Employment Law Alert
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Employment Law Alert- February 2023
Greetings!
We at Singhania and Partners are committed to keeping our readers informed about the latest legal developments across India. In this month's edition, we bring you the latest updates on employment laws in India.
Our Employment Law Alert is your one-stop destination for monthly updates on employment laws across the country. It includes recent circulars issued by Central and State Governments regarding employment law and significant decisions made by the Supreme Court and High Court. We hope you find this edition informative and valuable. Happy reading!
?REGULATORY UPDATE
?1.??Clarification regarding the minimum due benefit to be paid from the employees’ deposit linked insurance scheme fund to the eligible family members
The Ministry of Labour and Employment, vide its notification dated January 2, 2023, has issued directions regarding the minimum due benefit to be paid from the Employees’ Deposit Linked Insurance (“EDLI”) Scheme fund, to the eligible family members who were beneficiaries in cases of death of eligible employees but the amount paid to them was less than the stipulated minimum assurance benefit of INR 2.5 Lakh (Rupees Two Lakh Fifty Thousand) resulting in short payments. The said directions provide that:
?2.????Launch of integrated online services portal, ‘Silpasathi’, in West Bengal
The Labour Department, Government of West Bengal, vide notification dated December 27, 2022, notified the integration of 13 (thirteen) services under the Labour Department, Government of West Bengal, through a single end-to-end ‘State Single Window Portal’ available at www.silpasathi.wb.gov.in .
These services include, inter alia, procurement and renewal of licenses and registrations under the Factories Act, 1948; Boilers Act, 1923; Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA Act”); shops and Establishments Act, 1963, etc., with effect from January 1, 2023.
?3.????The West Bengal minimum wages notification
?The office of the Labour Commissioner, West Bengal, vide notification dated January 16, 2023, has released the minimum rates of wages effective from January 1, 2023, to June 30, 2023.
?4.????Switching of Employees’ State Insurance Corporation domains to https://esic.gov.in
?All existing https://esic.nic.in[1] and https://esic.in have been moved to https://esic.gov.in. Further, all existing email ids are also mapped with the new domain.
?5.????Online filing of applications under the CLRA in Puducherry
?The office of the Chief Inspector of Factories & Boilers, Puducherry, vide its notification dated January 12, 2023, has mandated online filing of the following applications:
?FROM THE BENCH
?Supreme Court
1.Supreme Court refers to a larger bench the question of whether an employee covered under the Employee State Insurance Act, 1948 (“ESI Act”) can claim compensation under the Motor Vehicles Act, 1988 (“MVA”) for a motor accident.
In the case of Rajkumar Agrawal vs Vehicle Tata Venture [2] , the division bench, constituting Justices A. S. Bopanna and Sudhanshu Dhulia, referred the matter to a larger bench in the absence of any authoritative judgements on the issue.
?Brief Facts
?The appellant suffered injuries resulting in his lower limb amputation. The Motor Accident Claims Tribunal (MACT) initially awarded him compensation, and the respondents contested this award.
The Allahabad High Court reversed the tribunal's judgement on the ground that an employee insured under the ESI Act would be barred from claiming compensation or damages of a similar kind by virtue of section 53 of the ESI Act . Hence the present appeal.
?Issue
The matter being examined here is the potential contradiction in filing a compensation claim simultaneously under the ESI Act and the MVA.
Appellant’s Claims
The bar under Sections 53 and 61 of the ESI Act are not absolute bars but merely bar compensation of a similar kind. There is a distinction between a claim for periodic insurance payment and damages or compensation – they are not benefits of a similar kind.
Furthermore, the MVA being a subsequent enactment, and by virtue of the provisions under sections 163(A) and 167 beginning with a non obstante (a clause that ensures the enforceability of one provision over another that is contradictory to it) clause, there is no bar against subsequently claiming compensation under the MVA.
?Judgement Referred to by Appellant
?The general law of tort or special law in the MVA or Workmen’s Compensation Act, 1948, may provide a remedy for damages. The insurance coverage under the ESI Act in an insured employment is in addition to but not in substitution of the above remedies. It cannot, on that account, be denied to the employee.
