L2 Unit 7-12 Flashcards
Registration
and
cancellation of
an
establishment.
(1) Every establishment to which this Code applies shall be electronically or
otherwise, registered within such time and in such manner as may be prescribed by the
Central Government
Any establishment to which Chapter III or Chapter IV applies, and whose business
activities are in the process of closure, my may make an application for cancellation of
registration granted under this section
section 4- Constitution of Board of Trustees of Employees’ Provident Fund
and section 5- Constitution of Employees’ State Insurance Corporation
Section 4: Constitution of Central Board (Employees’ Provident Fund)
- Central Board: Formed by the Central Government to manage EPF funds under Chapter III.
- Members:
- Chairperson and Vice-Chairperson
- Up to 5 Central Govt officials
- Up to 15 representatives from State Governments
- 10 employer representatives (after consulting recognised employer bodies)
- 10 employee representatives (after consulting recognised employee bodies)
- Central Provident Fund Commissioner (ex officio)
- Status: A corporate body with perpetual succession, can sue and be sued.
- Committees:
- Executive Committee may be set up from Board members to assist with functions.
- Other committees can also be formed to aid in duties.
- Delegation: Board can delegate powers to Chairperson, committees, officers, or State Boards for efficient scheme administration.
- Terms: Tenure and conditions for members are set by the Central Government. Members continue until a successor is appointed.
- Additional Functions: May perform other functions as prescribed by the Central Government.
Section 5: Constitution of Employees’ State Insurance Corporation (ESIC)
- ESIC: Formed by the Central Government for purposes under Chapter IV.
- Members:
- Chairperson and Vice-Chairperson
- Up to 5 Central Govt officials
- One representative from each participating State and one from Union Territories
- 10 employer representatives (in consultation with recognised employer bodies)
- 10 employee representatives (in consultation with recognised employee bodies)
- 2 medical professionals (in consultation with recognised medical associations)
- 3 Members of Parliament (2 from Lok Sabha, 1 from Rajya Sabha)
- Director General of the Corporation (ex officio)
- Status: A corporate body with perpetual succession, can sue and be sued.
- Committees:
- Standing Committee: Administers ESIC affairs and exercises powers as prescribed.
- Medical Benefit Committee: Assists with medical benefit functions.
- Other committees may be formed as needed.
- Terms: Tenure and working conditions for members are prescribed by the Central Government. Members continue in office until successors are appointed.
National Social
Security Board
and State
Unorganised
Workers’
Board
The National Social Security Board shall consist of the following members, namely:—
(a) Union Minister for Labour and Employment as Chairperson;
(b) Secretary, Ministry of Labour and Employment as Vice-Chairperson;
(c) forty members to be nominated by the Central Government, out of whom—
(i) seven members representing unorganised sector workers;
(ii) seven members representing employers of unorganised sector;
(iii) seven members representing eminent persons from civil society;
(iv) two members representing the Lok Sabha and one from the Rajya
Sabha;
(v) ten members representing Central Government Ministries and
Departments concerned;
(vi) five members representing State Governments;
(vii) one member representing the Union territories; and
(d) the Director General Labour Welfare, as Member Secretary, ex officio.
(3) All members except Chairperson of the National Social Security Board shall be
from amongst persons of eminence in the fields of labour welfare, management, finance,
law and administration.
(5) The term of the National Social Security Board shall be three years
Provided that adequate representation shall be given to persons belonging to the
Scheduled Castes, the Scheduled Tribes, the minorities and women
duties of National Social
Security Board and State Unorganised Workers’
Board
The National Social Security Board shall perform the following functions,
namely:—
(a) recommend to the Central Government for formulating suitable schemes for different sections of unorganised workers, gig workers and platform workers;
(b) advise the Central Government on such matters arising out of the administration of this Code as may be referred to it;
(c) monitor such social welfare schemes for unorganised workers, gig workers and platform workers as are administered by the Central Government;
(d) review the record keeping functions performed at the State level;
(e) review the expenditure from the fund and account; and
(f) undertake such other functions as are assigned to it by the Central Government from time to time.
