Hello All,
Hope you all are doing well.
My friend's father, currently 63 years old and coming from a lower-middle-class family, has been working full-time for a mid-sized textile export Pvt. Ltd. company in Ahmedabad, Gujarat, India for more than two decades. He started as an office assistant when the company was established, without any written employment agreement in place. However, the company boss has now asked him to leave permanently, after signing some unknown documents, next month due to his old age, without providing any notice period or retirement benefits, as the company is no longer willing to pay his salary. The company does not issue any salary slips or documentary proof, but he has an active EPF and ESIC account with the company for the past two decades. He has managed to obtain an EPF slip and a salary slip from a decade ago. His monthly salary has been increased from 4000 (his joining salary over two decades ago) to 6000 (current salary), which is well below minimum wages.
Note: He has been working for the past 5-6 months with an artificial limb as he lost one leg last year (with a 75% locomotor disability certificate from the Government of India). During his hospitalization of 2-3 months, he did not receive any salary. Although his family followed the leave procedure at the ESIC office and submitted the ESIC leave documents to his company, the company closed his ESIC account, marking "LEFT SERVICE" in the ESIC portal, resulting in him not receiving any ESIC leave benefits, salary, or ESIC medicine benefits during this period. His ESIC account was reopened by the same company upon his return, but there is a non-contribution period (gap) of approximately 4-5 months.
Kindly provide your valuable guidance on the issues below:
1. As the company will not issue any relieving letter and may classify it as a termination rather than retirement, what retirement and other benefits such as gratuity, leave encashment, EPF, etc., can he claim?
2. How can all such benefits be calculated for his income when no salary breakdown/salary slip is available?
3. Despite working full-time for over two decades, his salary is much lower than the minimum wages, and his annual increment is minimal. What are the regulations regarding minimum wages and minimum increments in his case? Can he request a higher last salary?
4. How can he access ESIC retirement benefits for medicines, considering that ESIC rules require recent continuous contributions for five years, but there is a recent gap of 4-5 months in the last year?
5. What steps can he take or where can he file a complaint if his boss refuses to provide any benefits?
6. Please share any relevant Indian resources or similar reference cases in India, if possible.
7. Given that the company is clearly infringing on employee rights, what are the key rights of a private employee protected by the law in this situation?
Thanks in advance.
From United States, Cambridge
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Hope you all are doing well.
My friend's father, currently 63 years old and coming from a lower-middle-class family, has been working full-time for a mid-sized textile export Pvt. Ltd. company in Ahmedabad, Gujarat, India for more than two decades. He started as an office assistant when the company was established, without any written employment agreement in place. However, the company boss has now asked him to leave permanently, after signing some unknown documents, next month due to his old age, without providing any notice period or retirement benefits, as the company is no longer willing to pay his salary. The company does not issue any salary slips or documentary proof, but he has an active EPF and ESIC account with the company for the past two decades. He has managed to obtain an EPF slip and a salary slip from a decade ago. His monthly salary has been increased from 4000 (his joining salary over two decades ago) to 6000 (current salary), which is well below minimum wages.
Note: He has been working for the past 5-6 months with an artificial limb as he lost one leg last year (with a 75% locomotor disability certificate from the Government of India). During his hospitalization of 2-3 months, he did not receive any salary. Although his family followed the leave procedure at the ESIC office and submitted the ESIC leave documents to his company, the company closed his ESIC account, marking "LEFT SERVICE" in the ESIC portal, resulting in him not receiving any ESIC leave benefits, salary, or ESIC medicine benefits during this period. His ESIC account was reopened by the same company upon his return, but there is a non-contribution period (gap) of approximately 4-5 months.
Kindly provide your valuable guidance on the issues below:
1. As the company will not issue any relieving letter and may classify it as a termination rather than retirement, what retirement and other benefits such as gratuity, leave encashment, EPF, etc., can he claim?
2. How can all such benefits be calculated for his income when no salary breakdown/salary slip is available?
3. Despite working full-time for over two decades, his salary is much lower than the minimum wages, and his annual increment is minimal. What are the regulations regarding minimum wages and minimum increments in his case? Can he request a higher last salary?
4. How can he access ESIC retirement benefits for medicines, considering that ESIC rules require recent continuous contributions for five years, but there is a recent gap of 4-5 months in the last year?
