The important among them are:

1. The Workmen’s Compensation Act, 1923

2. The Employee’s State Insurance Act, 1948

3. The Employee’s Provident Funds and Miscellaneous Provisions Act, 1952

4. The Maternity Benefit Act, 1961

5. The Payment of Gratuity Act, 1972

The social security provisions in these Acts are now briefly outlined as under:

The Workmen’s Compensation Act, 1923:

This Act is the first planned step in the field of social security in India. The main objective of the Act is to ensure compensation to workers for accidents occurred during the course of employment. The main features of the Act are as follows:

Coverage:

This act covers workers employed in factories, mines, plantations, mechanically propelled vehicles, construction works, railways, ships, circus and other hazardous occupations specified in schedule II of the Act. It does not apply to the Armed Forces, casual workers and workers covered by the Employee’s State Insurance Act, 1948.

Administration:

The Act is administered by the State Government by appointing commissioners for this purpose under Section 20 of the Act.

Benefits:

Under this Act, compensation is payable by the employer to the workman for all personal injuries caused by industrial accidents which disable him/her for more than three days. In case of the death of workman, the compensation is paid to his/her dependents. The Act also Specifies that in case a workman contracts any occupational disease, which is specified in its third schedule, such disease shall ordinarily, be treated as an employment injury arising out of and in the course of employment.

The compensation is paid depending upon the type of injury. In case of permanent total disablement, the rate of compensation varies between Rs.60, 000 to Rs.2.74 lakhs. In case of partial disablement, compensation at the rate of 50 per cent of wages is payable for a maximum period of 5 years.

There is no age limit to the coverage of the Act. In case of injuries causing death, the rate of compensation varies from Rs.50, 000 to Rs. 2.28 lakhs depending upon the salary and age of the worker at the time of his/her death.

The employer is under obligation to make the payment of compensation within one month from the date on which it falls due. In case of default in paying the compensation due under the Act, the commissioner may direct for recovery of the amounts of arrears with interest @ 12% p.a. on the amount due. If, in the opinion of the commissioner, delay is without convincing justification, a runner due not exceeding @ 50% of such amount by way of penalty may also be recovered from the employer.

Employee’s State Insurance Act, 1948

The main object of this Act is to provide social insurance for workers. It is a contributory and compulsory health insurance scheme that provides medical facilities and unemployment insurance to industrial workers for the period of their illness.

Following are main features of this Act:

Coverage:

The Act covers all workers (whether manual, supervisory or salaried employees) whose income do not exceed Rs. 6,500 per month and are employed in factories, other than seasonal factories which run with power and employ 20 or more workers. The State Government can extend the coverage of the Act with the approval of the Central Government.

Administration:

The Act is administered by the Employees State Insurance (ESI) Corporation, an autonomous body of 40 persons consisting of representatives of the Central and State Governments, employers, employees, medical profession and the parliament.

Benefits:

Under this Act, an insured is entitled to receive the following types of benefits:

(i) Medical Benefit:

An insured or a member of his/her family requiring medical help is entitled to receive medical facility free of charge in a hospital either run by the ESI Corporation or by any other agency.

(ii) Sickness Benefit:

An insured worker in case of certified sickness is entitled to receive cash payment for a maximum period of 91 days in any continuous period of one year. The daily rate of sickness benefit is calculated as half of average daily wages. The insured worker should be under medical treatment at a dispensary of other medical institutions maintained by the corporation.

(iii) Maternity Benefit:

An insured woman is entitled to receive cash payment calculated at a full average wage for a period of 12 weeks of which not more than 6 weeks shall precede the expected date of her confinement.

(iv) Disablement Benefit:

This benefit is entitled to insured worker in case of industrial accidents and injury. In case of temporary disablement, the worker is paid 70 per cent of wages during the period of disablement. In case of permanent partial disablement, the insured individual is entitled to a cash benefit for life to be paid as a percentage of the full rate. In case of permanent total disablement, 70 per cent of the wages is paid as monthly pension to the worker for life.