?Respondent’s Claims
?The benefit received under the ESI Act bars the employee from seeking a similar benefit (compensation or damages) under any other act.
Judgements Referred to by Respondents
?Both reinforce the absolute bar against compensation as stated under Section 53 of the ESI Act, 1948.
?Judgement
?The division bench found a need for more authoritative judgements on this issue. Furthermore, due to the bench strength being the same as those in the Western India Plywood Ltd. vs P. Ashokan (supra) and National Insurance Co. Ltd vs Hamida Khatoon & Ors (supra) cases, the present bench did not find it prudent to rule on the matter. Therefore, the issue was referred to a larger bench.
?2. ESI Act applies to factories or establishments, regardless of the number of employees, as per the Supreme Court.
?In the case of ESI Corporation vs M/s. Radhika Theatre [6] , the division bench of Justice M.R. Shah and Justice C.T. Ravikumar ruled that Section 1(6) of the ESI Act , shall apply even to establishments established before 31.03.1989/20.10.1989 notwithstanding that the number of employees at any time falls below the limit specified by the Act. This was concluded based on the ESI Act being welfare legislation, needing to be read liberally.
?Brief Facts
Issues
?1.?Can a factory or establishment established before October 1989, which now has less than the minimum number of employees specified under the ESI Act, still be subject to the Act for demand notices issued after October 1989?
?2.?For demand notices issued after October 1989, can Section 1(6) of the ESI Act be applied retrospectively?
Appellant’s Contentions
?The ESI Act is a social welfare legislation for the workmen concerned. The purpose of the amended sub-section (6) of Section 1 – by virtue of which the ESI Act shall govern all establishments (notwithstanding the number of employees) – is in line with the preamble, object and purpose of the ESI Act.
?Demand notices for the period post-October 1989, therefore, cannot be said to be illegal. They may be bad in law as, in that case, Sub-section (6) of Section 1 of the ESI Act can be said to have applied retrospectively.
Judgements Referred to by Appellants
In this case, it was held that by virtue of the object and purpose of the ESI Act, it should be given a liberal interpretation to assure employee social security.
?Respondent’s Contentions
Sub-section (6) of Section 1 of the ESI Act, which came to be inserted on 20.10.1989, cannot be made applicable retrospectively and would be effective only on or after 20.10.1989.
?Provisions and Judgements Referred to by the Court
Articles 21 , 38 , 39 , 41 and 43 of the Constitution of India, 1950; social and economic justice as mentioned in the Preamble to the Constitution; the rights to medical and disability benefits are fundamental human rights under Article 25(2) of the Universal Declaration of Human Rights ; and Article 7(b) of the International Convention on Economic, Social and Cultural Rights.
All three cases emphasised the nature of the ESI Act as welfare legislation intended to secure employee benefits in case of sickness, maternity, employment injury etc., to provide a safe insurance cover to employees likely to suffer from various physical illnesses during their employment.
When two views are possible on their applicability, the view that furthers the legislative intention should be preferred over a technical or narrow interpretation. Any welfare act must receive a liberal construction, but the same must flow from the words used in the section.
Judgement
The Supreme Court held that while the primary rule of interpretation of statutes may be the literal rule when considering beneficial or welfare legislation, The Supreme Court has, on numerous occasions, adopted the liberal rule of interpretation.?
Before the insertion of sub-section (6) of Section 1 of the ESI Act, only those establishments/factories engaging more than 20 employees were governed by the ESI Act. But on and after 20.10.1989, irrespective of the number of persons employed, a factory/establishment shall be governed by the ESI Act.
Therefore, for the demand notices after 20.10.1989, every factory/establishment shall be liable, and with respect to such a notice, section 1(6) of the ESI Act cannot be said to be applied retrospectively. Only in the case of demand notice for the period before inserting Sub-section (6) of Section 1 of the Act can it be said to have been applied retrospectively.
The High Court has erred in allowing the appeal and setting aside demand notices even for the period after 20.10.1989.
3. Supreme Court: Employees under Voluntary Retirement Scheme (VRS) not on par with superannuated peers in pay revision
?In Maharashtra State Financial Corporation Ex-Employees Association & Ors. v. State of Maharashtra & Ors. [11] , a division bench of Justices Dipankar Dutta and S. Ravindra Bhat scrutinised the fixation of a date for implementing the Fifth Pay Commission recommendations, as applied to the respondent Corporation. They noted that for pay revision, employees who retired under VRS are in a separate category from other employees.