5. What steps can he take or where can he file a complaint if his boss refuses to provide any benefits?
6. Please share any relevant Indian resources or similar reference cases in India, if possible.
7. Given that the company is clearly infringing on employee rights, what are the key rights of a private employee protected by the law in this situation?
Thanks in advance.
From United States, Cambridge
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There is no need to talk to the employer or anybody connected with the employer, but he should go to the Labour Office and find the appropriate authority to file a complaint. It is ridiculous that such kind of sheer exploitation happens in India, perhaps only in Gujarat.
I am sure that the employer will try to delete all records relevant to his employment, but the fact that somebody in the factory would be a witness to his employment, other than the ESI registration and PF registration. That is enough for him to establish that he was employed.
His right to get a salary at par with the minimum wages notified by the Gujarat Government will also be materialized with retrospective effect. But the Labour Officer has the authority only to make it applicable for six months.
Regarding the retirement benefits, since there was no communication of superannuation and no document like Standing Order to prove that the employees would retire on attaining a certain age, this will come under the purview of termination of employment of Industrial Disputes Act. Therefore, he should get compensation at the rate of 15 days' wages for every completed year of service.
In addition to this, the employer should pay him gratuity as per the Payment of Gratuity Act, which is again at the rate of 15 days' wages for every completed year of service.
He can apply for the withdrawal of EPF and, of course, will get a pension from EPFO with retrospective effect from the date of reaching 58 years of age.
He can continue to get the medical benefits from the ESIC by paying Rs 120 per year as a contribution.
The denial of ESI benefits at the time when he had surgery should also be reviewed, and the employer's action striking his name from the rolls should be challenged.
All these will be possible only if somebody takes it up and fights for him. It all depends on the attitude of the personnel in the Labour department to help an employee. Though the objective of such departments is to help the working class and to protect their rights under various Labour Acts, many of them consider it as a place for their living and enjoyment. If the officer concerned is not inclined to the employer's money, he will succeed.
I am sure that if the media is enlightened, something positive can happen. I long if I were in Gujarat to help the poor man...!
From India, Kannur
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4766I am sure that the employer will try to delete all records relevant to his employment, but the fact that somebody in the factory would be a witness to his employment, other than the ESI registration and PF registration. That is enough for him to establish that he was employed.
His right to get a salary at par with the minimum wages notified by the Gujarat Government will also be materialized with retrospective effect. But the Labour Officer has the authority only to make it applicable for six months.
Regarding the retirement benefits, since there was no communication of superannuation and no document like Standing Order to prove that the employees would retire on attaining a certain age, this will come under the purview of termination of employment of Industrial Disputes Act. Therefore, he should get compensation at the rate of 15 days' wages for every completed year of service.
In addition to this, the employer should pay him gratuity as per the Payment of Gratuity Act, which is again at the rate of 15 days' wages for every completed year of service.
He can apply for the withdrawal of EPF and, of course, will get a pension from EPFO with retrospective effect from the date of reaching 58 years of age.
He can continue to get the medical benefits from the ESIC by paying Rs 120 per year as a contribution.
The denial of ESI benefits at the time when he had surgery should also be reviewed, and the employer's action striking his name from the rolls should be challenged.
All these will be possible only if somebody takes it up and fights for him. It all depends on the attitude of the personnel in the Labour department to help an employee. Though the objective of such departments is to help the working class and to protect their rights under various Labour Acts, many of them consider it as a place for their living and enjoyment. If the officer concerned is not inclined to the employer's money, he will succeed.
I am sure that if the media is enlightened, something positive can happen. I long if I were in Gujarat to help the poor man...!
From India, Kannur
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Thanks a lot, sir, for your quick response.
Sir, is there any way possible for him to get minimum wages with minimum increments as per Gujarat Government rules for the last 2 decades instead of just 6 months? Also, how can he determine his rightful minimum wage and minimum increment figures for Gujarat?
As his employer has verbally instructed him not to come from next month, should he wait for the current month's salary and then file a complaint at the labor office? Additionally, are there any other offices apart from the labor office where he should lodge a complaint?
Thanks in advance.
From United States, Cambridge
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Sir, is there any way possible for him to get minimum wages with minimum increments as per Gujarat Government rules for the last 2 decades instead of just 6 months? Also, how can he determine his rightful minimum wage and minimum increment figures for Gujarat?
As his employer has verbally instructed him not to come from next month, should he wait for the current month's salary and then file a complaint at the labor office? Additionally, are there any other offices apart from the labor office where he should lodge a complaint?
