LABOUR LAWS RELATED TO TRAINEES IN INDIA
The law related to trainees in India is one of the most complicated subject has ever evolved.
The reason is that, they are trainee and employee at the same time. Organizations who engage the trainees should better know the following scenario before engaging any trainee in his organization.
1. The application of Apprentice Act is applicable to the companies who are registered under the Act. Private sector players do not come under the purview of this Act unless the trainee is engaged under the Apprentice Act.
2. ESIC for the Trainee: The trainees are generally not paid salary, in spite they are paid stipend. Whether the person is trainee but if the trainee is satisfying S. 2(9) of the ESIC Act, the person will naturally called as ‘Employee’ under the section. Though specifically S. 2(9) has exempted and ignored the apprentices engaged under the Apprentices Act, 1961, therefore from here the conclusion can be drawn is that ‘Trainee’ may be treated as ‘employee’ but apprentice engaged under the Apprentice Act will not be treated as ‘employee’ under the ESIC Act.
3. Wages under the ESIC is defined u/s 2(22) and includes all the remuneration paid or payable in cash to an employee.
4. In Andhra Prabha (P) Ltd. vs E.S.I. Corporation on 5 February, 1996 Equivalent citations: 1996 (2) ALT 301, (1996) IILLJ 389 AP the principle was laid as under:-
i. The Employees State Insurance Act is a beneficial piece of legislation to protect the interests of the workers.
ii. Therefore, the interpretation of the provisions of the Act has to be made keeping in view the objects of the Statute.
iii. The employer cannot be allowed to circumvent the provisions of the Act in the disguise of ambiguous designations. Though the designation 'Apprentices'/Trainees gives an impression at the first blush that they are not regular employees, but if the veil is lifted and the real facts are ascertained, they are in fact found to be working as regular employees. Thus, the employer cannot be permitted to flout the Law.
Link: https://indiankanoon.org/doc/204620/
Hence, on the basis of above analysis from ESIC point of view, to state that ‘trainees’ are subjected to ESIC contribution, provided in consideration to the ceiling limit i.e Rs 21,000/- as of now.
5. EPF for Trainees: Unusual like ESIC, the trainee for EPF has been suitable answered by our Apex Court. In The Regional Provident Fund Commissioner, Mangalore Vs. M/S Central Aercanut & Coca Marketing and Processing Co-Op [2006] Insc 39 (30 January 2006), the Apex Court held that trainees are apprentices engaged under the Standing Order of an organisation or under the Apprentices Act and will not come within the ambit of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Bench noted that Section 2 (f) of the EPF Act "defines an employee to include an apprentice, but, at the same time, makes an exclusion in the case of an apprentice engaged under the Apprentices Act or under the Standing Orders. Under the Model Standing Orders an apprentice is described as a learner who is paid allowance during the period of training." Therefore, employers are not obliged to contribute to the PF for them.
The apex court further held that "in the case at hand, trainees were paid stipend during the period of training. They had no right to employment, nor any obligation to accept any employment, if offered by the employer. Therefore, the trainees were apprentices engaged under the "Standing Orders" of the establishment.
Link: The Regional Provident Fund Commissioner, Mangalore Vs. M/S Central Aercanut & Coca Marketing and Processing Co-Op | Judgments | Supreme Court Judgments: January, 2017 | Law Library | AdvocateKhoj
6. But again a ‘trainee not being a student’ who is engaged not under the Apprentice Act, will be covered under the Act and will be subjected to EPF deduction as well, if attracts S. 2(b) and S. 2(e)of EPF.
7. In case the students are often do internship as a part of their curriculum; in this case however the EPF authority has given clarification that ‘Students’ getting stipend need not to contribute for EPF. Hence it is the option for both employer as well as the employee whether to or not to contribute in EPF. (Ref. circular no. coord/40(5) 2015/Misc/clarification dated 12-10-2015)
Link: Students getting stipend need not contribute for EPF
8. Further, it may be noted that trainees were recruited under a particular Training Scheme and there was no guarantee of employment after completion of the training period and that they were not entitled to other benefits, which were available to other permanent employees. These aspects have been decided in Sri Rama Vilas Service Ltd. V RPFC 2000 –I-LLJ-709(Mad) and Gandhi Vinita Ashram v PFC 1996 (1) CLR 1140 (P&H)
Link: https://indiankanoon.org/doc/1942367/
9. Bonus for Trainee: The trainee who is engaged under the Apprentice Act will not be entitled for the statutory bonus, as by virtue of S. 2(13) of the Payment of Bonus Act, 1965, an apprentice is not an employee, hence not eligible for bonus.
