PAPER-I: LABOUR AND INDUSTRIAL LAW-II short answer

IV SEMESTER

PAPER-I: LABOUR AND INDUSTRIAL LAW-II

Unit-l:

1. What is the concept of minimum wages?
Minimum wages refer to the lowest remuneration that employers can legally pay their workers. It is set by the government to protect workers from exploitation and ensure a basic standard of living. Under the Minimum Wages Act, 1948, both the Central and State Governments are empowered to fix minimum wage rates for scheduled employments. These rates vary by region, type of work, and skill level. The objective is to reduce wage disparity and provide workers with a fair income to meet essential needs.

2. Define fair wages and how they differ from living wages.
Fair wages lie between the minimum and living wages. They are determined by the employer’s paying capacity, the worker’s productivity, and the prevailing wage rates in similar industries. Living wages, on the other hand, are higher than fair wages and are intended to provide a worker and their family with a decent standard of living, including health, education, and some savings. While minimum wages are enforceable by law, fair and living wages are more aspirational and determined by social justice principles and industrial negotiations.

3. What are the key provisions of the Payment of Wages Act, 1936?
The Payment of Wages Act, 1936 ensures that employees receive their wages on time and without unauthorized deductions. The Act mandates the timely disbursement of wages—typically by the 7th or 10th of every month, depending on the establishment’s size. It specifies who is responsible for wage payments and lists authorized deductions like income tax, provident fund contributions, and fines for misconduct. Any unjust deduction or delay can be contested by the employee through a claims process. This law primarily benefits non-supervisory workers earning below a certain wage threshold.

4. What are authorized deductions under the Payment of Wages Act, 1936?
Authorized deductions under the Payment of Wages Act, 1936 include specific legal and contractual charges. These typically cover income tax, provident fund contributions, court-ordered payments, cooperative society dues, insurance premiums, and sanctioned fines. Deductions for absence from duty, damage or loss caused by the employee, and recovery of loans or advances are also permitted under certain conditions. Importantly, the total deductions cannot exceed 50% of the employee’s wages in any wage period (75% in some loan recovery cases). Any unauthorized deduction can be challenged before an appropriate authority.

5. What is the procedure for fixing minimum wages under the Minimum Wages Act, 1948?
Under the Minimum Wages Act, 1948, wages can be fixed using two methods: the Committee Method and the Notification Method. In the Committee Method, advisory committees comprising employers, employees, and independent experts are formed to suggest wage rates. In the Notification Method, the government directly publishes proposed rates in the official gazette, inviting public objections. After considering feedback, final rates are declared. These may vary based on region, industry, skill, and nature of work. Periodic revisions must be undertaken to adjust wages with inflation and cost of living.

6. What are Whitley Commission’s recommendations on wages and labour welfare?
The Whitley Commission (1931) was established to assess labour conditions in India. It emphasized the need for legal protections for workers, including regular payment of fair wages, health benefits, housing, and regulated working hours. The Commission recommended the establishment of wage boards, joint industrial councils, and the inclusion of workers’ voices in industrial policy-making. It also stressed the need for labour welfare funds, minimum wage laws, and mechanisms to resolve industrial disputes. These recommendations laid the groundwork for several post-independence labour legislations in India.

7. What are wage policies and their objectives in India?
India’s wage policy aims to ensure economic justice by promoting fair wage distribution and protecting vulnerable workers. It includes legal enforcement (Minimum Wages Act), collective bargaining mechanisms, and periodic revision of wage rates. The objectives are:

Eliminate exploitation
Narrow wage disparities
Improve standard of living
Encourage productivity
It also involves fixing minimum wages for unorganized sectors and promoting skill development for better employability. The policy supports economic growth while balancing the needs of both employers and employees.

8. What are the types of wages?
There are several types of wages:

Minimum Wage: Legally set minimum remuneration.
Fair Wage: Wage slightly above minimum, adjusted for employer’s capacity.
Living Wage: Sufficient for a decent living standard.
Nominal Wage: Wages expressed in monetary terms.
Real Wage: Wages adjusted against inflation.
Piece Wage: Paid based on units of work produced.
Time Wage: Paid based on hours/days worked.
These classifications help understand the wage structures and guide policymaking.

9. How are wage claims settled under the Payment of Wages Act, 1936?
Under the Act, if an employee is denied wages or faces unauthorized deductions, they can file a claim before the authority appointed under the Act—often a Labour Commissioner or similar officer. The application must be made within 12 months of the incident. The authority can order the employer to pay due wages along with compensation up to 10 times the deducted amount. The decision can be enforced like a civil court decree. This provision ensures access to legal recourse for wage-related grievances.

10. How does the Minimum Wages Act, 1948 protect unorganized workers?

The Minimum Wages Act, 1948 plays a critical role in safeguarding unorganized workers who lack collective bargaining power. The Act empowers the government to fix minimum wage rates for scheduled employments, many of which cover informal sector jobs like agriculture, construction, and domestic work. It ensures payment of statutory minimum wages regardless of an employer’s capacity or worker’s agreement. Non-payment or underpayment is punishable. The Act thus protects workers from exploitation, especially in rural and unregulated sectors, and helps reduce income inequality.

11. How are minimum wage rates determined in India?
In India, minimum wage rates are determined under the Minimum Wages Act, 1948 by both Central and State Governments. Two procedures are followed:

Committee Method – Advisory committees consisting of employers, employees, and independent persons recommend wage rates.
Notification Method – Governments publish proposed wage rates in the Official Gazette and invite objections before finalizing them.
The wage rates vary according to region, occupation, skill level, and employment category. These rates are periodically revised, typically every five years, to keep pace with inflation and the cost of living. The process ensures fair remuneration for workers, especially in unorganized sectors.

12. What is meant by “Scheduled Employment” under the Minimum Wages Act, 1948?
“Scheduled Employment” refers to occupations or industries that are specifically listed in the schedule of the Minimum Wages Act, 1948, for which the government is empowered to fix minimum wage rates. Examples include employment in agriculture, construction, brick kilns, textiles, domestic work, and more. These sectors often have vulnerable workers, making it necessary to provide statutory wage protection. The government periodically updates this schedule to include more sectors and extend wage protection to a broader range of unorganized or semi-organized industries, thereby promoting social justice.

13. How are claims resolved under the Payment of Wages Act, 1936?
Under the Payment of Wages Act, 1936, if a worker is not paid on time or faces unauthorized deductions, they can file a claim before an appointed authority, such as the Labour Commissioner or a judicial magistrate. The claim must be submitted within 12 months of the incident. The authority can order the employer to pay the pending wages along with compensation up to 10 times the wrongfully deducted amount. The process is designed to be fast and accessible to workers, offering them an effective remedy without requiring lengthy litigation.

14. What is the objective of wage-related industrial policy in India?
India’s wage-related industrial policy aims to balance worker welfare with economic development. It promotes fair wage practices, reduction in income inequality, and social security. The key objectives include:

Ensuring workers receive minimum and fair wages
Encouraging productivity-linked wages
Narrowing the wage gap across sectors
Supporting sustainable industrial growth
The policy also emphasizes social dialogue, collective bargaining, and legal frameworks to protect vulnerable workers. By creating a just wage structure, it helps in reducing poverty, improving living standards, and maintaining industrial peace.

15. What factors influence the determination of fair wages?
Fair wages are influenced by multiple factors:

The employer’s paying capacity
Prevailing wage rates in similar industries
The cost of living and inflation
Worker’s skill, experience, and productivity
The legal minimum wage as the lower limit
Fair wages are higher than minimum wages but lower than living wages. They aim to ensure reasonable remuneration that allows workers to live above the subsistence level while also being financially sustainable for the employer. A well-defined fair wage system fosters motivation, loyalty, and increased efficiency in the workforce.

16. What impact did the Whitley Commission have on India’s labour policy?
The Whitley Commission (1931) played a pivotal role in shaping modern Indian labour laws. It recommended:

The institution of minimum wages
Creation of joint industrial councils involving workers and employers
Welfare measures like housing, health, and education for workers
Regulation of working conditions and industrial relations
These recommendations laid the foundation for key legislations post-independence, such as the Factories Act, 1948, Minimum Wages Act, 1948, and Industrial Disputes Act, 1947. It emphasized the need for a legal framework for labour rights and inspired the development of social justice policies for the working class.

