1975, the Equal Remuneration Ordinance, 1975 so that the
provisions of Article 39 of the Constitution may be implemented in the year which is being celebrated as the International
Women's Year. The Ordinance provides for payment of equal remuneration to men and women workers for the same work or
work of a similar nature and for the prevention of discrimination on grounds of sex.

(2) The Ordinance also ensures that there will be no discrimination against recruitment of women and provides for the setting up
of Advisory Committees to promote employment opportunities for women.

3. This Bill seeks to replace the Ordinance.

► Object.—That Act is a legislation providing equality of pay for equal work between men and women which certainly is a part
of the principle ‘equal pay for equal work’, Dharwad Distt. P.W.D. L.D.W. Employees' Association v. State of Karnataka, (1990)
2 SCC 396 : 1990 SCC (L&S) 274 : (1990) 12 ATC 902.

2(g) “remuneration” means the basic wage or salary, and any

additional emoluments whatsoever payable, either in cash or in kind, to a person employed in respect of employment or work
done in such employment, if the terms of the contract of employment, express or implied, were fulfilled;

2(h) “same work or work of a similar nature” means work in respect of which the skill, effort and responsibility required are
the same, when performed under similar working conditions, by a man or a woman and the differences, if any, between the skill,
effort and responsibility required of a man and those required of a woman are not of practical importance in relation to the terms
and conditions of employment;

PAYMENT OF REMUNERATION AT EQUAL RATES TO MEN AND WOMEN WORKERS AND OTHER MATTERS

4. Duty of employer to pay equal remuneration to men and women workers for same work or work of a similar nature.—
(1) No employer shall pay to any worker, employed by him in an establishment or employment, remuneration, whether payable in
cash or in kind, at rates less favourable than those at which remuneration is paid by him to the workers of the opposite sex in such
establishment or employment for performing the same work or work of a similar nature.

(2) No employer shall, for the purpose of complying with the provisions of sub-section (1), reduce the rate of remuneration of any
worker.

(3) Where, in an establishment or employment, the rates of remuneration payable before the commencement of this Act for men
and women workers for the same work or work of a similar nature are different only on the ground of sex, then the higher (in
cases where there are only two rates), or, as the case may be, the highest (in cases where there are more than two rates), of such
rates shall be the rate at which remuneration shall be payable, on and from such commencement, to such men and women
workers:

Provided that nothing in this sub-section shall be deemed to entitle a worker to the revision of the rate of remuneration payable to
him or her with reference to the service rendered by him or her before the commencement of this Act.
5. No discrimination to be made while recruiting men and women workers.—On and from the commencement of this Act, no
employer shall, while making recruitment for the same work or work of a similar nature, or in any condition of service
subsequent to recruitment such as promotions, training or transfer, make any discrimination against women except where the
employment of women in such work is prohibited or restricted by or under any law for the time being in force:

Provided that the provisions of this section shall not affect any priority or reservation for Scheduled Castes or Scheduled Tribes,
ex- servicemen, retrenched employees or any other class or category of persons in the matter of recruitment to the posts in an
establishment or employment.

► Equal remuneration to men and women workers.—Under Section 5 of Equal Remuneration Act of 1976, early-age
retirement policy of air hostesses cannot be described as discriminatory conditions of service on the basis of sex alone, Air-India
Cabin Crew Assn. v. Yeshaswinee Merchant, (2003) 6 SCC 277.

6. Advisory Committee.—(1) For the purpose of providing increasing employment opportunities for women, the appropriate
Government shall constitute one or more Advisory Committees to advise it with regard to the extent to which women may be
employed in such establishments or employments as the Central Government may, by notification, specify in this behalf.

(2) Every Advisory Committee shall consist of not less than ten persons, to be nominated by the appropriate Government, of
which one -half shall be women.

(3) In tendering its advice, the Advisory Committee shall have regard to the number of women employed in the concerned
establishment or employment, the nature of work, hours of work, suitability of women for employment, as the case may be, the
need for providing increasing employment opportunities for women, including part-time employment, and such other relevant
factors as the Committee may think fit.

(4) The Advisory Committee shall regulate its own procedure.

(5) The appropriate Government may, after considering the advice tendered to it by the Advisory Committee and after giving to
the persons concerned in the establishment or employment an opportunity to make representations, issue such directions in respect
of employment of women workers, as the appropriate Government may think fit.