A

SUMMER INTERSHIP PROJECT REPORT

On

SOCIAL SECURITY ACT & POLICY

Submitted for partial fulfillment of requirement for the award
of degree
Of
Master of Business Administration
Of
GRAPHIC ERA UNIVERSTY
DEHRADUN (UTTRAKHAND)
Session 2014-16
Supervision By:

Submitted By:

Dr.Rashmi Tripathi

Priyansh Kandwal

Professor

SCHOOL OF MANAGEMENT STUDIES

GRAPHIC ERA UNIVERSITY, DEHRADUN
1

DECLARATION

I hereby that I have worked on the topic SOCIAL SECURT Y ACT & POLICY
All the information that has been collected, analyzed and documented for the project is authentic
possession to me.
I would like to categorically mention that the work here has neither been purchased nor acquired
by any other unfair means. The data and information existing in this report are accurate and
update to the current data, to the best of our knowledge.
However, for this purpose of the project, information already compiled in many sources have
been utilized. I extend my sincere thanks to DR RASHMI TRIPATHI for their support. All
information in this report is true representation of what I have experienced during the project.

PRIYANSH KANDWAL

CERTIFICATE BY GUIDE
I have the pleasure in certifying that PRIYANSH KANDWAL

is a student of

Graphic Era University of the Masters Degree in Business Administration

(MBA).His University Roll No. 1401462 . He has completed her project work Title
as

SOCIAL SECURITY ACT AND POLICY under my guidance.

I certify that this is her original effort & has not been copied from any other
source. This project has also not been submitted in any other University for the
purpose of award of any Degree.
This project fulfils the requirement of the curriculum prescribed by Graphic Era
University, Dehradun, for the said course.
I recommend this project work for evaluation & consideration for the award of
Degree to the student.

Signature :
Name of the Guide : DR. RASHMI TRIPATHI

Acknowledgement
I express my sincere thanks to my project guide, DR. RASHMI TRIPAHTI
Professor GEU for guiding me right from the inception till the successful
completion of the project.
I wish to record my sincere thanks for their help and cooperation throughout
our project.

PRIYANSH KANDWAL

CONTENT
S.NO

PARTICULAR

PAGE NO.

1.

COMPANY PROFILE

6-18

2.

INTRODUCTION OF SOCIAL SECURITY ACT

19-59

EMPLOYEES STATE INSURANCE ACT

WORKMENT COMPENSATION ACT
PAYMENT GRATUITY ACT
EMPLOYEE WELFARE
3.

OBJECTIVE OF THE STUDY

4.

RESEARCH METHODOLOGY `

61-62

5.

DATA ANALYSIS AND INTERPRETATION

63-72

6.

FINDINGS

73-74

7.

LIMTATION OF THE STUDY

74

8.

CONCLUSION

75

9.

BIBLIOGRAPHY

76

60

COMPAY PROFILE

Two decades ago, Mahindra and Mahindra Financial Services Limited (MMFSL) commenced its
journey in the rural non-banking finance industry. And with that was born a vision to transform
rural and semi-urban India into a self-reliant, flourishing landscape. Since then, we have come a
long way, empowering millions of ambitious individuals with personalized finance for a wide
range of vehicles, home development requirements and many other diverse endeavors all to
help them live their dreams and Rise in life.
At Mahindra Finance, we are guided by a firm belief in people, their dreams, and their potential
to achieve those dreams. Hence, our socially inclusive business model facilitates loans to
customers based not on their current financial status, but their future earning capacity. This
philosophy has instilled a sense of confidence in the minds of rural and semi-urban India a
confidence that allows them to believe that no dream is too big. Today, as one of the leading nonbanking finance companies, we are proud to have touched over 3 million lives.

Our Vision
To be a leading financial services provider in semi-urban and rural India.

History

The history of Mahindra Finance has been one of continuous ascent where our effort to empower
our customers has been a constant element. A strong set of values, an evolved lineage and a
group of highly motivated individuals is what we started with.
What followed was a series of events that helped us grow from strength to strength. And two
decades that witnessed many dreams across the nation see the light of day. Come, walk with us
through the journey of time and take a glimpse of how Mahindra Finance grew with all those
who believed in it.

