SOCIAL SECURITY

CONCEPT
The conceptual framework of social security in India under labor law is built upon the principles of
providing economic protection and social support to workers and their families during various life
events. The primary objective is to alleviate poverty, promote social justice, and ensure a decent
standard of living for workers. Here are the key elements of the conceptual framework of social
security in India:
1. Coverage and Applicability: Social security laws in India typically apply to specific categories
of workers or establishments based on factors like the number of employees, type of
industry, or employment status. For instance, laws like the EPF Act and ESI Act apply to
establishments meeting specific employee count criteria. The Unorganized Workers' Social
Security Act is designed to cover unorganized and informal sector workers.
2. Social Insurance Programs: Social security in India is often organized as social insurance
programs, where both employers and employees contribute to a fund. These contributions
create a pool of funds that are utilized to provide benefits to eligible beneficiaries when
certain events occur, such as retirement, disability, maternity, or medical emergencies.
3. Employee Contributions: Under various social security schemes, employees contribute a
certain percentage of their wages or salary towards the social security fund. This
contribution is deducted from their earnings on a regular basis and deposited into the
relevant fund.
4. Employer Contributions: Employers also make contributions to the social security funds on
behalf of their employees. These contributions are usually a percentage of the employee's
wages or salary and are a statutory obligation for the employer.
5. Social Security Benefits: Social security benefits in India vary depending on the specific
scheme. They may include retirement benefits, medical benefits, disability benefits,
maternity benefits, unemployment benefits, and more. These benefits are provided to
eligible beneficiaries as per the conditions and criteria laid down in the respective laws.
6. Administration and Institutions: Social security schemes are often managed and
administered by government institutions or specialized bodies. For example, the Employees'
Provident Fund Organization (EPFO) administers the EPF scheme, while the Employees' State
Insurance Corporation (ESIC) manages the ESI scheme.
7. Government Support: The government may provide financial support or subsidies to certain
social security programs to ensure their effectiveness and affordability for beneficiaries and
employers.
8. Welfare of Unorganized Workers: In recent years, there has been an emphasis on extending
social security coverage to workers in the unorganized and informal sectors. The Unorganized
Workers' Social Security Act is one such initiative to address the welfare needs of this
vulnerable section of the workforce.
9. Legal Framework and Compliance: Labor laws in India establish the legal framework for
social security provisions and ensure that employers comply with the requirements of
contributing to social security funds and providing benefits to eligible employees.
It's important to note that the effectiveness and coverage of social security in India may vary
across different regions and industries. The government periodically reviews and amends these
laws to address emerging challenges and ensure the welfare of the workforce.
 HISTORY
The history of social security legislations in India can be traced back to the early 20th century
when the British colonial government introduced the first labor and social welfare laws.
Since then, various legislations have been enacted and evolved over time to address the
social security needs of workers in India. Here's a brief overview of the key milestones in the
history of social security legislations in India:
1. Workmen's Compensation Act, 1923 (renamed Employee's Compensation Act): Enacted
during the British colonial rule, this was one of the earliest labor laws in India. It provided for
compensation to workers or their dependents in the event of an injury or death arising out
of and during the course of employment.
2. Employees' State Insurance Act, 1948 (ESI Act): This was a landmark legislation passed
shortly after India's independence. It established the Employees' State Insurance Corporation
(ESIC) to provide medical, cash, maternity, disability, and dependent benefits to employees in
certain specified industries. The ESI Act aimed to protect workers against health and
employment-related risks.
3. Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act): The EPF Act
was enacted to provide social security benefits to workers and their families by creating a
fund to which both employers and employees contribute a percentage of the employee's
salary. The fund, known as the Employees' Provident Fund, provides retirement benefits to
employees.
4. Maternity Benefit Act, 1961: This Act was introduced to regulate the employment of women
in certain establishments and provide them with maternity benefits, including paid maternity
leave and nursing breaks.
5. Payment of Gratuity Act, 1972: The Gratuity Act was enacted to provide a lump sum
payment, known as gratuity, to employees who have completed five or more years of
continuous service in an organization.
6. National Social Assistance Programme (NSAP): The NSAP was introduced in 1995 as a
centrally sponsored scheme to provide social assistance to the elderly, widows, and disabled
individuals living below the poverty line. It comprises various pension schemes like the Indira
Gandhi National Old Age Pension Scheme, Widow Pension Scheme, and Disability Pension
Scheme.
7. Unorganized Workers' Social Security Act, 2008: This Act aimed to provide social security
coverage to unorganized workers in various sectors, including gig workers, street vendors,
domestic workers, and others who did not have access to formal employee-employer
relationships.
8. National Rural Employment Guarantee Act (NREGA), 2005 (renamed Mahatma Gandhi
National Rural Employment Guarantee Act, 2009): While not strictly a social security
legislation, NREGA provides a form of social security by guaranteeing a certain number of
days of employment to rural households in public works projects.
9. Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM): Launched in 2019, PM-SYM is a pension
scheme for workers in the unorganized sector, providing them with a monthly pension after
attaining the age of 60.
 Over the years, the Indian government has continued to review and amend these legislations
to adapt to changing socio-economic conditions and extend social security benefits to a
larger section of the population. The goal has been to enhance the well-being of workers and
ensure social protection for all.

