Overtime wages payable only on basis & DA – Ruling of Kerala High Court.

Section 59 of the Factories Act lays down that where a worker works in a factory for more than 9 hours in any day or more than 48 hours in any week, he shall, in respect of the overtime work, be entitled to wages at the rate of twice his ordinary rate of wages. Section 59(2) stipulates that ordinary rate of wages means the basic wages + such allowances, including cash equivalent of the advantage approving through the concessional sale to workers of food grains and other articles, as the worker is for the t ime being entitled to, but does not include bonus and wages for overtime work.

The division bench of Hon’ble High Court of Kerala has considered what constitutes ordinary rate of wages as defined under Section 59(2) of the Factories Act in the case of V.E.Jossie and others Vs. Flag Officers, Commanding in Chief, Novel Base and another, 2011 (3) CLR 2011.

The Respondent was paying overtime Wages including HRA, Travelling Allowances, Small family Norms allowance and CCA. The Respondent by an order dated 23.07.2009 informed that the employees are not entitled to overtime on the above four items. The decision of the respondents was challenged before the Central Administrative Tribunal (CAT) and the Tribunal upheld the action of the Respondent. The workmen challenged the orders of the CAT before the Hon’ble High Court of Kerala. The Division Bench of the High Court also upheld the orders of the CAT. The Hon’ble High Court observed as under:

·               We are therefore of the view that the ordinary rate of wages referred to in Sub-section (2) does not take in compensatory and Incentive Allowances. In fact unless the standard rate of wages is understood as not including the above incentives, the rate of overtime wages will also keep on varying for different employees of the same grade in different stations. Section 59(2) doesnot visualise such discrimination among employees. In order to have uniform rate of overtime wages payable to the same category of employees, the original rate of wages also should be the same, which includes only salary and allowances for the for the work. Obviously, compensatory allowances and allowances in the nature of incentives are not covered under Section 59(2) of the Act. We donot find any ground to deviate from the view taken by the Tribunal.

·               Senior Counsel contended that the action of the respondents in recalling the benefits through the impugned orders is a violation of Section 9A of the Industrial Disputes Act, 1947. What is stated in Section 9A is that employers should not recover the benefits covered by Schedule 4 of the Act without notice to the employees. However, what was find in this case is that the respondents were only making a correction of the mistake they have committed by giving overtime wages on inadmissible allowances which is a violation of Section 59(2) of the Act. Section 9A of the Act refers to the steps that an officer should take before withdrawal of eligible benefits otherwise enjoyed by the employees which includes allowances. Notice u/s 9A need be issued only if the overtime allowance withdrawn was on eligible rate of wages. A mistake can always be corrected at any time and in this case, what is done is correction with future effect. The inadmissible benefits granted to the employees after July, 2009 only is proposed to be recovered. So much so, we donot find any violation of Section 9A of the ID Act because respondents have not taken any decision adverse to the terms of employment including eligibility for Overtime Allowance. We therefore, donot find any merit in this contention also.

Revised minimum wages for Security Agencies in Karnataka

The Government of Karnataka has revised the minimum rate of wages for employment in Security Agencies (Industries where office staff appointed by which agency including security guards) vide its notification no. LD -11/LMW/2009 dated 14.09.2011 w.e.f. 01.04.2011. The details of the revised rate of minimum wages as per government notification are as under:

Sl.No	Working Category	Minimum wages rate every month (in Rs.)
		Zone 1	Zone 2
1.	Security Supervisor	5231.46	4949.81
2.	Security Officer
3.	Field Officer
4.	Manager
5.	Security Inspector	4828.00	4736.55
6.	Assistant Security Officer
7.	Head Guard	4649.31	4348.57
8.	Intelligence & Fire Fighting	4459.91	4376.75
9.	Security Guard
10	Assistant
11	Lady Guard / Lady Nurse
12	Supervisor	4646.46	4601.41
13	Accountant
14	Cashier
15	Stenographer
16	Clerk	4553.11	4508.76
17	Typist
18	Receptionist
19	Computer Operator
20	Driver
21	Attender	4343.46	4359.28
22	Office Boy
23	Peon

The revised rate of minimum wages under this notification included cost of living allowance payable on 3944 points. Over and above 3944 points of CPI (1960=100), cost of living allowance has to be paid @ 0.04 paise per point per day as D.A. for all the category of employees.

