Mentoassociates.com – Legal Articles

Provident Fund is a fund, plan or scheme to provide retirement income. The Employment Provident Fund and Miscellaneous Provisions Act 1952 and the rules there under provide for the law on Provident Fund and pension benefits. The Act was enacted with a view to provide for compulsory contribution to provident fund, both by the employer and the employee.
It applies to every establishment which is a factory engaged in any industry specified in Schedule-I of the act and in which 20 or more persons are employed. The Central Government by notification can bring in any other establishments employing 20 or more persons or less than 20 persons under the purview of this act. The appropriate government may by notification in official gazette exempt any establishment from the operation of all or any of the provision of any scheme under this act.
An employee, to become eligible to the provisions of the Act is required to be a member, by filing the Form 2. Under the scheme of PF the employer and employee will each contribute 10% or 12% of the basic salary towards the PF. The remittance of the same should be done on or before the 15th of the following month. Accordingly the monthly returns have to be filed before the 25th of every month by filling the Forms 12A, 5 and 10. Annual returns are also to be filed by the employer under Form 3A and Form 6A.
The PF amount is also transferable when the employee upon termination / resignation, joins the services of another employer. The same is done by filling the Form 13, which will be provided by the former employer. Upon the form being filled, the new employer shall forward it to the provident fund organization. The transfer of the PF amount ordinarily takes 40 days.
A member is eligible to apply for withdrawing his provident fund and pension fund only after 2 months from the date of resignation, provided that he / she is not employed during the said 2 months. The member should submit Form 19 to withdraw his provident fund dues on leaving service/retirement/termination. The same has to be signed by the previous employer and submitted to the provident fund office. Ordinarily it takes about 40 days for the PF amount to be credited to the bank account. The withdrawal of PF is not taxable provided the employee has rendered continuous services; else the applicable tax slab for the income would apply.
Members are also entitled to withdraw monies from as advances from the PF account for purposes like marriage, education, medical treatment, purchase of residential property etc.
Contributed by:
Naqsha Biliangady
Advocate

The labour law, at present in India, is not highly favouring employees drawing handsome salary, working in IT and other related fields. The applicable labour laws do not assure the job security of skilled employees, particularly who work mainly in managerial, administrational and supervisory roles. In the absence of specific contracts which protect the interest of employees, employers continue to adopt a hire and fire policy. The present discussion includes within its ambit IT Sector and other higher level employment.

In Karnataka almost all IT and other major companies come under the definition of ‘commercial establishment’ and hence The Karnataka Shops and Commercial Establishment Act, 1961 is applicable to the employees working in them.

As per sec-39 of the said Act, an employer can remove or dismiss an employee who has put in at least 6 months of continuous service only for a reasonable cause and after issuing one month notice or giving him salary instead. This means that if an employee has put in less than 6 months of service an employer can terminate him at his will.

If, after an enquiry, it had come to the notice of employer that there is some misconduct on the part of the employee, then the employee is not entitled for notice or salary in lieu of notice.

An employee who is removed or dismissed from his service shall have the right of appeal before the Assistant Commissioner of Labour within 30 days from the date on which the order of removal or dismissal was communicated to him.

If the appellate authority finds that the employee has been removed or dismissed without reasonable cause or without proof of misconduct and if the employer does not agree to reinstate him, employee shall be entitled to compensation calculated at the rate of one month pay for every year of service. If the employee or the employer is not satisfied with the order of appellate authority they can apply for a revision of the said order by the district judge.

Other states have passed similar acts for Shops and Commercial Establishments.

The Industrial Dispute Act 1947 also deals with the termination of employees. However this Act is not applicable in the case of the following employees:
a. Employees who are employed in managerial or administrative capacity
b. Employees who are employed in a supervisory capacity and whose monthly income exceeds Rs. 10,000/- per month.

As per this Act, if an eligible employee, who had been in continuous service for not less than 1 year, then the employer can terminate him only by following the below mentioned procedure:
a. The workman to be given 1 month notice in writing indicating the reasons for retrenchment/termination or one month salary instead of notice.
b. The workman has been paid at the time of retrenchment compensation equivalent to 15 days average pay for every completed year of service.
c. Notice in the prescribed manner is served on the appropriate government authority.