Every State Unorganised Workers’ Board shall consist of the following members,
namely:—
(a) Minister of Labour and Employment of the concerned State as Chairperson,
ex officio;
(b) Principal Secretary or Secretary (Labour) as Vice-Chairperson;
(c) one member representing the Central Government in the Ministry of Labour
and Employment;
(d) thirty-one members to be nominated by the State Government, out of
whom—
(i) seven representing the unorganised workers;
(ii) seven representing employers of unorganised workers;
(iii) two members representing the Legislative Assembly of the concerned
State;
(iv) five members representing eminent persons from civil society;
(v) ten members representing the State Government Departments
concerned; and
(e) Member Secretary as notified by the State Government.
he Building Workers’ Welfare Board shall perform the following functions,
namely:—
a) provide death and disability benefits to a beneficiary or his dependants;
(b) make payment of pension to the beneficiaries who have completed the age of sixty years;
(c) pay such amount in connection with premium for Group Insurance Scheme of the beneficiaries as may be prescribed by the appropriate Government;
(d) frame educational schemes for the benefit of children of the beneficiaries as may be prescribed by the appropriate Government;
(e) meet such medical expenses for treatment of major ailments of a beneficiary or, such dependant, as may be prescribed by the appropriate Government;
(f) make payment of maternity benefit to the beneficiaries;
(g) frame skill development and awareness schemes for the beneficiaries;
(h) provide transit accommodation or hostel facility to the beneficiaries;
(i) formulation of any other welfare scheme for the building worker beneficiaries by State Government in concurrence with the Central Government; and
(j) make provision and improvement of such other welfare measures and facilities as may be prescribed by the Central Government.
Section 8: Disqualifications, Removal, Resignation & Conflict of Interest for Social Security Organisation Members
1. Disqualification from Being a Member
A person cannot be or remain a member of a Social Security Organisation (or its Committees) if they:
- (a) Have been declared insolvent
- (b) Are of unsound mind
- (c) Are convicted of an offence involving moral turpitude
- (d) Are defaulting employers under this Code
- (e) Are a member of Parliament or State Assembly and cease to be so
- (f) Are a member of Parliament or State Assembly and become:
- Minister (Central/State)
- Speaker/Deputy Speaker (Lok Sabha/State Assembly)
- Deputy Chairman (Rajya Sabha)
Exceptions:
- Clause (f) doesn’t apply if the person is a member ex officio (e.g., a Minister by designation).
- If there’s a dispute about clause (d), the decision of the appropriate Government is final.
2. Removal by Government
The Central or State Government may remove a member if:
- They meet any of the disqualification criteria (above).
- They are absent without leave for 3 consecutive meetings.
- They abuse their position or are found unfit for office.
> Note: No removal under absence or abuse unless the member is given a chance to be heard.
Also, if a member of an Executive or Standing Committee ceases to be a member of the main body (Board or Corporation), they automatically lose their committee position.
3. Resignation
A member can resign by submitting a written resignation to the appointing Government. Once accepted, the seat becomes vacant.
4. Removal for Inadequate Representation or Change in Role
A member may be removed if:
- They no longer represent employers, employees, or unorganised workers adequately.
- They were appointed as an expert but lack sufficient expertise.
- They can no longer represent the Government due to administrative reasons.
> Note: Removal under points (a) and (b) requires giving the member a chance to explain.
5. Conflict of Interest
If a member is a director in a company and has a financial interest in any matter under discussion:
- They must disclose this interest.
- The disclosure must be recorded.
- They cannot participate in any discussions or decisions related to that matter.
Supersession of Corporation, Central Board, National Social Security
Board or State Unorganised Workers’ Board or the Building Workers’
Welfare Board.
Section 11: Supersession of Social Security Organisations or Committees
1. Grounds for Supersession
The Central Government (for Central Board, ESIC, National Board) or State Government (for State Unorganised Workers’ Board, Building Workers’ Welfare Board) may supersede these bodies or their Committees if:
- They are unable to perform their functions,
- They delay performance persistently,
- They exceed or abuse their powers or jurisdiction.
> Before doing so, the concerned Government must:
- Give the body or committee a chance to explain, and
- Consider their objections before making a final decision.
2. Temporary Administration
Until the body is reconstituted, the Central or State Government will:
- Make alternate arrangements to administer the provisions of the Code,
- As per rules set by the Central Government.
3. Reporting to Parliament/Legislature
- A full report explaining the reasons and actions taken under this section must be:
- Laid before Parliament (for Central bodies) or State Legislature (for State bodies),
- Within 3 months from the date of the supersession notification.
Section 17- Contribution in
respect of employees and
contractors.
Contractor and Employer Contributions (Simplified Overview)
Recovery of Contributions (Sub-sections 1–3)
1. Recovery by Employer from Contractor
- If an employer hires employees through a contractor, then:
- The employer can recover from the contractor:
- The employee’s and employer’s contributions (like provident fund and insurance),
- And any administration charges.
- This can be done by:
- Deducting from payments due to the contractor, or
- Treating it as a debt owed by the contractor.
2. Recovery by Contractor from Employee
- The contractor can only deduct the employee’s share of the contribution from the employee’s wages.
- This must be limited to the employee’s own contribution only.