All conditions of providing other amenities remain the same except the washing allowance which has been revised to Rs. 250/- per month.

The Industrial (Standing Order) Act, 1946

Applicability:

The Act will apply to every industrial establishment wherein 100 or more workmen are employed or were employed on any day of the preceding 12 months.

Industrial establishment means –

i.      Industrial establishment defined under the Payment of Wages Act, 1936

ii.    Factory defined under the Factories Act, 1948

iii.   Railway defined under the Indian Railways Act, 1890

iv.   Establishment of contractor who employs workmen for fulfilling contract with the owner of the industrial establishment.

Workman has meaning assigned to it under section 2(s) of the Industrial Dispute Act, Thus it includes skilled, unskilled, manual or clerical work but does not include employees engaged in managerial, administrative or supervisory capacity.

Submission and approval of draft Standing Order:

The employer should submit to the certifying officer, 5 copies of draft Standing Order proposed to be adopted by him within 6 months from the date of applicability of the Act. On receipt of draft, the certifying officer will forward one copy to trade union or workmen (in case there is no trade union) and hear their objections. After that he will certify the Standing Order or direct the employer to make necessary modification. The Certified Standing Order should be displayed in English and local language at the notice board or near the entrance of the establishment. Standing Orders once approved will be binding on both employer and employee. Till the approval of the draft Standing Order, Model Standing Order prescribed under the Act will automatically apply to the establishments.

Date of operation of Standing Order:

The Standing Order shall come into operation –

i.          On the expiry of 30 days from the date on which authenticated copies are sent or

ii.        In case appeal against the order is preferred, on expiry of 7 days from the date on which copies of the order of the appellate authority are sent.

Payment of Subsistence Allowance:

Where any workman is suspended by the employer pending investigation or inquiry into the complaint or charges of misconduct against him, the employer shall pay the subsistence allowance to such workman at 50% of his wages for first 90 days and 70% of wages for remaining period till the completion of disciplinary proceedings. In case of any dispute regarding the payment of subsistence allowances, parties may refer the dispute to labour court constituted under the Industrial Dispute Act, 1947. The dicision of the labour court shall be final and binding on both the parties.

Penalties and Procedures:

An employer who fails to submit draft standing order (as per section 3) or who modified his standing order otherwise than in accordance with section 10, shall be punishable with a fine which may extend to Rs.5000 and in case of continuing offence with a further fine of Rs.200 for every day after the first during which the offence continues.

Interpretation etc. of the Standing Order:

If any question arises as to the application or interpretation of the Standing Order parties may refer the same to any of the Labour court constituted under the Industrial Disputes Act, 1947. The decision of the concerned labour court shall be final and binding on both employer and workmen.

Matters to be provided in the Standing Order

1.    Classification of workmen e.g. Permanent/temporary/apprentice/probationery etc.

2.    Manner of intimating to workmen periods and hours of work, holydays, pay-days and wage rate.

3.    Shift working

4.    Attendance and late coming

5.    Conditions of, procedure in applying for, and the authority which may grant leave and holidays.

6.    Requirement to enter premises by certain gates, and liability to search.

7.    Closing and reporting of sections of industrial establishment, temporary stoppages of work and the rights liabilities of the employer and workmen arising there from.

8.    Termination of employment, and the notice thereof to be given by the employer and workmen.

9.    Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct.

10. Means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants.

11. Any other matters which may be prescribed.

The Contract Labour (Regulation and Abolition) Act, 1970

Objects:

The Act aims to prevent the exploitation of workers under the contact labour system. This Act seeks to regulate the employment of contract labour in certain establishments and to provide for its abolition under certain circumstances.