17. What is the legal significance of the concept of Living Wage in India?
In India, the concept of a Living Wage is reflected in Article 43 of the Constitution under the Directive Principles of State Policy, which guides the State to ensure a decent standard of life for workers. Although not legally enforceable, it influences wage policy, judicial decisions, and welfare schemes. Courts have interpreted the right to livelihood and dignity to include aspects of a living wage. Government programs like MGNREGA and social security schemes are also rooted in this principle. It serves as an aspirational goal for improving workers’ quality of life.

18. Why is timely payment of wages important?
Timely payment of wages is crucial for the economic security and dignity of workers. It ensures that they can meet their daily needs like food, rent, education, and healthcare without falling into debt. The Payment of Wages Act, 1936 mandates payment by the 7th or 10th of each month, depending on the size of the establishment. Delay in wages can lead to worker dissatisfaction, stress, and industrial disputes. Regular and prompt payment boosts morale, enhances productivity, and reflects responsible corporate governance.

19. What is the difference between Time Wage and Piece Wage systems?

Time Wage: Payment is based on the amount of time (hour, day, month) the employee works, regardless of the output. It offers income stability and is suitable for jobs requiring consistency and care (e.g., clerical work, teaching).
Piece Wage: Payment depends on the number of units produced. It incentivizes productivity and is common in manufacturing or tailoring.
While piece wage encourages higher output, it may affect quality and cause stress. Time wage, on the other hand, may not directly promote productivity. A hybrid model is sometimes used to balance both efficiency and fairness.

20. What is the process for revising minimum wages under the Minimum Wages Act, 1948?
The Minimum Wages Act, 1948 requires periodic revision of wage rates to match inflation and living costs. Revision occurs in two ways:

Regular Revision – At least once every five years, the government revises rates through committees or public notification.
Special Revision – Can be done at any time based on market conditions or socio-economic factors.
The process includes stakeholder consultation, expert recommendations, and analysis of cost-of-living indices. Revised rates are then notified and made applicable by law. This ensures that workers continue to receive a wage that is fair and relevant to present-day conditions.

21. What are the penalties for non-compliance under the Minimum Wages Act, 1948?
Non-compliance with the Minimum Wages Act, 1948 attracts penalties. Employers who pay less than the fixed minimum wage or violate related provisions may face imprisonment up to 6 months or a fine up to ₹500, or both. Repeat offenders may face harsher punishment. Inspectors are appointed to monitor compliance, and workers can file claims before the competent authority. Courts may also order compensation in addition to recovery of dues. These provisions ensure enforcement of statutory rights and deter exploitation of labour, especially in vulnerable sectors.

22. What is the role of Inspectors under the Minimum Wages Act, 1948?
Inspectors under the Act are appointed by the appropriate government to ensure implementation of the Minimum Wages Act, 1948. Their duties include:

Inspecting workplaces
Examining records, registers, and wage slips
Interviewing employees
Ensuring correct payment of minimum wages
They have powers to enter premises, seize relevant documents, and take evidence for prosecution. They serve as a watchdog to protect workers’ rights and ensure employers comply with wage rules. Their reports are crucial in initiating legal action against defaulters.

23. What is the definition of wages under the Payment of Wages Act, 1936?
Under the Payment of Wages Act, 1936, “wages” include all remuneration expressed in monetary terms, payable to a person employed for their services. It includes basic pay, dearness allowance, overtime, bonus, and incentive payments. However, it excludes:

Travelling allowances
Provident fund contributions
Gratuity
Value of accommodation or medical facilities
The definition ensures that all essential components of employee compensation are covered under wage laws, and unauthorized deductions can be identified and addressed.

24. How does wage protection benefit the informal sector in India?
The informal sector, which employs over 80% of India’s workforce, often lacks formal contracts or security. Wage protection laws like the Minimum Wages Act and Payment of Wages Act provide a safety net by ensuring:

Guaranteed minimum earnings
Timely wage payment
Legal remedies for underpayment or exploitation
By applying minimum wage norms to scheduled employments in the informal sector (e.g., domestic work, construction), the government helps uplift the economic condition of low-income workers and reduce poverty. It also promotes social equity and economic inclusion.

25. What is the significance of wage fixation by the government?
Government wage fixation is crucial for protecting workers from exploitation, especially where collective bargaining is weak or absent. It ensures:

Equity in income distribution
Standardization across regions and industries
A basic standard of living for workers
It is especially important in unorganized and low-skilled sectors where employers may pay below subsistence levels. Wage fixation balances labour welfare with economic feasibility and supports stable industrial relations, contributing to inclusive economic growth.

26. How does the concept of ‘Equal Pay for Equal Work’ apply to wages?
The principle of Equal Pay for Equal Work means that employees doing similar work under similar conditions must receive the same wage, regardless of gender or social identity. The Supreme Court of India has upheld this right under Article 14 (Right to Equality) and Article 39(d) of the Constitution. This principle combats discrimination and promotes fairness in wage structures. It’s especially relevant in public employment and has also influenced private sector practices. It is a fundamental tenet of labour justice.

27. What is the effect of inflation on minimum wage determination?
Inflation directly affects workers’ purchasing power. Therefore, while fixing or revising minimum wages, governments must consider the Consumer Price Index (CPI) or Cost of Living Index to ensure wages remain adequate for meeting basic needs. Without adjustment, stagnant wages can lead to real income loss. Many states in India have Variable Dearness Allowance (VDA) linked to inflation, which is revised biannually or annually. Factoring in inflation helps maintain the relevance and sufficiency of minimum wages over time.

28. What are the responsibilities of employers under wage laws?
Employers are legally required to:

Pay minimum wages as fixed under law
Disburse wages on time
Maintain wage registers, records, and slips
Make only authorized deductions
Facilitate inspection and audits by authorities
Non-compliance can result in legal action, penalties, or imprisonment. Employers must also cooperate with committees or authorities during wage fixation and revision processes. Their role is essential in implementing labour welfare laws and promoting industrial harmony.

29. What are the remedies available to workers for wage-related grievances?
Workers can seek remedies under:

Payment of Wages Act, 1936 – for delay or unauthorized deductions
Minimum Wages Act, 1948 – for underpayment or non-payment
Labour Courts or Authorities – for legal adjudication
Trade Unions – for collective action and legal aid
Authorities may order recovery of wages, compensation, and even initiate prosecution. These remedies ensure workers’ rights are protected and give them a formal mechanism to address grievances.

30. How does wage policy promote economic development?
A well-structured wage policy ensures fair income distribution, encourages productivity, and reduces poverty, which in turn stimulates demand and economic activity. By promoting fair wages, job security, and social equity, it helps in creating a motivated workforce, reducing labour unrest, and attracting investments. It also addresses income inequality and aligns labour costs with economic conditions, supporting inclusive and sustainable growth. A sound wage policy, therefore, acts as both a social welfare tool and an economic development strategy.

Unit-II:

1. What is the concept of Bonus in labour law?
Bonus is a monetary reward given to employees in addition to their regular salary, recognizing their contribution to the company’s profits and success. It aims to promote industrial harmony and increase productivity. In India, the Payment of Bonus Act, 1965 provides a statutory right to bonus for eligible employees, ensuring profit-sharing between employers and workers. It balances the interests of both parties by linking bonus to the financial performance of the establishment while also guaranteeing a minimum bonus even in years without profits.

2. What is the right to claim bonus under the Payment of Bonus Act, 1965?
Under the Payment of Bonus Act, 1965, employees earning a salary or wage up to ₹21,000 per month and having worked for at least 30 days in an accounting year are entitled to receive a bonus. This right is statutory and enforceable. Employers are obligated to pay a minimum bonus of 8.33% of the employee’s annual salary or ₹100 (whichever is higher), even if there is no allocable surplus. The maximum bonus payable is 20% of annual wages, based on available surplus.

3. What is the Full Bench Formula related to Bonus?
The Full Bench Formula, laid down by the Labour Appellate Tribunal in 1950, was an early method for determining bonus before the 1965 Act. It defined bonus as deferred wages, not merely a profit-sharing mechanism. It provided for a minimum 4% return on capital employed before calculating the bonus. The remaining surplus was considered allocable to employees. This formula helped shape the Payment of Bonus Act, which later replaced it but retained its spirit by linking bonus to allocable surplus while ensuring a statutory minimum.