3. Protection of Employee’s Wages
- The contractor CANNOT deduct:
- The employer’s contribution, or
- Administrative charges
- from the employee’s wages, even if there’s an agreement or contract saying otherwise.
Section 16: Establishment and Administration of Funds
Section 16: Establishment and Administration of Funds
1. Provident Fund Scheme
- The Central Government can set up a Provident Fund.
- Employer’s contribution: 10% of wages (for all employees, direct or via contractor).
- Employee’s contribution: Same as employer’s (i.e., 10%) but may choose to contribute more voluntarily.
- Employer is not obligated to match the excess.
- Modification:
- For specific establishments/classes (via notification), this can be increased to 12%.
- The Government may also notify different rates of contribution for certain employee classes and time periods.
2. Pension Scheme
- A Pension Fund may be set up by the Government.
- Contributions will include:
1. Part of the employer’s share (not exceeding 8.33% of wages or as notified),
2. Specific sums by employers of exempted establishments,
3. Additional contributions from the Central Government (as approved by Parliament).
3. Insurance Scheme
- A Deposit-Linked Insurance Fund may be created.
- Employer contributes:
- Up to 1% of wages (or as notified).
- Additionally:
- Employer must pay an extra amount (up to one-fourth of the above) to cover administrative expenses of the scheme.
4. Fund Management
- The Provident Fund, Pension Fund, and Insurance Fund:
- Will belong to and be administered by the Central Board.
- This will be done as per the respective scheme rules.
Let me know if you’d like this turned into a comparative chart (e.g., PF vs Pension vs Insurance) or a visual infographic!
Section 21: Exemption for Employer to Maintain Own Provident Fund and Section 22: Transfer of Provident or Pension Fund
Section 21: Exemption for Employer to Maintain Own Provident Fund
1. When Can an Employer Maintain Their Own PF Account?
- The Central Government can authorize an employer to maintain their own PF account, if:
- The establishment has 100 or more employees,
- There is an application by the employer and majority of employees, and
- There has been no default in:
- PF payments, or
- Other Code offences in the last 3 years.
2. Responsibilities of Such an Employer
- If authorized, the employer must:
- Maintain proper accounts,
- Submit returns,
- Deposit contributions correctly,
- Allow inspection,
- Pay administrative charges, and
- Follow terms and conditions mentioned in the Provident Fund Scheme.
3. Cancellation of Authorisation
- The Government can cancel the authorisation if:
- The employer violates any terms, or
- Commits any offence under the Code.
- However, the employer must be given a chance to be heard before cancellation.
Section 22: Transfer of Provident or Pension Fund
When an Employee Changes Jobs
- If an employee:
- Leaves a job in a PF-covered establishment and joins any other establishment, OR
- Leaves a job in a non-covered establishment and joins a PF-covered one—
→ Then, their PF or Pension fund will be:
- Transferred or dealt with as per the Provident Fund Scheme or Pension Scheme guidelines.
Section 23: Appeals to Tribunal
Section 23: Appeals to Tribunal
1. Right to Appeal
- A person (usually an employer) can appeal to the Tribunal against:
- Assessment of dues (under Section 125),
- Levy of damages (under Section 128).
2. Procedure for Appeal
- Must be filed:
- In the prescribed form, within a specified time, and
- With prescribed fees.
3. Deposit Requirement for Appeals
- For appeals against dues assessment (Section 125), the employer must deposit:
- 25% of the dues with the Social Security Organisation,
- Otherwise, appeal won’t be entertained.
4. Timeline
- The Tribunal should try to dispose of the appeal within 1 year from the date it is filed.
🧑⚖️ Case Title:
**The Regional Provident Fund Commissioner (II), West Bengal v. Vivekananda Vidyamandir & Other
s**,
Civil Appeal No. 6221 of 2011, decided on 28 February 2019
Bench: Justice Arun Mishra and Justice Navin Sinha
⚖️ Legal Issue:
Whether special allowances paid to employees form part of “basic wages” under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, and thus, whether Provident Fund contributions are payable on such allowances.
📜 Relevant Law (Before the Social Security Code):
### Section 2(b) of the EPF Act, 1952 – Definition of “basic wages”
- Basic wages include all emoluments earned by an employee while on duty or on leave, except:
- House Rent Allowance (HRA),
- Overtime allowance,
- Bonus,
- Commission, or
- Similar allowances.
Section 6 of the EPF Act, 1952
- Both employer and employee must contribute 12% of the basic wages, dearness allowance, and retaining allowance (if any).
🔍 Facts of the Case:
- Vivekananda Vidyamandir was excluding ‘special allowances’ from the calculation of PF contributions.