Thanks in advance.
From United States, Cambridge
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The first level to raise such complaints and disputes is the Labour Officer/ Asst Labour Commissioner. However, the Courts (Labour courts and Tribunals) have the power to make decisions from the date of joining. (I would seek the assistance of our Senior member Umakanthan Sir, a retired Labour Commissioner from Tamil Nadu, for more clarity on this matter).
His right to receive minimum wages cannot be denied by the employer, and gratuity and other benefits should be calculated based on these statutory wages. To understand how gratuity is affected, he may need to wait for 30 days of remaining unemployed.
If he is on a notice period and continues to work, he will receive his salary for that month. Legal action can only be initiated after he has left the organization.
Umakanthan Sir, your valuable comments on this issue would be greatly appreciated.
From India, Kannur
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His right to receive minimum wages cannot be denied by the employer, and gratuity and other benefits should be calculated based on these statutory wages. To understand how gratuity is affected, he may need to wait for 30 days of remaining unemployed.
If he is on a notice period and continues to work, he will receive his salary for that month. Legal action can only be initiated after he has left the organization.
Umakanthan Sir, your valuable comments on this issue would be greatly appreciated.
From India, Kannur
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Dear Madhu,
I have already gone through the thread and the replies you have given. Under the peculiar circumstances of the case marked by total violation of labor laws allegedly on the part of the employer and unexplained inaction on the part of the employee for many years of continuous service under the same employer, I don't think that any answer better than yours can be given at this stage.
The narrative in the initial post about the initial and current monthly salaries does not seem to be believable given the length of service rendered so far and the designation of the individual mentioned. Perhaps the individual might have been employed as a domestic servant in the residence of the employer, and his wages would have been charged under the business account with such a fictitious designation. The fact that he was enrolled as a member of EPF and insured with the ESIC by his employer would be sufficient proof of his employment, and the salary can be ascertained from the records of the organizations concerned, or the employer can be asked to produce the records at the appropriate stage of any dispute raised later in this regard. In my experience, I have found that normally both disputants come forward with only half-truths at the initial stage.
As it stands, the cause of action for claiming gratuity has not yet arisen, although there seems to be a fair chance to make a claim for minimum wages under Section 20(2) of the Minimum Wages Act, 1948. However, it may be advisable for strategic reasons to delay claiming gratuity under Section 7 of the Payment of Gratuity Act, 1972 soon after his actual termination. I would also suggest to the poster to interact with the employee in a manner that brings out the actual details of his employment before taking any legal action for remedy.
Kind regards,
[Your Name]
From India, Salem
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I have already gone through the thread and the replies you have given. Under the peculiar circumstances of the case marked by total violation of labor laws allegedly on the part of the employer and unexplained inaction on the part of the employee for many years of continuous service under the same employer, I don't think that any answer better than yours can be given at this stage.
The narrative in the initial post about the initial and current monthly salaries does not seem to be believable given the length of service rendered so far and the designation of the individual mentioned. Perhaps the individual might have been employed as a domestic servant in the residence of the employer, and his wages would have been charged under the business account with such a fictitious designation. The fact that he was enrolled as a member of EPF and insured with the ESIC by his employer would be sufficient proof of his employment, and the salary can be ascertained from the records of the organizations concerned, or the employer can be asked to produce the records at the appropriate stage of any dispute raised later in this regard. In my experience, I have found that normally both disputants come forward with only half-truths at the initial stage.
As it stands, the cause of action for claiming gratuity has not yet arisen, although there seems to be a fair chance to make a claim for minimum wages under Section 20(2) of the Minimum Wages Act, 1948. However, it may be advisable for strategic reasons to delay claiming gratuity under Section 7 of the Payment of Gratuity Act, 1972 soon after his actual termination. I would also suggest to the poster to interact with the employee in a manner that brings out the actual details of his employment before taking any legal action for remedy.
Kind regards,
[Your Name]
From India, Salem
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Thank you, Umakanthan Sir and Madhu Sir, for your quick and valuable suggestions.
Sir, it appears that the employer was consistently providing only the minimum wage "without any annual increment" for two decades to a full-time regular employee. Is there a rule to provide at least some (minimum) increment, such as 3% of the basic salary, to regular employees? If so, could you please provide any relevant case or act details?
I understand that to claim for minimum wages under section 20(2) of the MW Act, 1948, the employee would need to approach the Labor office. Is this correct, sir?