Milestones

On 30th September 2015 Mahindra and Mahindra Financial Services Ltd was successfully
appraised and rated at Maturity Level 3 of the People Ca/pability Maturity Model (PeopleCMM). People CMM is a framework for organizational change through streamlined people
management. At maturity Level 3 of the People CMM, MMFSL has implemented robust HR
processes and aligned itself to a competency framework.

India Ratings and Brickworks Ratings upgraded Company's long term debt rating to "AAA".
CARE Ratings also assigned "AAA" rating to Company's long term debt.

MIBL declared 'Broker of the Year' at 18th Asia Insurance Industry Awards

Mahindra Finance wins ABP Award for Most Admired Company in Financial Service Sector.

We crossed the benchmark of financing more than 4 million customers through more than
1200 branches.

We cross the benchmark of financing more than 4 million customers through more than 1200
branches

Maintenance of an 18% Capital Adequacy, complying with the minimum requirement of

15% set by the RBI

CRISIL reaffirms 'CRISIL AA+/ Stable' rating to our long-term debt instruments and bank
facilities

Mahindra Finance wins the inaugural Porter Prize in the category of Creating Distinctive
Value
8

MRHFL selected as the winner of the Golden Peacock Innovation Management Award

MIBL announces a strategic partnership with LeapFrog investments

We're ranked 9th in the prestigious Dun & Bradstreet's India's Top 500 Companies 2011
(released on 1st June, 2012), based on the total income in the FIs/ NBFCs/ Financial Services
Sector

Introduction of finance for Commercial Vehicles and Construction Equipments

We enter the home loan business through our subsidiary, Mahindra Rural Housing Finance
Limited (MRHFL)

Mahindra Finance was issued certificate by the RBI under section 45-IA of the Reserve Bank
of India Act, 1934 classifying it as an Asset Finance Company Deposit Taking

Issued our IPO

Collaboration with Maruti Udyog Limited

Listing of non-convertible debentures on BSE on the wholesale debt market segment

We get into financing of non-M&M vehicles

International Finance Corporation grants us Tier II debt

A decade of good work results in our total assets crossing the 10 billion mark

We introduce tractor retail financing in rural and semi-urban areas

The Mahindra Group focuses on enabling people to rise through solutions that power
mobility, drive rural prosperity, enhance urban lifestyles and increase business efficiency.
A USD 16.5 billion multinational group based in Mumbai, India, Mahindra provides
employment opportunities to over 200,000 people in over 100 countries. Mahindra operates
in the key industries that drive economic growth, enjoying a leadership position in
tractors, utility vehicles, information technology, financial services,and vacation ownership.
In addition, Mahindra enjoys a strong presence in the agribusiness, aerospace, components,
consulting services, defence, energy, industrial equipment, logistics, real estate, retail,
steel, commercial vehicles and two wheeler industries.
9

In 2014, Mahindra featured on the Forbes Global 2000, a comprehensive listing of the
world's largest, most powerful public companies, as measured by revenue, profit, assets and
market value. The Mahindra Group also received the Financial Times 'Boldness in Business'
Award in the 'Emerging Markets' category in 2013.

The Mahindra Group focuses on enabling people to rise through solutions that power mobility,
drive rural prosperity, enhance urban lifestyles and increase business efficiency.
A USD 16.5 billion multinational group based in Mumbai, India, Mahindra provides
employment opportunities to over 200,000 people in over 100 countries. Mahindra operates in
the key industries that drive economic growth, enjoying a leadership position in tractors, utility
vehicles, information technology, financial services ,and vacation ownership. In addition,
Mahindra enjoys a strong presence in the agribusiness, aerospace, components, consulting
services, defense, energy, industrial equipment, logistics, real estate, retail, steel, commercial
vehicles and two wheeler industries.
In 2014, Mahindra featured on the Forbes Global 2000, a comprehensive listing of the world's
largest, most powerful public companies, as measured by revenue, profit, assets and market
value. The Mahindra Group also received the Financial Times 'Boldness in Business' Award in
the 'Emerging Markets' category in 2013.
At Mahindra Finance, our vision has always been to make a positive difference to as many lives
as possible. It is what inspires us to expand our family and deliver more value to our customers
through superior services and expertise. Here's a bit about two such successful ventures
Mahindra Insurance Brokers Ltd. and Mahindra Rural Housing Finance Ltd., whom we are
proud to have as a part of our ever-growing family.
We live in a day and age where staying protected against the uncertainties of tomorrow is of
paramount importance. Understanding this very requirement, Mahindra Insurance Brokers Ltd.
(MIBL), our subsidiary, provides 360o insurance solutions, tailor-made for the diverse needs and
risk profiles of our varied consumer base. While providing direct insurance broking for the retail
10