- The Regional Provident Fund Commissioner contended that these allowances were essentially part of basic wages.
- Employers argued that these were variable or incentive-based payments, not part of basic wages.
🧾 Supreme Court’s Ruling:
The Court ruled in favour of the Provident Fund authorities, holding:
-
Disguised allowance:
- If an allowance is universally, necessarily, and ordinarily paid to all employees, it forms part of basic wages.
- Labeling a component as “special allowance” does not change its true nature if it’s paid to all employees regularly and uniformly.
-
PF is mandatory:
- The object of the Act is to ensure social security. Employers cannot contract out of this obligation by restructuring salaries under different labels.
-
Substance over form:
- The Court emphasized that substance must prevail over the form. The real nature of the payment matters, not its name.
📘 Relevance under the Social Security Code, 2020:
The Supreme Court’s ruling directly influenced the drafting of the Social Security Code, 2020, particularly regarding the definition of “wages”.
✅ Key provision: Section 2(88) – “Wages”
It now includes:
- Basic pay, dearness allowance, and retaining allowance, if any,
but excludes:
- Bonus,
- HRA,
- Overtime,
- Commission,
- Conveyance allowance, etc.,
provided that the excluded components do not exceed 50% of the total remuneration.
💡 Implication: If the excluded components exceed 50%, the excess gets added back to “wages” for calculation of PF.
🧷 Thus, the Code codifies the principle laid down in this case – to prevent employers from avoiding PF obligations by artificially splitting wages into non-contributory heads.
📝 Impact of the Judgment:
1. Increased employer liability – Employers must re-examine their salary structures and ensure compliance.
2. Benefit to employees – Ensures higher social security benefits through proper PF contributions.
3. Guided drafting of the Social Security Code – especially to plug the loophole of salary structuring to avoid PF.
📌 Conclusion:
The Vivekananda Vidyamandir case is a landmark judgment in Indian labour law that ensures the integrity of PF contributions. It reinforced that employers cannot evade social security obligations by clever salary structuring. Its reasoning is now reflected and strengthened in the Social Security Code, 2020, particularly through the expanded and clarified definition of “wages”.
Would you like a case brief in table format or a one-page summary for quick revision?
Manipal Academy of Higher Education vs. Provident Fund Commissioner
Regional Provident Fund Commissioner (“Commissioner“) ordered that the amount received on encashment of earned leave has to be considered for the purpose of calculation of “basic wage” under Section 2(b) of Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (“Act“). Accordingly, Respondent raised demands for provident fund contribution from the Appellant. The Appellant then preferred an appeal before the Employees Provident Fund Appellate Tribunal (“Tribunal“) which held that amount received on encashment of earned leave does not form part of basic wages.
Issue:
Whether the amount received by encashing the earned leave is a part of “basic wage” under Section 2(b) of the requiring pro rata employer’s contribution.
HELD:
The Apex Court reiterated the basic principles as laid down in Bridge Roof’s case (supra) on a combined reading of Sections 2(b) and 6 of the Act as follows:
Where the wage is universally, necessarily and ordinarily paid to all across the board such emoluments are basic wages.
Where the payment is available to be specially paid to those who avail of the opportunity is not basic wages.
Conversely, any payment by way of a special incentive or work is not basic wages.
EMPLOYEES STATE INSURANCE CORPORATION- Principal officers an dother staff
🧑💼 Section 24 – Appointment and Powers of Officers in the Corporation
-
Top Officers Appointed by Central Government
- The Director General and Financial Commissioner are the principal officers of the Corporation, appointed by the Central Government.
-
Tenure and Re-appointment
- They can hold office for up to 5 years, with eligibility for reappointment if they meet the qualifications.
-
Salary and Powers
- Their salary, allowances, powers, and duties will be as prescribed by the Central Government and may also include functions mentioned in regulations.
-
Disqualification Clause
- A person disqualified under Section 8 is not eligible to be appointed or continue as Director General or Financial Commissioner.
-
Removal from Office
- The Central Government can remove them anytime, and must do so if a 2/3rd majority of the Corporation votes for their removal in a special meeting.
-
Other Employees
- The Corporation can hire other officers/employees for smooth functioning and duties assigned by the Central Government.
- Prior Central Government approval is required if the salary exceeds the prescribed limit.
-
Recruitment Rules & Service Conditions
- Recruitment, pay, discipline, and service terms shall align with Central Government rules for similar posts.
- For medical specialists/super specialists, terms will match those at AIIMS/PGIs, as notified.
-
Flexibility and Exceptions
- If the Corporation wants to deviate from standard rules, it must get prior Central Government approval.
- This rule does not apply to contract-based consultants or specialists.