(v) Dependents’ Benefit:

This benefit is available to the dependents of a deceased worker due to industrial accident or injury. The rate of benefit differs depending upon the relationship between the deceased and the dependents. For example, the widow of the deceased will receive during her lifetime of until remarriage, an amount equivalent to three-fifth of the full rate. Every dependent son receives two-fifths of the full rate till he reaches to the age of 15 years. Every dependent daughter gets the same amount till she reaches to 15 year or until marriage, whichever is earlier.

Since its inauguration in October 1948, the ESI Corporation has 129 ESI hospitals with 23,690 beds, 43 ESI annexes and 1,450 dispensaries including mobile dispensaries and 66.13 lakhs employees had received benefits as on 3December, 1998. During a single year 1997-98, the Corporation had distributed Rs.932 crores by way of sickness benefits, maternity benefits, temporary and permanent disablement benefits and dependents benefit.

The Employee’s Provident Funds and Miscellaneous Provisions Act, 1952

The main object of this Act is to afford the retired workers financial security by way of provident fund, family pension, and deposit linked insurance. The Act is characterised by the following features:

Coverage:

The Act covers workers employed in a factory of any industry specified in Schedule 1 in which20or more workers are employed or which the Central Government notifies in its official Gazette. The Act does not apply to co-operative societies employing less than 50 persons and working without the aid of power. It also does not apply to those new establishments till they become 3 years old.

Administration:

The Act is administered by Tripartile Central Board of Trustees represented by employers, employees and the Government.

Benefits:

The Act provides 3 (Three) types of benefits:

(a) Provident Fund:

Under this benefit, an employee can avail non-refundable withdrawal or take advances from the Provident Fund Account for various purposes. On superannuation, the employee gets the full balance at his credit with interest.

(b) Pension:

Under the new pension scheme which has come into force from 16-11 -1995 replacing the 1971 scheme, several types of pension are available to an employee and his/her dependents.

(c) Deposit Linked Insurance:

Under the deposit-linked insurance scheme, an amount equal to the average balance in the Provident Fund Account of the deceased employee during the preceding one year subject to a maximum of Rs.35, 000 is granted to his/her nominee/legal heir.

The Maternity Benefit Act, 1961

The main object of this Act is to regulate women employment in industrial establishments for certain specified period before and after childbirth.

Coverage:

The Act is applicable to all establishments not covered under the Employee’s State Insurance Act, 1948.

Administration:

The Act is administered by the Employee’s State Insurance (ESI) Corporation.

Benefits:

Under the Act, a woman worker is entitled to receive the payment for maternity benefit at the rate of average daily wages for a total period of 12 weeks. With effect from 1^st February 1996, a woman worker is entitled to grant of leave with wages for a maximum period of one month in cases of illness arising out of MTP or tubectomy. Women workers who will undergo tubectomy operation will get two weeks’ leave.

The Payment of Gratuity Act, 1972

Gratuity is a lump sum payment made by the employer as a mark of recognition of the service rendered by the employee when he retires or leaves service.

The Payment of Gratuity Act provides for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments. The Payment of Gratuity Act has been amended from time to time to bring it in tune with the prevailing situation. Recently the Act has been amended twice to enhance the ceiling on amount of gratuity from Rs.10 lakh to Rs.20 lakh as well as to widen the scope of the definition of “employee” under section 2 (e) of the Act.

 APPLICATION OF THE ACT

Application of the Act to an employed person depends on two factors. Firstly, he should be employed in an establishment to which the Act applies. Secondly, he should be an “employee” as defined in Section 2(e).