LEGISLATIONS
India has several legislations related to social security under labor law. These laws aim to provide
social security benefits to workers and employees across various sectors. Here are some of the key
legislations:
1. Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act): The EPF Act
applies to establishments employing 20 or more persons. It mandates both the employer
and employee to contribute a percentage of the employee's salary to the Employees'
Provident Fund (EPF) account. The EPF provides retirement benefits to employees.
2. Employees' State Insurance Act, 1948 (ESI Act): The ESI Act applies to establishments
employing 10 or more persons in certain specified industries. It provides medical, cash,
maternity, disability, and dependent benefits to insured persons and their dependents.
3. Employee's Compensation Act, 1923 (formerly Workmen's Compensation Act): This Act
provides for compensation to employees and their dependents in the event of injury or
death caused by accidents arising out of and during the course of employment.
4. Maternity Benefit Act, 1961: The Maternity Benefit Act aims to regulate the employment of
women in certain establishments and provides maternity benefits like paid leave, nursing
breaks, and other related benefits.
5. Payment of Gratuity Act, 1972: The Gratuity Act applies to establishments employing 10 or
more persons. It mandates the payment of gratuity to employees who have completed five
or more years of continuous service.
6. Unorganized Workers' Social Security Act, 2008: This Act seeks to provide social security
coverage to unorganized workers, including gig workers, street vendors, domestic workers,
and others who do not have access to traditional employee-employer relationships.
7. National Pension System (NPS): While not strictly a labor law, the NPS is a government-
initiated voluntary pension scheme open to all Indian citizens. It aims to provide retirement
income to subscribers through a systematic investment during their working life.
Please note that labor laws and social security regulations can undergo updates and amendments
over time. It is essential to verify the current status of these legislations to ensure you have the latest
information. Additionally, this is not an exhaustive list of all labor-related laws in India, but it covers
some of the major legislations related to social security.
AIMS AND OBJECTIVES OF THE WORKMEN'S COMPENSATION ACT,1923
The Workmen's Compensation Act, 1923 (now known as the Employee's Compensation Act, 1923) is
an important labor law in India that provides for compensation to workers in case of injuries or death
arising out of and during the course of employment. The main provisions of the Act include:
1. Applicability: The Act applies to employees (referred to as workmen) engaged in various
employments, including factories, mines, plantations, construction work, and other
hazardous occupations mentioned in schedule 2, where a specified number of employees
are working.
 2. Employer's Liability: The Act imposes a strict liability on the employer to pay compensation
to the workmen for injuries caused by accidents arising out of and during the course of
employment. It follows a no-fault liability principle, meaning the worker is entitled to
compensation regardless of whether the employer or the employee was at fault.
3. Accidents and Occupational Diseases Covered: The Act covers both physical injuries and
occupational diseases contracted during employment. It includes accidents occurring on the
premises of the employer or off-site while carrying out work-related tasks. Sec 3
4. Compensation for Temporary and Permanent Disablement: The Act provides for
compensation to be paid to the worker based on the nature and extent of the disablement.
Compensation is payable for both temporary and permanent disablement, with rates
specified in the Act.
5. Compensation for Death: In the unfortunate event of a workman's death due to a work-
related accident or occupational disease, the Act provides for compensation to be paid to the
dependents of the deceased workman. Dependents can include a spouse, children, parents,
or other individuals wholly or partially dependent on the deceased workman.
6. Compensation Rates: The Act prescribes a schedule of compensation rates for various types
of injuries, disablements, and death. The amount of compensation is determined based on
the wages of the workman and the extent of the injury or disablement.
7. Employer's Insurance: Employers can fulfill their liability to pay compensation by either
obtaining an insurance policy from an authorized insurer or by making a deposit with the
Commissioner of Workmen's Compensation. This ensures that the employer is financially
capable of providing compensation in case of accidents.
8. Establishment of Commissioners: The Act empowers the government to appoint
Commissioners of Workmen's Compensation to adjudicate disputes related to the payment
of compensation. These Commissioners have the authority to determine the amount of
compensation and oversee the implementation of the Act.
9. Appeals: The Act allows for appeals to be made against the decisions of the Commissioner to
higher courts, providing a legal recourse for both employers and workmen. Sec 30
10. Notice of Accidents: The Act requires the employer to report any accidents resulting in
injuries or death to the nearest Commissioner and also provide notice to the appropriate
authorities and representatives of the workmen.
The Workmen's Compensation Act, 1923, has been instrumental in providing financial protection to
workers and their dependents in case of work-related accidents or occupational diseases. It ensures
that workers receive fair compensation for their injuries and contributes to promoting occupational
safety and welfare in the workplace.
The Workmen's Compensation Act, 1923 (now known as the Employee's Compensation Act, 1923)
was one of the earliest labor laws enacted in India during the British colonial period. The primary aim
and objectives of this act were to provide financial protection and assistance to workers who suffer
injuries or death during the course of their employment. The key goals of the Workmen's
Compensation Act, 1923 are as follows:
1. Compensation for Injuries: The main objective of the Act is to ensure that workers who
sustain injuries, disablement, or occupational diseases while performing their duties are
entitled to receive compensation from their employers. The Act seeks to provide a prompt
and fair compensation mechanism for work-related injuries.
 2. Financial Support for Dependents: In case of fatal accidents resulting in the death of a
worker, the Act aims to provide financial support to the dependents of the deceased. The
compensation is intended to help the family cope with the loss of the primary breadwinner
and maintain a decent standard of living.
3. No-Fault Liability: The Act follows a no-fault liability principle, meaning that the employer is
liable to pay compensation to the worker or their dependents irrespective of whether the
employer or the employee was at fault for the accident or injury.
4. Legal Redress: The Act provides a legal framework for workers or their dependents to seek
redress in case of work-related injuries or death. It establishes a system for adjudicating and
determining the compensation payable to the affected parties.
5. Statutory Obligation for Employers: The Act imposes a statutory obligation on employers to
compensate their employees for any injuries or accidents arising during the course of
employment. This ensures that employers take necessary precautions to provide a safe
working environment and prevent accidents.
6. Promotion of Occupational Safety: By holding employers responsible for compensating
injured workers, the Act encourages employers to adopt measures to promote occupational
safety and reduce workplace hazards.
7. Applicability: The Act applies to a wide range of employment activities and industries,
including factories, mines, plantations, construction sites, and other establishments where
workers are engaged in hazardous activities.
8. Prescribed Compensation Rates: The Act provides a schedule of compensation rates based
on the nature and severity of the injury or disablement. These rates are used to calculate the
amount of compensation payable to the worker or their dependents.
Overall, the Workmen's Compensation Act, 1923 aimed to address the social and economic
consequences of work-related injuries and death by establishing a system of compensation and
financial support for workers and their families. It has played a crucial role in providing social security
to the workforce in India for several decades.
Rights of workmen under this Act
1. Section 3 – To receive compensation for disablement and death resulting from personal
injury caused by accident or occupational disease arising out of and in the course of
employment.
2. Section 6 – To apply to the commissioner for review half – monthly payment if his condition
deteriorates.
3. Section 10 – To apply to the commissioner for determining the claim and the amount of the
commissioner if the employer denies the claim, or determines an inadequate amount of
compensation.
4. Section 30 – Can appeal to the High Court against the Commissioner’s order, if he feels
aggrieved by any of the orders.