customer base of around 1.3 million and catering to a large number of corporate customers, the
company also offers a range of plans for the Life as well as Non-life insurance segments.
MIBL is committed to provide value to its customers by understanding their insurance needs and
risk profile in a highly detailed and systematic manner. This helps in chalking out more
innovative, cost-effective and customized insurance solutions. And its uncompromising
adherence to the highest standards of quality is evident from the fact that it is one of the few
insurance broking companies in India to have been awarded the prestigious ISO 9001:2008
CORPORATE SOCIAL RESPONSIBILITY
As a socially responsible citizen, the Company has undertaken Corporate Social Responsibility
(CSR) activities since 2006. Through our activities we constantly touch the lives of the
underprivileged communities across the country, in and around our areas of operation. We
believe in contributing to the society and all employees across all the regions participate in the
organizations

CSR

activities

with

full

rigour

and

passion.

The Board of Directors at its Meeting held on 19th March, 2014 has approved the revised CSR
Policy to align it in accordance with the provisions of Companies Act, 2013 and the Rules
framed there under.

At Mahindra Finance, we feel a strong sense of responsibility towards the

environment in which we thrive. Hence, the very essence of our business
model is based on a vision to enable and augment Sustainable Development.
With an active sustainability council comprising the senior
FORWARD FOCUS TO TRANSFORM LIFE

How do we make a sustainable tomorrow possible at Mahindra Finance? A prudent answer

would be by intelligently using human expertise and resources to drive maximum good for
people and the planet.
11

Our commitment is encapsulated in two simple words: 'Transforming lives'. This is what we
strive towards achieving every day for a wide cross-section of customers across semi-urban and
rural India. Acting as a powerful agent of change in their lives.
Since inception, Mahindra Finance has singularly focused on elevating the quality of lives of
people with a deep sensitivity towards local cultures and people's desire for a better live.
Our forward focus to transform lives continues to gather momentum, despite an evolving socioeconomic landscape. Our sustainability goal is a wide framework for consistent business growth,
while taking into consideration the aspirations of all stakeholders.

HISTORY OF SOCIAL SECURITY SCHEME IN INDIA

Indias social security system is composed of a number of schemes and programs spread
throughout a variety of laws and regulations. Keep in mind, however, that the governmentcontrolled social security system in India applies to only a small portion of the population.
Furthermore, the generally accepted concept of the social security system includes not just an
insurance payment of premiums into government funds (like in China), but also lump sum
employer obligations.
12

Generally, Indias social security schemes cover the following types of social insurances:

Pension

Health Insurance and Medical

Maternity

Gratuity

Disability

While a great deal of the Indian population is in the unorganized sector and does not have an
opportunity to participate in each of these schemes, Indian citizens in the organized sector (which
include those employed by foreign investors) and their employers are entitled to coverage under
the above schemes.
The applicability of mandatory contributions to social insurances is varied. Some of the social
insurances require employer contributions from all companies, some from companies with ten or
more employees, and some from companies with twenty or more employees.
In this article, well discuss each of these social insurances, along with their coverage,
contribution rates, and the laws and regulations behind them.
Pension
The Employees Provident Fund Organization, under the Ministry of Labor and Employment,
ensures superannuation pension and family pension in case of death during service. Presently
only about 35 million out of a labor force of 400 million have access to formal social security in
the form of old-age income protection. Out of these 35 million, 26 million workers are members
of the Employees Provident Fund Organization, which comprises private sector workers, civil
servants, military personnel and employees of State Public Sector Undertakings.
The schemes under the Employees Provident Fund Organization apply to businesses with at
least 20 employees. Contributions to the Employees Provident Fund Scheme are obligatory for
13

