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PAPER-I: LABOUR AND INDUSTRIAL LAW-II Unit-IV

IV SEMESTER

PAPER-I: LABOUR AND INDUSTRIAL LAW-II

Unit-IV

🔶 Employees’ Provident Fund and Miscellaneous Provisions Act, 1952

🔶 Q.1: Explain the objectives and scope of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. How does the Act ensure social security for employees?

🔷 Introduction:

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act) is one of the most important legislations enacted to provide social security and financial protection to employees in India. It applies to factories and other establishments engaged in specified industries and employing 20 or more persons.

🔷 Objectives of the EPF Act, 1952:

  1. Social Security to Employees:
    • The primary objective is to provide financial security to employees after retirement or in cases of death, disability, or illness.
  2. Savings for the Future:
    • It promotes compulsory savings from both employer and employee, which can be utilized by the employee at the time of need, particularly during retirement.
  3. Post-Retirement Support:
    • Ensures that employees have a source of income post-employment, especially in the unorganized or private sector where pension benefits may not be available.
  4. Protection to Dependents:
    • In case of the untimely death of the employee, the dependents are entitled to provident fund accumulations and insurance benefits.
  5. Uniformity and Central Regulation:
    • Aims to standardize provident fund benefits across industries and ensure uniformity in implementation through a centralized system.

🔷 Scope and Applicability:

  1. Applicability to Establishments:
    • Applies to every factory and establishment employing 20 or more persons.
    • The Central Government may notify its applicability to other establishments with fewer than 20 workers.
  2. Geographical Scope:
    • The Act is applicable throughout India, except Jammu and Kashmir (prior to its special status removal).
  3. Eligible Employees:
    • It applies to all employees drawing wages up to ₹15,000 per month (as per the latest wage ceiling) unless voluntarily covered.
  4. Compulsory Nature:
    • Once applicable, the provisions are mandatory, and both employer and employee must contribute.

🔷 How the Act Ensures Social Security for Employees:

  1. Statutory Contribution:
    • Both the employer and employee contribute 12% of the basic wages and DA to the fund.
    • This contribution is compulsory and regulated.
  2. Three Key Schemes Under the Act:

    i) Employees’ Provident Fund Scheme (1952):

    • A retirement benefit scheme where both contributions are deposited and interest is earned.
    • Amount is payable on retirement, resignation, or death.

    ii) Employees’ Pension Scheme (1995):

    • Provides monthly pension to the employee post-retirement and to family members after the employee’s death.
    • A portion of the employer’s contribution (8.33%) is diverted to this scheme.

    iii) Employees’ Deposit-Linked Insurance Scheme (1976):

    • Provides life insurance cover to employees.
    • In the event of death, the nominee gets an amount linked to the employee’s salary and last contribution.
  3. Portability and Universal Access:
    • With the introduction of Universal Account Number (UAN), employees can carry forward their PF account across jobs.
  4. Financial Independence:
    • Helps employees build a corpus fund during employment, which can be used in retirement or emergency.
  5. Interest and Tax Benefits:
    • Interest earned on EPF is tax-free, and contributions are eligible for deductions under Section 80C of the Income Tax Act.

🔷 Conclusion:

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 is a cornerstone of India’s social security system. It ensures financial stability, retirement support, and family welfare of employees working in various sectors. By mandating contributions and offering schemes like PF, pension, and insurance, the Act protects the interests of the working population, especially in the private sector, and ensures a secure and dignified life after retirement.

🔶 Q.2: Discuss in detail the contributions made by the employer and employee under the EPF Act. What are the rules regarding the percentage of contributions and its deposit?
दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 aims to ensure financial security and post-retirement benefits to employees through a structured savings system. The core mechanism of this system is the mandatory contribution by both employer and employee to various provident fund schemes notified under the Act.

🔷 Statutory Contributions under the EPF Act:

Under the EPF Act, contributions are primarily made towards the following three schemes:

  1. Employees’ Provident Fund Scheme, 1952 (EPF)
  2. Employees’ Pension Scheme, 1995 (EPS)
  3. Employees’ Deposit-Linked Insurance Scheme, 1976 (EDLI)

🔷 1. Contributions to Employees’ Provident Fund (EPF):

🔹 Employee’s Contribution:

  • Every employee is required to contribute 12% of his/her basic wages + dearness allowance + retaining allowance (if any).
  • This percentage is statutory and uniform for all eligible employees.

