Employees Providing their Services Outside the Establishment will also come Under the Purview of the ESI Act, 1948

What is the legal position regarding the applicability of the Employees’ State Insurance Act, 1948 if the services provided by the employees of the establishment are outside the establishment? E.g. a business of playing music (band) at marriages and birthdays which take place outside the establishment or the catering services where food is cooked and served in the client’s premises. These establishments are mostly seasonal basis as marriages are a seasonal affair and do not take place on daily basis. Under such circumstances, does the ESI Act become applicable to the establishment of such nature where the employees are providing services outside the establishment?

In the case of Hindu Jea Band, the applicant establishment through their labour law advocate challenged the coverage before the Learned EI Court, Rajasthan on the plea that the employees are providing services outside the establishment which is of seasonal in nature. However, the plea of the applicant establishment was rejected by the Learned EI Court and thereafter the Hon’ble Rajasthan High Court dismissed the appeal filed by the appellant establishment.

Finding no other alternatives, the applicant establishment moved before the Hon’ble Supreme Court. The Supreme Court of India held that employees whether paid on daily basis or part time employees, will be treated as ‘employees’ under the Act. Hence, the establishment has been rightly covered under the Employees’ State Insurance Act, 1948. Thus it can be concluded that even if the employees provide services outside the establishment, still they will be treated as employees and will come under the coverage of the ESI Act.


Importance of Supplying Enquiry Report to the Charge Sheeted Employee

Is a delinquent employee entitled to copy of the enquiry report before any punishment is imposed upon him? If the employee does not get the copy of the enquiry report, then part of reasonable opportunity is lost as held by the Hon’ble Supreme Court of India.

Enquiry report is a vital document because basing on such report punishment is awarded. If copy of enquiry report is not provided to the delinquent employee, then it automatically violates the principle of natural justice.

An enquiry officer during the enquiry records evidences, considers documents and finally submits his enquiry report and findings to the disciplinary committee/ management of the company for deciding the quantum of punishment. There is a possibility for various reasons that the enquiry report might contain some findings which are not based on the actual proceedings. In such circumstances, if the copy of the enquiry report is not available with the delinquent employee, then such unknown facts would be considered by the disciplinary committee while deciding the quantum of punishment. The enquiry report might have been prepared by the whim of the enquiry officer without considering the evidence and facts. The delinquent employee needs to know what is in the enquiry report and then give his explanation to such report. Non-supplying of the enquiry report is not recommended since it violates the principle of natural justice which is the basic ingredients of holding any domestic enquiry. However, the Hon’ble Supreme Court in the case of Oriental Bank of Commerce vs. S. Balakrishnana has held that mere non-supplying of the enquiry report would not completely vitiate the enquiry. But such act should no way prejudice any delinquent employee.

Observance of principle of natural justice is mandatory while conducting a domestic enquiry. Hence, it is always advisable to supply a copy of the enquiry report to the delinquent employee before imposing minor or major punishment which would save the company from future unnecessary legal complications.

Relationship between Completion of Probationary Period and Automatic Confirmation

If an employee completes a stipulated probationary period in the company successfully, is he entitled to confirmation automatically? Certainly not, but such an employee would have a positive impression for the purpose of permanent appointment. The situation is tricky, and each and every case needs independent interpretation of a labour law advocate.

The Hon’ble Allahabad High Court in Mustafa Ansari vs. Kisan Gramin Bank & ors. has held that the power of confirmation of a probationer is in the hands of the confirming authority and such authority takes decisions on the basis of the performance of the probationer. Just because a probationer has completed the probationary period does not mean that he is fit for the service and should be made permanent. It is up on completion of the probationary period when the confirming authority gets the opportunity to judge the overall performance of the probationer and only after considering the performance of the probationer; his service is either confirmed or terminated. The Court held that termination of a probationer cannot be unjustified or illegal.

On the same line of action, the Hon’ble Gujrat High Court in Edwin A. Daniel vs. Labour Court has opined that completion of probationary period does not give right to confirmation. An order of confirmation is must before an employee is confirmed after the probationary period.