both the employer and the employee when the employee is earning up to INR 6,500 (US$120)
per month, and voluntary when the employee earns more than this amount. If the pay of any
employee exceeds this amount, the contribution payable by the employer will be limited to the
amount payable on the first INR 6,500 (US$120) only. Contributions should be made to the
Employees Provident Fund Organization on an annual basis.
The Employees Provident Fund Organization includes three schemes:

The Employees Provident Fund Scheme, 1952

The Employees Pension Scheme, 1995

The Employees Deposit Linked Insurance Scheme, 1976

The Employees Provident Fund Scheme is contributed to by the employer (1.67-3.67 percent)
and the employee (10-12 percent).
The Employee Pension Scheme is contributed to by the employer (8.33 percent) and the
government (1.16 percent), but not the employee.
Finally, the Employees Deposit Linked Insurance Scheme is contributed to by the employer (0.5
percent) only.
Four main types of pension (all monthly) are offered:

Pension upon superannuation or disability;

Widows pension for death while in service;

Childrens pension; and

Orphans pension.

In addition, there are separate pension funds for civil servants, workers employed in coal mines
and tea plantations in the State of Assam, and for seamen.
14

Health Insurance and Medical

India has a national health service, but this does not include free medical care for the whole
population. The Employees State Insurance Act creates a fund to provide medical care to the
employees and their families, as well as cash benefits during sickness and maternity, and
monthly payments in case of death or disablement for those working in factories and
establishments with 10 or more employees.
In case of sick leave, the employer will pay half salary to the employees covered under the
Employees State Insurance Act.
Disability
The Workmens Compensation Act requires the employer to pay compensation to employees or
their families in cases of employment related injuries resulting in death or disability.
In addition, workers employed in certain types of occupations are exposed to the risk of
contracting certain diseases, which are peculiar and inherent to those occupations. A worker
contracting an occupational disease is deemed to have suffered an accident out of and in the
course of employment and the employer is liable to pay compensation for the same.
Occupational diseases have been defined in the Workmen Compensation Act in parts A, B and C
of Schedule III.
Compensation calculation depends on the situation of occupational disability:
(a)Death 50% of the monthly wage multiplied by the relevant factor (age) or an amount of INR
80,000 (US$1,474), whichever is more.
(b) Total permanent disablement60% of the monthly wage multiplied by the relevant factor (age)
or an amount of INR90,000 (US$1,667), whichever is more.
The Compensation Act also includes stipulations for partial permanent disablement and
temporary disablement (total or partial).

15

Maternity
The Maternity Benefit Act requires an employer to offer 12 weeks wages during maternity as
well as paid leave in certain other connected contingencies.
Every woman shall be entitled to, and her employer shall be liable for, the payment of maternity
benefit at the rate of the average daily wage (the average of the womans wages payable to her
for the days on which she has worked during the period of three calendar months immediately
preceding the date from which she is absent on account of maternity), including the day of her
delivery and for the six weeks immediately following that day.
The maximum period for which any woman shall be entitled to maternity benefit shall be 12
weeks, six weeks up to and including the day of her delivery, and six weeks immediately
following that day.
During the one month proceeding the period of six weeks before her expected delivery or any
period during that six week period for which she does not take a leave of absence, no pregnant
woman shall be required by her employer to do any work that is arduous, involves long hours of
standing or is in any way likely to interfere with her pregnancy or the normal development of the
fetus, or is likely to cause her miscarriage or otherwise adversely affect her health.
Any woman working in an organization and allowed to maternity benefit may give written notice
to her employer stating that her maternity benefit and any other benefits to which she may be
entitled may be paid to her or to anyone she nominates in the notice, and that she will not work
in any establishment during the period for which she receives maternity benefit.
On receipt of the notice, the company shall authorize the employee to absent herself from the
company until the end of six week period following the day of her delivery.
The maternity benefit for the period preceding the date of her expected delivery shall be paid in
advance by the company to the employee after having confirmed that she is pregnant. The
amount due for the subsequent period shall be paid by the employer to the employee within 48
hours of the childs birth.