🔹 Employer’s Contribution:

  • The employer is also required to contribute 12% of the employee’s basic wages + DA + retaining allowance.
  • However, the employer’s contribution is divided between different schemes:
    Component % of Wages Remarks
    EPF 3.67% Directly credited to employee’s provident fund account
    EPS (Pension Scheme) 8.33% Contributed to pension fund
    Total 12% Mandatory for employer

🔷 2. Contribution to Employees’ Deposit Linked Insurance Scheme (EDLI):

  • In addition to the above 12%, the employer must also contribute 0.5% of the employee’s wages towards the EDLI scheme.
  • No contribution is required from the employee for EDLI.
  • The employer also pays administrative charges, currently:
    • 0.5% towards EPF administration
    • 0.01% for EDLI administration (subject to minimum limits)

🔷 3. Contribution Rate in Certain Special Cases:

  • For certain industries and establishments notified by the government, the contribution rate is 10% instead of 12%.
    • Example: Jute, beedi, brick, coir industries.
  • Small establishments with less than 20 employees may also be permitted to contribute at 10%.

🔷 4. Deposit and Payment Rules:

🔹 Due Date of Contribution Deposit:

  • Both employer and employee contributions must be deposited on or before the 15th day of the following month in which wages are paid.

🔹 Mode of Payment:

  • Payments must be made electronically through designated banks.
  • The contributions are deposited into EPFO-managed accounts.

🔹 Default and Penalty:

  • Delay or default in payment may attract interest under Section 7Q and damages/penalty under Section 14B of the Act.
    • Interest @ 12% p.a.
    • Damages ranging from 5% to 100% depending on the period of delay.

🔷 Example Calculation (For ₹15,000 basic + DA):

Particulars Employee Employer
EPF (12%) ₹1,800 –
EPF (3.67%) – ₹550.50
EPS (8.33%) – ₹1,249.50
Total ₹1,800 ₹1,800
EDLI (0.5%) – ₹75
EPF Admin (0.5%) – ₹75
EDLI Admin (0.01%) – ₹1.50

🔷 Significance of Contribution Mechanism:

  1. Encourages Saving: Ensures employees save regularly for retirement and emergencies.
  2. Pension Benefit: Provides lifelong pension after retirement through EPS.
  3. Insurance Benefit: Protects dependents in case of death through EDLI.
  4. Tax Benefits: Contributions are eligible for tax deduction under Section 80C of the Income Tax Act.

🔷 Conclusion:

The contribution system under the EPF Act is a well-structured and legally binding mechanism aimed at ensuring social and financial security for employees. Through regular and mandatory contributions by both employer and employee, and strict enforcement of deposit timelines, the Act builds a retirement corpus, a pension, and insurance support — making it a comprehensive social welfare scheme for the organized workforce in India.

🔶 Q.3: What are the various schemes framed under the EPF Act? Discuss the features and objectives of:

  • Employees’ Provident Fund Scheme, 1952
  • Employees’ Pension Scheme, 1995
  • Employees’ Deposit Linked Insurance Scheme, 1976
    दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 provides for the institution of three main social security schemes for employees working in establishments covered under the Act. These schemes are administered by the Employees’ Provident Fund Organisation (EPFO). Each scheme has a specific objective aimed at providing financial stability and social welfare to employees and their families.

🔶 1. Employees’ Provident Fund Scheme, 1952 (EPF):

✅ Objective:

To provide a retirement benefit to employees by ensuring compulsory savings during the period of employment.

✅ Features:

  • Mandatory Contributions: Both employee and employer contribute 12% of the employee’s wages (basic + DA).
  • Interest Bearing Account: Contributions are deposited into the employee’s EPF account which earns compound interest, notified annually by the government.
  • Withdrawals:
    • Final withdrawal on retirement or resignation.
    • Partial withdrawal allowed for specific purposes like marriage, education, housing, medical emergency, etc.
  • Portability: The EPF account is linked with the Universal Account Number (UAN), which remains the same across employers.
  • Tax Benefits: EPF is Exempt-Exempt-Exempt (EEE) under Income Tax – contributions, interest, and withdrawals (after 5 years) are tax-free.

🔶 2. Employees’ Pension Scheme, 1995 (EPS):

✅ Objective:

To provide monthly pension to employees after superannuation and to their family in case of the employee’s death.

✅ Features:

  • Funding: Out of the employer’s 12% contribution, 8.33% is diverted towards the EPS (subject to wage ceiling).
  • Eligibility for Pension:
    • Minimum 10 years of contributory service.
    • Attains 58 years of age (or early pension after 50 years with reduced amount).
  • Types of Pension:
    • Superannuation Pension: On retirement after 58 years.
    • Early Pension: Available after 50 years at reduced rates.
    • Disability Pension: If the member becomes permanently disabled.
    • Family Pension: Paid to widow/widower or children after death of member.
    • Orphan Pension: Higher pension in case both parents are deceased.
  • No Separate Contribution by Employee: Entire contribution to EPS is from the employer’s share.