In spite of what is discussed above, if there is any employment contract between the employer and employee, which provides better conditions in favour of the employee, then the same will have applicability over and above the statutory provisions mentioned before.

(1) THE EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISION ACT, 1952.
It applies to every establishment which is a factory engaged in any industry specified in Schedule-I of the act and in which 20 or more persons are employed. The Central Government by notification can bring in any other establishments employing 20 or more persons or less than 20 persons under the purview of this act.
FACTORY means any premises where a manufacturing process is being carried on with or without the aid of power.
The Central Government can add any other industry under Schedule-I for the purposes of this Act.
This act shall not apply to any establishment registered under the Co-operative Societies Act, 1912 or under any other Co-operative Society laws, employing less than 50 persons, and working without the aid of power.
The appropriate government may by notification in official gazette exempt any establishment from the operation of all or any of the provision of any scheme under this act.
(2) THE MATERNITY BENEFIT ACT, 1961
This act applies to every establishment being a factory, mine, plantation (private as well as Government) and to every establishment wherein persons are employed for exhibition of equestrian, acrobatic and other performance.

This Act also applies to every shop or establishment in which 10 or more persons are employed.

Nothing contained in this Act shall apply to any factory or other establishment to which the provisions of ESI act, 1948 apply.

The appropriate Government has powers to exempt an establishment or classes of establishment from the provisions of this act or any rule there under.

(3) THE CHILD LABOUR (PROHIBITION AND REGULATION) ACT 1986
The occupations and processes from which children are prohibited to be employed or permitted to work are listed in Part A and B of the Schedule under this Act.

The Part 3 of this Act will apply to those establishments where the occupation and processes mentioned in schedule to the Act are not applicable.

(4) THE PAYMENT OF WAGES ACT, 1936
This Act applies to persons employed in any factory (as defined under Factories Act, 1948) and to persons employed upon any railway directly or through a sub-contractor. This act also applies to persons employed in an industrial or other establishment specified in section 2 clause (ii) sub clauses a to g of the act.

This Act is applicable only to persons whose wages do not exceed Rs.6500/- per month.

(5) THE INDUSTRIAL DISPUTES ACT, 1947
Under this act “Industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen.

“Industrial dispute” means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person.

“Industrial Establishment or Undertaking” means an establishment or undertaking in which any industry is carried on.

“ Workman” means any person ( including an apprentice) employed in any industry to do manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person:-

i) who is subject to the Air Force Act, 1950 or the Army Act, 1950 , or the Navy Act., 1957; or
ii) who is employed in the police service or as an officer or other employee of a prison, or
iii) who is employed mainly in a managerial or administrative capacity, or
iv) who, being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per month or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

(6) THE EQUAL RENUMERATION ACT, 1976
The term employer under this act has the meaning assigned to it in Sec.2 (f) of the payment Gratuity Act, 1972.

(7) FACTORIES ACT, 1948
1) Under this act “Factory” means any premises where
i) 10 or more workers are working or were working on any day of the preceding 12 months and in any part of which a manufacturing process is being carried on with the aid of power.

ii) where 20 or more workers are working or were working on any day of the preceding 12 months and where a manufacturing process is being carried on with out the aid of the power.

2) The term factory does not include a mine, a mobile unit belonging to the armed forces of the Union, the railway running shed or a hotel, restaurant or a eating place.

(8) WORKMEN’S COMPENSATION ACT 1923
Under this act workman is defined under section 2 (n). Workman is any person who is:
i) a railway servant, as defined in Sec (3) of Indian Railways Act, not permanently employed and not employed in any capacity as specified in Schedule 2.

ii) a master seaman, or other member of the crew of the ship,
iii) a captain or other member of the crew of an aircraft.
iv) a person, recruited as a driver, helper, mechanic, cleaner or any other capacity in connection with a motor vehicle.
v) a person recruited for a work abroad by a company and who is employed outside India in any such capacity as specified in Schedule 2 and the ship, aircraft or motor vehicle or the company is registered in India.
vi) a person employed in any capacity as specified in Schedule 2 of the act but does not include any person working as a member of the armed forces of the Union.
vii) The Schedule 2 of the act gives a list of persons who are workmen as per the act.