4. What was the Bonus Commission and its relevance?
The Bonus Commission (1961), also known as the Mundhra Commission, was set up to examine the feasibility of making bonus payments a statutory obligation. It studied industry practices, labour demands, and profit-sharing models. The Commission recommended a comprehensive bonus law that would ensure both minimum bonus and profit-based additional bonuses. Its findings led to the enactment of the Payment of Bonus Act, 1965, replacing discretionary bonus practices with a uniform, legal framework to safeguard employee rights.

5. How is gross profit and allocable surplus computed under the Bonus Act?
The gross profit is calculated as per the First or Second Schedule of the Act, depending on whether the company is banking or non-banking.
From gross profit, certain deductions are made:

Depreciation
Development rebate
Direct taxes
Prior losses
The remaining amount is called available surplus.
A percentage of this (60% for companies, 67% for others) is termed the allocable surplus, which is the amount legally set aside for bonus distribution to eligible employees.

6. Who is eligible to receive bonus under the Act?
An employee is eligible for bonus under the Payment of Bonus Act, 1965 if:

Their monthly salary or wage is ₹21,000 or less
They have worked at least 30 days in the accounting year
Employees of factories or establishments with 20 or more workers are covered. The eligibility includes full-time workers, including contract workers (under certain conditions), but excludes apprentices, managerial personnel, and employees in the armed forces. Eligible employees must be paid a bonus regardless of the company’s profit status, subject to statutory minimum limits.

7. What are the grounds for disqualification from receiving bonus?
An employee may be disqualified from receiving bonus under Section 9 of the Payment of Bonus Act, 1965 if they are **dismissed for:

Fraud
Riotous or violent behavior
Theft, misappropriation, or sabotage of property**
Such dismissals must follow a proper domestic enquiry and disciplinary procedure. In these cases, the employer is not legally bound to pay the bonus for the accounting year in which the misconduct occurred. This provision acts as a deterrent against serious misconduct and safeguards employer interests.

8. What is the concept of set-on and set-off under the Bonus Act?
Set-on and set-off are mechanisms in Sections 15 and 16 of the Act to manage fluctuating profits:

Set-on: If allocable surplus exceeds the amount required for maximum bonus (20%), the extra amount is carried forward up to 4 years and used in less profitable years.
Set-off: If allocable surplus is insufficient for minimum bonus, the shortfall is carried forward and adjusted in subsequent years when surplus is higher.
This ensures continuity and fairness in bonus distribution across profit cycles.

9. What are the minimum and maximum limits of bonus under the Act?
According to the Payment of Bonus Act, 1965:

The minimum bonus payable is 8.33% of annual wages or ₹100, whichever is higher. This is payable even if the employer has made no profit.
The maximum bonus is capped at 20% of annual wages, depending on the available allocable surplus.
These limits ensure a balance between employee welfare and employer capacity, providing workers with basic income support while allowing performance-based rewards.

10. How can employees recover unpaid bonus?
If an employer fails to pay bonus, employees can file a complaint under Section 21 of the Payment of Bonus Act, 1965 within one year of the due date. The claim must be made before the Labour Court or Authority designated under the Act. The court can direct payment of bonus along with penal interest and may impose penalties or fines on the employer. This legal mechanism ensures accountability and enforces the right to bonus as a statutory benefit.

11. What is the applicability of the Payment of Bonus Act, 1965?
The Payment of Bonus Act, 1965 applies to all factories and establishments employing 20 or more persons on any day during an accounting year. Even if the number of employees falls below 20 later, the Act continues to apply. The Act is applicable to both private and public sector establishments (except those exempted by the government). Employees drawing wages up to ₹21,000 per month and having completed 30 days of service in a year are entitled to bonus under this Act.

12. How is ‘available surplus’ calculated under the Bonus Act?
Available surplus is calculated by deducting the following from gross profits:

Depreciation as per Income Tax Act
Development rebate or allowance
Direct taxes (e.g., income tax)
Sums set aside for reserves
The result is the available surplus, which is used to calculate the allocable surplus—the portion distributed as bonus. This ensures that essential business expenses and tax liabilities are deducted before determining the share of profit to be distributed among employees.

13. What is ‘allocable surplus’ under the Bonus Act?
Allocable surplus is the portion of the available surplus that is legally required to be distributed as bonus among employees. It is calculated as:

60% of available surplus in the case of companies
67% in the case of others (non-corporates)
This mechanism ensures fair sharing of profits between the employer and employees. If the allocable surplus is high, employees may receive bonuses up to the maximum limit of 20%. The remainder may be retained by the employer or carried forward under the set-on provisions.

14. What is the time limit for payment of bonus under the Act?
As per Section 19 of the Payment of Bonus Act, 1965, employers must pay bonus to eligible employees within 8 months from the close of the accounting year. If there is a delay due to unavoidable circumstances, the employer must obtain government approval for extension. Timely payment of bonus helps ensure industrial peace, employee satisfaction, and compliance with labour laws. Failure to pay within the prescribed time can result in legal action, penalties, and employee claims.

15. Can bonus be paid in kind under the Bonus Act?
No, under the Payment of Bonus Act, 1965, bonus must be paid in cash. Payment in kind, such as goods or services, is not recognized under the Act and would be treated as non-compliance. Employers are required to disburse the bonus directly into employees’ accounts or in physical cash (where permissible), with proper records and acknowledgment. This provision ensures transparency, accountability, and the actual receipt of bonus by employees without dilution or substitution.

16. What are the records employers must maintain under the Bonus Act?
Employers are required to maintain the following records under the Payment of Bonus Act, 1965:

Register A: Computation of allocable surplus
Register B: Set-on and set-off
Register C: Details of bonus paid to each employee
Register D: Amount of bonus due but unpaid
These records must be preserved for at least 8 years and made available for inspection by labour authorities. Maintaining these registers ensures compliance, transparency, and serves as evidence in case of disputes or audits.

17. Is an employee entitled to bonus during suspension or absence?
Bonus is payable only for the period during which the employee has actually worked. If an employee is suspended without pay, absent without leave, or on unauthorized leave, that period will not count towards bonus eligibility. However, if the suspension ends in reinstatement with back wages, the period may be considered as worked, and bonus may become payable. Similarly, paid leaves such as earned leave or maternity leave are included in working days for bonus eligibility.

18. Can temporary or contract employees claim bonus under the Act?
Yes, temporary, probationary, and contract employees are entitled to bonus under the Payment of Bonus Act, 1965, provided they are on the rolls of the employer and fulfill the eligibility criteria (i.e., wages up to ₹21,000/month and 30 days of service). However, independent contractors (not under employer control/supervision) are not covered. Courts have upheld the inclusion of contract workers (engaged directly or indirectly) in certain cases where they worked under the supervision and control of the principal employer.

19. What happens if the employer suffers a loss—does bonus still apply?
Yes, even if the employer incurs a loss, they are required to pay the minimum bonus of 8.33% of annual wages to eligible employees, unless exempted by the government under specific conditions. The set-off mechanism allows the loss to be carried forward and adjusted against future profits. However, the obligation to pay minimum bonus remains unless a formal exemption is obtained. This ensures that workers have income security even during downturns.

20. Can bonus be recovered under any other law apart from the Bonus Act?
Yes, if bonus payment is delayed or denied, it may also be recovered under other applicable laws like:

Industrial Disputes Act, 1947 – through a labour court
Code on Wages, 2019 (once fully implemented)
Civil suit (for contractual bonus)
However, the primary law governing statutory bonus is the Payment of Bonus Act, 1965, and it provides a dedicated recovery mechanism through Labour Authorities. Alternative remedies are usually pursued if the bonus is not statutory but contractual or customary.

21. What is the significance of the minimum bonus under the Act?
The minimum bonus of 8.33% of annual wages (or ₹100, whichever is higher) ensures that employees receive a guaranteed share of earnings, even when the employer incurs losses or has no allocable surplus. It reflects the principle of income security and acknowledges the role of employees in the productivity and success of an organization. This statutory minimum creates a floor for bonus payments and promotes social justice by protecting the financial interests of workers, especially in low-wage and unorganized sectors.