🔶 3. Employees’ Deposit Linked Insurance Scheme, 1976 (EDLI):

✅ Objective:

To provide a life insurance cover to the family or nominee of a member in case of the employee’s death during service.

✅ Features:

  • Eligibility: All employees who are covered under EPF are also automatically covered under EDLI.
  • Contribution:
    • 0.5% of wages contributed only by the employer.
    • No contribution required from employee.
  • Benefit Amount:
    • In case of death, the nominee/legal heir receives an amount linked to the last drawn salary and length of service.
    • Maximum benefit is ₹7,00,000 (subject to change by EPFO notification).
  • No Minimum Service Required: Insurance benefit is available even if the employee dies after just one month of joining.

🔷 Comparison Table:

Scheme Objective Source of Fund Benefit
EPF (1952) Retirement savings Employee + Employer (12% each) Lump sum with interest
EPS (1995) Monthly pension post-retirement Employer (8.33%) Monthly pension
EDLI (1976) Life insurance in case of death Employer (0.5%) Insurance up to ₹7 lakh

🔷 Conclusion:

The three schemes under the EPF Act — EPF, EPS, and EDLI — work collectively to provide a comprehensive social security system for employees in the organized sector. While EPF ensures financial savings, EPS guarantees post-retirement income, and EDLI provides protection to the employee’s family in unfortunate circumstances. Together, they play a vital role in ensuring economic security and welfare of employees and their dependents.

🔶 Q.4: Explain the benefits available to employees under the EPF Act, 1952. How does this Act support employees during retirement or unforeseen circumstances?
दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 is a beneficial legislation that provides social and economic security to employees working in the organized sector. The Act achieves this through three schemes—EPF, EPS, and EDLI—which collectively aim to ensure financial protection during retirement, disability, and in cases of death or emergencies.

🔷 Benefits Available to Employees under the EPF Act, 1952:

The following are the major benefits available to employees:

🔶 1. Provident Fund Benefit (Under EPF Scheme, 1952):

✅ Retirement Savings:

  • Employees accumulate savings throughout their employment by contributing a fixed percentage of salary to the Provident Fund.
  • A lump-sum amount (employee’s + employer’s contribution + interest) is paid at retirement, resignation, or death.

✅ Interest Accrual:

  • Annual compound interest is credited to the employee’s EPF account, notified by the Central Government.

✅ Withdrawal Benefits:

  • Full withdrawal allowed at retirement, permanent disability, migration abroad, or unemployment for over 2 months.
  • Partial withdrawals allowed for specific purposes such as:
    • Marriage or education of self or family.
    • Medical emergencies.
    • Housing/loan repayment.
    • Renovation or construction of house.
    • Natural calamity or lockdown situations (like COVID-19 advance).

✅ Tax-Free Returns:

  • EPF contributions and interest are exempted from tax under Section 80C and EEE provisions of the Income Tax Act.

🔶 2. Pension Benefit (Under EPS, 1995):

✅ Monthly Pension After Retirement:

  • Employees are eligible for a monthly pension after the age of 58, provided they have rendered at least 10 years of eligible service.

✅ Types of Pensions:

  • Superannuation Pension: Regular pension after 58 years.
  • Early Pension: Available from age 50 with reduced benefits.
  • Disability Pension: Payable in case of total and permanent disability.
  • Family Pension: Payable to spouse/children in case of employee’s death.
  • Orphan Pension: Higher pension in case both parents are deceased.

✅ Survivor Benefits:

  • In case of death of the employee, pension continues to be paid to dependents (spouse, children, nominee).

🔶 3. Life Insurance Benefit (Under EDLI Scheme, 1976):

✅ Death-in-Service Coverage:

  • Provides a lump-sum life insurance benefit to the family/nominee in case the employee dies while in service.

✅ Amount of Insurance:

  • The maximum insurance benefit is currently up to ₹7,00,000 (subject to EPFO notifications).
  • Benefit is linked to last drawn salary and service period.

✅ No Premium Deducted from Employee:

  • Entire contribution is made by the employer only (0.5% of wages), making it a free benefit for the employee.

🔶 4. Portability and Universal Access:

✅ Universal Account Number (UAN):

  • Each employee is allotted a Universal Account Number (UAN) which remains the same even if they change jobs.
  • Ensures portability and easy access to funds and account details.