10. But where the trainee is engaged other than the Apprentice Act, the trainee if satisfies S. 8 of the Payment of Bonus Act regardless his designation.
11. Gratuity for Trainee: In Chairman-Cum-Managing Director, Orissa Mining Corpn. Ltd. V. Controlling Authority, Payment of Gratuity Act & Ors. 1995-(001)-LLJ -0381 –ORI it was held that the period of traineeship will not be excluded for counting the minimum 5 yrs of service for the purpose of payment of gratuity.
Link: https://www.citehr.com/101305-whethe...sequently.html
Furthermost the trainee is eligible for gratuity subjected to S. 2(e) and S. 4 of the Payment of Gratuity Act, but in this case even the Apprentices engaged under the Apprentice Act are not eligible for Gratuity payment by virtue of S. 2(e).
12. Trainees under the purview of “The Sexual Harassment of Women At Workplace (Prevention, Prohibition and redressal) Act, 2013, regardless to whether it’s an Apprentice or a trainee.
13. Employees Compensation Act applicability for Trainees: A trainee, if engaged in purview of Schedule II and occupation listed in Schedule III of the Act, will naturally can avail benefit under the Act. Whereas, S. 61 of the ESIC Act puts limit to the employees on availing benefits under other Acts, even we can find the same provision while referring S. 51 of the Employees Compensation Act.
14. Though an Apprentice appointed under the Apprentice Act is not entitled for claim under the Employees Compensation Act.
U.P. State Electricity Board vs Shri Shiv Mohan Singh And Anr on 1 October, 2004
Link: https://indiankanoon.org/doc/1198044/
15. Maternity Benefit Act for Trainees: A woman trainee can too avail the benefit under the Maternity Benefit Act. The benefit can be availed if S. 3(o) and S. 5(2) regardless the designation of the trainee or Apprentice.
16. Minimum wages Act for Trainees: The Ministry of Labour and Employment, through its Notification G.S.R. 680(E) dated September 22, 2014 prescribed the minimum rate of stipend per month payable to trade apprentices. The minimum rate of stipend per month shall be calculated at a percentage of the minimum wage of semi-skilled workers of the respective state or union territory which will be, namely (a) seventy per cent during the first year of training, (b) eighty per cent during the second year, and (c) ninety per cent during the third and the fourth year. Further, in the event the minimum rate of wage for a trade is not notified by any state or union territory, then, the maximum of minimum wages of the scheduled employment for semi-skilled workers shall be considered for paying the stipend.
17. Whereas in case of Trainees in Pvt. Sector the employer cannot deprive the trainees from the payment of notified minimum wages even. As the Minimum Wages Act contains a list, which in the legal terminology is called as ‘Schedule’. This list states “scheduled employments”. This act applies to these scheduled employments. All workers regardless temporary and/or permanent and/or regardless to the status (trainee or probationary) under a scheduled employment must receive at least the statutory rate.
18. In a remarkable judgment given by the Apex Court in Yash Pal & Ors Vs. Union of India & Ors. took the reference of State of Punjab v. Jagjit Singh in where the following principles were laid down:-
i. An employee engaged for the same work, cannot be paid less than another, who performs the same duties and responsibilities. Certainly not, in a welfare state.
ii. that the principle of equal pay for equal work would be applicable to all the concerned temporary employees, so as to vest in them the right to claim wages, at par with the minimum of the pay-scale of regularly engaged government employees, holding the same post
Link: Yash Pal Vs. Union of India | Latest Supreme Court Judgments | Law Library | AdvocateKhoj
In reference to the above supra, the trainee will even be taken under the purview of ‘Equal Remuneration Act’ where the basis of the Act is “Equal Pay for Equal Work regardless to gender”.
19. At last, but not the least if the above stated are taken into consideration then the State specific LWF contribution will so far has to be taken into consideration if the definition of ‘employees’ is substantiated under the Act.