(9)THE EMPLOYMENT EXCHANGES (COMPULSORY NOTIFICATION OF VACANCIES) ACT 1959:

This act applies to all public sector establishments and private sector establishments where 25 or more persons are employed. Agriculture, horticulture, domestic service and skilled office work etc do not come under the purview of this act.

(10) THE PAYMENT OF BONUS ACT 1965

This act applies to every factory and every other establishment in which 20 or more persons are employed on any day during an accounting year. An establishment to which this act applies shall continue to be governed by this act even if the number of persons employed is below 20.

In certain cases the act will be applicable to establishments in public sector .If a public sector establishment derives income by the sale of any goods produced or renders any services and if the said income is not less than 20% of the gross income of the establishment for that year, then provisions of the act will apply to that establishment.

This act is not applicable for the following employees:-

1. Employees of LIC.

2. Seamen.

3. Employees registered under any scheme under Dock Workers (Regulation of Employment) Act 1948.

4. Employees of Central or State Government industries.

5. Employees of Indian Red Cross Society or University or educational Institutions or non profit Institutions.

6. Employees of RBI.

7. Employees of Industrial Finance Corporation of India, State financial corporation, Deposit Insurance Corporation, NABARD, UTI, IDBI, SIDBI, NHB.

8. Employees of Inland Water transport establishments operating on routes passing through other countries.

(11) THE PAYMENT OF GRATUITY ACT, 1972

This act applies to every factory, mine, oil field, plantation, port, Railway Company, shops and establishment where 10 or more persons are employed.

12) THE MINIMUM WAGES ACT, 1958

The Part I and II of the Schedule attached to this Act lists the employments for which the appropriate government can fix the minimum wages payable to employees.

(13) THE KARNATAKA SHOPS AND COMMERCIAL ESTABLISHMENTS ACT, 1961

This Act applies for Shops and Commercial establishments in the State of Karnataka.

Commercial Establishment means a commercial or trading or banking or insurance establishment, an establishment or administrative service in which persons employed or mainly engaged in office work, a hotel, restaurant, boarding or eating house, a cafe or any other refreshment house, a theatre or any other place of public amusement or entertainment and includes such establishments as the State Government may by notification declare to be a commercial establishment for the purposes of this Act.

Shop means any premises where any trade or business is carried on or where services are rendered to customers and includes offices, storerooms, godowns, or warehouses, whether in the same premises or otherwise, used in connection with such trade or business, but does not include a commercial establishment or a shop attached to a factory where the persons employed in the shop fall within the scope of the Factories Act, 1948.

(14) THE EMPLOYEES STATE INSURANCE ACT, 1948:

This act shall apply to all factories (including Government factories) other than seasonal factories.

“Factory” means any premises including the precincts thereof:

i) whereon 10 or more persons are employed  or were employed for wages on any day of the preceding 12 months and in any part of which a manufacturing process is being carried on with the aid of power or is so ordinarily  carried on, or.

ii) Wherein 20 or more persons are employed or were employed for wages on any day of the preceding 12 months and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, but does not include a mine or railway running shed.

The appropriate government has the power to exempt factory or establishment or class of factories or establishments or person or class of persons from the operation of the act.

The Karnataka Industrial Establishments (National & Festivals Holidays) Act, 1963 and the rules there under provide for holidays for shops, commercial establishments, factories, plantations etc in Karnataka.