✅ Online Facilities:

  • Balance check, withdrawals, transfers, and nominations can be managed online via EPFO portal and UMANG app.

🔷 How the Act Supports Employees During Retirement or Unforeseen Circumstances:

Circumstance Support Provided
Retirement Lump-sum provident fund + Monthly pension
Resignation or Job Loss Withdrawal or transfer of EPF balance
Death during Service EDLI insurance + Family Pension
Permanent Disability Early withdrawal + Disability pension
Emergency (e.g., medical, lockdown) Partial advance withdrawal
Marriage or Education Permitted partial withdrawals from EPF

🔷 Conclusion:

The EPF Act, 1952 serves as a comprehensive financial safety net for employees working in the formal sector. By ensuring systematic savings, lifelong pension, and insurance protection, the Act significantly reduces the vulnerability of employees and their families to financial hardships. It not only promotes financial discipline but also guarantees dignity and security in the post-retirement phase or during unforeseen life events.

🔶 The Maternity Benefit Act, 1961

🔶 Q.5: Define the key terms under the Maternity Benefit Act, 1961 such as ‘Maternity Benefit’, ‘Woman’, ‘Employer’ and ‘Establishment’. What is the scope and applicability of the Act?
दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Maternity Benefit Act, 1961 is a social welfare legislation enacted to protect the employment of women during maternity and to entitle them to certain benefits before and after childbirth. The Act ensures that a woman is not deprived of her wages or job merely because of her pregnancy or maternity leave.

🔷 Key Definitions Under the Act:

The Act provides several important definitions that are fundamental to its implementation:

🔶 1. ‘Maternity Benefit’ [Section 3(h)]:

✅ Meaning:
Maternity benefit refers to the payment made to a woman who is absent from work due to maternity reasons. It is paid at the rate of the average daily wage for the period of her actual absence.

✅ Includes:

  • Leave for pregnancy, delivery, and recovery.
  • Paid leave for miscarriage, medical termination of pregnancy, tubectomy operation, and illness arising from pregnancy or childbirth.

🔶 2. ‘Woman’ [Section 3(o)]:

✅ Meaning:
A ‘woman’ under the Act means a female employee, whether employed directly or through an agency, who is employed in any capacity (skilled, unskilled, manual, supervisory, technical, or clerical) in an establishment.

✅ Key Points:

  • Applies irrespective of the nature of the job.
  • Can be permanent, temporary, contractual, or casual.

🔶 3. ‘Employer’ [Section 3(d)]:

✅ Meaning:
‘Employer’ includes:

  • Owner, occupier, manager, or managing agent of an establishment.
  • In relation to government or local authority: the person appointed to supervise and control employees.
  • In relation to a factory: the person named under the Factories Act as the manager.

✅ Key Responsibility:
The employer is responsible for paying maternity benefits and maintaining records under the Act.

🔶 4. ‘Establishment’ [Section 3(e)]:

✅ Meaning:
‘Establishment’ means:

  • Any factory, mine, or plantation (including those belonging to the government),
  • An establishment where people are employed for the exhibition of equestrian, acrobatic or other performances, and
  • Any shop or establishment under any law for the time being in force relating to shops and establishments.

✅ Inclusion After 2017 Amendment:

  • Includes private sector organizations, educational institutions, and other service sectors.
  • Also applies to work from home and remote jobs (as notified).

🔷 Scope and Applicability of the Act:

🔶 ✅ 1. Applicability:

The Act applies to:

  • Every establishment employing 10 or more employees on any day in the preceding 12 months.
  • Includes both government and private sector organizations.
  • Applicable to factories, mines, plantations, shops, and commercial establishments.
  • Also covers contractual and daily wage workers, if they fulfill eligibility.

🔶 ✅ 2. Coverage of Employees:

  • Applies to all women employees, whether permanent, temporary, or contractual.
  • The woman must have worked for at least 80 days in the 12 months immediately preceding the expected delivery date to be eligible for maternity benefit.

🔶 ✅ 3. Maternity Leave Benefit:

As per the 2017 Amendment, the Act provides:

  • 26 weeks of paid maternity leave for up to two surviving children.
  • 12 weeks for a woman with more than two children.
  • 12 weeks for adoptive mothers and commissioning mothers (surrogacy cases).

🔷 Conclusion:

The Maternity Benefit Act, 1961 is a progressive step to ensure women’s health, dignity, and job security during maternity. By defining key terms like ‘maternity benefit’, ‘woman’, ’employer’, and ‘establishment’ and expanding its scope through amendments, the Act reflects India’s commitment to gender justice and social welfare. It not only safeguards the rights of working women but also promotes inclusive work environments in both public and private sectors.