22. What is the maximum bonus payable under the Payment of Bonus Act, 1965?
The maximum bonus payable under the Act is 20% of annual wages or salary. If the allocable surplus is sufficient, the employer must distribute up to this maximum limit. This ceiling ensures that the bonus is proportionate to the organization’s financial capacity and profits. Any surplus beyond this may be set-on for future years. The cap maintains a balance between employee welfare and the company’s financial stability, preventing excessive payouts in highly profitable years.

23. What is the role of the government in the Payment of Bonus Act, 1965?
The government plays a regulatory and supervisory role in the implementation of the Bonus Act. Its responsibilities include:

Framing rules and procedures
Appointing inspectors and authorities to enforce the Act
Granting exemptions to certain establishments
Resolving disputes between employers and employees
Amending wage limits or bonus percentage
The government ensures that the provisions of the Act are applied uniformly and workers’ rights are protected, especially in vulnerable sectors.

24. Can bonus be linked to performance or productivity?
While the Payment of Bonus Act primarily links bonus to the allocable surplus, nothing in the Act prevents employers from introducing performance-based or productivity-linked bonus schemes, provided that the statutory minimum bonus is met. Many companies use such models to incentivize higher efficiency, motivate employees, and reward excellence. However, statutory bonus remains distinct from ex-gratia or incentive bonuses, and the employer cannot substitute the former with the latter.

25. What is the limitation period for filing a claim under the Bonus Act?
As per Section 21 of the Payment of Bonus Act, 1965, an employee must file a claim for unpaid or short-paid bonus within one year from the date the bonus became due. However, if sufficient cause is shown, the authority may condone the delay. This time frame ensures timely dispute resolution and protects employers from indefinite liability, while also offering workers a fair chance to claim their dues.

26. Are apprentices entitled to bonus under the Bonus Act?
No, apprentices appointed under the Apprentices Act, 1961 or under standing orders of an establishment are not eligible to receive bonus under the Payment of Bonus Act, 1965. Since apprentices are considered trainees and not employees, they are outside the scope of this Act. However, if a person is designated as an “apprentice” but is in fact performing regular employee duties, courts may treat them as eligible depending on the nature of employment.

27. How does the Bonus Act handle newly set-up establishments?
New establishments are given a grace period of five years from the date of setup. During this period, they are not required to pay bonus, unless they have made profits in any of the years within this period. If profits are made, the employer becomes liable to pay minimum bonus for those years. This provision encourages entrepreneurship and business development, offering financial breathing space to new ventures while still protecting employee rights if the business is profitable.

28. Is bonus payable on overtime wages and allowances?
Bonus is calculated on basic wages and dearness allowance only. It does not include:

Overtime wages
House rent allowance
Conveyance allowance
Bonuses or commissions
Value of perks (e.g., free meals, medical aid)
This distinction is important to maintain uniformity in bonus computation and prevent inflation of wage figures. Only those components that are part of regular monthly earnings are considered for bonus calculation under the Act.

29. Can a company be exempted from the Payment of Bonus Act?
Yes, under Section 36, the appropriate government may exempt an establishment from all or any provisions of the Act if it is in public interest and the financial position and other relevant circumstances justify the exemption. Exemptions may be temporary or conditional, and are typically granted to financially distressed companies or institutions serving public welfare (e.g., hospitals or non-profits). The aim is to prevent undue burden while safeguarding essential services.

30. What happens if an employer fails to comply with the Bonus Act provisions?
Non-compliance with the Payment of Bonus Act, 1965 may lead to penalties under Section 28:

Imprisonment up to 6 months
Or fine up to ₹1,000
Or both
Additionally, employees can file claims for unpaid bonuses, and the employer may be ordered to pay arrears with interest and compensation. Persistent default can also result in prosecution. The Act ensures that bonus is not optional but a legal obligation, and failure to follow it attracts consequences.

Unit-III

1. What is the concept of Social Security in labour welfare?
Social Security refers to the protection provided to individuals against certain life risks like sickness, unemployment, old age, injury, or death. In the context of labour welfare, it ensures that workers and their dependents receive support in case of wage loss, disability, or death. It may be provided through social insurance (contributory) or social assistance (non-contributory) mechanisms. In India, various laws like the Employees’ State Insurance Act, Employees’ Provident Fund Act, and Workmen’s Compensation Act provide social security benefits to industrial workers.

2. What is the difference between Social Insurance and Social Assistance?
Social Insurance involves contributions from employees, employers, and sometimes the government. Benefits are paid as a matter of right, such as under the Employees’ State Insurance Act.
Social Assistance, on the other hand, is non-contributory and funded entirely by the government to support economically weaker sections, e.g., old age pensions or disability benefits under state schemes. Social insurance is formal and structured, while assistance is more flexible and need-based. Both aim to ensure economic and social welfare.

3. What are the key objectives of the Workmen’s Compensation Act, 1923?
The Workmen’s Compensation Act, 1923 (now Employees’ Compensation Act) aims to provide financial compensation to employees or their dependents in case of injury, disability, or death due to accidents arising out of and in the course of employment. It imposes strict liability on employers, ensuring speedy and just compensation without requiring proof of negligence. It encourages workplace safety and ensures dignity and security for workers and their families during unforeseen circumstances.

4. Who is a ‘Workman’ under the Workmen’s Compensation Act, 1923?
A ‘Workman’ under the Act is any person employed in specified hazardous occupations like manufacturing, mining, construction, or transport, excluding members of the armed forces. The employee must be engaged in manual, clerical, or technical work, not in managerial or administrative roles. The definition includes both regular and temporary workers. The Act aims to protect those involved in physically risky jobs by ensuring compensation for workplace-related injuries or death.

5. When is an employer liable to pay compensation under the Act?
An employer is liable to pay compensation under the Workmen’s Compensation Act, 1923 when:

A personal injury is caused to a workman
The injury arises out of and during the course of employment
The injury results in death, permanent/temporary disability
No compensation is payable if the injury is self-inflicted, due to intoxication, or if the employee deliberately disobeyed safety rules. The compensation amount depends on the nature of injury, wages, and age of the workman.

6. What is the nexus between injury and employment in compensation claims?
The term “nexus between injury and employment” means that there must be a clear connection between the worker’s injury and their work duties or environment. The injury should occur in the course of employment and should arise out of it, meaning it must be directly related to the job. For example, a machine operator injured while operating a machine during working hours is eligible. However, injuries outside work premises or hours may not be compensable unless exceptions apply.

7. What is the penalty for default in payment of compensation by an employer?
If an employer fails to pay the due compensation within the stipulated time under the Workmen’s Compensation Act, 1923, the Commissioner may order:

Payment of interest on the due amount
Imposition of penalty up to 50% of the compensation
The employer can also face legal action. This ensures accountability and deters employers from delaying or denying rightful compensation. The Act provides a mechanism for adjudicating such disputes and ensuring timely relief for the injured workman or their dependents.

8. What is the objective of the Employees’ State Insurance (ESI) Act, 1948?
The Employees’ State Insurance Act, 1948 aims to provide comprehensive social security to employees in case of sickness, maternity, disablement, or death due to employment injury. It is a contributory scheme, jointly funded by employers and employees, and managed by the ESI Corporation (ESIC). The Act ensures medical care and cash benefits to insured persons and their families. It promotes industrial productivity by ensuring workers’ welfare during economic and health-related hardships.

9. What are the main benefits provided under the ESI Act, 1948?
The ESI Act provides the following benefits to insured employees:

Medical Benefit: Free medical care for insured persons and dependents
Sickness Benefit: 70% of wages for up to 91 days during medical leave
Maternity Benefit: Full wages for 26 weeks (extendable)
Disablement Benefit: For temporary or permanent disablement
Dependents’ Benefit: Pension to dependents in case of death
Funeral Expenses: Lump sum assistance
These benefits ensure economic security and dignity for workers and their families.

10. What is the role of the ESI Corporation under the ESI Act, 1948?
The Employees’ State Insurance Corporation (ESIC) is a statutory body under the ESI Act, 1948, responsible for administering the ESI Scheme. Its key functions include:

Registration of insured employees and employers
Collection of contributions
Disbursement of cash and medical benefits
Maintenance of ESI hospitals and dispensaries
Adjudication of disputes and claims
The Corporation operates through regional offices, hospitals, and branch offices to deliver health and social security services efficiently across India.