DOCTRINE OF COMMON EMPLOYMENT UNDER EMPLOYER'S LIABILITY ACT 1918

The "doctrine of common employment" was a legal principle that was historically applied in the
context of employer's liability for workplace injuries in the United Kingdom and some other
common law jurisdictions. It was relevant during the period before the implementation of
comprehensive workers' compensation laws.

Under the doctrine of common employment, an employer could not be held liable for injuries
suffered by an employee due to the negligence of a fellow employee. The rationale behind this
doctrine was that both the injured employee and the negligent co-worker were considered to be
in the same employment and, therefore, assumed the inherent risks associated with the job.

The doctrine of common employment was based on the idea that by accepting employment,
workers implicitly consented to the risk of injury caused by the negligence of their co-workers. As
a result, if a worker was injured due to the negligence of a colleague, they were generally barred
from bringing a claim for damages against their employer.

This doctrine was heavily criticized for its unfairness to injured workers and its failure to hold
employers accountable for providing a safe working environment. In many cases, injured workers
were left without compensation or any legal recourse, even if their injuries resulted from unsafe
working conditions or the negligence of other employees.

In the United Kingdom, the doctrine of common employment was abolished with the
introduction of the Workmen's Compensation Act 1897. This Act provided a system of
compensation for workers who suffered injuries arising out of and in the course of their
employment, irrespective of the fault of the employer or fellow employees. Similar workers'
compensation laws were introduced in other countries, gradually rendering the doctrine of
common employment obsolete.

It is important to note that the information provided here is based on the historical context of the
doctrine of common employment. Laws and legal principles may vary across different
jurisdictions and are subject to change over time. For the most current and accurate information
regarding employer's liability and workers' compensation laws, it is advisable to consult legal
experts or refer to the relevant legislation in the respective country.

The "doctrine of contracting out" was another legal principle that existed in the context of
employer's liability for workplace injuries in the United Kingdom before the implementation of
comprehensive workers' compensation laws.