🔶 Q.6: Discuss the provisions related to maternity benefits under the Maternity Benefit Act, 1961. What are the conditions for eligibility and how is the benefit calculated?
दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Maternity Benefit Act, 1961 was enacted to regulate the employment of women during the period of maternity and to provide maternity benefits such as paid leave, nursing breaks, and protection from dismissal. It ensures that a woman is not financially or professionally disadvantaged due to pregnancy, childbirth, or related medical conditions.

🔷 Provisions Related to Maternity Benefits:

The Act lays down detailed provisions for maternity leave, benefit amount, nursing breaks, and other entitlements:

🔶 1. Duration of Maternity Leave:

  • 26 weeks of paid maternity leave for women with up to two surviving children.
    • Maximum 8 weeks can be taken before the expected date of delivery.
    • Remaining 18 weeks after childbirth.
  • For women having more than two surviving children:
    • 12 weeks of maternity leave (6 weeks before and 6 weeks after delivery).

🔶 2. Maternity Benefit for Adoptive and Commissioning Mothers (Amendment 2017):

  • A woman who adopts a child below the age of 3 months or is a commissioning mother (in surrogacy) is entitled to 12 weeks of maternity leave from the date the child is handed over.

🔶 3. Benefit in Case of Miscarriage or Medical Termination of Pregnancy (MTP):

  • Entitled to 6 weeks of leave with wages after the date of miscarriage or medical termination of pregnancy.

🔶 4. Leave for Tubectomy Operation:

  • Women undergoing tubectomy (sterilization operation) are entitled to 2 weeks of paid leave.

🔶 5. Leave for Illness Arising Out of Pregnancy:

  • Additional leave up to 1 month with wages in case of illness arising from pregnancy, delivery, premature birth, or miscarriage.

🔶 6. Nursing Breaks (Section 11):

  • After resuming duty post-delivery, the woman is entitled to two nursing breaks (in addition to regular breaks) each day until the child is 15 months old.

🔶 7. Prohibition of Dismissal During Maternity Leave (Section 12):

  • It is illegal to dismiss or discharge a woman during maternity leave.
  • Any termination or adverse action is void, and the woman is entitled to full benefits.

🔷 Eligibility Conditions:

To avail maternity benefit, the following conditions must be fulfilled:

  1. The woman must have worked for at least 80 days in the 12 months immediately preceding the expected date of delivery.
  2. She should be working in an establishment with 10 or more employees.
  3. The benefit is available to all women – permanent, temporary, or contractual – if they meet the above conditions.

🔷 Calculation of Maternity Benefit:

✅ Maternity benefit is calculated as:

Average daily wage × Number of maternity leave days

Where,

  • Average daily wage = wages earned in the last 3 calendar months before the date of absence due to maternity, divided by the number of days worked.
  • Wages include basic salary + DA + other cash allowances but exclude bonuses, overtime, and gratuity.

✅ Illustration:

If a woman earns ₹18,000 per month, her average daily wage = ₹18,000 / 30 = ₹600
If she takes 26 weeks (182 days) of maternity leave,
Maternity benefit = ₹600 × 182 = ₹1,09,200

🔷 Other Important Provisions:

  • Notice of claim (Section 6):
    The woman must give written notice to the employer about her maternity leave and intended return.
  • Medical Bonus (Section 8):
    If the employer does not provide free prenatal and postnatal care, the woman is entitled to a medical bonus (currently ₹3,500, subject to changes).
  • Non-waiver (Section 27):
    A woman cannot waive her right to maternity benefit even through a contract—any such agreement is null and void.

🔷 Conclusion:

The Maternity Benefit Act, 1961 ensures that a working woman can take care of her health and her child without the fear of losing income or employment. Through provisions like 26 weeks of leave, full wage benefit, and job protection, the Act plays a crucial role in promoting women’s rights, health, and gender equality in the workplace. It empowers women to manage both motherhood and a professional career with dignity and legal protection.

🔶 Q.7: What are the duties of employers under the Maternity Benefit Act? What are the penalties for non-compliance?
दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Maternity Benefit Act, 1961 is a key legislation that ensures the health and well-being of women employees during and after pregnancy. The Act not only provides various benefits to women workers but also imposes certain duties and obligations on employers. It further prescribes penalties for those who fail to comply with its provisions.

🔶 Duties of Employers under the Maternity Benefit Act, 1961:

Employers covered under the Act are required to fulfill several responsibilities to ensure that women workers receive their legal entitlements.

