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Hi, Please let me know what are the HR / LEGAL compliances involved in R&D companies, do we have to register under companies Act, kindly let me know.
From India, Bangalore
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Dear All,

In one of our earlier posts, we had highlighted the exemption provisions of the EPF Act which are once again emphasized:

Section 17 provides for it:

17. Power of exempt

(1) The appropriate government may, by notification in the Official Gazette and subject to such conditions as may be specified in the notification, exempt, whether prospectively or retrospectively, from the operation of all or any of the provisions of any Scheme:

(a) any establishment to which this Act applies if, in the opinion of the appropriate government, the rules of its provident fund with respect to the rates of contribution are not less favorable than those specified in section 6, and the employees are also enjoying other provident fund benefits which, on the whole, are not less favorable to the employees than the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of similar character, or

(b) any establishment enjoying benefits in the nature of provident fund pension or gratuity, and the appropriate government is of the opinion that such benefits, separately or jointly, are, on the whole, not less favorable to such employees than the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of a similar character:

Provided that no such exemption shall be made except after consultation with the Central Board which, on such consultation, shall forward its views on exemption to the appropriate government within such time limit as may be specified in the Scheme.

Sec 17 1 (a) is with reference to exemption from PF Contribution and Sec 17 1 (b) is with reference to Pension and Gratuity.

A common question arises in preparing payroll for Temporary Employees by Staffing Entities: whether exemption from coverage under EPF Act of any Temporary Employee is the right of the Staffing Company?

Yes. But substantiating evidence by way of documents has to be provided to the EPF Department for claiming the exemption. Initially, if the same is rejected by the Department, then it is better to opt for the coverage, thereby limiting the liability. Furthermore, the Delhi High Court in the case of J K College of Nursing & Paramedicals vs. UOI & ORS, decided on 24th May 2011 by the Judgment of His Lordship Mr. Justice Rajiv Sahai Endlaw, has held that if any establishment or employer claims not to be covered under the said Act, then it is for the employer to present sufficient cogent and convincing material before the designated authority in an inquiry under Section 7A of the Act, in order to satisfy the Authority regarding the non-applicability of the Act. It was further held that the EPF authorities, under no circumstances, can be in possession of necessary records evidencing the extent of employment strength in any particular establishment.

It was also held that in matters like this, the question of the burden of proof is immaterial; the Provident Funds Commissioner is an authority created by the statute who has to administer the statutory provisions according to law and, for this purpose, is entitled to collect material by resorting to powers under various provisions of the law, including by examining the books of accounts and other records of establishments.

The next time any Employer is before the PF authority under Section 7A, the burden of proof is on the Employer, and the Employer has to provide all details/proof to claim exemption. Time need not be wasted to assert that the Authority has to prove their assertion.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

-9025792684

From India, Bangalore
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    (Fact Checked)-The user's reply is factually correct, citing Section 17 of the EPF Act and referencing the Delhi High Court judgment in the case of J K College of Nursing & Paramedicals. The information provided aligns with the latest laws and regulations. (1 Acknowledge point)
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    (Fact Checked)-The user's reply contains accurate information regarding the exemption provisions under the EPF Act, including the burden of proof on the employer to claim exemption. The reference to the Delhi High Court case of J K College of Nursing & Paramedicals vs. UOI & ORS is relevant and supports the explanation provided. (1 Acknowledge point)
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  • Dear Friends,

    As per the ID Act Amendment, Section 9C was introduced. By that, setting up a Grievance Redressal Machinery became a statutory need.

    Section 9C is extracted as follows:

    9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances.

    (2) The Grievance Redressal Committee shall consist of an equal number of members from the employer and the workmen.

    (3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on a rotation basis every year.

    (4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:

    Provided that there shall be, as far as practicable, one woman member if the Grievance Redressal Committee has two members, and in case the number of members is more than two, the number of women members may be increased proportionately.

    (5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal Committee shall not affect the right of the workman to raise an industrial dispute on the same matter under the provisions of this Act.

    (6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party.

    (7) The workman who is aggrieved by the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of the Grievance Redressal Committee, and the employer shall, within one month from the date of receipt of such appeal, dispose of the same and send a copy of his decision to the workman concerned.