CONTRACTING OUT
Under the doctrine of contracting out, employers attempted to limit their liability for workplace
injuries or accidents by including clauses in employment contracts or agreements that sought to
waive or limit the rights of employees to claim compensation for injuries. These contractual
provisions were aimed at absolving employers from their responsibility to provide compensation to
injured workers or their dependents, even if the employer was at fault for the injuries.
The doctrine of contracting out was based on the idea that employers and employees could mutually
agree to modify the legal rights and obligations that would otherwise arise under the law. By signing
a contract that explicitly waived the right to claim compensation for injuries, employees were
deemed to have given up their legal rights to seek damages or compensation from their employers.
This practice was widely criticized as it allowed employers to escape their liability for workplace
injuries, leaving workers without adequate compensation or support in case of accidents or injuries
occurring at work. It was seen as undermining the fundamental principle that employers have a duty
to provide a safe working environment and bear the responsibility for any injuries or harm caused by
their negligence.
The doctrine of contracting out was eventually abolished with the introduction of workers'
compensation laws in various jurisdictions. These laws replaced the common law principles of
employer's liability with a statutory framework that provided a system of compensation for injured
workers, regardless of employer fault. Workers' compensation laws established a "no-fault" system,
ensuring that injured workers or their dependents are entitled to compensation without the need to
prove employer negligence.
In the United Kingdom, the Workmen's Compensation Act 1897 was one of the early laws that
introduced a system of workers' compensation, thus rendering the doctrine of contracting out
obsolete.
As legal principles and laws can vary across different jurisdictions and change over time, it is essential
to consider the specific laws and regulations in the respective country to understand the current
employer's liability and workers' compensation provisions.

UNIT 2
MATERNITY BENEFIT
The Maternity Benefit Act, 1961 is an important labor law in India that aims to regulate the
employment of women in certain establishments and provide them with maternity benefits.
The primary objectives of the Maternity Benefit Act are as follows:
1. Protection of Women's Employment: One of the main aims of the Maternity Benefit
Act is to protect the employment of women during their maternity period. The Act
prohibits the dismissal or discharge of a woman from her employment during the
period of her maternity leave.
2. Maternity Leave: The Act provides for maternity leave to eligible women employees.
A woman is entitled to a maximum of 26 weeks of maternity leave for the first two
children. For subsequent children, the duration of maternity leave is reduced to 12
weeks. The maternity leave is granted as a right and cannot be refused by the
employer.
3. Payment During Maternity Leave: The Act also provides for the payment of
maternity benefit during the period of maternity leave. The rate of payment is
generally the average daily wage of the woman for the days on which she actually
worked during the three months immediately preceding her maternity leave.
4. Medical Bonus: In addition to the maternity leave and payment, the Act mandates
that employers provide a medical bonus to women who are not covered under any
employer-provided health insurance scheme. The medical bonus is intended to cover
the medical expenses related to the pregnancy and childbirth.
5. Nursing Breaks: The Act allows women to take breaks for nursing their child for up to
four times a day until the child reaches the age of 15 months. These nursing breaks
are in addition to the regular rest intervals allowed to all employees.
 6. Creche Facilities: Establishments employing 50 or more employees are required to
provide creche facilities for the benefit of working mothers. The Act ensures that
women have access to childcare facilities within the workplace.
7. Non-Discrimination: The Act prohibits discrimination against women employees on
the grounds of their pregnancy or maternity leave. It ensures that women are treated
fairly and equally in the workplace during and after their maternity period.
The Maternity Benefit Act, 1961, seeks to provide social security to women employees by
protecting their employment, providing paid maternity leave, and ensuring that they can
balance work and motherhood responsibilities. The Act aims to promote the well-being of
working women and facilitate a conducive work environment that supports maternity and
childcare needs.

Right to Maternity Benefit, Medical Bonus, Leave Dismissal during Pregnancy with
provisions under maternity benefit act 1961
Under the Maternity Benefit Act, 1961, women employees in India are entitled to various
rights and benefits during their pregnancy and maternity period. The Act provides provisions
for the following rights:
1. Right to Maternity Benefit (Maternity Leave and Payment):
 Section 5 of the Maternity Benefit Act grants eligible women employees the
right to maternity leave. A woman is entitled to receive a maximum of 26
weeks of maternity leave for the first two children.
 For women who have two or more surviving children, the duration of
maternity leave is reduced to 12 weeks.
 The maternity leave is granted as a right, and the employer cannot refuse to
grant it to the eligible woman.
2. Right to Medical Bonus:
 Section 8 of the Act provides for the payment of a medical bonus to women
employees who are not covered under any employer-provided health
insurance scheme.
 The medical bonus is a lump-sum amount and is intended to cover the
medical expenses related to the pregnancy and childbirth.
3. Right to Leave Dismissal during Pregnancy:
 Section 12 of the Act prohibits the dismissal, discharge, or termination of
service of a woman during her maternity leave period.
 An employer cannot terminate the employment of a woman on the grounds
of her pregnancy or maternity leave.
4. Right to Nursing Breaks:
  Section 11 of the Act allows women employees to take breaks for nursing
their child for up to four times a day until the child reaches the age of 15
months.
 These nursing breaks are in addition to the regular rest intervals allowed to all
employees.
It's important to note that the above provisions apply to establishments employing ten or
more persons. The Act also mandates that employers provide creche facilities for
establishments employing 50 or more employees.
To be eligible for maternity benefits under the Maternity Benefit Act, a woman must have
worked in the establishment for a certain period preceding her expected date of delivery.
The Act defines eligibility criteria and other terms and conditions for claiming maternity
benefits.
Additionally, the Act places an obligation on the employer to inform women employees of
their rights under the Act by providing written notices in the prescribed manner.
The Maternity Benefit Act, 1961, aims to ensure the health and well-being of women during
pregnancy and motherhood and promote gender equality in the workforce. It provides
essential protections and benefits to support women employees during this crucial phase of
their lives.