In the case of LIC vs. Ramapal Mandola, the Hon’ble Court held that the probationer, who has left his service soon after completion of probationary period, cannot claim himself to be a confirmed.

Hence, it can be concluded that a probationer does not become a permanent employee unless he is confirmed. However, non-confirming a probationer after completion of probationary period and making him continue to do the same work for a longer period of time without either confirming or terminating his service in order to deprive him of all the statutory benefits of a permanent employee would attract the provisions of unfair labour practice.

EPFO Plans to Reduce the Strength of Employees to 10 for the Purpose of Coverage

In order to provide social security to millions of workers who are beyond the ambit of provident fund benefits under the Employees’ Provident Fund Organization, the labour ministry has decided to reduce the minimum strength of eligible employees to ten for the purpose of extending the coverage to the maximum limit. Currently, the total strength of employees required for the purpose of coverage under the Employees’ Provident Fund & Miscellaneous Act, 1952 is twenty.

As per the labour ministry, which is planning to reduce the strength to ten from the existing strength of twenty employees through an executive order is hopeful that such change will bring an additional five million workers under the coverage of EPF & MP Act and benefits provided under such Act. Talks regarding the amendment of EMP & MP Act, 1952 are also going on. The Act itself allows change in number of eligible employees for the purpose of coverage under this Act through a notification with a time limit of two months for consultation and/ or modification. Since such amendment does not require permission from the Parliament, the officials of the labour ministry are very much keen on publishing a notification soon. It is pertinent to mention that the EPFO’s apex decision making body the central board of trustees have already approved the decision of reducing the strength of eligible employees to ten in 2008, but for reasons unknown, it could not be implemented till today.

Such decisions, if implemented soon will bring a lot of workers under the coverage of the EPF & MP Act and they will be able to enjoy the benefits of provident fund. However, on the other hand, it will create a huge financial burden of the small scale industries and employers.

Can an Employer Reduce the Salary of its Employees Below the Minimum Wages

Running a business needs lots of money. A substantial amount of earning is spent on the salaries of the employees. A business often goes through financial turmoil, leading to a situation where the employer finds it very difficult to pay the salary of the employees. This is often the result of reduction in sale, fierce competition and other factors. The situation sometimes becomes so difficult that the employer finds no other alternative but to reduce the salary of its employees in order to keep the business running.

Now, can an employer reduce the salary of its employees under any circumstances? This is definitely a tricky question. The Industrial Disputes Act, 1947 allows change in the service conditions of a workman by way of giving notice of change. The changes can be made in relation to the matters mentioned in the fourth schedule of the Act, under which ‘wages’ also falls.

Moreover, wages of an employee can be directly reduced as a result of settlement or an award passed by a competent court. As an employer, one has every right to reduce the salary when the employer is under the burden of financial hardship and unable to pay its employees the existing wages. However, under no circumstances, one can reduce the wages below the prescribed ceiling of wages fixed by the Minimum Wages Act, 1948 even if the employer is finding it impossible to pay the wages and continue with the business further.

Applicability of the EPF & MP Act, 1952 on International Workers

Being a beneficial legislation, the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 is applicable to an establishment which has 20 or more employees. The present salary ceiling limit has been restricted to Rs.15,000/- per month for the purpose of coverage under the EPF & MP Act. The earlier salary ceiling limit was Rs.6,500/- per month which was increased to the current limit of Rs.15,000/- per month vide notification dated 29.08.2014 issued by the EPF organization.

An Indian worker, who is generally covered under the Employees’ Provident Fund Organization in India, while working in a foreign country with which India has a social security agreement, is eligible to enjoy the benefit of social security provided by that particular country.

On the other hand, a foreign worker i.e. a non-Indian working in India will be eligible to enjoy the benefits provided by the EPFO if the organization under which he is working is covered under the provisions of the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952.

However, a foreign national worker who is employed in India but is contributing to the social security program in his country, when India has social security agreement with such country, is considered as an “excluded employee” under the provisions of Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 for the purpose of applicability of this Act.