As the employer does not disclose any leave balance details, is there a rule to ensure a minimum allocation of Medical Leaves (ML), Earned Leaves (EL), etc., for this regular employee? Can the employee request leave encashment for EL, ML? Additionally, what other types of leaves can be claimed for leave encashment apart from EL and ML? Kindly provide any relevant case or act details.
Thanks.
From United States, Cambridge
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Sir, it appears that the employer was consistently providing only the minimum wage "without any annual increment" for two decades to a full-time regular employee. Is there a rule to provide at least some (minimum) increment, such as 3% of the basic salary, to regular employees? If so, could you please provide any relevant case or act details?
I understand that to claim for minimum wages under section 20(2) of the MW Act, 1948, the employee would need to approach the Labor office. Is this correct, sir?
As the employer does not disclose any leave balance details, is there a rule to ensure a minimum allocation of Medical Leaves (ML), Earned Leaves (EL), etc., for this regular employee? Can the employee request leave encashment for EL, ML? Additionally, what other types of leaves can be claimed for leave encashment apart from EL and ML? Kindly provide any relevant case or act details.
Thanks.
From United States, Cambridge
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Dear Adi Cool,
Your reference to the establishment as "Textile Export Pvt. Limited Company" indicates just its constitution and not its classification, such as whether it is a 'factory' comprising the administrative office situated within its premises under the Factories Act, 1948, or an exclusive office situated elsewhere as an 'establishment' coming under the Gujarat Shops and Establishments Act, 1948. Thus, this classification criterion of the said establishment is very pertinent to ascertain the statutory employment benefits like rates of minimum wages, types of leave, and their scales, etc.
Now, let me answer your latest queries as follows:
a) No Indian Labor Law relating to wages prescribes the grant of annual increment to employees. 'Wages' or 'Salary' can be in the form of a certain consolidated amount or bifurcated into various components such as basic and allowances for any wage period not exceeding one month. It depends on various factors like the nature of work, type of industry, agreement between the employer and union of workmen, etc. A noteworthy feature of fixation under the Minimum Wages Act, 1948, is that the minimum rates of wages are fixed and revised with the bifurcation of the gross wages into basic and variable dearness allowance to neutralize the effect of inflation. Thus, the statutory minimum wages always remain incremental. As per the ratio decidendi of the honorable Supreme Court of India in the Airfreight Corporation case [1999 LLR 1008], 'wages' or 'salary' has to be taken as a single package that shall always remain at par with the statutory minimum rates of wages, and if it is split into basic and allowances, only those allowances mentioned in the inclusive part of the definition of the term under the MW Act, 1948, have to be taken into account for determining the parity between the industry wages and the statutory minimum wages.
b) YES; the authority under section 20(1) of the MWA, 1948 is normally the Deputy Labor Commissioner of Labor appointed by the appropriate Government for the area of the place of employment.
c) This question can be answered only with reference to the classification of the establishment and the establishment-specific labor law applicable to it. Normally, the accumulated portion of the earned leave alone is encashable on termination of employment.
From India, Salem
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Your reference to the establishment as "Textile Export Pvt. Limited Company" indicates just its constitution and not its classification, such as whether it is a 'factory' comprising the administrative office situated within its premises under the Factories Act, 1948, or an exclusive office situated elsewhere as an 'establishment' coming under the Gujarat Shops and Establishments Act, 1948. Thus, this classification criterion of the said establishment is very pertinent to ascertain the statutory employment benefits like rates of minimum wages, types of leave, and their scales, etc.
Now, let me answer your latest queries as follows:
a) No Indian Labor Law relating to wages prescribes the grant of annual increment to employees. 'Wages' or 'Salary' can be in the form of a certain consolidated amount or bifurcated into various components such as basic and allowances for any wage period not exceeding one month. It depends on various factors like the nature of work, type of industry, agreement between the employer and union of workmen, etc. A noteworthy feature of fixation under the Minimum Wages Act, 1948, is that the minimum rates of wages are fixed and revised with the bifurcation of the gross wages into basic and variable dearness allowance to neutralize the effect of inflation. Thus, the statutory minimum wages always remain incremental. As per the ratio decidendi of the honorable Supreme Court of India in the Airfreight Corporation case [1999 LLR 1008], 'wages' or 'salary' has to be taken as a single package that shall always remain at par with the statutory minimum rates of wages, and if it is split into basic and allowances, only those allowances mentioned in the inclusive part of the definition of the term under the MW Act, 1948, have to be taken into account for determining the parity between the industry wages and the statutory minimum wages.
b) YES; the authority under section 20(1) of the MWA, 1948 is normally the Deputy Labor Commissioner of Labor appointed by the appropriate Government for the area of the place of employment.
c) This question can be answered only with reference to the classification of the establishment and the establishment-specific labor law applicable to it. Normally, the accumulated portion of the earned leave alone is encashable on termination of employment.