Applicability:

This Act applies to every establishment in which 20 or more workmen are employed or were employed on any day on the preceding 12 months as contract labour and to every contractor who employs or who employed on any day of the preceding 12 months 20 or more workmen. It does not apply to establishments where the work performed is of intermittent or casual nature. The Act also applies to establishments of the Government and local authorities as well


Registration of Establishment:

The establishments to whom this Act applicable are required to be registered as the Principal Employer. Application (under subsection (1) of section 7) for registration shall be made in triplicate Form I to the registering officer of the area in which the establishment sought to be registered. Certificate of Registration (under subsection (2) of section 7) shall be granted in Form II. Any changes in the particulars specified in the Certificate of registration, the principal employer shall intimate the registering officer within 30 days from the date of such change along with the particulars and reasons for such change.

License for Contractor:

Every contactor to whom this Act applicable is required to obtain a License and should not undertake any activity except in accordance with the License. Application shall be made in triplicate Form IV to the licensing authority of the area in which contractor is located. License shall be granted in Form V.

Registration / License Fee in Karnataka:

No. of Employees	Registration Fee (in Rs.)	License Fee (in Rs.)
20	150.00	100.00
21 - 50	375.00	150.00
51 - 100	750.00	300.00
101 - 200	1500.00	500.00
201 - 400	3000.00	1000.00
More than 400	3750.00	1250.00

Obligations

The Act puts obligations on the contractors for the establishment of canteens, rest rooms, first aid, drink water, latrines and urinals, Washing facilities etc. In case of failure on the part of the contractor to provide such facilities, the principal employer is liable for providing such services.

The contractor is required to disburse the wages in the presence of authorised representative of the principal employer. No wage period shall exceed one month. In case of failure on the part of the contactor to pay the wages either in part or in full, the principal employer is liable to pay the same. Wages shall be paid before the expiry of 7th day of the wage period if the contractor/establishment employed less than 1000 workers and before the expiry of 10th day of the wage period in other cases.


Registers and Records
Principal Employer should maintain following records

1. Register of contractors in Form XII

2. Annual Return in Form XXV


Contactor should maintain following records

1. Register of persons employed in Form XIII
2. Employment Card shall be issued in Form XIV within 3 days of employment of worker
3. Service Certificate shall be issued to the worker in Form XV on termination of employment.I
4. Wage slip shall be issued in Form XIX

5. Register of Wages in XVII

All such Registers and records shall be preserved in original and kept for a period of 3 calendar years from the date of last entry therein.

Every employer shall, within 15 days of commencement or completion of each contract work, submit a return to the inspector, intimating the date of commencement or as the case may be, of completion of work in Form VI B.

Returns

Particluars	Due date	Form No.	Responsible person	Authority	Section / Rule
Half Yearly Return	On or before 30 days from the closure of the year	Form XXIV	Contractor	Assistant Labour commissioner of the concerned area	Sec 11 & Rule 82 (1)
Annual Return	On or before 15th February of the subsequent year	Form XXV	Principal Employer	Assistant Labour commissioner of the concerned area	Sec. 6 & Rule 82(2)

Statutory Compliance in October - Due dates for Karnataka, India

Act	Particulars	Due date
EPF Act	Pay P.F.Deductions	Before 15th October
EPF Act	Submit monthly return in Form 5 (along with Form 2, 10, 12 & 12A)	Before 25th October
EPF Act (in respect of international workers)	Submit monthly statement IW-1 relating to details of Employyes qualifying for membership as International workers along with Form 5 (for unexempted) /Form 4 PS (for exempted)*	Before 15th October
ESI Act	Make ESI payments	Before 21st October
Professional Tax	Submit Form 5  and pay Tax deducted from employees' salary/wages	Before 20th October
Apprentice Act	Submit Report in Form Appl.6 in respect of Graduates and Technician Apprentices	Before 30th October
Factories Act	Renewal of Factory License	Beofre 31st October