11. What is meant by ‘disablement’ under the Workmen’s Compensation Act, 1923?
Disablement refers to the reduction in the earning capacity of a workman due to a personal injury caused by an accident in the course of employment. It is classified as:

Temporary Disablement: Loss of earning capacity for a limited time.
Permanent Partial Disablement: Partial but permanent loss of earning capacity.
Permanent Total Disablement: Complete loss of earning capacity for any kind of work.
The nature and extent of disablement determine the amount of compensation. The Act ensures financial support to injured workers based on their disability.

12. How is compensation calculated under the Workmen’s Compensation Act, 1923?
Compensation is calculated based on the nature of injury (death, permanent total or partial disablement), the age of the workman, and their monthly wages. For example:

Death: 50% of monthly wages × relevant factor (based on age)
Permanent Total Disablement: 60% of monthly wages × relevant factor
Permanent Partial Disablement: Proportionate to the percentage of loss of earning capacity
Minimum and maximum limits are also prescribed. The Act ensures a just and pre-defined compensation system.

13. What is the procedure for claiming compensation under the Act?
The injured workman or their dependent must file a claim with the Commissioner for Workmen’s Compensation. The claim must include details of the accident, nature of injury, employment details, and amount of compensation sought. The Commissioner conducts a summary inquiry, hears both parties, and passes an order. No court fees are charged, and legal formalities are minimal, ensuring easy access to justice for injured workers or their dependents.

14. What is the importance of the ‘course of employment’ in compensation claims?
To claim compensation under the Act, the injury or death must have occurred “in the course of employment”, meaning it must happen while the employee was performing duties related to the job or within working hours. This is essential to establish the employer’s liability. If the injury is unrelated to work duties or occurred outside of work context, compensation may not be granted. The concept protects employers from unrelated liabilities and employees from unfair denial.

15. What is the scope of the Employees’ State Insurance (ESI) Act, 1948?
The ESI Act, 1948 applies to all factories and notified establishments (like shops, hotels, and cinemas) employing 10 or more persons, where workers earn up to a prescribed wage limit (currently ₹21,000/month). The Act covers both employees and their dependents, ensuring comprehensive medical, sickness, maternity, and employment injury benefits. It is a self-financing scheme, where employees and employers contribute a fixed percentage of wages, and the government subsidizes it partially.

16. Who is an ‘employee’ under the ESI Act, 1948?
An employee under the ESI Act is a person employed for wages in a factory or establishment, either directly or through an immediate employer, and whose monthly income does not exceed the prescribed wage ceiling. It includes full-time, part-time, and contract workers engaged in manufacturing or service activities. Apprentices under standing orders may also be included. The definition is broad to ensure comprehensive coverage under social security provisions.

17. What are the contribution rates under the ESI Act?
As of recent notifications:

Employer’s Contribution: 3.25% of the employee’s wages
Employee’s Contribution: 0.75% of wages
These rates are applicable to employees earning up to ₹21,000 per month. Contributions are paid monthly and are used to fund medical and cash benefits under the scheme. The government may revise the rates from time to time. Contribution ensures shared responsibility and sustainability of the ESI Scheme.

18. How are disputes resolved under the ESI Act, 1948?
Disputes regarding eligibility, contribution, or benefits are adjudicated by the Employees’ Insurance Court, established under Section 74 of the Act. Either party (employee or employer) can approach the court within the prescribed limitation period. The court has powers similar to a civil court and provides a speedy, specialized forum for resolving social security disputes. Appeals from its decision lie to the High Court.

19. What are the functions of the Medical Benefit Council under the ESI Act?
The Medical Benefit Council advises the ESIC on medical benefits. Its functions include:

Suggesting improvements in medical care
Coordinating with state governments for healthcare delivery
Recommending changes in benefit structure
It consists of medical experts, government officials, employer and employee representatives. It ensures that quality medical services are delivered efficiently to the insured persons and their families under the ESI Scheme.

20. What penalties are imposed for non-compliance under the ESI Act?
Non-compliance with the ESI Act, such as failure to register, deduct or deposit contributions, or maintain records, may result in:

Imprisonment up to 2 years
Fine up to ₹5,000 or more, depending on the nature of the offence
Liability to pay interest and damages
In serious or repeated offences, imprisonment is mandatory. These penalties ensure strict compliance and protection of workers’ rights under the social security net.

21. What is meant by ‘occupational disease’ under the Workmen’s Compensation Act, 1923?
An occupational disease is an illness or disorder directly caused by exposure to risk factors arising from work activity or work environment. Under the Workmen’s Compensation Act, certain diseases are specifically listed in Schedule III and are presumed to arise out of employment if contracted in the course of work (e.g., lead poisoning in battery manufacturing). If a workman contracts a listed occupational disease, they are eligible for compensation without needing to prove employer negligence.

22. What is the meaning of ‘arising out of and in the course of employment’?
This phrase defines the scope of employer liability under the compensation law. “Arising out of” means the injury must be caused by or connected to the employment. “In the course of” means it happened during the working period or while performing job duties. Both elements must be present. For example, an injury during work hours while using factory machinery qualifies. However, personal disputes outside duty hours may not be covered.

23. What are the employer’s duties under the ESI Act, 1948?
Under the ESI Act, an employer must:

Register their establishment under ESIC
Enroll all eligible employees
Deduct employee contributions and deposit both employer and employee shares
Maintain proper records and submit returns
Facilitate ESI inspections
Failure to comply attracts penalties. Employers must also inform ESIC about new hires and ensure workers receive ESI benefits. Their cooperation is crucial for effective implementation of the ESI Scheme.

24. What medical facilities are available under the ESI Scheme?
The ESI Scheme provides comprehensive medical care through a vast network of hospitals, dispensaries, and panel clinics. Benefits include:

Outpatient and inpatient treatment
Specialist and diagnostic services
Emergency services
Maternity and child care
Super specialty treatment (in tie-up hospitals)
These services are provided free of cost to insured workers and their families. The scheme ensures accessible and affordable healthcare for the industrial workforce and reduces the financial burden of medical expenses.

25. What is maternity benefit under the ESI Act?
The Maternity Benefit under the ESI Act provides full wage compensation to insured women for 26 weeks, extendable by 1 month in case of complications. It includes pre- and post-natal medical care, confinement expenses, and rest. To qualify, the woman must have contributed for at least 70 days in the preceding 2 contribution periods. This benefit ensures health, dignity, and economic security for working women during maternity.

26. What is ‘dependent’s benefit’ under the ESI Act?
Dependents’ Benefit is a monthly pension payable to the dependents (like spouse, minor children, or widowed mother) of an insured person who dies due to an employment-related injury or occupational disease. The amount is a percentage of the worker’s wage and is divided among eligible dependents. This benefit offers economic support to the family after the death of the breadwinner and promotes family welfare through a social safety net.

27. How is ESI contribution deposited and reported?
Employers must deposit monthly ESI contributions (employer and employee shares) through the ESIC portal using online payment modes. The due date is the 15th of every month. Employers must also file half-yearly returns and maintain records of employee wages, contributions, and attendance. Non-payment or delayed payment may attract penalties and interest. Accurate reporting ensures employee eligibility for benefits and compliance with the law.

28. What are the powers of the ESI Inspector?
ESI Inspectors are empowered to:

Enter business premises
Examine wage and contribution records
Verify employee details and registers
Demand documents
They ensure that the establishment complies with the provisions of the ESI Act, including proper registration and contribution payments. Inspectors can initiate action against defaulting employers. Their role is vital in enforcing social security laws and protecting employee rights.

29. What are the advantages of social security for employees?
Social security ensures that employees are protected against life contingencies such as illness, disability, maternity, unemployment, or death. Key benefits include:

Income stability during emergencies
Medical care and support for family
Pension or insurance in case of death or disablement
Legal support through labor courts or insurance courts
Social security laws improve employee morale, productivity, and industrial peace. They reflect the State’s commitment to workers’ welfare in a modern economy.