According to Section 1(3), the Act applies to:

(a) Every factory, mine, oilfield, plantation, port and Railway Company;

(b)Every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months;

(c) Such other establishments or class of establishments in which ten or more employees are employed, or were employed, on any day of the preceding twelve months as the Central Government may, by notification specify in this behalf. In exercise of the powers conferred by clause (c), the Central Government has specified Motor transport undertakings, Clubs, Chambers of Commerce and Industry, Inland Water Transport establishments, Solicitors offices, Local bodies, Educational Institutions, Societies, Trusts and Circus industry, in which 10 or more persons are employed or were employed on any day of the preceding 12 months, as classes of establishments to which the Act shall apply. A shop or establishment, to which the Act has become applicable once, continues to be governed by it, even if the number of persons employed therein at any time after it has become so applicable falls below ten. (Section 3A)

WHO IS AN EMPLOYEE?

The definition of “employee” under section 2 (e) of the Act has been amended by the Payment of Gratuity (Amendment) Act, 2009 to cover the teachers in educational institutions retrospectively with effect from 3rd April, 1997. The amendment to the definition of “employee” has been introduced in pursuance to the judgment of Supreme Court.

 According to Section 2(e) as amended by the Payment of Gratuity (Amendment) Act, 2009 “employee” means any person (other than an apprentice) who is employed for wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or other establishment to which this Act applies, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

DEFINITIONS:

Appropriate Government “Appropriate Government” means: (i) in relation to an establishment: (a) belonging to, or under the control of, the Central Government, (b) having branches in more than one State, (c) of a factory belonging to, or under the control of the Central Government. (d) of a major port, mine, oilfield or railway company, the Central Government. (ii) in any other case, the State Government. [Section 2(a)] It may be noted that many large establishments have branches in more than one State. In such cases the ‘appropriate Government’ is the Central Government and any dispute connected with the payment or nonpayment of gratuity falls within the jurisdiction of the ‘Controlling Authority’ and the ‘Appellate Authority’ appointed by the Central Government under Sections 3 and 7.

Wages “Wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance. [Section 2(s)]

WHEN IS GRATUITY PAYABLE?

According to Section 4(1) of the Payment of Gratuity Act, 1972, gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years:

(a) On his superannuation, or

(b) On his retirement or resignation, or

(c) On his death or disablement due to accident or disease.

The completion of continuous service of five years is not necessary where the termination of the employment of any employee is due to death or disablement. Further, the period of continuous service is to be reckoned from the date of employment and not from the date of commencement of this Act. Mere absence from duty without leave cannot be said to result in breach of continuity of service for the purpose of this Act.

TO WHOM IS GRATUITY PAYABLE?

It is payable normally to the employee himself. However, in the case of death of the employee, it shall be paid to his nominee and if no nomination has been made, to his heirs and where any such nominees or heirs is a minor, the share of such minor, shall be deposited with the controlling authority who shall invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such minor attains majority. Amount of Gratuity Payable Gratuity is calculated on the basis of continuous service as defined above i.e. for every completed year of service or part in excess of six months, at the rate of fifteen days wages last drawn. The maximum amount of gratuity allowed under the Act is Rs. 20 lakh. The ceiling on the amount of gratuity from Rs. 10 lakh to Rs.20 lakh has been enhanced by the Payment of Gratuity (Amendment) Act, 2018. Nomination An employee covered by the Act is required to make nomination in accordance with the Rules under the Act for the purpose of payment of gratuity in the event of his death. The rules also provide for change in nomination.

Forfeiture of Gratuity

The Act deals with this issue in two parts. Section 4(6)(a) provides that the gratuity of an employee whose services have been terminated for any act of willful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, gratuity shall be forfeited to the extent of the damage or loss or caused. The right of forfeiture is limited to the extent of damage. In absence of proof of the extent of damage, the right of forfeiture is not available.