✅ 1. Provide Maternity Leave and Benefits [Section 5]:

  • The employer must grant paid maternity leave of:
    • 26 weeks (for up to two children)
    • 12 weeks (if more than two children)
  • Ensure payment of maternity benefit at the rate of average daily wage for the leave period.

✅ 2. Leave for Miscarriage, Illness, or Tubectomy [Sections 9, 10 & 10A]:

  • Grant 6 weeks leave after miscarriage or medical termination of pregnancy.
  • Grant additional 1 month leave for illness arising out of pregnancy.
  • Provide 2 weeks leave for tubectomy operations.

✅ 3. Provide Nursing Breaks [Section 11]:

  • Permit two nursing breaks of prescribed duration each day for women returning to work post-delivery, until the child is 15 months old.

✅ 4. Non-Dismissal During Maternity Leave [Section 12]:

  • Prohibited from dismissing, discharging, or punishing any woman:
    • During her maternity leave.
    • For reasons associated with pregnancy or childbirth.
  • Any such dismissal is void and the woman remains entitled to maternity benefits.

✅ 5. Maintain Registers and Records [Section 20]:

  • Maintain records/registers in the prescribed format containing:
    • Details of women employees.
    • Leave granted.
    • Benefits paid.
  • These records must be made available for inspection by authorities.

✅ 6. Display Notices [Section 19]:

  • Display an abstract of the Act and rules in English and local language at a conspicuous place in the establishment.
  • This ensures employees are aware of their rights.

✅ 7. Provide Medical Bonus [Section 8]:

  • If the employer does not provide free pre-natal and post-natal care, he must pay a medical bonus (currently ₹3,500, subject to notification).

✅ 8. Accept and Process Notice of Maternity [Section 6]:

  • The employer must accept the written notice from the woman indicating the intended date of absence and expected return.
  • Must respond and process maternity benefits accordingly.

🔶 Penalties for Non-Compliance:

The Act imposes strict penalties to ensure that employers follow the law diligently.

✅ 1. General Penalty for Contravention [Section 21(1)]:

  • For denying maternity benefits or discharging/dismissing a woman during maternity leave:
    • Imprisonment up to 3 months, or
    • Fine up to ₹5,000, or
    • Both.

✅ 2. Penalty for Obstructing Inspector [Section 21(2)]:

  • If an employer refuses access or obstructs the Inspector or fails to produce documents:
    • Imprisonment up to 1 year, or
    • Fine up to ₹5,000, or
    • Both.

✅ 3. Repeated Offences [Section 21(3)]:

  • For repeat violations, enhanced punishment:
    • Imprisonment for a minimum of 3 months, extendable up to 1 year, and
    • Fine up to ₹5,000.

🔷 Conclusion:

The Maternity Benefit Act, 1961 imposes clear and specific duties on employers to protect the rights of women employees during the vulnerable period of pregnancy and childbirth. The non-compliance attracts strict penalties, including imprisonment and fines. These provisions ensure that the objectives of the Act are effectively enforced and that women are provided with dignity, health, safety, and job security during maternity.

🔶 The Payment of Gratuity Act, 1972

🔶 Q.8: Define the term ‘Gratuity’. Who is eligible for payment of gratuity under the Payment of Gratuity Act, 1972? Explain the formula for calculation of gratuity.
दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Payment of Gratuity Act, 1972 is a beneficial social welfare legislation enacted to provide a lump-sum monetary benefit to employees as a token of appreciation for their long and continuous service. It is payable at the time of retirement, resignation, superannuation, or death/disability.

🔷 Definition of ‘Gratuity’:

  • According to Section 2(e) of the Act, “Gratuity” is a statutory retirement benefit payable to an employee as a mark of recognition for continuous service rendered by him/her in an establishment.
  • It is a one-time payment, not deducted from salary, and is paid at the end of employment.

🔷 Eligibility for Payment of Gratuity:

As per Section 4(1) of the Act, an employee is eligible to receive gratuity if the following conditions are met:

✅ 1. Continuous Service of at least 5 Years:

  • The employee must have rendered continuous service of five years or more with the same employer.
  • Exceptions:
    • In case of death or disablement, the 5-year condition is not applicable. Gratuity becomes payable immediately.

✅ 2. Employment in Eligible Establishments:

  • The Act applies to:
    • Every factory, mine, oilfield, plantation, port, and railway company.
    • Every shop or establishment with 10 or more employees on any day in the preceding 12 months.
  • Once applicable, the Act continues to apply, even if the number of employees falls below 10 later.