?Brief Facts
Issue:
Is excluding employees who retired before 29.03.2010 and confining pay revision benefits arbitrary and/or discriminatory?
?Appellants Submissions
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The Appellants were in continuous service and had even received the benefit of interim revision, pending the finalisation of pay scales in accordance with the Pay Commission Report. Those in employment on and after 29.03.2010, and those who continued in service after 01.01.2006 but retired before 29.03.2010, belonged to the same category.
The cut-off date for pay revision is arbitrary because several employees have retired and would be deprived of the benefit of pay revision merely because the MSFC chose to implement the decision on a particular date.
Those who had sought voluntary retirement must be included on the ground that they had secured benefits and not completed their tenure based on Clause 5 of the VRS scheme[12] .
?Respondent’s Submissions
MSFC is an autonomous corporation and is not bound to follow the terms and conditions applicable to Maharashtra Government employees. It must independently generate its income from its resources to meet additional expenditures.
MSFC is not bound by the decision of the State to implement the decisions of the Fourth, Fifth and Sixth Pay Commissions for its employees, nor was it directed to do so.
The employees of MSFC cannot claim, as a matter of right, any benefit of pay revision without MSFC’s ability to bear the burden of such pay increase.
The fixation of the cut-off date is a policy matter, depending on various considerations such as financial constraints and the number of employees. Granting any benefit to employees normally involves fixing of the cut-off date. Devising a limited retrospective limit for the employees on the MFSC’s rolls lessens the financial burden. Thus, the fixation of the cutoff date in the present case was not arbitrary.
Judgement
The Court held that while the decision to revise pay and the extent of revision are policy matters, they are also matters of larger public interest. Whilst the fixation of the cut-off date for the grant of benefits cannot be questioned, the Court may examine the impact of such fixation and whether it results in discrimination.
?There is no distinction between those who retired (or died in service) before 29.03.2010 and those who continued and were granted the pay revision. And the exclusion of employees on such a basis is violative of Article 14 of the Constitution of India.
However, employees who secured VRS benefits and left service voluntarily cannot claim parity with those who superannuated. VRS employees found the VRS offer beneficial. Apart from the regular terminal benefits they were entitled to, the additional amount each of them was given was an exgratia amount paid to end the employer-employee relationship. Consequently, there can be no question of the VRS employee claiming past rights since that would frustrate the scheme's purpose.
Similarly, those who ceased to be employees due to termination, dismissal, etc., would not be entitled to the benefits of pay revision either.
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High Courts
?1.?Delhi High Court bars employees from challenging enquiry findings on 'adequacy or reliability' grounds
?The Delhi High Court, in its single bench judgement in Sneh Aggarwal vs Punjab National Bank, ruled that under Article 226 of the Constitution of India, an employee cannot challenge the findings of a disciplinary committee on the grounds of adequacy or reliability.
?Brief Facts
Issue
Whether the findings of departmental authorities in disciplinary proceedings can be challenged by the employee under Article 226 of the Constitution of India
Petitioners Contentions
Respondent's Contentions
Judgment
2. Telangana High Court exempts voluntary working juveniles from Juvenile Justice (Care and Protection of Children) Act, 2015 (“JJA”) provisions.
A single judge bench of the High Court of Telangana, in its judgement of Kothakonda Aishwarya v. The State of Telangana, rep. by its Public Prosecutor , has ruled that if a child is working voluntarily, then Sections 75 and 79 of the JJA do not apply to them.
?Brief facts
Issue
?Whether Sections 75 and 79 of the JJA apply where the juvenile works voluntarily?
Petitioner's Contentions
Judgment
3. The benefits of welfare legislation cannot be deprived of mere technicalities held by the Madras High Court.
In Tamil Nadu State Transport Corporation (Coimbatore) Ltd. v. B. Rajeswari, the Madras High Court opined that welfare legislation such as The Maternity Benefits Act, 1961 and its benefits could not be denied on mere interpretation and technicalities, as an interpretation of law should be liberal and it should not defeat the very purpose of welfare scheme.