As per this Act, every employee shall be given a holiday on 26th January, 15th August and 2nd October. Apart from this, the employees are entitled for seven other holidays for other festivals, a list of which are mentioned in the Schedule attached to the Act. In addition all the establishments shall give holidays to their employees on 1st May and 1st November.
However this rule is not applicable to undertakings owned or controlled by the Government of India.  In addition to this every employee whose name is included in the electoral roll of the constituency, where an election to the Legislative Assembly is held, shall be allowed a day’s paid holiday to enable him to exercise his franchise.
Every employer shall display a list of national and festival holidays entitled to his employees in the form of a statement in a conspicuous place in the establishment.  In addition to this every establishment shall remain closed for one day of the week which is available to the employee as a weekly holiday.

As per the Karnataka Shops and Establishment Act, 1961 and the rules there under, there are certain prohibitions and restrictions in employing children, young persons and women in Shops and Establishments in Karnataka. As per this Act, a child is defined as a person who has not completed his 14th year. Similarly a young person is defined as a person who has completed his 14th year but not yet completed 18th year.
The Act prohibits the employment of children in any establishment. If anyone contravenes this provision, he shall be punishable with imprisonment for a term which shall not be less than three months and which may extend to six months or with a fine which shall not be less than Rs. 10,000/- but which may extend to Rs.20,000/- or with both.
The Act also prohibits the employment of women or young persons during nights. If anybody contravenes this provision they are liable to punishment similar to punishment for child labor as mentioned above. State Government is empowered to exempt establishments of IT and ITES from the provisions relating to employment of women during night. The Government may impose conditions that such establishments which employ women during night time shall provide the facilities of transportation and security to such women employees. For the purpose of this act, night means a period of at least twelve consecutive hours, which shall include an interval between 8 pm to 6 am.
Every employer who intends to seek exemption to engage women employees during night shift shall make an application to the Commissioner for Labor or the Deputy Labor Commissioner having jurisdiction, with the list of women employees willing to work in night shifts. There shall be at least five women employees in one night shift.    

Every employee in shops and establishments in Karnataka is entitled for annual leave with wages, calculated at the rate of one day for every twenty days work performed by him. 

In addition to this, every employee shall, during the first twelve months of continuous service and during every subsequent twelve months of such service, also be entitled to leave with wages for a maximum period of twelve days. This leave can be availed on the ground of any sickness incurred or accident sustained by the employee or for any other reasonable cause. 

The annual leave with wages for which an employee is entitled may be carried forward to the next year in case he has not utilized it during a year. However, the total number of leave days carried forward shall not exceed a maximum of thirty days.  

An employee can at any time apply in writing to the manager of the establishment to avail the annual leave. However he shall apply minimum ten days prior the date on which he wishes his leave to begin. However this minimum period of ten days is not applicable in case of medical leaves. 

For the leave allowed to an employee, he shall be paid wages at a rate equal to the daily average of his total full time earnings for the day on which he worked, during the month immediately preceding his leave. The number of times, a leave may be taken by an employee during an year shall not exceed three.            

There is enough confusion prevailing among employers and employees regarding the working hours of employees in shops, offices and establishments in the state of Karnataka. Often this confusion leads to frustrations and in turn to labor unrest. Let us see what the law of the land prescribes in this regard.

Normally an employee can be made to work only for a maximum of nine hours on any day and 48 hours in any week. Including overtime, an employee can be made to work for a maximum of 10 hours in a day, the exemption being days of stock taking and account preparations. However the total number of overtime hours worked by an employee shall not exceed fifty in a period of three continuous months.

When an employee works in any establishment for more than nine hours in any day or for more than forty eight hours in any week, he shall in respect of such overtime work be entitled to wages at twice the rate of normal wages.

The period of work for an employee shall not exceed five hours at a stretch. After five hours of continuous work the employee shall have at least one hour of rest. Further, the period of work (inclusive of interval for rest) shall not spread over more than twelve hours in any day.

In this period of economic recession lakhs of employees face the threat of lay off and retrenchment. People often mistake retrenchment for lay off. Even though in common parlor people use the latter term more often, what actually happens in the case of most of the employees is retrenchment or termination from service.

The Industrial Disputes Act, 1947 defines retrenchment as “termination by the employer of the service of a workman, for any reason whatsoever”. The following are not instances of retrenchment.
a.Termination as a form of punishment by way of disciplinary action.
b.Voluntary retirement of the workman.
c.Retirement of the workman on reaching the age of superannuation.
d.Termination of the service as a result of the non renewal of the contract of the employment.
e.Termination on the ground of continuous ill health.