30. What are the limitations of the Workmen’s Compensation Act, 1923?
Despite its importance, the Act has certain limitations:

It excludes casual workers in many cases
Compensation amounts are often low
No provision for medical treatment—only monetary compensation
Claims process can be slow and complex
Does not cover psychological trauma or stress-related injuries
Due to these limitations, the Act is gradually being merged under broader social security codes like the Code on Social Security, 2020, which seeks to modernize and expand worker protection

Unit-IV

1. What is the objective of the Employees’ Provident Fund (EPF) Act, 1952?

The EPF Act, 1952 aims to provide retirement security and long-term financial savings for employees in the organized sector. It mandates that both employer and employee contribute a fixed percentage of wages to a provident fund. The accumulated fund, along with interest, is payable to the employee upon retirement, resignation, or death. The Act ensures financial stability for employees after they leave service and also includes provisions for pension and insurance through associated schemes.

2. What are the schemes framed under the EPF Act, 1952?

There are three major schemes under the Act:

Employees’ Provident Fund Scheme, 1952 – For retirement savings.
Employees’ Pension Scheme, 1995 – Provides monthly pension after retirement or to family on death.
Employees’ Deposit Linked Insurance Scheme, 1976 – Offers life insurance benefit to nominees of the deceased employee.
These schemes collectively ensure social security for employees and their families in cases of retirement, death, or disability.

3. What is the contribution structure under the EPF Act?

Under the EPF Act:

Employee contributes 12% of basic wages + DA
Employer also contributes 12%, out of which:
- 8.33% goes to the Pension Scheme
- Remaining to the Provident Fund
  Both contributions are deposited with the EPFO (Employees’ Provident Fund Organisation). Contributions ensure future savings, pension support, and life insurance coverage, promoting financial independence post-retirement.

4. What are the benefits of the EPF scheme?

Benefits include:

Lump sum payment on retirement or resignation
Pension for life under the EPS
Partial withdrawals for emergencies like education, housing, or illness
Life insurance through the EDLI Scheme
Tax exemptions on contributions and interest
The EPF scheme promotes long-term financial planning and provides a safety net for employees and their dependents in case of death or incapacity.

5. What is the purpose of the Maternity Benefit Act, 1961?

The Maternity Benefit Act, 1961 aims to protect the employment and health of women during pregnancy and post-childbirth. It provides for paid leave, medical benefits, and job security during maternity. It applies to establishments employing 10 or more people, including factories, mines, plantations, and shops. The Act ensures women do not face job loss or financial hardship due to pregnancy, promoting health, dignity, and equality in the workplace.

6. What are the benefits provided under the Maternity Benefit Act?

The Act provides the following:

Paid maternity leave for 26 weeks (for up to two surviving children)
12 weeks leave for more than two children
Medical bonus of ₹3,500 (if pre-natal or post-natal care is not provided)
Leave for miscarriage, tubectomy, or illness
Prohibition of dismissal during maternity
Work-from-home option where applicable
These benefits ensure maternal health and job protection for working women.

7. What is the eligibility for maternity benefit under the Act?

A woman is eligible if:

She has worked for at least 80 days in the 12 months preceding the expected delivery
She is employed in an establishment with 10 or more employees
Eligibility ensures that regular and long-term workers are covered under the maternity benefit law. It applies regardless of the nature of her work or employment contract, covering a wide range of workplaces.

8. What is gratuity under the Payment of Gratuity Act, 1972?

Gratuity is a lump sum monetary benefit paid by the employer to an employee upon retirement, resignation, or death, as a reward for continuous service. It is governed by the Payment of Gratuity Act, 1972, and applies to establishments with 10 or more employees. Gratuity fosters employee loyalty and provides post-employment financial support. The amount is based on last drawn salary and years of service.

9. What is the eligibility for payment of gratuity?

An employee is eligible if:

They have completed 5 years of continuous service (except in case of death or disablement)
They leave the job due to retirement, resignation, death, or disablement
Gratuity is calculated as:
(15/26) × Last drawn salary × Years of service
It provides a retirement cushion and rewards employee loyalty. The Act applies to both government and private sector establishments.

10. Under what conditions can gratuity be forfeited?

Gratuity can be wholly or partially forfeited if the employee:

Is terminated for an act involving moral turpitude, violence, theft, or sabotage
Causes financial loss to the employer through willful misconduct
Is dismissed for riotous or disorderly conduct
Such forfeiture must be based on valid termination and proof of misconduct. Otherwise, gratuity is considered a statutory right and must be paid.

11. What is the procedure to withdraw money from the EPF account?
An employee can withdraw money from their EPF account by submitting Form 19 (for final settlement) or Form 31 (for partial withdrawal) through the EPFO portal or their employer. The Universal Account Number (UAN) must be activated and linked with Aadhaar and bank details. Partial withdrawals are allowed for specific purposes like marriage, education, or medical emergencies. After retirement, the full amount can be withdrawn tax-free. The online claim process ensures faster and transparent settlement.

12. Is it mandatory for all employees to contribute to the EPF scheme?
Yes, it is mandatory for employees earning up to ₹15,000 per month in an establishment covered under the Act. Employees earning above this limit may opt in voluntarily. Once covered, membership continues even if salary later exceeds ₹15,000. Employers must deduct and deposit contributions regularly. Provident Fund provides financial security, and being a member helps build long-term savings, avail pension benefits, and life insurance under the associated schemes.

13. What happens if an employer fails to deposit EPF contributions?
Failure to deposit EPF contributions is a serious offence. The EPFO may impose:

Interest on delayed payments
Damages/Penalty ranging from 5% to 100% of the default amount
Prosecution, leading to imprisonment up to 3 years
Employees can lodge complaints via the EPFO grievance portal. The EPF amount is a statutory right of the employee, and the employer is legally obligated to deposit it on time to avoid liabilities and ensure worker welfare.

14. Can a woman employee claim both maternity and EPF benefits?
Yes, a woman can claim maternity benefits under the Maternity Benefit Act, 1961 and also receive her EPF benefits if she retires or resigns. The two benefits are independent and serve different purposes. Maternity Benefit ensures income and health support during pregnancy, while EPF is a retirement-saving tool. If the woman has completed 5 years of service, she may also claim gratuity. These legislations together secure the economic and social welfare of working women.

15. Is an employer allowed to terminate a woman employee during maternity leave?
No. Under Section 12 of the Maternity Benefit Act, termination during maternity leave is strictly prohibited. Any such dismissal is void, and the woman is entitled to all maternity benefits. Employers cannot issue a notice of discharge, vary her conditions of service, or reduce her salary. Violation can result in fines and imprisonment. The law safeguards the dignity and security of women during the most vulnerable period of their working lives.

16. What are the obligations of employers under the Maternity Benefit Act, 1961?
Employers must:

Provide 26 weeks’ paid leave to eligible women
Ensure non-dismissal during maternity
Disburse medical bonus and other maternity benefits
Maintain maternity records/registers
Display an abstract of the Act in the workplace
Failure to comply may lead to penalties up to ₹5,000 and/or imprisonment up to 1 year. The Act compels employers to create a supportive environment for working mothers, ensuring health and job continuity.

17. Who is the ‘Controlling Authority’ under the Payment of Gratuity Act, 1972?
The Controlling Authority is an officer appointed by the appropriate government (Central or State) to administer and enforce the Gratuity Act. The Authority has quasi-judicial powers to:

Settle disputes related to gratuity
Direct employers to pay gratuity with interest
Enforce compliance
Employees or nominees can approach the Controlling Authority in case of delay or denial. The Authority ensures fair implementation and quick resolution of gratuity-related claims.

18. What is the process for nomination under the Gratuity Act?
Every employee eligible for gratuity must nominate a family member by submitting a written nomination form (Form F) to the employer. The nomination ensures that in the event of the employee’s death, the gratuity amount is paid directly to the nominee without legal disputes. Nomination can be modified at any time by submitting a fresh form. This legal provision ensures smooth transfer of benefit to the rightful heir.

19. Is gratuity taxable in the hands of employees?
Gratuity is tax-exempt up to:

₹20 lakhs for government employees
For private-sector employees: Least of ₹20 lakhs, actual gratuity received, or amount as per formula under the Act
Any excess amount is taxable as income under ‘Salaries’. Tax exemption encourages long-term service and rewards employee loyalty. Proper record-keeping and planning can help employees maximize tax benefits on gratuity.

20. What are the penalties for non-payment of gratuity?
If an employer fails to pay gratuity within 30 days from the date it becomes payable, they must pay interest on the delayed amount. Additionally, non-payment or wrongful denial may lead to:

Fine up to ₹10,000
Imprisonment up to 1 year (minimum 3 months)
Or both
The Controlling Authority can enforce recovery. The strict penalties ensure gratuity is treated as a statutory right, not a goodwill gesture, and is paid on time to deserving employees or their nominees.