***End***
From India, Kolkata
87The law related to trainees in India is one of the most complicated subject has ever evolved.
The reason is that, they are trainee and employee at the same time. Organizations who engage the trainees should better know the following scenario before engaging any trainee in his organization.
1. The application of Apprentice Act is applicable to the companies who are registered under the Act. Private sector players do not come under the purview of this Act unless the trainee is engaged under the Apprentice Act.
2. ESIC for the Trainee: The trainees are generally not paid salary, in spite they are paid stipend. Whether the person is trainee but if the trainee is satisfying S. 2(9) of the ESIC Act, the person will naturally called as ‘Employee’ under the section. Though specifically S. 2(9) has exempted and ignored the apprentices engaged under the Apprentices Act, 1961, therefore from here the conclusion can be drawn is that ‘Trainee’ may be treated as ‘employee’ but apprentice engaged under the Apprentice Act will not be treated as ‘employee’ under the ESIC Act.
3. Wages under the ESIC is defined u/s 2(22) and includes all the remuneration paid or payable in cash to an employee.
4. In Andhra Prabha (P) Ltd. vs E.S.I. Corporation on 5 February, 1996 Equivalent citations: 1996 (2) ALT 301, (1996) IILLJ 389 AP the principle was laid as under:-
i. The Employees State Insurance Act is a beneficial piece of legislation to protect the interests of the workers.
ii. Therefore, the interpretation of the provisions of the Act has to be made keeping in view the objects of the Statute.
iii. The employer cannot be allowed to circumvent the provisions of the Act in the disguise of ambiguous designations. Though the designation 'Apprentices'/Trainees gives an impression at the first blush that they are not regular employees, but if the veil is lifted and the real facts are ascertained, they are in fact found to be working as regular employees. Thus, the employer cannot be permitted to flout the Law.
Link: https://indiankanoon.org/doc/204620/
Hence, on the basis of above analysis from ESIC point of view, to state that ‘trainees’ are subjected to ESIC contribution, provided in consideration to the ceiling limit i.e Rs 21,000/- as of now.
5. EPF for Trainees: Unusual like ESIC, the trainee for EPF has been suitable answered by our Apex Court. In The Regional Provident Fund Commissioner, Mangalore Vs. M/S Central Aercanut & Coca Marketing and Processing Co-Op [2006] Insc 39 (30 January 2006), the Apex Court held that trainees are apprentices engaged under the Standing Order of an organisation or under the Apprentices Act and will not come within the ambit of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Bench noted that Section 2 (f) of the EPF Act "defines an employee to include an apprentice, but, at the same time, makes an exclusion in the case of an apprentice engaged under the Apprentices Act or under the Standing Orders. Under the Model Standing Orders an apprentice is described as a learner who is paid allowance during the period of training." Therefore, employers are not obliged to contribute to the PF for them.
The apex court further held that "in the case at hand, trainees were paid stipend during the period of training. They had no right to employment, nor any obligation to accept any employment, if offered by the employer. Therefore, the trainees were apprentices engaged under the "Standing Orders" of the establishment.
Link: The Regional Provident Fund Commissioner, Mangalore Vs. M/S Central Aercanut & Coca Marketing and Processing Co-Op | Judgments | Supreme Court Judgments: January, 2017 | Law Library | AdvocateKhoj
6. But again a ‘trainee not being a student’ who is engaged not under the Apprentice Act, will be covered under the Act and will be subjected to EPF deduction as well, if attracts S. 2(b) and S. 2(e)of EPF.
7. In case the students are often do internship as a part of their curriculum; in this case however the EPF authority has given clarification that ‘Students’ getting stipend need not to contribute for EPF. Hence it is the option for both employer as well as the employee whether to or not to contribute in EPF. (Ref. circular no. coord/40(5) 2015/Misc/clarification dated 12-10-2015)
Link: Students getting stipend need not contribute for EPF
8. Further, it may be noted that trainees were recruited under a particular Training Scheme and there was no guarantee of employment after completion of the training period and that they were not entitled to other benefits, which were available to other permanent employees. These aspects have been decided in Sri Rama Vilas Service Ltd. V RPFC 2000 –I-LLJ-709(Mad) and Gandhi Vinita Ashram v PFC 1996 (1) CLR 1140 (P&H)
Link: https://indiankanoon.org/doc/1942367/
9. Bonus for Trainee: The trainee who is engaged under the Apprentice Act will not be entitled for the statutory bonus, as by virtue of S. 2(13) of the Payment of Bonus Act, 1965, an apprentice is not an employee, hence not eligible for bonus.