-
Salary Parity Determination
- While deciding pay parity, the Corporation will consider educational qualifications, duties, and recruitment methods.
- If any doubt arises, the matter will be referred to the Central Government, whose decision is final.
Purposes for which Employees State Insurance Fund may be expended
Benefits and provision – Medical treatment and attendance of
insured person / extended to their families if insurance extended
Payment of fees / allowances to members of Corpn., Standing
Committee< Medical Benefit Committee, other Committees
Payment of salaries, Leave and joining allowances, travelling allowances, compensatory allowances, gratuities, compassionate
allowances, pensions, PF, other benefit fund – meeting expenses of offices and other services
Establishment and maintenance of hospitals, dispensaries, provisions for medical and ancillary services
Cost of medical treatment paid to any SG, Local Authority, private body or individual
Defraying cost of auditing the accounts and valuation of assets and liabilities
Defraying cost of setting of Employees Insurance Courts
Any amount paid under any contract with Corpn. or committees
Sums paid under any decree, order or award of any court /
tribunal against Corpn / officer / staff – act done in execution of
their duties
Cost of instituting and defending cases (Civil/Criminal)
Defraying expenditure for improvement of health and welfare /
rehabilitation and re-employment – of Insured Persons
Section 31 – Contribution Responsibilities of Employer & Contractor
💰 Section 31 – Contribution Responsibilities of Employer & Contractor
-
Dual Contribution Requirement
- The employer must pay both:
- Employer’s contribution
- Employee’s contribution
- This applies whether the employee is hired directly or via a contractor.
- The employer must pay both:
-
Recovery of Employee’s Share
- The employer can recover the employee’s share only by deducting it from wages.
-
Conditions:
- The deduction must relate only to the period for which the contribution is due.
- No deduction can be made beyond the required amount.
-
Employer’s Share Cannot Be Recovered from Employee
- No deduction from the employee’s wages is allowed for the employer’s contribution – even if a contract says otherwise.
-
Deducted Sum as Trust Money
- Any amount deducted from wages is deemed to be held in trust by the employer for the sole purpose of contribution payment.
-
Remittance Expenses
- The employer bears all costs for sending the contributions to the Corporation.
-
Recovery from Contractor
- If the employer has paid contributions for employees hired through a contractor, they can recover the full amount (both shares) from the contractor:
- By deducting it from the amount payable under contract, or
- As a debt owed by the contractor.
- If the employer has paid contributions for employees hired through a contractor, they can recover the full amount (both shares) from the contractor:
-
Contractor’s Register & Compliance
- The contractor must maintain a register of employees as per regulations.
- This must be submitted to the employer before any final payments are made.
-
Contractor’s Right to Recover from Workers
- The contractor can recover the employee’s share from their wages only under the same conditions as stated for direct employers (i.e., as per subsection (2)).
section 32=
Benefits that the insured and their dependants are entitled to:
entitled to:
1. periodical payments to any indured person in case of sickness certiefied by a dly appointed medical practitioner
2. if insured person is a woman then periodical payments in case of confinment, miscarriage, or sickness arising out of pregnancy, confinement, premature birth of child.
3. payments to insured individual suffering from disablement as a result of an employment injury
4. payments to dependents of the insured person who dies as a result of employment injury
- Medical treatments for insured person
- payments towards eldest surviving member towards expenditutre on funeral of deceasede insured person
(2) The Corporation may, subject to such conditions as may be laid down in the
regulations, extend the medical benefits to the family of an Insured Person.
Section 34. Presumption as
to accident arising in course of
employment
an accident arising in the course of an
employee’s employment shall be presumed, in the absence of evidence to the contrary, to have arisen out of that employment
- An accident happening to an employee in or about any premises at which he is employed - pccurs when during am actual or supposed emergency he is taking steps to rescue or protect persons at premises or serious damage to property
- accident when commuting from his residence to place of duty or vice versa shall be deemed to have occurred during employment if nexus between the circumstances and the employment is established
- Accident while travelling in a vehicle provided by employer (Vehical means aircraft/vessel)
Even if the employee does any act in contravention to law or without instructions from employer – accident would be deemed to
have happened in course of employment if the accident would have happened anyway even if the employee had not acted in contravention to law or without instructions from employer
Occupational disease – specified in 3rd Schedule – Part A, Part B
and Part C – disease has to be directly attributable to employment
Reference to Medical Board
Any question regarding
(i) Permanent disability
(ii) Extent of loss of earning capacity (provisionally/finally)
Any decision of medical Board – can be reviewed – if satisfied by fresh evidence that there was non-disclosure or misrepresentation by employee or any other person of a material fact – whether
fraudulently done or not
(5) Except with the leave of a medical appeal tribunal constituted by regulations, an
assessment shall not be reviewed under sub-section (4) on any application made less than
five years, or in the case of a provisional assessment, six months, from the date thereof and
on such a review the period to be taken into account by any revised assessment shall not
include any period before the date of the application.