✅ 3. Types of Employees Covered:

  • Covers all employees (skilled, unskilled, clerical, supervisory, etc.) other than apprentices.
  • Includes both full-time and contractual employees, if employed through proper channels.

🔷 Formula for Calculation of Gratuity:

The gratuity amount is calculated using the following formula:

🔸 Gratuity = (Last Drawn Salary × 15 × Number of Completed Years of Service) / 26

✅ Where:

  • Last Drawn Salary = Basic Pay + Dearness Allowance (DA)
  • 15 = 15 days’ wages for each completed year of service
  • 26 = Number of working days in a month (as per the Act)
  • Completed Years = Service exceeding 6 months is counted as a full year

✅ Example Calculation:

Let’s assume:

  • Last drawn salary (Basic + DA) = ₹20,000 per month
  • Completed years of service = 10 years 7 months → Counted as 11 years

Gratuity = ₹20,000 × 15 × 11 / 26
= ₹20,000 × 165 / 26
= ₹3,30,000 ÷ 26
= ₹1,26,923

Hence, the employee will receive ₹1,26,923 as gratuity.

🔷 Maximum Limit of Gratuity:

  • As per the latest amendment (March 2018), the maximum limit of gratuity payable under the Act is ₹20,00,000 (20 lakh).
  • However, in case of government employees or under private agreements, it may vary.

🔷 Tax Exemption:

  • Gratuity up to ₹20 lakhs is exempt from Income Tax under Section 10(10) of the Income Tax Act, for employees covered under the Act.

🔷 Conclusion:

Gratuity is a right of the employee and an obligation on the employer under the Payment of Gratuity Act, 1972. It acknowledges the employee’s loyalty and long service. The eligibility conditions are straightforward, and the formula ensures a fair compensation based on salary and duration of service. By ensuring a financial cushion at the end of employment, the Act contributes to the social security and dignity of labor.

🔶 Q.9: What are the circumstances under which gratuity can be forfeited under the Payment of Gratuity Act, 1972? Discuss with reference to relevant sections.
दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Payment of Gratuity Act, 1972 is a social security legislation enacted to provide monetary benefits to employees for their long and continuous service. However, the Act also provides specific circumstances under which gratuity may be wholly or partially forfeited by the employer. These provisions are laid down in Section 4(6) of the Act.

🔷 Statutory Provision: Section 4(6) – Forfeiture of Gratuity

According to Section 4(6) of the Act, gratuity can be forfeited wholly or partially in the following circumstances:

🔶 1. Forfeiture to the Extent of Loss or Damage [Section 4(6)(a)]:

✅ Condition:

  • If the employee’s services are terminated for any act, willful omission, or negligence causing damage or loss to the employer’s property.

✅ Extent of Forfeiture:

  • Only to the extent of the loss or damage caused.

✅ Example:

  • If an employee’s negligence causes a fire that damages company property worth ₹50,000, the gratuity can be deducted up to ₹50,000.

🔶 2. Partial or Full Forfeiture for Misconduct [Section 4(6)(b)]:

Gratuity may be partially or wholly forfeited if the services are terminated for the following serious misconducts:

✅ (i) Riotous or Disorderly Conduct / Acts of Violence [Section 4(6)(b)(i)]:

  • If the employee is terminated for riotous behavior, disorderly conduct, or acts of violence during employment.
  • Forfeiture: Gratuity can be partially or wholly forfeited, depending on the severity of misconduct.

✅ Example: Assaulting a fellow employee or supervisor on factory premises.

✅ (ii) Offence Involving Moral Turpitude [Section 4(6)(b)(ii)]:

  • If the employee commits an offence involving moral turpitude, provided the offence is committed in the course of employment.
  • Forfeiture: Gratuity can be wholly forfeited.

✅ Examples:

  • Theft, fraud, or embezzlement committed during employment.
  • Sexual harassment or serious breach of trust.

🔸 Note: The term moral turpitude refers to conduct that is contrary to justice, honesty, or morality.

🔷 Key Conditions for Forfeiture:

  1. Termination is essential – Forfeiture can only be invoked if the employee is terminated for misconduct. Resignation or retirement does not attract forfeiture provisions.
  2. Misconduct must be proven – The employer must clearly establish the misconduct through a proper domestic enquiry or disciplinary proceedings.
  3. In the course of employment – Especially for offences involving moral turpitude, the act must be committed while on duty.
  4. No automatic forfeiture – The employer must take a specific decision and issue a notice/order of forfeiture with reasons.