    HR professionals may provide their feedback in this thread on their experience in setting up this Grievance Redressal Machinery in their respective organization.

    rajanlawfirm

    From India, Madras
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    (Fact Checked)-The user's reply is accurate and provides a detailed explanation of Section 9C of the Industrial Disputes Act Amendment. Great job in outlining the key provisions. Thank you for sharing your insights. (1 Acknowledge point)
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    (Fact Checked)-The user's reply accurately reflects the requirements set out in Section 9C of the Industrial Disputes Act Amendment. Well done! (1 Acknowledge point)
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  • Immediate question for Staffing Entities

    Dear All,

    What can keep Staffing Entities secure from litigation?

    At the first instance when a legal notice or claim is received from the Temporary Employee or his/her Advocate, the Staffing Entity, without waiting for the Client to take a stand, should work out a settlement with the Temporary Employee in compliance with the legal provisions of Sec 25(F) of the Industrial Disputes Act and corresponding provisions of the Shops and Establishments Act. Staffing Entities need to seek specialist legal advice from their own Legal Department or outside Counsel. The problem will be solved then and there, thereby saving a huge outflow later.

    Unfortunately, due to the monetary factor involved in deciding whether the Staffing Entity or the Client is to bear the liability, the matter gets dragged to court. In fact, Staffing Entities hesitate to portray the correct position to the Client for fear of losing business. This must be avoided.

    Observing the trend of court decisions, wherever proper retrenchment compensation is paid at the time of retrenchment, i.e., when the Temporary Employee is fired, the Employers have been protected.

    However, every Employer will learn the hard way. For example, if a Temporary Employee has worked for 3 years when he is fired, the Temporary Employee should be given one month's notice or pay together with 45 days' salary as retrenchment compensation. But this may not be paid, and he will be let go just like that. In the event of the Temporary Employee going to court and the case pending for 2 years, claiming for reinstatement with back wages, and winning the case, then the Employer has to pay 2 years back wages together with the retrenchment compensation or even reinstate the employee. By this time, the Staffing Entity would have finished their contract with the Client, and the whole liability would be on their head. In fact, through this settlement, whatever the Staffing Entity earned in the whole contract will be lost.

    The success of Staffing Business is to foresee this risk and curtail it.

    With Regards,

    V. Sounder Rajan

    Advocates & Notaries & Legal Consultants

    E-mail: rajanassociates@eth.net

    -9025792684.

    From India, Bangalore
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    (Fact Checked)-The user's reply contains accurate information regarding the legal provisions related to grievance redressal committees and industrial disputes. The advice provided for staffing entities on handling legal notices and settlements aligns with legal requirements under Sec 25(F) of the Industrial Disputes Act. The mention of retrenchment compensation and potential liabilities is also in line with legal considerations. (1 Acknowledge point)
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    (Fact Checked)-[response] The user's reply contains accurate information regarding the legal provisions of Sec 25(F) of the Industrial Disputes Act and the importance of settling disputes promptly to avoid future liabilities. It emphasizes the need for legal advice and proactive measures to mitigate risks effectively. (1 Acknowledge point)
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  • Dear,

    Please see 9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances.

    (4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:

    Pointing out to "one or more Grievance Redressal Committee" and "The total number of members of the Grievance Redressal Committee shall not exceed more than six."

    - rajanlawfirm

    From India, Madras
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    (Fact Checked)-The user reply correctly highlights the requirement for an Industrial establishment to have a Grievance Redressal Committee for resolving individual grievances, with a maximum of six members. No amendments needed. (1 Acknowledge point)
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  • Hi Manish,

    Thank you for your query. In response to your question, whether one Grievance Redressal Committee of six members is sufficient for 1000 employees or if additional committees need to be established, it is recommended to assess the workload and complexity of grievances faced by the employees.

    Typically, for a large workforce like 1000 employees, having multiple committees could be more effective in ensuring timely and thorough grievance resolution. The criteria for determining the number of committees required may include factors such as the nature of grievances, geographical dispersion of employees, and the intricacy of internal processes.

    I hope this information helps. If you have any further questions or need clarification, feel free to ask.

    Thanks & Regards,

    From India, Patiala
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    (Fact Checked)-The Grievance Redressal Committee for an industrial establishment employing twenty or more workmen should consist of equal members from employer and workmen, not to exceed six members. There should be one woman member if the committee has two members, increasing proportionately with more members. The committee should complete proceedings within thirty days. The number of committees needed for 1000 employees would depend on the number of workmen in different sections or departments to ensure effective grievance redressal. (1 Acknowledge point)
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  • Dear,

    The section does not provide any cap. Depending upon the class of workmen, you can have multiple GRM. It is for the management to decide. Starting with one GRM may be ideal. If the complaints are not manageable, then you can go in for the multiple mode.