For the retrenchment of a workman who has been employed for a minimum period of one year continuous service, the following conditions shall be met with by the employer:
a.The workman shall be given one month’s notice in writing, indicating the reason for retrenchment, or wage equivalent to the period of notice.
b.The workman shall be paid compensation equivalent to 15 days average pay, for every completed year of continuous service.
c.Notice in the prescribed manner shall be served on the appropriated authority.

Employees working in factory, mine, oilfield, plantation, port, railway company, shops and establishments where 10 or more persons are employed are eligible for gratuity. Normally gratuity is to be paid to an employee after termination of his service, if he has rendered continuous service of not less than 5 years. If termination is due to death or disablement, then 5 years service is not required.

The amount of gratuity is calculated at the rate of 15 days wages for every completed year of service. However the maximum gratuity amount shall not exceed Rs 3,50,000/-.

Keeping in view inflation and spiraling prices, the Union Government decided to amend the relevant provisions, namely Sec 4 of the Act. While it was found that an amount computed at the rate of 15 days wages was a small amount, the said amendment seeks to enhance the same to 30 days wages. The Bill was introduced in the Rajya Sabha in November 2012 and is yet to be passed in the Rajya Sabha. Following the President’s Assent, the Bill will become an Act and come into force on a date decided by the Government and notified in the official gazette.

Employers of establishments where gratuity is applicable are supposed to obtain insurance for their liability for payment towards gratuity. They also need to register the establishment with the Controlling authority. The employer is also duty bound to display an abstract of the act and rules in English and language understood by the majority of the employees in a place near the main entrance.

Each employee who has completed one year of service shall make a nomination, within 30 days of the completion of one year service.  If he or she has a family, then the nomination shall be made to a family member and not to a third party. The employee needs to apply for gratuity within 30 days of it becoming payable.

An employer who   makes a false statement or false representation with respect to any gratuity matter is liable for punishment with imprisonment up to 6 months or fine up to 1000 rupees or both.

The Payment of Gratuity (Amendment) Act, 2010, has increased the gratuity limit from 3.5 lakhs to 10 lakhs and the same is tax free. The same is applicable for both private and public sector employees. The enhancement is with effect from 24-05-10, and the same is calculated based on the date of retirement/resignation and not on the date of receipt of the amount. Section 10(10) 0f the income tax contains the provisions relevant to tax implications of gratuity.

Once the Act becomes applicable, it continues even if the number of employees falls below ten.
The formula for the calculation of gratuity = (Last drawn basic salary +DA) x 15/26 x number of years of service.
As per the decision in of Madras High Court in   Mettur Beardsell Limited, Madras Vs. Regional Labour Commissioner (Central), Madras & others reported in 1998 LLR 1072 (Mad. HC), an employee who has completed at least 240 days of service in the fifth year will be eligible for gratuity.

THE KARNATAKA SHOPS AND COMMERCIAL ESTABLISHMENTS ACT, 1961

Objective:The Act aims to provide for the regulation of conditions of work and employment in shops and commercial establishments in the state of Karnataka.

Application:The act, in the first instance applies to the areas specified in the Schedule attached to the Act. The government is authorised to bring in other areas under the operation of the act.

Important definitions:

Adult:  a person who has completed his eighteenth year.

Child:  a person who has not completed his fourteenth year.

Commercial establishment: means a commercial or trading or banking or insurance establishment, oran establishment or administrative service in which persons employed or mainly engaged in office work, ora hotel, restaurant, boarding or eating house, a café or any other refreshment house, ora theatre or any other place of public amusement or entertainment.

Employee: means a person wholly or principally employed in or in connection with, any establishment whether working on permanent, periodical, contract or piece rate wages, or on commission basis, even though he receives no reward for his labour and includes an apprentice, any clerical or other member of the staff of a factory or industrial establishment who falls outside the scope of the Factories Act, 1948.