THE PAYMENT OF GRATUITY ACT, 1972: AIMS AND OBJECTS OF ACT

The Payment of Gratuity Act, 1972, is a social security legislation in India that aims to
provide financial security and retirement benefits to employees in the form of gratuity. The
main objectives and aims of the Act are as follows:
1. Providing Retirement Benefit: The primary aim of the Payment of Gratuity Act is to
provide a retirement benefit to employees who have completed a certain period of
continuous service with their employer. The gratuity amount serves as a monetary
reward for long and faithful service rendered by the employee.
2. Financial Security to Employees: The Act aims to ensure financial security to
employees after their retirement, resignation, or termination. By receiving gratuity,
employees are provided with a lump sum amount, which can be used for various
purposes such as settling outstanding debts, meeting medical expenses, or planning
for their future.
3. Encouraging Employee Loyalty: The Act aims to encourage employee loyalty and
dedication towards their employers. By providing gratuity as a reward for long
service, the Act promotes a sense of commitment among employees to stay with
their employers for an extended period.
4. Promoting Social Welfare: The Payment of Gratuity Act is part of the larger social
welfare framework in India. It reflects the government's commitment to ensuring the
well-being of workers and providing them with financial protection during their post-
employment years.
 5. Standardizing Gratuity Payment: Before the enactment of this Act, the payment of
gratuity was left to the discretion of employers. The Act aims to standardize gratuity
payment across various establishments and industries, ensuring that eligible
employees receive their rightful benefits.
6. Statutory Obligation on Employers: The Act imposes a statutory obligation on
employers to pay gratuity to their employees. Employers are required to contribute
to a gratuity fund and make periodic payments to eligible employees based on the
formula prescribed by the Act.
7. Protecting Employee Rights: The Act aims to protect the rights of employees by
ensuring that they receive gratuity as per the statutory provisions. It lays down clear
rules and guidelines for the calculation and payment of gratuity, leaving little room
for disputes or unfair practices.
8. Facilitating Social Security during Retirement: The Act contributes to enhancing the
social security of employees during their retirement years. By providing a gratuity
payout, it assists employees in maintaining their financial stability and dignity post-
retirement.
Overall, the Payment of Gratuity Act, 1972, is a significant legislation that seeks to safeguard
the interests of employees and promote social welfare by providing retirement benefits in
the form of gratuity. It serves as an important component of the labor laws in India, aiming
to ensure financial security and social protection for the workforce.

POWERS OF CONTROLLING AUTHORITY UNDER THE PAYMENT OF GRATUITY

ACT 1972
The Controlling Authority under the Payment of Gratuity Act, 1972, is an important
administrative body responsible for the implementation and enforcement of the Act. The
Controlling Authority plays a vital role in resolving disputes and ensuring that eligible
employees receive their gratuity payments. The powers and functions of the Controlling
Authority under the Payment of Gratuity Act, 1972, include the following:
1. Adjudication of Disputes: One of the primary functions of the Controlling Authority
is to adjudicate disputes between employers and employees regarding the payment
of gratuity. If an employer disputes the liability to pay gratuity or the amount of
gratuity payable, the employee can approach the Controlling Authority to seek
resolution.
2. Recovery of Gratuity: The Controlling Authority has the power to recover the
amount of gratuity due to an employee from the employer. If the employer fails to
pay the gratuity amount within the specified time or as ordered by the Controlling
Authority, the Authority can take measures to recover the outstanding amount.
3. Inspection of Records: The Controlling Authority has the power to conduct
inspections of the records and documents maintained by employers to ensure
compliance with the Act. The Authority can examine relevant records related to
gratuity payments, contributions, and other relevant matters.
 4. Inquiry and Summoning Witnesses: The Controlling Authority can conduct inquiries
related to gratuity claims and may summon witnesses or call for documents to
facilitate the inquiry process.
5. Passing Orders: The Controlling Authority has the authority to pass orders and
decisions on matters related to gratuity claims. These orders are legally binding on
the parties involved.
6. Settlement of Disputes: The Controlling Authority aims to settle disputes amicably
and expeditiously through conciliation or mediation. It may encourage parties to
resolve their disputes through negotiation.
7. Appeals: Any person aggrieved by an order of the Controlling Authority has the right
to appeal to the appropriate Appellate Authority within the prescribed time period.
The Controlling Authority's decisions can be challenged or reviewed through the
appellate process.
8. Monitoring Compliance: The Controlling Authority monitors compliance with the Act
by employers to ensure that eligible employees receive their gratuity benefits as per
the statutory provisions.
The Controlling Authority functions as a quasi-judicial body, and its decisions are enforceable
and subject to judicial review. Its objective is to provide an accessible and efficient
mechanism for resolving gratuity-related disputes and protecting the interests of employees
under the Payment of Gratuity Act, 1972.