    Rajan Law Firm

    From India, Madras
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    Immediate concern for Staffing Entities

    Dear All,

    The Gujarat High Court in the matter of Chemical vs Secretary, decided on 26 April 2011 by Honourable Mr. Justice H.K. Rathod, described the possibilities of a Contract worker raising an Industrial Dispute before the Industrial Dispute has listed out the following contingencies:

    In this connection, it will be necessary to note that even if contract labor is in vogue in a concern, employees employed by the contractor can validly raise the following contentions which may buttress their grievance that even though they are the direct employees of the principal employer, they have wrongly been treated as employees of the contractor who is not a real intermediary. Such types of disputes under the ID Act can legitimately be raised in the following cases which are mentioned by way of illustrations only without suggesting that they are exhaustive:

    (1) when it is alleged that the employees were directly employed by the principal employer and subsequently contract system was introduced for the same activities resulting in snapping of relationship of employee-employer between the workmen on the one hand and the main employer on the other, thus violating sec. 9A of the ID Act.

    (2) When there is absence of proper registration of the concerned principal employer under the Contract Labour Act.

    (3) When there is absence of proper licensing of the concerned contractor who employs contract labor at a given point of time.

    (4) Even though the principal employer may be a registered employer under the Act and the concerned contractor may be a licensed contractor under the Act, his license may not cover the activity which is carried on by the contract labor.

    (5) Even though the principal employer may be a registered employer under the Contract Labour Act and the contractor may be having a valid license to employ contract labor under the Contract Labour Act, for a given activity, still, the license issued to him may not cover the exact number of permissible employees employed by him, meaning thereby the number of permissible employees under the license may be less than the number of employees actually employed and qua such excess number of employees, the protective umbrella of the license would not be available to the contractor so far as the activity covered by the license is concerned.

    (6) Even though the principal employer may be a registered employer and the contractor may be a licensed contractor and the workmen employed by him might be covered by the permissible number of employees as recognized by the license and even though such activities may be covered by the license, in fact and in substance, control including disciplinary control and supervision of the entire activity may be with the principal employer and the wages of the employees may, in fact, be coming out of the coffers of the principal employer and may be getting paid through the contractor who may operate as a mere conduit pipe. Such type of control, supervision, and payments being outside the scope of sec. 10(2) read with secs. 20 and 21 of the Contract Labour Act would give rise to a legitimate contention that the principal employer is in fact and substance the real employer and the so-called contract is an eyewash.

    Staffing Industry professionals need to note the above Industrial adjudication possibilities and steer clear of them.

    With Regards,

    V. Sounder Rajan

    Advocates & Notaries & Legal Consultants

    Email: rajanassociates@eth.net

    9025792684.

    From India, Bangalore
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    (Fact Checked)-The user reply contains accurate information regarding the possibilities of contract workers raising industrial disputes. The details provided align with key factors affecting such disputes as per labor laws. (1 Acknowledge point)
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    (Fact Checked)-The information provided in the user reply is factually correct and aligns well with the Industrial Disputes Act and the scenarios outlined by the Gujarat High Court. The details shared are relevant for staffing industry professionals. (1 Acknowledge point)
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  • Immediate Concern for Staffing Entities

    Dear All,

    Are there any state government statutes providing for claiming permanency?

    A: Yes. The State Government of Tamil Nadu, by the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981, has conferred this power on the Industrial Adjudicators. The State of Assam also has the Assam Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1985, which provides for employees to claim permanency. However, there is a procedure for it. These enactments were enacted before the advent of globalization.

    With Regards,
    V. Sounder Rajan
    Advocates & Notaries & Legal Consultants
    E-mail: rajanassociates@eth,net - 9025792684

    From India, Bangalore
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    (Fact Checked)-The information provided in the user reply regarding the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 and the Assam Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1985 is [B]correct[/B]. (1 Acknowledge point)
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    (Fact Checked)-The information provided in the user's reply regarding the Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 and the Assam Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1985 is factually correct based on the original post. (1 Acknowledge point)
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  • The Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 [Tamil Nadu Act 46 of 1981] was upheld by the Hon'ble Supreme Court in State of Tamil Nadu vs Nellai Cotton Mills Limited.

    Rajan Law Firm

    From India, Madras
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