Establishment:  means a shop or a commercial establishment;

Shop: means any premises where any trade or business is carried on or where services are rendered to customers, and includes offices, storerooms, godowns, or warehouses, whether in the same premises or otherwise, used in connection with such trade or business.

Young person:  a person who is not a child and who has not completed his eighteenth year.

Exemptions: (1) This act is not applicable to-

(a)   officers of or under the Central or State Governments or local authorities, except commercial undertakings;

(b)  any railway service, water transport service postal telegraph or telephone service, any system of Public conservancy or sanitation or any industry, business or undertaking which supplies power, light or water to the public;

(c)  railway dining cars;

(d)  establishments for the treatment or care of the sick, infirm, or the mentally unfit;

(e) Establishments of the Food Corporation of India.

(f) Offices of legal practitioners and medical practitioners in which not more than three persons are employed:

(g) Officers of a banking company

(h) Any person employed about the business of any establishment mentioned in clause (a) to (g) aforesaid;

(i) Person occupying positions of management in any establishment;

(j) Persons whose work is inherently intermittent such as drivers, caretakers, watch and ward staff, or canvassers; and

(k) Persons directly engaged in preparatory or complementary work, such as clearing and forwarding clerks responsible for the dispatch of goods. Section 3(2) of the Act gives a list of establishments for which  sections 11(which deals with opening and closing hours of establishments) and sub-section (1) of section 12(dealing with weekly holidays) are not applicable.

Registration of Establishments:  Within 30 days from the date of commencement of work in an establishment,  the employer of every establishment shall send to the Inspector of the area concerned, a statement in the prescribed form together with such fees as may be prescribed, containing:

(a)   the name of the employer and the manager, if any;

(b)  the postal address of the establishment;

(c)  the name, if any , of the establishment; and

(d)  such other particulars as may be prescribed.

On receipt of the statement and the fees, the Inspector shall, on being satisfied about the correctness of the statement, register the establishment in the register of establishments and shall issue, a registration certificate to the employer. The registration certificate shall be prominently displayed at the establishment. A registration certificate shall be valid for five years and shall be renewed before the expiry of the period of registration certificate.

Change to be communicated to Inspector: The employer shall notify to the Inspector, in the prescribed form any change in respect of any information contained in his statement given earlier, within fifteen days after the change has taken place.

Closing of establishment to be communicated to Inspector: The employer, shall within fifteen days of his closing the establishment, notify to the Inspector in writing the date of such closure and return the registration certificate. The Inspector shall, on receiving the information and being satisfied about correctness, remove such establishment from the register of establishments and cancel the registration certificate.

Issue of appointment Orders: Every employer, employing any person in or in connection with his establishment, shall issue an appointment order in writing indicating the name, designation, wage scale of such person and terms and conditions of his employment and serve the same on such person within 30 days from the date of appointment in his establishment;

Hours of work:

a. No employee in any establishment shall be required or allowed to work for more than nine hours on any day or forty-eight hours in any week.

b. The total number of hours of work including overtime shall not exceed ten hours in any day except on days of stock taking and preparation of accounts.

c. The total number of overtime hours worked by an employee shall not exceed fifty in a period of three continuous months.

d. No young person shall be allowed to work in any establishment for more than five hours in a day.

e. Where an employee works in any establishment for more than nine hours in any day or for more than forty-eight hours in any week he shall in respect of such overtime work be entitled to wages at twice the rate of normal wages.

f. The periods of work of an employee in an establishment each day shall be so fixed that no period shall exceed five hours and that no such person shall work for more than five hours before he has had an interval of rest of at least one hour.

g. The periods of work of an employee in an establishment shall be so fixed that, inclusive of his interval for rest, they shall not spread over more than twelve hours in any day.

h. Every establishment shall remain closed for one day of the week. The employer shall fix such date and notify it to the Inspector and specify it in a notice prominently displayed in a conspicuous place in the establishment.

i. The State Government may allow an establishment to remain open throughout the week if it is satisfied that the establishment employs additional staff for meeting the requirements of sub-section (3) of this section.

j. Every employee in an establishment shall be given at least one whole day in a week as a holiday for rest.

k. It shall not be lawful for an employer to call an employee at, or for an employee to go to, his establishment or any other place for any work in connection with the business of his establishment on a day on which such establishment remains closed.

l. No person shall carry on, in or adjacent to a street or public place, the     sale of any goods after the hour (if a closing hour is fixed by the government) for the closing of establishments dealing in the same class of goods in the locality in which such street or public place is situated.

