Apprentices under Industrial Employment (Standing Orders) Act, 1946 are not employees under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
This is an interesting case between an employer and the Employees’ Provident Fund Commission. The Apex Court of India settled this case on 30th January 2006.
The Supreme Court of India has defined Section 2 (f) of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 in this case.
Section 2 (f) the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
“employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets his wages directly or indirectly from the employer, and includes any person
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961) or under the Standing Orders of the establishment;
The management of Central Aercanut & Coca Marketing and Processing Co-op. Ltd., Mangalore, has invited applications from the intending applicants for undergoing training at its Chocolate Factory, Puttur, on a stipend of Rs.600/- per month that may be increased to Rs.800/- per month after six months. It was also provided that the successful candidates may be considered for regular posting in the factory.
By its resolution-dated 21.1.1990 and after interviewing 270 applicants, 45 persons were selected. By a combined order dated 3.2.1990, the Managing Director of the company notified the selection of 45 persons.
It was clearly indicated in the order that the training in the factory does not entitle any trainee to claim right of appointment after completion of training period. It was also stipulated that if any trainee leaves the factory within one year, he was required to refund the amount received by him as stipend.
In respect of these 45 trainees the Employees’ Provident Fund Commission issued Notice to the management under Section 7-A of the Act and by its order dated 15.5.1991 PF authorities held that the trainees were employees for the purpose of the Act and the management is liable to pay the quantified amount.
The management filed a writ application questioning the order of the PF authorities. After making reference to various provisions of Industrial Employment (Standing Orders) Act, 1946, The Apprentices Act, 1961 and the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 the learned Single Judge of Karnataka High Court held that the demand of the PF Authorities was unsustainable.
Later the Division Bench of the Karnataka High Court affirmed the judgment of the learned Single Judge and held that the 45 persons who were selected as trainees were not covered by Employees Provident Fund & Misc. Provisions Act, 1952 as they cannot be called as “employees” as defined under Section 2(f) of the Act.
In its appeal to the Supreme Court of India the advocate for the Provident Fund authorities argued that the both the learned Single Judge and the Division Bench have failed to notice the true import of Section 2(f) and have erroneously held that the 45 trainees were not covered by the Act. It was also submitted that the Act is a beneficial legislation and a wider meaning has to be given to the expression ‘employee.
In response, learned advocates for the management supported the judgments of the learned Single Judge and the Division Bench and stated that undisputedly the respondents are trainees.
The Apex Court stated that the question is whether an apprentice can be deemed to be an employee within the meaning of Section 2(f) of the Act in the case at hand. The Court sated that Section 2(f) of the Act defines an employee to include an apprentice, but at the same time makes 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.
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.
Above being the position, it cannot be said that the concerned 45 trainees were employee in terms of Section 2(f) of the Act. In other words, an apprentice engaged under the Apprentices Act or under the Standing Orders is excluded from the definition of an ‘employee’ as per Section 2(f) of the Act. That being so, the view of the learned Single Judge as affirmed by the Division Bench of the High Court cannot be faulted and the appeal of the Provident Fund Commission fails and is dismissed- The Supreme Court held.
Supreme Court of India in the case of The Regional Provident Fund Commissioner, Mangalore Vs Appellant Central Aercanut & Coca Marketing and Processing Co-op. Ltd., Mangalore, decided in 2006
From India, New Delhi
22This is an interesting case between an employer and the Employees’ Provident Fund Commission. The Apex Court of India settled this case on 30th January 2006.
The Supreme Court of India has defined Section 2 (f) of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 in this case.
Section 2 (f) the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
“employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets his wages directly or indirectly from the employer, and includes any person
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961) or under the Standing Orders of the establishment;
The management of Central Aercanut & Coca Marketing and Processing Co-op. Ltd., Mangalore, has invited applications from the intending applicants for undergoing training at its Chocolate Factory, Puttur, on a stipend of Rs.600/- per month that may be increased to Rs.800/- per month after six months. It was also provided that the successful candidates may be considered for regular posting in the factory.
By its resolution-dated 21.1.1990 and after interviewing 270 applicants, 45 persons were selected. By a combined order dated 3.2.1990, the Managing Director of the company notified the selection of 45 persons.
It was clearly indicated in the order that the training in the factory does not entitle any trainee to claim right of appointment after completion of training period. It was also stipulated that if any trainee leaves the factory within one year, he was required to refund the amount received by him as stipend.
In respect of these 45 trainees the Employees’ Provident Fund Commission issued Notice to the management under Section 7-A of the Act and by its order dated 15.5.1991 PF authorities held that the trainees were employees for the purpose of the Act and the management is liable to pay the quantified amount.
The management filed a writ application questioning the order of the PF authorities. After making reference to various provisions of Industrial Employment (Standing Orders) Act, 1946, The Apprentices Act, 1961 and the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 the learned Single Judge of Karnataka High Court held that the demand of the PF Authorities was unsustainable.
Later the Division Bench of the Karnataka High Court affirmed the judgment of the learned Single Judge and held that the 45 persons who were selected as trainees were not covered by Employees Provident Fund & Misc. Provisions Act, 1952 as they cannot be called as “employees” as defined under Section 2(f) of the Act.
In its appeal to the Supreme Court of India the advocate for the Provident Fund authorities argued that the both the learned Single Judge and the Division Bench have failed to notice the true import of Section 2(f) and have erroneously held that the 45 trainees were not covered by the Act. It was also submitted that the Act is a beneficial legislation and a wider meaning has to be given to the expression ‘employee.
In response, learned advocates for the management supported the judgments of the learned Single Judge and the Division Bench and stated that undisputedly the respondents are trainees.
The Apex Court stated that the question is whether an apprentice can be deemed to be an employee within the meaning of Section 2(f) of the Act in the case at hand. The Court sated that Section 2(f) of the Act defines an employee to include an apprentice, but at the same time makes 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.
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.
Above being the position, it cannot be said that the concerned 45 trainees were employee in terms of Section 2(f) of the Act. In other words, an apprentice engaged under the Apprentices Act or under the Standing Orders is excluded from the definition of an ‘employee’ as per Section 2(f) of the Act. That being so, the view of the learned Single Judge as affirmed by the Division Bench of the High Court cannot be faulted and the appeal of the Provident Fund Commission fails and is dismissed- The Supreme Court held.
Supreme Court of India in the case of The Regional Provident Fund Commissioner, Mangalore Vs Appellant Central Aercanut & Coca Marketing and Processing Co-op. Ltd., Mangalore, decided in 2006
From India, New Delhi
Dear Katyana,
According to Apperentice Act, Generally provision of any Labor Law don't apply to apperentices, except those who are working with Factories, then provisions related with health, safety and welfare under the Factories Act applies to them...
Apperentices are not entitled for PF benefit, ESI benefita and Bonus Act..
Regards,
Amit Seth.
From India, Ahmadabad
According to Apperentice Act, Generally provision of any Labor Law don't apply to apperentices, except those who are working with Factories, then provisions related with health, safety and welfare under the Factories Act applies to them...
Apperentices are not entitled for PF benefit, ESI benefita and Bonus Act..
Regards,
Amit Seth.
From India, Ahmadabad
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