21. Can an employee receive gratuity before completing 5 years of service?

Generally, an employee becomes eligible for gratuity only after completing 5 years of continuous service. However, there are exceptions. If the employee dies or becomes disabled due to accident or disease, the 5-year condition is waived, and gratuity is payable irrespective of the service length. This ensures support for the family or the disabled worker during difficult times. Otherwise, resignation or termination before 5 years does not entitle an employee to gratuity.

22. Is gratuity payable to part-time or contractual employees?

Yes, if a part-time or contractual employee has rendered continuous service for 5 years or more in a covered establishment, they may be eligible for gratuity. Courts have held that nature of work and length of service are key factors, not just the mode of employment. Thus, even daily wage workers or casual labourers can claim gratuity if continuity of service and employment terms are established.

23. What happens to EPF balance if the employee dies during service?

If an employee dies while in service, the nominee/legal heir is entitled to receive the EPF balance, pension (under EPS), and life insurance (under EDLI scheme). The process involves submitting Form 20 (for EPF), Form 10D (for pension), and Form 5IF (for EDLI) with supporting documents. This provides financial assistance to dependents, including spouse, children, or parents, helping them cope with the loss of income after the employee’s death.

24. Can maternity benefit be extended beyond 26 weeks?

Yes, maternity leave can be extended in special cases. For example:

Women with health complications arising from pregnancy may be granted additional unpaid leave.
Commissioning and adoptive mothers are entitled to 12 weeks of maternity benefit.
Some companies offer voluntary extensions through their HR policies.
While 26 weeks is the statutory maximum, work-from-home arrangements may be permitted depending on the nature of the work and mutual agreement.

25. Is gratuity applicable on termination due to misconduct?

Yes, but only in specific cases gratuity can be forfeited. If the termination is due to:

Willful omission or negligence causing financial loss
Riotous or disorderly conduct
Acts involving moral turpitude committed during employment
Then, gratuity can be partially or wholly forfeited. However, this must be supported by proper inquiry and documentation. Employers cannot deny gratuity arbitrarily—it is a statutory right under normal circumstances of resignation, retirement, or death.

26. What is the role of EPFO in implementing the EPF Act?

The Employees’ Provident Fund Organisation (EPFO) is a statutory body under the Ministry of Labour. It ensures:

Registration of establishments
Collection and management of contributions
Settlement of claims (withdrawal, pension, insurance)
Compliance monitoring through inspections and audits
Providing online services through UAN portal
EPFO acts as the guardian of social security funds and ensures that employees receive their benefits smoothly and transparently.

27. How is pension calculated under the Employees’ Pension Scheme, 1995?

Pension is calculated using the formula:
(Pensionable Salary × Pensionable Service) ÷ 70

Pensionable Salary: Last 60 months’ average basic + DA
Pensionable Service: Maximum 35 years
For example, if salary is ₹15,000 and service is 30 years:
(15,000 × 30) ÷ 70 = ₹6,429/month
Minimum pension is ₹1,000/month. The scheme ensures regular post-retirement income for eligible employees, even after leaving active service.

28. What are the rights of women under the Maternity Benefit Act?

The Act ensures:

Paid leave for maternity, miscarriage, or tubectomy
Job protection during maternity period
Medical bonus
Nursing breaks after return to work
No discrimination or termination due to pregnancy
These rights promote gender equality and safeguard the health and employment status of women. Employers must strictly follow these provisions to avoid legal liability.

29. Is nomination under EPF and Gratuity mandatory?

Yes, employees are required to submit nomination forms:

EPF: Form 2
Gratuity: Form F
Nomination ensures the rightful legal heir receives benefits in case of death. If no nomination is made, the legal heirs must go through a more complex legal process. Timely nomination helps avoid disputes and ensures smooth and quick disbursal of benefits to dependents.

30. What is the difference between EPF, Gratuity, and Maternity Benefits?

EPF: Retirement savings through monthly contributions (employer + employee)
Gratuity: One-time lump sum paid for long service (after 5 years)
Maternity Benefit: Paid leave and allowances to women during pregnancy
Each serves a distinct purpose—EPF and Gratuity are for post-employment financial security, while Maternity Benefit ensures income and job protection for women during childbirth. Together, they contribute to a comprehensive employee welfare framework in India.

Unit-V

1. What are the objectives of the Factories Act, 1948?

The Factories Act, 1948 aims to ensure the health, safety, and welfare of workers employed in factories. It regulates working hours, provides for medical and hygienic conditions, prohibits child labour in hazardous conditions, and mandates the maintenance of safe machinery and processes. The Act applies to premises where 10 or more workers are employed with power, or 20 or more without power. It promotes better work environments and reduces industrial accidents.

2. What health provisions are made under the Factories Act, 1948?

Chapters under the Act ensure the following health measures:

Cleanliness of premises
Disposal of waste and effluents
Ventilation and temperature control
Dust and fume control
Provision of drinking water
Latrines and urinals
These measures aim to provide sanitary and disease-free environments for workers. The employer is legally bound to maintain prescribed standards and is subject to inspections and penalties for non-compliance.

3. What are the safety measures required under the Factories Act?

The safety provisions include:

Fencing of machinery
Provision of safety appliances
Prohibition of employment near dangerous machines
Appointment of Safety Officers
Precautions against fire and hazardous processes
Emergency exits
These are mandatory to prevent accidents, especially in factories involving chemicals or heavy machinery. The employer must ensure worker training and implement safeguards to reduce industrial risks.

4. What welfare amenities must be provided under the Act?

The Act mandates:

Washing facilities
Canteens (for factories with 250+ workers)
Restrooms and lunchrooms
Creches (for 30+ women workers)
First-aid appliances
Welfare officers (for 500+ workers)
These provisions promote worker well-being, hygiene, and productivity. Welfare amenities are not optional—they are essential for maintaining a humane and lawful workplace.

5. What are the working hours and rest provisions under the Act?

The Act provides:

Maximum 48 hours/week
9 hours/day with a minimum 30-minute rest after 5 hours
Weekly holiday (usually Sunday)
Extra wages for overtime
These ensure that workers are not exploited and get adequate rest and compensation for extra work. Any violation attracts penalties, and labour inspectors monitor adherence to these rules.

6. How does the Factories Act, 1948 regulate child labour?

The Act prohibits employment of children below 14 years in factories. Adolescents (aged 15–18) may be employed only with a fitness certificate from a certifying surgeon. Working hours for adolescents are limited, with no work allowed between 10 p.m. and 6 a.m. These provisions align with the constitutional rights of children and protect them from exploitation in hazardous environments.

7. What are the salient features of the Child Labour (Prohibition and Regulation) Act, 2016?

Key features include:

Total prohibition of employment of children below 14 years in any occupation
Adolescents (14–18 years) prohibited from working in hazardous occupations
Exceptions for helping in family business or entertainment industry (non-hazardous and after school hours)
Strict penalties for employers: imprisonment up to 2 years and/or fines
Rehabilitation fund for rescued children
The Act aligns with international labour standards and ensures holistic development and education of children.

8. What rights does the Indian Constitution grant to children against exploitation?

The Indian Constitution provides strong safeguards:

Article 24: Prohibits employment of children below 14 years in hazardous work
Article 21A: Right to free and compulsory education for children aged 6–14
Article 39(e) & (f): Directive Principles mandating protection of children from abuse and ensuring opportunities for healthy development
These constitutional rights form the basis for child labour laws and highlight the nation’s commitment to child welfare and dignity.

9. What is the punishment for employing child labour under the 2016 Act?

Under the Child Labour (Prohibition and Regulation) Act, 2016:

First offence: Imprisonment from 6 months to 2 years and/or fine up to ₹50,000
Repeat offence: Minimum 1 year up to 3 years of imprisonment
Parents are not penalised for the first offence, but habitual offenders can be prosecuted. These strict penalties act as a deterrent and ensure better enforcement of child protection laws.