Annual Leave with Wages

a. Every employee in an establishment shall be entitled to leave with wages and shall be to avail such leave for the number of days calculated at the rate of-

(i)                one day for every twenty days works performed by him in case of an adult;

(ii)              one day for every fifteen days of work performed by him in case of a young person;If an employee does not in any one calendar year take the whole of the leave allowed to him, any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year. However the total number of the days of leave that may be carried forward to a succeeding year shall not exceed thirty days in the case of an adult and forty days in the case of a young person. An employee may at any time apply in writing to the manager of the establishment, not less than ten days before the date on which he wishes his leave to begin, to take all the leave or any portion thereof allowable to him during the calendar year. However the number of times in which leave may be taken during any year shall not exceed three.

b. Every employee shall also be entitled during the first twelve months of continuous service and during every subsequent twelve months of such service in any establishment to leave with wages for a period not exceeding twelve days, on the ground of any sickness incurred or accident sustained by him or for any other reasonable cause. For this leave, prior notice/ application may not be required

c. An employee who has been allowed leave for not less than four days in the case of an adult, and for not less than five days in the case of a young person, shall before his leave begins, be paid the wages due for the period of leave allowed.

Application of the Workmen’s Compensation Act: The provisions of the Workmen’s Compensation Act, 1923 and the rules made there under by the State Government shall apply to employees and employers of shops and commercial establishments.

Employment of children and women:

a. No child shall be required or allowed to work in any establishment.

b. No woman, or a young person shall be required or allowed to work whether as an employee or otherwise in any establishment during nights.  The  State Government may, by notification exempt any establishment of Information Technology or Information Technology enabled service from the provisions of this section relating to, employment of women during night subject to the condition that the establishment provides facilities of transportation and security to such women employees and subject to any other condition as may be specified in the notification.

Inspectors: The State Government may appoint Inspectors and Assistant Inspectors for the purposes of this Act. The Commissioner of Labour in Karnataka shall be the Chief Inspector for the purposes of this Act, for the whole of the State of Karnataka.

Penalties:

a. Whoever contravenes any of the provisions of sections 4,5,6, 6-A,7,9,10,11,12,13,15,16, 25 and 39, shall, on conviction, be punished with fine, which , for a first offence, may extend to one thousand rupees and, for a second or any subsequent offence may extend to two thousand rupees.

b. Whoever contravenes any of the provisions of sections 8, 17, 29 and 34 shall, on conviction, be punished with a fine which may extend to two hundred and fifty rupees.

c. Whoever contravenes the provisions of sections 24 and 25, shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to six months or with fine which shall not be less than ten thousand rupees, but which may extend to twenty thousand rupees or with both, for the first offence and for the second and subsequent offences, he shall be punishable with imprisonment of a term which shall not be less than six months but which may extend to one year.

d. Any person who wilfully obstructs an Inspector in the exercise of any power conferred on him under this Act, or any person lawfully assisting an Inspector in the exercise of such power or who fails to comply with any lawful direction made by an Inspector shall be punishable with fine which may extend to five hundred rupees.

Compounding of Offences.- The jurisdictional Labour Officer, in lieu of Prosecution may compound the offences punishable under this Act or the rules made there under, except the offences punishable under Sections 24 and 25, at the option of the offending employer before or after the institution of the prosecution by levying a sum not exceeding rupees two thousand but not less than rupees one thousand for the first offence and for the second or subsequent same offence, a sum not exceeding rupees five thousand but not less than rupees two thousand.