Can be reviewed – if there is substantial and unforeseen aggravation of result of injury
They can appeal to Medical Appeal Tribunal / Employees Insurance Court - against the decision
Dependent’s benefit
If Insured person dies – due to employment injury – dependant’s
benefit will be paid to his dependants
If NO dependants – Other dependants of the deceased
Decision of award can be reviewed by Corpn. - if satisfied by fresh evidence that there was non-disclosure or misrepresentation by employee or any other person of a material fact – whether
fraudulently done or not
Medical Benefit
Insured person – If extended to family than family – medical
treatment and attendance
Treatment as out-patient treatment or attendance in hospital / dispensary / clinic etc.
Insured person who – attains age of superannuation / takes voluntary retirement under a scheme / premature retirement – he
and his spouse will get medical benefit subject to payment of contribution Medical treatment can be given by Corpn or State Govt. – by entering into agreement – for sharing the cost If NO agreement it would be shared as determined by the Arbitrator
State Govt to provide – medical, surgical, obstetric treatment
Person in receipt of sickness/disablement benefits – shall remain under medical treatment at a dispensary / hospital / clinic AND
shall adhere to the instructions of medical officer / medical attendant in-charge AND not do anything which might retard or prejudice his recovery AND shall leave the area of treatment without permission AND shall allow to be examined by medical officer
Insured person cannot receive –
1. Both sickness and maternity benefits
2. Both sickness and disablement benefits
3. Both maternity and disablement benefits
Insured has to choose the benefits
- Women getting maternity benefit under this chapter cannot Maternity benefit under Chapter VI
Corporation’s rights when an employer fails to register, extra Sickness Expenses Due to Neglect of Health Regulations section 42-43
Here’s a clean, structured summary of Sections 42 & 43 in your preferred format:
⚖️ Section 42 – Consequences of Employer’s Default in Employee Insurance or Contributions
-
When is the Employer Liable?
- The employer fails to insure the employee under Section 28 within the required or extended period.
- The employee is insured after an accident, causing them to lose out on benefits.
- The employer doesn’t pay required contributions, causing:
- Loss of benefit
- Lower-scale benefit eligibility
-
What Can the Corporation Do?
- If the Corporation finds the employee was entitled to benefits but was deprived due to the employer’s actions:
- It can pay the benefit directly to the employee
- Then, recover the capitalised value of the amount from the employer
-
Subject to:
- Giving the employer a chance to be heard
- Recovery value being adjusted against any pending contributions, interest or damages
- If the Corporation finds the employee was entitled to benefits but was deprived due to the employer’s actions:
-
How is it Recovered?
- As an arrear of land revenue
- Or by using sections 129–132 procedures
🏭 Section 43 – Extra Sickness Expenses Due to Neglect of Health Regulations
-
When Does It Apply?
- If excess sickness among insured employees is due to:
- Insanitary working conditions in a factory/establishment, or
- Poor housing/lodging conditions attributable to the owner’s neglect to follow health laws
- If excess sickness among insured employees is due to:
-
Corporation’s Right to Claim
- The Corporation can send a claim to the owner/occupier for the extra cost of sickness benefits.
-
If Disputed
- The Corporation can refer the matter to the appropriate Government
- Government may initiate an inquiry if a prima facie case exists
-
Outcome of Inquiry
- If default/neglect is proven, the inquiry officer(s) will:
- Determine the extra expenditure
- Decide who is liable and for how much
- If default/neglect is proven, the inquiry officer(s) will:
-
Enforcement
- The determination is treated like a Civil Court money decree
-
Definition of “Owner”
- Includes:
- The actual owner
- Their agent
- Anyone collecting rent as lessee
- Includes:
Let me know if you’d like to link this to any real-world case or illustrate it with examples!
Constitution of Employees’
Insurance Court. and matters before the EIC
Number of Judge / Court as SG thinks fit
Judge – person who is or has been a Judicial Officer / Legal practitioner of 5 years standing
One Court for one Local area OR same court for 2 or more local areas OR 2 or more courts same local area
If 2 or more courts of same local area then SG – business is distributed between them
Any question or dispute regarding
- Whether a person is an employee within the meaning & liable to pay his contribution
- Rate of wages / average daily wages
- Whether a person is an Employer
- Right of a person for the benefit under ESIC – amount and duration
- Direction by Corpn. for review – payment to dependents
- Dispute between employer and Corpn. OR between employer and contractor OR between employer and employee/Contractor regarding ESIC
- Claim for recovery of contribution from employer
Order of Appellant Authority (Medical Appeal Tribunal) - Claim by employer from contractor
- Any dispute by employer in respect of contribution Employer has to deposit 50% claimed by Corpn.