DEFINITION AND TYPES OF RETIREMENT UNDER PAYMENT OF GRATUITY ACT

1972
Under the Payment of Gratuity Act, 1972, the term "retirement" is not explicitly defined.
However, the Act does provide for different types of events that can result in the payment of
gratuity to an eligible employee upon termination of their employment. These events
include retirement, resignation, superannuation, death, or disablement due to an accident
or illness. Let's explore these types of retirement under the Act:
1. Retirement: Retirement refers to the voluntary or compulsory cessation of
employment by an employee after attaining a certain age or completing a specified
period of service. The Act does not specify a mandatory retirement age, leaving it to
the employer's policy or the terms of the employment contract.
2. Resignation: Resignation occurs when an employee voluntarily chooses to terminate
their employment with the employer. If the employee has completed the minimum
qualifying service required under the Act, they may be eligible to receive gratuity
upon resignation.
3. Superannuation: Superannuation refers to the retirement of an employee upon
reaching the age of superannuation or retirement as prescribed by the employer's
policies or the terms of employment. If an employee retires due to superannuation
 and has completed the qualifying service, they are entitled to receive gratuity as per
the Act.
4. Death or Disablement: In the unfortunate event of an employee's death or
disablement due to an accident or illness, the Act allows the payment of gratuity to
the employee's nominee or legal heir, as the case may be, subject to the conditions
specified in the Act.
To be eligible for gratuity, an employee must have completed a minimum of five years of
continuous service with the employer. However, there are some exceptions where gratuity is
payable even if the employee has not completed five years of service, such as in the case of
death or disablement.
It is important to note that the Payment of Gratuity Act, 1972, primarily focuses on providing
a retirement benefit to employees and does not provide a specific definition of "retirement."
Instead, it outlines the events under which gratuity is payable to employees upon
termination of their employment. The Act aims to ensure that eligible employees receive a
financial benefit in the form of gratuity as a reward for their long and dedicated service to
the employer.

UNIT 3

Payment of Remuneration at equal rates to Men and Women workers and

other matters under The Equal Remuneration Act, 1976 with relevant
provisions.
The Equal Remuneration Act, 1976 is an important labor law in India that aims to ensure the
principle of equal pay for equal work for both men and women workers. The Act seeks to
prevent discrimination on the basis of gender in matters of remuneration and provides for
the following key provisions:
1. Equal Remuneration for Equal Work: The primary objective of the Act is to eliminate
gender-based wage discrimination and ensure that men and women receive equal
remuneration for performing work of the same or similar nature in the same
establishment. It prohibits employers from paying different wages to employees of
opposite sexes for similar work or work of equal value. The Act prohibits employers
from discriminating against women workers in matters of recruitment, promotion,
training, or transfer solely on the grounds of gender. Employers cannot differentiate
between male and female employees in terms of remuneration and other
employment-related benefits. Section 4 - Prohibition of Discrimination in
Remuneration:
2. Applicability: The Act applies to all establishments, both in the public and private
sectors, and covers all categories of employees, irrespective of their designation or
status.
3. Job Evaluation: The Act allows for the evaluation of jobs based on the skill, effort,
responsibility, and working conditions involved to determine the relative value of
work performed by different employees. This evaluation helps in assessing whether
 men and women are receiving equal pay for work of equal value. Section 5 - Job
Evaluation.
4. Remuneration Committees, Section 7 - Appropriate Government's Powers:
 The appropriate government may appoint authorities to hear and decide complaints
regarding the contravention of the Act's provisions.
 The government may also appoint Inspectors to ensure compliance with the Act and
inspect records and documents of the establishments.
 The Act empowers the appropriate government to appoint Remuneration
Committees to advise on matters related to the application of the Act and the
elimination of discrimination in wages.
5. Complaint Mechanism: The Act provides for a complaint mechanism that allows any
employee who believes that they are being discriminated against in matters of
remuneration to file a complaint with the appropriate authority. The complaint
should be made within a specified time from the date of the alleged discrimination.
Section 8 - Complaints and Complaints Committee:
1. Any employee who feels that they have been discriminated against in
remuneration can make a complaint to the appropriate authority.
2. The appropriate government may constitute Complaints Committees to
inquire into and redress such complaints.