Saving of certain rights and privileges: Nothing in this Act shall affect any rights or privileges which an employee in any establishment is entitled to under any other law, contract, custom or usage, applicable to such establishment, or any award, settlement or agreement binding on the employer and the employee in such establishment, if such rights or privileges are more favourable to him than those to which he would be entitled under this Act.

Dismissal of employees:If an employee has put in service continuously for a period not less than six months, he cannot be dismissed or removed by his employer, except for a reasonable cause and unless one month’s previous notice or pay in lieu has been given to him.If an employee is dismissed, he has a right of appeal to the Assistant Commissioner of Labour.

Repeal of the Weekly Holidays Act, 1942: The Weekly Holidays Act, 1942 shall stand repealed in areas where the Karnataka Shops and Commercial Establishments Act, 1961 apply.

Schedule: The schedule attached to the Act, contains the names of places where the act applies.

THE KARNATAKA SHOPS AND COMMERCIAL ESTABLISHMENTS RULES, 1963

Registration: The statement for registration of an establishment shall be sent by the employer in Form A. The Registration Certificate issued shall be renewed once in five years before the date of its expiry. For renewal, a statement in duplicate in Form A has to be sent to the Inspector before ninety days from the date of expiry of such registration certificate. The Inspector shall register the establishment in the register of establishments in Form B and shall issue a Registration Certificate to the employer in Form C.

Changes how notified: The employer shall notify to the Inspector concerned any changes in respect of  his establishment within 15 days after the change has taken place.

Leave with wages register: The employer shall maintain a leave with Wages Register in Form F. This register shall be preserved for a period of three years after the last entry in it and shall be produced before the Inspector on demand.

Leave with wages book of the persons employed:  The employer shall provide each employee with a book called the ‘Leave with Wages Book’ in Form ‘H’. The book shall be the property of the employee and entries of the date of holidays or interruptions in service shall be made therein by the employer from time to time.

Maintenance of registers and records and display of notices:

a. Every employer shall exhibit in his establishment a notice in Form ‘P’ specifying the day or days of the week on which the persons employed by him shall be given a holiday.

b. Every employer shall exhibit in his establishment a notice containing such extracts of the Act and the rules in Kannada and in the language of the majority of the employees.

c. The registers, records and notices relating to any calendar year shall be preserved till the end of the next calendar year.

d. The appointment order issued by the employer under Section 6-A shall be in Form ‘Q’.

e. Every employer shall maintain a combined Muster Roll-cum-Register of Wages in Form ‘T’ in respect of the employees employed in the establishment. Where an employer has maintained Form ‘T’, he need not be required to maintain other Muster Roll or Register of Wages separately which contains the same information already available in Form ‘T’.

f. Every employer shall send a combined Annual Return in Form ‘U’ to the concerned Inspector on or before 31st January of every year:

g. Every employer shall maintain a Visit Book in which an Inspector visiting the establishment may record his remarks regarding any defects that may come to light at the time of his inspection and shall produce it whenever required to do so by an inspector.

h. Where an office, store room, go down, warehouse or work place used in connection with the trade and business of an establishment is situated at premises other than the premises of the establishment, all registers, records, muster-rolls, visit book and notices required to be maintained, exhibited, or given under the Act, and these rules shall be separately so maintained, exhibited or given in respect of and at such office, storeroom, go down, warehouse or work place.

Exhibition of name board: The name of board of every establishment shall be in Kannada and wherever other languages are also used, the versions in such other languages shall be below the Kannada version.

Exemption under Section 25:Every employer who intends to seek exemption under section 25 to engage women employees during night shift, shall make an application in Form R to the Commissioner for Labour or the Deputy Labour Commissioner having jurisdiction, with the list of women employees willing to work in night shifts. There shall be at least five women employees in one night shift. On receipt of the application the Commissioner for Labour or the Deputy Labour Commissioner concerned may, grant exemption in Form S.

Penalty for contravention: Whoever contravenes rules 8,9,9-A, 9-B and 9-C,17,18,19,20,22,24, 24-A, 24-B, shall on conviction, be punishable with fine which shall not be less than one hundred rupees but which may extend to two hundred and fifty rupees.