🔷 Judicial Interpretation:

Indian courts have provided clarity and safeguards against arbitrary forfeiture:

  • Delhi Transport Corporation v. Sardar Singh (2004 SC):
    The Supreme Court held that gratuity can be forfeited only when the misconduct is of serious nature, and termination is based on such misconduct.
  • Union Bank of India v. CG Ajay Babu (2018 SC):
    Mere dismissal is not sufficient to forfeit gratuity unless misconduct clearly falls under Section 4(6).

🔷 Conclusion:

The Payment of Gratuity Act, 1972 primarily protects the rights of employees to receive gratuity after continuous service. However, Section 4(6) acts as a safeguard for employers by allowing forfeiture in cases of serious misconduct or financial loss. The provision is not arbitrary, and any forfeiture must be justified, limited in scope, and done following due process. This ensures a balanced approach between employee welfare and organizational discipline.

🔶 Q.10: Discuss the provisions relating to nomination, controlling authority, and dispute resolution mechanism under the Payment of Gratuity Act, 1972.
दीर्घ उत्तरीय उत्तर (Long Answer):

🔷 Introduction:

The Payment of Gratuity Act, 1972 aims to ensure that employees receive a retirement benefit as a token of appreciation for long and continuous service. In addition to eligibility and payment provisions, the Act provides for nomination of beneficiaries, appointment of controlling authorities, and a clear dispute resolution mechanism to ensure smooth administration and enforcement of the Act.

🔶 1. Nomination [Section 6 of the Act]:

✅ Meaning:

Nomination refers to the process by which an employee designates one or more persons to receive the gratuity amount in the event of the employee’s death.

✅ Key Provisions:

  • Time Limit:
    Every employee who has completed one year of service is required to make a nomination within 30 days.
  • Mode of Nomination:
    Must be in writing, in the prescribed Form ‘F’, and submitted to the employer.
  • Nomination in Favor of Family:
    • If the employee has a family, nomination must be in favor of a family member only.
    • If made in favor of a non-family person, it is invalid.
    • If the employee has no family, nomination can be made in favor of any person, but will become invalid if the employee later acquires a family.
  • Modification of Nomination:
    An employee can modify the nomination at any time by submitting a written notice in Form ‘G’.
  • Employer’s Duty:
    Employer must keep the nomination in safe custody and record it in the official register.

🔶 2. Controlling Authority [Section 3 of the Act]:

✅ Who is the Controlling Authority?

  • The appropriate government (Central or State) appoints officers as Controlling Authorities for different areas or establishments.

✅ Functions and Powers:

  • Ensures compliance with the provisions of the Act.
  • Receives applications for gratuity claims in case of dispute or denial by employer.
  • Conducts inquiries to verify the validity of the claim.
  • Issues directions to the employer for payment of gratuity, with interest if delayed.
  • Has powers of a civil court under the Code of Civil Procedure (CPC), 1908:
    • Summoning witnesses
    • Taking evidence on oath
    • Enforcing attendance

🔶 3. Dispute Resolution Mechanism [Section 7 of the Act]:

✅ Procedure for Payment of Gratuity:

  • The employer is required to determine and pay gratuity within 30 days from the date it becomes payable (i.e., retirement, resignation, death, etc.).
  • If not paid within 30 days, the employer is liable to pay interest on the delayed amount.

✅ Filing of Application:

  • The employee (or nominee/legal heir) must submit a written application to the employer within 30 days from the date gratuity becomes payable.
  • If the employer refuses or fails to pay:
    • The aggrieved person may apply to the Controlling Authority in Form ‘N’ within 90 days of cause of action.
    • Delay may be condoned if sufficient cause is shown.

✅ Inquiry and Decision by Controlling Authority:

  • The Controlling Authority conducts an inquiry, gives both parties an opportunity to be heard, and then passes an order.
  • If the employer fails to comply with the order, the Authority may issue a certificate to the Collector to recover the amount as arrears of land revenue.

✅ Appeal [Section 7(7)]:

  • Either party (employee or employer) aggrieved by the decision of the Controlling Authority can file an appeal before the Appellate Authority within 60 days.
  • The appeal must be accompanied by a certificate showing deposit of the gratuity amount ordered.

🔷 Conclusion:

The Payment of Gratuity Act, 1972 not only ensures the payment of gratuity to eligible employees but also provides a structured and fair mechanism for nominations, administration, and redressal of grievances. The roles of the employee (in nominating beneficiaries), the employer (in maintaining records and making timely payments), and the Controlling Authority (as adjudicator and enforcer) are clearly defined. The provisions safeguard employee rights and ensure quick and effective justice in cases of delay, denial, or disputes.