Brief Facts
Petitioner’s Submissions
?Denial of maternity leave is contrary to the dictum laid down by the Supreme Court. Maternity benefit and the need to be granted full wages during the leave period, along with other benefits, is essential for facilitating woman employees to care for their child.
The Maternity Benefit Act 1961 cannot be interpreted in a way that deprives?wages for the maternity period merely on discriminatory treatment of permanent/temporary employment.
Appellant’s Submissions
?There is no provision for grant of eligible maternity leave during the training period. Non-permanent women employees who have worked for not less than 160 (one hundred and sixty) days in twelve months would be eligible to demand maternity leave. Since the Writ Petitioner had worked only for 145(one hundred and forty-five) days, she is not eligible to get maternity leave
There is no grant for eligible maternity leave during the training period. Letter No. (Ms) 13965 FR 3/2015 dated 20.04.2015 issued by the Personnel and Administrative Reforms (FR III) Department was silent regarding the grant of maternity leave to non-permanent married women who had put in less than one year of continuous service. In the absence of fulfilment of such condition, the writ petitioner, as a matter of right, could not demand total wages and refixation of her seniority.
Judgements Referred to by the Court
?1.????Workmen of American Express International Banking Corporation vs Management of American Express International Banking Corporation [13]
?In this case, the Court clarified that the question was whether a workman could be said to have been employed for 240 (two hundred and forty) days by the mere fact that he was in service for the whole year whether or not he worked for 240 (two hundred and forty) days.
?Though the aforementioned decision was rendered under the context of the Payment of Gratuity Act, 1972, the principle laid down therein is that the employee should have completed the required number of days within the time stipulated and that the Writ Petitioner herein has completed the same.
?It was stated that female workers working on a casual basis or a muster roll on a daily-wage basis should be given maternity benefits.
?Judgement
?The narrow interpretation that the employee must have worked for 160 (one hundred and sixty) days for 12 (twelve) months cannot be accepted. It would suffice if the employee completed 160 (one hundred and sixty) days, even in a period of fewer than 12 (twelve) months. In the present case, the Writ Petitioner had rendered 180 (one hundred and eighty) days of service from 16.09.2013. Even assuming there is a shortage of working days in the twelve calendar months, welfare legislation and the benefits cannot be deprived of mere interpretation and technicalities, as the interpretation of law should be liberal and should not defeat the very purpose of the welfare scheme.
?The Court emphasised that the interpretation of law must be balanced and harmonious to uphold legislative intent and the statute's object. The order of the Single Judge was upheld. The writ appeal was dismissed.
?These are just a few recent developments in Indian employment law. We hope you find this newsletter informative and helpful. If you have any questions or feedback, please do not hesitate to contact Singhania and Partners LLP.
[1] No. E-376 No.I-11013/5/2021-ICT dated 31.01.2023
[2] CA 4941/2022 | 19 Jan 2023
[3] (1993) Supp. (4) SCC 100
?[4] (1997) 7 SCC 638
[5] (2009) 13 SCC 361
[6] CIVIL APPEAL NO. 312 OF 2023 (@ SLP(C) NO. 12520 OF 2022)
[7] (2014) 9 SCC 657
[8] (2000) 1 SCC 332 : 2000 SCC (L&S) 121
[9] AIR 1964 SC 1272
[10] (2009) 9 SCC 61 : (2009) 2 SCC (L&S) 573
[11] SLP (CIVIL) NOS.1902 OF 2019
[12] “The officers/employees whose request for voluntary retirement is accepted by the MSFC will be entitled for payment of arrears on account of revision of pay-scales and allowances as also for the difference of voluntary retirement benefits accruing to them on account of revision of pay-scales, if and as may be made effective retrospectively to the employees of the MSFC by the Board and approved by Govt. of Maharashtra and IDBI.”
[13] AIR 1986 SC 458, 1985 (51) FLR 481, (1985) IILLJ 539 SC, 1985 (2) SCALE 1393, (1985) 4 SCC 71, 1986 (1) UJ 228 SC
[14] Special Leave Petition (civil) 12797 of 1998
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