From India, Salem
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Hello, sir,
It is a GST registered factory in Ahmedabad urban area of Gujarat under Form GST REG-06 [see Rule 10(1)].
Its details obtained from the GST website are as follows:
Nature Of Core Business Activity: Manufacturer
Nature of Business Activities: 1. Factory / Manufacturing 2. Wholesale Business
Trade Name: *** EXPORTS PRIVATE LIMITED
Constitution of Business/ENTITY TYPE: Private Limited Company
NATURE OF BUSINESS: Factory / Manufacturing
DEPARTMENT CODE: RANGE II
Taxpayer Type / REGISTRATION TYPE: Regular
Effective Date of registration: 01/04/2017
GSTIN / UIN Status: Active
Its Principal Place of Business, office and factory all have the same registered address.
Sir, can it now be determined whether it falls under the Factories Act, 1948, or under the Gujarat Shops and Establishments Act, 1948?
Which specific labor law will be applicable to it?
What types of leave can be encashable in this case? How to calculate it without any documentary proofs?
Also, as this employee was among the initial employees recruited, even before the company was officially registered? So, from which period can he actually claim for gratuity benefits, i.e., from the start of his EPF deduction (as EPF deduction was started after 1-2 years) or from when the company was actually started, as documentary evidence is missing?
Apart from gratuity, encashable leaves, and EPF, is there anything else which he can claim as a retirement benefit?
Thanks in advance, sir.
From United States, Cambridge
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It is a GST registered factory in Ahmedabad urban area of Gujarat under Form GST REG-06 [see Rule 10(1)].
Its details obtained from the GST website are as follows:
Nature Of Core Business Activity: Manufacturer
Nature of Business Activities: 1. Factory / Manufacturing 2. Wholesale Business
Trade Name: *** EXPORTS PRIVATE LIMITED
Constitution of Business/ENTITY TYPE: Private Limited Company
NATURE OF BUSINESS: Factory / Manufacturing
DEPARTMENT CODE: RANGE II
Taxpayer Type / REGISTRATION TYPE: Regular
Effective Date of registration: 01/04/2017
GSTIN / UIN Status: Active
Its Principal Place of Business, office and factory all have the same registered address.
Sir, can it now be determined whether it falls under the Factories Act, 1948, or under the Gujarat Shops and Establishments Act, 1948?
Which specific labor law will be applicable to it?
What types of leave can be encashable in this case? How to calculate it without any documentary proofs?
Also, as this employee was among the initial employees recruited, even before the company was officially registered? So, from which period can he actually claim for gratuity benefits, i.e., from the start of his EPF deduction (as EPF deduction was started after 1-2 years) or from when the company was actually started, as documentary evidence is missing?
Apart from gratuity, encashable leaves, and EPF, is there anything else which he can claim as a retirement benefit?
Thanks in advance, sir.
From United States, Cambridge
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Since this is a manufacturing organization, the only leave available is earned leave or annual leave with wages. The same can be accumulated only up to 24 days unless otherwise provided for in any separate settlement with the workers/unions. The unavailed leave can be encashed in full.
Other than the gratuity and the PF accumulation and the Pension due from the EPFO, there are no other benefits available to a retired person. The employer will be ready to offer a gratuity, but the thing is, what is the amount and how is it arrived at. That needs to be carefully studied. Regarding gratuity, the calculation should be based on at least the latest minimum wages.
He can also get the ESI extended by paying the required annual contribution of ₹120. This will be very helpful to him.
From India, Kannur
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Other than the gratuity and the PF accumulation and the Pension due from the EPFO, there are no other benefits available to a retired person. The employer will be ready to offer a gratuity, but the thing is, what is the amount and how is it arrived at. That needs to be carefully studied. Regarding gratuity, the calculation should be based on at least the latest minimum wages.
He can also get the ESI extended by paying the required annual contribution of ₹120. This will be very helpful to him.
From India, Kannur
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