No Civil Court has jurisdiction to try these matters
Powers of EIC
Court will follow procedure laid by State Govt.
An Order of EIC shall be enforceable as a decree in a Suit
EIC will have powers of a Civil Court for
- Summoning and enforcing attendance of witnesses
- Compelling discovery and production of documents and material objects
3 Administering oath - Recording evidence
Proceeding has to be initiated within 3 years from the date on which cause of action arises
Legal practitioner can appear or any officer of Regd. Trade Union can appear in EIC by written authorisation from person
NO Appeal lies from an Order of EIC
Appeal lies to High Court only if it involves **substantial question of law **
Appeal to be filed within 60 days from Order of EIC
GRATUITY
Gratuity payable to employee on termination of his
employment – after he has rendered continuous service of not less than 5 years
❖ Termination can happen –
1. On superannuation
2. On retirement or resignation
3. On death / disablement / disease
4. Termination of contract period
5. Happening of an event as notified by CG
In case of a Working Journalists – 5 years shall be deemed to be 3 years.
5 years continuous service not required where termination is due to death / disablement / expiration of contract period / happening of event notified by CG
❖ In case of death - gratuity shall be paid to ;
(i) Nominee
(ii) No nominee – Legal heirs
If nominee / legal heir is a minor – shall be
deposited with competent authority till he attains majority – money would be invested till that time in a bank / institution as approved by appropriate Govt.
❖ Gratuity – 15 days wages or such day as specified by CG - @ last drawn wages
❖ Piece rate or daily workers – average of total wages of 3 months - @ preceding the termination
❖ in the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year, the employer shall pay the gratuity at the rate of 7 days’ wages for each season
the gratuity of an employee, whose services have been terminated for any
act, wilful omission or negligence causing any damage or loss to, or destruction of property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused;
(b) the gratuity payable to an employee may be wholly or partially forfeited—
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided such offence is committed by him in the course of his employment.
15 days to be calculated by dividing the monthly rate of
wages last drawn by 26 days and multiplying the
quotient by 15.
Continuous service
Has been in an uninterrupted service
❖ Also service interrupted due to
1. Sickness
2. Accident
3. Leave
4. Absence from duty without leave (But not Order treating absence as break)
5. Layoff, strike, lockout
6. Cessation of work not due to fault of employee
Employee (not being in seasonal establishment) – not in continuous service as stated above for 1 year – will be deemed to be in continuous service if ;
- Worked for not less than 190 days – employed in mines or establishment which works for less than 6 days in a week
- 240 days in other cases
❖ For 6 months
1. Worked for not less than 95 days – employed in mines or establishment which works for less than 6 days in a week
2. 120 days in other cases
❖ In seasonal establishment – if he actually worked for not less than 75% of the number of days on which the establishment was
operational
Rohtas Industries Staff Union v State of Bihar
Legal Issue:
The issue in this case related to the Employees’ State Insurance Act and whether workers were
entitled to certain benefits despite the employer’s non-compliance with the Act.
Ratio Decidendi (Legal Principle):
The Supreme Court held that the Employees’ State Insurance (ESI) scheme is beneficial for
workers and cannot be bypassed by the employer’s failure to contribute. Workers are entitled
to ESI benefits even if the employer fails to meet statutory obligations. This case emphasized the worker’s right to statutory benefits, irrespective of the employer’s negligence.
Indian Newspapers (Bom) Pvt Ltd v TM Nagarajan
This case involved the issue of whether certain employees were entitled to Employees’
Provident Fund (EPF) benefits under the statutory scheme.
Ratio Decidendi (Legal Principle):
The court held that employees of Indian Newspapers Pvt Ltd were entitled to EPF benefits,
clarifying that even if the employer did not initially register with the EPF authority, the
employees’ right to EPF was not extinguished. The decision highlighted the non-waivable
rights of employees regarding statutory welfare benefits.
Similarly in Employees State Insurance Corporation & ANR. Vs. Mangalam Publications (I) Private Limited
This case focused on the applicability of the Employees’ State Insurance (ESI) Act to a
private company and whether the company was liable for non-payment of ESI contributions
for its employees.
The Supreme Court held that the company was liable for non-compliance with the ESI Act,
emphasizing that companies cannot escape their obligations to contribute to the scheme, even
if they try to argue that certain employees were not covered under the Act.