Section 4(6)(b) deals with a case where the services of an employee have been terminated: (a) For riotous and disorderly conduct or any other act of violence on his part, or

(b) For any act which constitutes an offence involving moral turpitude provided that such offence is committed by him in the course of his employment. In such cases the gratuity payable to the employee may be wholly or partially forfeited. Where the service has not been terminated on any of the above grounds, the employer cannot withhold gratuity due to the employee. Where the land of the employer is not vacated by the employee, gratuity cannot be withheld. Assignment of gratuity is prohibited; it cannot be withheld for non vacation of service quarters by retiring employees

EXEMPTIONS

The appropriate Government may exempt any factory or establishment covered by the Act or any employee or class of employees if the gratuity or pensionary benefits for the employees are not less favourable than conferred under the Act. The Controlling Authority and the Appellate Authority The controlling authority and the Appellate Authority are two important functionaries in the operation of the Act.

Section 3 of the Act says that the appropriate Government may by notification appoint any officer to be a Controlling Authority who shall be responsible for the administration of the Act. Different controlling authorities may be appointed for different areas. Section 7(7) provides for an appeal being preferred against an order of the Controlling Authority to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf.

RIGHTS AND OBLIGATIONS OF EMPLOYEES Application for Payment of Gratuity Section 7(1) lays down that a person who is eligible for payment of gratuity under the Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer. Rule 7 of the Payment of Gratuity (Central) Rules, 1972, provides that the application shall be made ordinarily within 30 days from the date gratuity becomes payable. The rules also provide that where the date of superannuation or retirement of an employee is known, the employee may apply to the employer before 30 days of the date of superannuation or retirement. A nominee of an employee who is eligible for payment of gratuity in the case of death of the employee shall apply to the employee ordinarily within 30 days from the date of the gratuity becomes payable to him. [Rule 7(2)] Although the forms in which the applications are to be made have been laid down, an application on plain paper with relevant particulars is also accepted. The application may be presented to the employer either by personal service or be registered post with acknowledgement due. An application for payment of gratuity filed after the period of 30 days mentioned above shall also be entertained by the employer if the application adduces sufficient cause for the delay in preferring him claim. Any dispute in this regard shall be referred to the Controlling Authority for his decision.

RIGHTS AND OBLIGATIONS OF THE EMPLOYER Employers Duty to Determine and Pay Gratuity Section 7(2) lays down that as soon as gratuity becomes payable the employer shall, whether the application has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the Controlling Authority, specifying the amount of gratuity so determined. Section 7(3) of the Act says that the employer shall arrange to pay the amount of gratuity within thirty days from the date of its becoming payable to the person to whom it is payable. Section 7(3A): If the amount of gratuity payable under sub-section (3) is not paid by the employer within the period specified in sub-section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at the rate of 10 per cent per annum: Provided that no such interest shall be payable if the delay in the payment is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority for the delayed payment on this ground. Dispute as to the Amount of Gratuity or Admissibility of the Claim If the claim for gratuity is not found admissible, the employer shall issue a notice in the prescribed form to the applicant employee, nominee or legal heir, as the case may be, specifying reasons why the claim for gratuity is not considered admissible. A copy of the notice shall be endorsed to the Controlling Authority. If the disputes relates as to the amount of gratuity payable, the employer shall deposit with the Controlling Authority such amount as he admits to be payable by him. According to Section 7(4)(e), the Controlling Authority shall pay the amount of deposit as soon as may be after a deposit is made (i) to the applicant where he is the employee; or (ii) where the applicant is not the employee, to the nominee or heir of the employee if the Controlling Authority is satisfied that there is no dispute as to the right of the applicant to receive the amount of gratuity.

Recovery of Gratuity

Section 8 provides that if the gratuity payable under the Act is not paid by the employer within the prescribed time, the Controlling Authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same together with the compound interest thereon at such rate as the Central Government may be notification, specify, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto: “Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate: Provided further that the amount of interest payable under this section shall, in no case, exceed the amount of gratuity payable under this Act”.

Protection of Gratuity

Gratuity has been exempted from attachment in execution of any decree or order of any Civil, Revenue or Criminal Court. This relief is aimed at providing payment of gratuity to the person or persons entitled there to without being affected by any order of attachment by a decree of any Court.