10. How are rescued child labourers rehabilitated under the law?

The law mandates setting up a Child and Adolescent Labour Rehabilitation Fund, into which a fine of ₹15,000 per child is deposited by the offender. This fund is used for:

Education
Skill development
Health care
Social integration
Additionally, children are enrolled in schools under the Right to Education Act, and NGOs often support their recovery. This holistic rehabilitation ensures that children are not just rescued but are also restored to a safe and dignified life.

11. What is the role of the factory inspector under the Factories Act, 1948?

A Factory Inspector ensures compliance with the provisions of the Factories Act. Their duties include:

Inspecting premises for health, safety, and welfare violations
Verifying records, registers, and machinery safety
Ensuring non-employment of underage workers
Issuing improvement or prohibition notices
They have legal powers to enter factories, examine persons, take samples, and initiate prosecution against violators. The inspector serves as a watchdog to ensure the protection of workers’ rights and working conditions.

12. What is meant by ‘hazardous occupation’ in child labour law?

A hazardous occupation refers to any work that poses significant risk to the life, health, or safety of a child or adolescent. Examples include mining, explosives, chemical plants, and construction. The Child Labour (Prohibition and Regulation) Act, 2016 prohibits employment of adolescents (14–18 years) in such jobs. These occupations are listed in a schedule under the Act, and engaging minors in them is a punishable offence.

13. What facilities must be provided to adolescent workers under the Factories Act?

If adolescents (15–18 years) are legally employed (with a fitness certificate), the employer must:

Ensure limited working hours (not exceeding 4.5 hours/day)
Provide rest intervals and no night shifts
Maintain registers of adolescent workers
Offer safe working conditions
These special protections prevent exploitation and ensure age-appropriate tasks for young workers. Employment must not interfere with education or health, and it must comply with constitutional mandates.

14. What are the constitutional remedies for violation of child rights?

If child rights are violated (e.g., illegal labour, denial of education), remedies include:

Writ petitions under Article 32 (Supreme Court) or Article 226 (High Courts)
Public Interest Litigations (PILs) filed by individuals or NGOs
Complaints to the National or State Commissions for Protection of Child Rights
Filing FIRs under applicable laws
These remedies empower citizens and institutions to enforce children’s fundamental rights guaranteed under the Constitution.

15. What is the penalty for repeated violations of the Factories Act provisions?

For a first offence, the penalty is:

Imprisonment up to 2 years, or
Fine up to ₹2,00,000, or both
For a continuing or repeat offence:
Imprisonment up to 3 years
Daily fine up to ₹10,000 during the period of default
These harsh penalties encourage strict adherence to health, safety, and labour welfare regulations and discourage negligent factory management.

16. How does the law regulate working hours for children and adolescents?

Under the Factories Act and the Child Labour Act:

Children (below 14): Cannot be employed
Adolescents (14–18): Max 4.5 hours/day, no night shifts (10 p.m. to 6 a.m.), weekly holidays
Work must not interfere with education, rest, or health. Strict regulation ensures that adolescents, if working, are not overburdened and are protected from exploitative conditions.

17. What is the significance of Article 21A for child labour laws?

Article 21A mandates free and compulsory education for all children aged 6 to 14 years. It supports the goal of eliminating child labour by ensuring children are in school, not in jobs. The Right to Education Act (2009) implements this constitutional right. As per law, no child should be employed in work that interferes with schooling. It forms a core part of India’s child protection framework.

18. What is the Child and Adolescent Labour Rehabilitation Fund?

This special fund is created under the 2016 Act for rehabilitating rescued child and adolescent labourers. It consists of:

₹15,000 fine deposited by the convicted employer per child
Government contributions
Funds are used for the education, health care, skill development, and reintegration of children into mainstream society. It reflects a reformative and supportive approach rather than just a punitive one.

19. Are there any exceptions under the Child Labour (Prohibition and Regulation) Act, 2016?

Yes. Children under 14 years are allowed to:

Help in family enterprises, provided the work is non-hazardous and after school hours
Work in audio-visual entertainment industry (e.g., TV, films) under proper safeguards
These exceptions aim to balance tradition and modern regulation, but critics argue they can be misused. The law requires that such work must not hinder education or development.

20. How does the Factories Act ensure the safety of women workers?

The Act provides:

Separate sanitation and washing facilities
Prohibition of night shifts without government permission
No hazardous tasks without safety measures
Creche facilities where women workers exceed 30
Prohibition of sexual harassment (in accordance with other laws)
These ensure a safe and inclusive work environment for women, recognizing their health, dignity, and special needs in industrial settings.

21. What is the role of creche facilities under the Factories Act?

Under Section 48 of the Factories Act, 1948, factories employing 30 or more women workers must provide and maintain creche facilities for the children (below 6 years) of women workers. The creche must be clean, well-ventilated, and staffed with trained caregivers. It should have provisions for rest, feeding, and play. This provision helps working mothers continue employment while ensuring the safety and welfare of their children within the workplace.

22. What are the duties of employers under child labour laws?

Employers are required to:

Not employ children below 14 years in any occupation
Not employ adolescents (14–18 years) in hazardous occupations
Maintain registers of child workers (if engaged in permissible roles)
Ensure working conditions and hours comply with law
Allow access to inspectors and provide records
Non-compliance can lead to imprisonment and fines. Employers must be aware of legal obligations and prioritize child welfare and education over economic benefits.

23. How does the Factories Act ensure cleanliness and hygiene?

The Act mandates that every factory be kept clean and free from effluents, dirt, and garbage. Specific requirements include:

Daily sweeping and washing of floors
Repainting or re-liming walls at regular intervals
Proper drainage and disposal systems
Safe drinking water supply
Clean and separate latrines and urinals for men and women
These measures prevent disease and promote health and dignity of workers.

24. Can a child work in a family enterprise under the Child Labour Act, 2016?

Yes, but only under strict conditions. A child below 14 years may help in the family enterprise:

After school hours or during vacations
In non-hazardous occupations
Without affecting the child’s education or health
The law aims to respect cultural practices while ensuring the child’s primary right to education. However, such provisions are often misused, making strict monitoring essential to prevent disguised exploitation.

25. What types of benefits are given to rescued child labourers?

Rescued child labourers are entitled to:

Free education under the RTE Act
Health checkups and counselling
Skill training for older adolescents
Financial support from the Child Labour Rehabilitation Fund
They may also receive help from NGOs and child welfare committees. The aim is holistic rehabilitation, ensuring the child is not only removed from work but also guided toward a safe, educated, and independent future.

26. What is the procedure for factory registration under the Factories Act?

To operate legally, an occupier must:

Apply for a license under Section 6
Submit details of building plans, number of workers, machinery used
Obtain approval from the Chief Inspector of Factories
Renew the license periodically
This ensures the factory meets statutory safety, health, and welfare requirements before commencing operations. Registration also helps in tracking and regulation of working conditions by government authorities.

27. What are ‘Notified Occupations’ under the Child Labour Act, 2016?

‘Notified Occupations’ refer to those jobs where children below 14 and adolescents (14–18 years) are not permitted to work. These include:

Mining
Explosives manufacturing
Fireworks
Slaughterhouses
Hazardous chemicals
The government periodically updates this list to match industry and safety changes. Employment in such occupations is a punishable offence, and enforcement is handled by labour inspectors and district authorities.

28. What is the importance of labour inspectors under child labour law?

Labour Inspectors play a crucial role in:

Inspecting workplaces for child/adolescent workers
Enforcing the prohibition and regulation provisions
Filing reports and initiating legal action
Ensuring rescued children are sent to rehabilitation and welfare agencies
They act as a bridge between law and enforcement, ensuring that children’s rights are not violated and employers follow the law strictly.

29. What protection does Article 39 of the Constitution provide to children?

Article 39 (e) and (f) of the Indian Constitution (Directive Principles of State Policy) directs the State to:

Ensure children are not forced by economic necessity to work
Protect them from abuse, exploitation, and moral or material abandonment
Provide facilities for healthy development
Though non-justiciable, these principles guide policy-making and legislation, such as the Child Labour Act and Right to Education Act.

30. How does the law balance tradition and protection in child labour regulation?

The 2016 amendment attempts to balance cultural practices (like helping in family work) with child protection. While it allows such work in non-hazardous family settings, the law:

Prohibits full-time child labour
Requires work to not interfere with education
Imposes strict penalties on commercial employers
This framework acknowledges economic realities, but safeguards the child’s right to education, health, and safety, in line with national and international standards.