M. Laxmanamurthy v. Employees’ State Insurance Corporation, Bangalore
The issue in this case was whether the employee was entitled to ESI benefits for an injury
sustained during the course of employment, and whether the Employees’ State Insurance
Corporation (ESIC) was liable to provide those benefits.
Ratio Decidendi (Legal Principle):
The Supreme Court ruled that the employee was entitled to ESI benefits, even in the event of
an injury that occurred while not directly performing the usual tasks of employment but in the course of employment. This decision affirmed that ESI benefits were broadly applicable to a
variety of employment scenarios.
Premchand Jute & Industries (P) Ltd. v. Employees State Insurance Corporation,
This case concerned whether the Employees State Insurance Corporation (ESIC) could
recover dues from an employer even after the employer had closed down its operations.
Ratio Decidendi (Legal Principle):
The Calcutta High Court ruled in favor of the ESIC, stating that even after a company ceases
operations, it remains liable to pay dues related to employee welfare and contributions under
the Employees’ State Insurance Act. The case underscored that the closure of a business does not absolve an employer from its statutory obligations to its employees.
Birla Institute of Technology vs The State of Jharkhand, 2019
The issue in this case concerned the application of the Employees’ Provident Fund (EPF)
provisions to educational institutions like the Birla Institute of Technology, and whether such
institutions are obliged to contribute to the Provident Fund for their employees.
Ratio Decidendi (Legal Principle):
The Supreme Court held that educational institutions, including the Birla Institute of
Technology, are covered under the Employees’ Provident Fund and Miscellaneous
Provisions Act. The Court emphasized that institutions, regardless of being educational, must
comply with the statutory obligation to contribute to the provident fund for their employees.
Ram Naresh Singh vs Bokaro Steel Ltd. (30 October 2017)
whether the employee was entitled to those benefits after being dismissed from service.
The Supreme Court ruled that dismissal from service does not automatically negate an
employee’s entitlement to service benefits like gratuity and pension. The decision
reaffirmed the principle that gratuity and pension rights are earned during employment and
should not be revoked due to dismissal, unless there are specific legal grounds for such
actions. The ruling underscored that service benefits are legally protected unless forfeited
in accordance with the law.
Municipal Corporation of Delhi v. Dharam Singh
The case involved a dispute regarding whether employees who were permanently employed under a temporary nature of employment were entitled to gratuity
The Supreme Court held that temporary employees who have been in continuous service
for the prescribed duration (5 years or more) are entitled to gratuity. The Court reaffirmed
that the nature of employment, whether permanent or temporary, does not affect an
employee’s right to gratuity once the eligibility criteria under the Act are met.
Reliance Industries Ltd. v. Gujarat State Electricity Corporation
whether gratuity should be paid on the basis of the last drawn salary (including allowances) or whether only the basic pay should be considered
Supreme Court clarified that gratuity should be calculated on the last drawn salary,
**including allowances that form part of the wages. **
U.P. State Road Transport Corporation v. Suresh Chandra Dubey
whether gratuity is payable to an employee who had been absent from work due to illness or injury.
The Supreme Court held that an employee’s absence due to illness or injury would not
break the continuity of service, and the employee would be entitled to gratuity even during
such periods of absence, as long as the absence was not due to misconduct. This case reaffirmed that an employee’s eligibility for gratuity is determined by continuous service
and not by the nature of leave taken.
Anshu Rani vs State of Uttar Pradesh
This case addressed the issue of maternity leave for a woman employee of the Uttar
Pradesh government who was denied maternity benefits due to her employment status and
the interpretation of the Maternity Benefit Act, 1961.
Ratio Decidendi (Legal Principle):
The Allahabad High Court ruled in favor of Anshu Rani, stating that maternity leave and
benefits are the legal entitlements of women employees once they fulfill the eligibility
requirements under the Maternity Benefit Act, 1961. The Court also emphasized that the
denial of maternity benefits on the grounds of temporary or contractual employment is
unconstitutional if the employee meets the service duration requirements. The Court
observed that maternity benefits are not discretionary, but rather a statutory entitlement to
all female workers.
Smt. Tanuja Tolia vs State of Uttarakhand
Ratio Decidendi (Legal Principle):
The Uttarakhand High Court ruled in favor of Smt. Tanuja Tolia, emphasizing that maternity leave is a statutory right under Indian labor law, specifically the Maternity Benefit Act, 1961.
The Court highlighted that the right to maternity benefits cannot be denied on arbitrary grounds, and all women employees are entitled to maternity leave if they meet the eligibility criteria, including having worked for at least 80 days in the preceding 12 months. The decision reaffirmed that public sector employees are entitled to maternity leave under the same conditions as private sector workers.