6. Penalties: The Act imposes penalties on employers who contravene its provisions.
Any employer found guilty of paying discriminatory wages may be subject to
imprisonment or fines as prescribed. Section 10 - Penalties:
1. Any employer who contravenes the provisions of the Act shall be punishable
with imprisonment for a term that may extend to one year or with a fine that
may extend to ten thousand rupees or with both.
The Equal Remuneration Act, 1976, is a significant step towards promoting gender equality
and ensuring fair treatment of women in the workforce. By providing legal protection against
wage discrimination, the Act contributes to empowering women economically and socially
and promotes their participation in the labor market on an equal footing with men.
7. Section 6 - Maintenance of Records:
1. Every employer is required to maintain and preserve records containing
particulars of the work performed by men and women employees, the
remuneration paid to them, and other relevant details.
8. Section 9 - Advisory Committees:
1. The appropriate government may appoint Advisory Committees to advise on
matters concerning the application of the Act and the elimination of
discrimination in wages.
9. Section 11 - Cognizance of Offences:
 1. No court shall take cognizance of any offense under this Act except on a
complaint made by or with the previous sanction of the appropriate
government or an officer authorized by the appropriate government.
The Equal Remuneration Act, 1976, is a vital piece of legislation in promoting gender
equality in the workplace and ensuring that women are treated fairly and receive equal
remuneration for the same or similar work as men. It contributes to empowering women
economically and bridging the gender pay gap.

UNIT 4

THE PAYMENT OF BONUS ACT: SCOPE AND APPLICATION

The Payment of Bonus Act, 1965, is a significant labor legislation in India that aims to provide for the
payment of bonus to employees in certain establishments. The Act applies to both the private and
public sectors and is applicable to specific establishments meeting certain criteria. Let's explore the
scope and application of the Payment of Bonus Act:
Scope: The Payment of Bonus Act applies to the payment of bonus to employees employed in
establishments that meet the following conditions:
1. Number of Employees: The Act applies to establishments that employ ten or more persons
on any day during the accounting year.
2. Duration of Employment: Employees who have worked for a minimum of thirty working
days in the accounting year are eligible to receive bonus under the Act.
3. Profitability: The Act applies to establishments engaged in any industry or activity, and they
should have made a profit in the accounting year.
Application: The Payment of Bonus Act is applicable to the following types of establishments:
1. Factories: The Act applies to factories as defined under the Factories Act, 1948.
2. Other Establishments: The Act is also applicable to other establishments, such as
commercial establishments, trading establishments, banking companies, and insurance
companies, which are notified by the government through official gazette.
Exemptions: There are certain exemptions under the Payment of Bonus Act:
1. Public Sector Undertakings: The Act does not apply to employees working in public sector
undertakings (government-owned enterprises) since these establishments have their bonus
payment rules governed by separate regulations.
2. Certain Classes of Employees: The Act excludes certain classes of employees, such as
employees in the armed forces, police services, and employees of the Life Insurance
Corporation (LIC) and seamen, among others.
Calculation and Payment of Bonus: The Act provides guidelines for calculating and paying the bonus
to eligible employees. The bonus payable to an employee is based on their salary or wage, and it is
calculated as a percentage of the employee's annual earnings or a fixed amount, whichever is higher.
The Act also prescribes the time limit for the payment of bonus, the maintenance of records, and the
penalties for non-compliance with its provisions.
It is important for employers to be aware of the scope and applicability of the Payment of Bonus Act
to ensure that eligible employees receive their rightful bonus payment and to comply with the
statutory requirements outlined in the Act.

1. Computation of Gross Profit and Available Surplus: The computation of Gross Profit and
Available Surplus under the Payment of Bonus Act, 1965, involves specific provisions and
deductions to arrive at the amount available for the payment of bonus to eligible employees.
Below are the key provisions for the computation of Gross Profit and Available Surplus:
 Gross Profit (Section 2(5)):
Gross Profit is calculated by deducting certain specified expenses from the gross revenue earned
by the establishment during the accounting year (financial year).
The Act defines Gross Profit as the "profits and gains derived by an employer from the
establishment" before making any deductions specified in the Act.
 Allowable Deductions (Section 6):
The Act allows the following deductions from the Gross Profit to arrive at the Available Surplus:
a. Bonus payable to employees: The amount of bonus payable to all eligible employees is
deducted from the Gross Profit. b. Depreciation: The amount of depreciation calculated as per
the Income Tax Act is deducted from the Gross Profit. c. Development Rebate or Development
Allowance: Any amount set aside for development rebate or development allowance is
deducted. d. Direct Taxes: Any direct taxes payable by the employer are deducted from the Gross
Profit.
 Calculation of Available Surplus (Section 2(4)):
Available Surplus is the amount left after deducting the allowable deductions from the Gross
Profit.
The formula for calculating Available Surplus is as follows: Available Surplus = Gross Profit -
(Bonus + Depreciation + Development Rebate or Allowance + Direct Taxes)
 Set-off and Carry Forward of Deficit or Surplus (Section 15):
If there is a deficit (negative Available Surplus) in any accounting year, it can be carried forward
and set off against the Available Surplus in the subsequent years.
If the Available Surplus in any accounting year exceeds the amount required to pay the minimum
bonus, the excess amount can be carried forward and set off in the subsequent years.
 Allocable Surplus (Section 2(21)):
Allocable Surplus is the surplus amount after making the specified deductions, but before making
deductions for bonus payable.
The Allocable Surplus is used for distributing the bonus among eligible employees.
It is important to note that the Payment of Bonus Act sets out these provisions to ensure
transparency and fairness in the calculation and distribution of bonus to employees. The Act
aims to strike a balance between the interests of employers and employees and promote
harmonious industrial relations. Employers should diligently follow the Act's provisions to
 determine the Gross Profit, Available Surplus, and ultimately the bonus payable to eligible
employees for the accounting year.
 Gross Profit: Gross Profit is calculated by deducting all direct expenses, direct
taxes, and depreciation from the gross revenue earned by the establishment
during the financial year.
 Available Surplus: The Available Surplus is the amount arrived at after deducting
certain specified allocable and statutory deductions from the Gross Profit. The
allocable and statutory deductions include bonus payable to employees under
the Act and the amount set aside for depreciation, development rebate, and
reserves, as per the Act's provisions.
2. Eligibility for Bonus:

 Every employee who has worked for a minimum of thirty working days during
the accounting year is eligible to receive bonus under the Act.
 The employee should be employed in an establishment that employs ten or
more persons during the accounting year.
 The employee's salary or wage should not exceed a specified limit (currently Rs.
21,000 per month, subject to revision) to be eligible for bonus. Under the
Payment of Bonus Act, 1965, certain eligibility criteria must be met for an
employee to be entitled to receive a bonus. The Act lays down provisions to
determine the eligibility of employees for bonus payment. Here are the key
provisions regarding eligibility for bonus under the Act:
Duration of Employment (Section 8):
 To be eligible for bonus, an employee must have worked for a minimum of thirty
working days in the financial year (accounting year) within the establishment.
 The thirty working days need not be continuous; they can be spread over the
entire accounting year.
Employment in Eligible Establishments (Section 1(3)):
 The Act applies to every establishment that employs ten or more persons on any
day during the accounting year.
 If the establishment meets this criterion, the Act is applicable, and eligible
employees are entitled to receive bonus.
Salary or Wage Ceiling (Section 2):
 The eligibility for bonus is not linked to the employee's designation or status but
rather on the salary or wage earned.
 As per the Act, the "salary or wage" of an employee is capped at Rs. 21,000 per
month (subject to revision).
 Employees whose salary or wage exceeds this threshold are still eligible for
bonus, but the bonus calculation will be based on the capped amount.
 Disqualification (Section 9):
 An employee can be disqualified from receiving bonus if they have been
dismissed from service for fraud, riotous or violent behavior, theft,
misappropriation, or sabotage, or if they have caused damage to property
belonging to the employer to the extent that the deduction from their wages
exceeds the bonus payable.
 It's important to note that all employees who meet the above eligibility criteria
are entitled to receive a bonus under the Act, subject to the availability of
allocable surplus in the establishment. Allocable surplus refers to the surplus
profits that can be used for bonus payment after certain specified deductions.
 Employers should ensure that they comply with the provisions of the Payment of
Bonus Act and accurately determine the eligibility of employees for bonus
payment based on the Act's criteria. Employees meeting the specified
requirements are entitled to receive their rightful bonus for the accounting year.
3. Minimum and Maximum Bonus:
 The minimum bonus payable to eligible employees is 8.33% of their annual
salary or wage, subject to a maximum of Rs. 7,000 or the minimum wage for the
scheduled employment, whichever is higher.
 If the allocable surplus exceeds the amount of minimum bonus payable, the
employer can pay a higher bonus, but the maximum bonus payable under the
Act is 20% of the annual salary or wage.
Minimum Bonus (Section 10):
The Act stipulates that every employee who has worked for at least thirty working days during the
accounting year is entitled to receive a minimum bonus of 8.33% of the salary or wage earned during
that period.
In the case of establishments where the employer has not paid any bonus or has paid a bonus at a
rate lower than 8.33% of the employee's salary or wage, the employee is entitled to receive the
minimum bonus.
Maximum Bonus (Section 11):
The maximum bonus payable under the Act is 20% of the employee's salary or wage earned during
the accounting year.
If the allocable surplus in the establishment permits, and the amount of bonus payable based on the
minimum bonus calculation is less than 20% of the salary or wage, the employer may pay a higher
bonus, subject to this maximum limit.
Calculation of Bonus (Section 2):
For the purpose of bonus calculation, the salary or wage of an employee is capped at Rs. 21,000 per
month (subject to revision).
If the salary or wage exceeds Rs. 21,000 per month, the bonus will be calculated based on the
capped amount.
Allocable Surplus (Section 2):
The "allocable surplus" is the available surplus after deducting sums for depreciation, development
rebate, and direct taxes from the gross profits of the establishment.
Salary or Wage (Section 2):
"Salary or wage" includes basic salary, dearness allowance, and any other allowance (excluding
certain specified allowances) that forms part of the employee's terms of employment.
It is important to note that the Payment of Bonus Act is subject to amendments and changes over
time. The percentages and amounts mentioned above are based on the Act as of my last update in
September 2021. Employers should refer to the latest version of the Act and any subsequent
amendments for the most current and accurate information regarding the computation of gross
profit, available surplus, eligibility for bonus, disqualification for bonus, and minimum and maximum
bonus payable under the Act.