10. But where the trainee is engaged other than the Apprentice Act, the trainee if satisfies S. 8 of the Payment of Bonus Act regardless his designation.
11. Gratuity for Trainee: In Chairman-Cum-Managing Director, Orissa Mining Corpn. Ltd. V. Controlling Authority, Payment of Gratuity Act & Ors. 1995-(001)-LLJ -0381 –ORI it was held that the period of traineeship will not be excluded for counting the minimum 5 yrs of service for the purpose of payment of gratuity.
Link: https://www.citehr.com/101305-whethe...sequently.html
Furthermost the trainee is eligible for gratuity subjected to S. 2(e) and S. 4 of the Payment of Gratuity Act, but in this case even the Apprentices engaged under the Apprentice Act are not eligible for Gratuity payment by virtue of S. 2(e).
12. Trainees under the purview of “The Sexual Harassment of Women At Workplace (Prevention, Prohibition and redressal) Act, 2013, regardless to whether it’s an Apprentice or a trainee.
13. Employees Compensation Act applicability for Trainees: A trainee, if engaged in purview of Schedule II and occupation listed in Schedule III of the Act, will naturally can avail benefit under the Act. Whereas, S. 61 of the ESIC Act puts limit to the employees on availing benefits under other Acts, even we can find the same provision while referring S. 51 of the Employees Compensation Act.
14. Though an Apprentice appointed under the Apprentice Act is not entitled for claim under the Employees Compensation Act.
U.P. State Electricity Board vs Shri Shiv Mohan Singh And Anr on 1 October, 2004
Link: https://indiankanoon.org/doc/1198044/
15. Maternity Benefit Act for Trainees: A woman trainee can too avail the benefit under the Maternity Benefit Act. The benefit can be availed if S. 3(o) and S. 5(2) regardless the designation of the trainee or Apprentice.
16. Minimum wages Act for Trainees: The Ministry of Labour and Employment, through its Notification G.S.R. 680(E) dated September 22, 2014 prescribed the minimum rate of stipend per month payable to trade apprentices. The minimum rate of stipend per month shall be calculated at a percentage of the minimum wage of semi-skilled workers of the respective state or union territory which will be, namely (a) seventy per cent during the first year of training, (b) eighty per cent during the second year, and (c) ninety per cent during the third and the fourth year. Further, in the event the minimum rate of wage for a trade is not notified by any state or union territory, then, the maximum of minimum wages of the scheduled employment for semi-skilled workers shall be considered for paying the stipend.
17. Whereas in case of Trainees in Pvt. Sector the employer cannot deprive the trainees from the payment of notified minimum wages even. As the Minimum Wages Act contains a list, which in the legal terminology is called as ‘Schedule’. This list states “scheduled employments”. This act applies to these scheduled employments. All workers regardless temporary and/or permanent and/or regardless to the status (trainee or probationary) under a scheduled employment must receive at least the statutory rate.
18. In a remarkable judgment given by the Apex Court in Yash Pal & Ors Vs. Union of India & Ors. took the reference of State of Punjab v. Jagjit Singh in where the following principles were laid down:-
i. An employee engaged for the same work, cannot be paid less than another, who performs the same duties and responsibilities. Certainly not, in a welfare state.
ii. that the principle of equal pay for equal work would be applicable to all the concerned temporary employees, so as to vest in them the right to claim wages, at par with the minimum of the pay-scale of regularly engaged government employees, holding the same post
Link: Yash Pal Vs. Union of India | Latest Supreme Court Judgments | Law Library | AdvocateKhoj
In reference to the above supra, the trainee will even be taken under the purview of ‘Equal Remuneration Act’ where the basis of the Act is “Equal Pay for Equal Work regardless to gender”.
19. At last, but not the least if the above stated are taken into consideration then the State specific LWF contribution will so far has to be taken into consideration if the definition of ‘employees’ is substantiated under the Act.
***End***
From India, Kolkata
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HC All - Trainees not covered for PF -2010.pdf
Labour laws.ppt