16

In addition to the above, the act states that no company shall deliberately employ a woman in any
organization during the six weeks immediately following the day of her delivery or her
miscarriage. No company shall compel its female employees to do tasks of a laborious nature or
tasks that involve long hours of standing or which in any way are likely to interfere with her
pregnancy or the normal development of the fetus, or are likely to cause her miscarriage or
otherwise adversely affect her health.
Gratuity
For establishments with ten or more employees, the Payment of Gratuity Act requires the
payment of 15 days of additional wages for each year of service to employees who have worked
at a company for five years or more.
This article was originally published in the India Briefing Magazine, titled Payroll Processing
in India. In this issue, we aim to help expatriate managers and business owners grasp the
overall picture of how payroll works in India. We also discuss how outsourcing payroll can
benefit all types of companies, particularly those of small and medium-size.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate
establishment, business advisory, tax advisory and compliance, accounting, payroll, due
diligence and financial review services to multinationals investing in emerging Asia. Since its
establishment in 1992, the firm has grown into one of Asias most versatile full-service
consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam
as well as liaison offices in Italy and the United States.

BENFIT OF SOCIAL SECURITY SCHEME

The following briefly describes the different types of beneficiaries paid by Social Security. The
descriptions are not meant to be definitive. Check with a local Social Security office if you
believe you may be eligible for benefits. We pay benefits to the following types of beneficiaries.

17

Retired workerbeneficiary who worked in covered employment long enough to

be insured and who is at least 62 years old (benefits equal to the "primary insurance
amount" are payable at the normal retirement age; maximum benefits are payable at age
70)

Spouse of retired workermust either (1) have a child under age 16 or a disabled child in
his or her care,or (2) be at least 62 years old; applies also to divorced spouse if the
marriage lasted at least 10 years

Child of retired workersee 3 types of child benefits below

Child of deceased workersee 3 types of child benefits below

Aged widow(er)must be at least 60 years old

Young widow(er)must have a child under age 16 or a disabled child in his or her care

Disabled widow(er)must be disabled and be at least 50 years old (converted to aged

widow(er) upon attainment of age 65)

Parent of deceased workermust have been dependent on worker and be at least 62

years old

Disabled workerbeneficiary who worked in covered employment long enough to be

insured and who had been working recently in covered employment prior to disability
onset

Spouse of disabled workermust either (1) have a child under age 16 or a disabled child
in his or her care, or (2) be at least 62 years old; applies also to divorced spouse if the
marriage lasted at least 10 years
18

Child of disabled workersee 3 types of child benefits below

Types of children:

Minor child (under age 18)

Adult disabled before the age of 22

High school student under age 19

Monthly Social Security benefits are payable from the Old-Age and Survivors Insurance(OASI)
Trust Fund and the Disability Insurance (DI) Trust Funds. Such benefits are paid to
several types of beneficiaries.
Supplemental Security Income (SSI) benefits are paid from the general fund of the Treasury.
Social Security beneficiary data in table format

Number of Social Security beneficiaries at end of calendar years

Annual benefits paid from the trust funds by type of beneficiary:

o OASI benefit amounts
o DI benefit amounts

Other statistical tables

How benefits are computed

Retirement benefit examples

Benefit formula

19

Benefit data, available for certain types of beneficiaries or "families," are collected on a monthly
basis. Such data provide the number of beneficiaries and their average payment amounts.
Available data bases are shown below.

Currently-paid beneficiaries, grouped by

o beneficiary type or
o family type,

Currently-paid beneficiaries, distributed by

o age or
o benefit level
for a selected beneficiary type

Benefits awarded (new beneficiaries and changes in benefit type)

Available graphs:

Growth in number of beneficiaries

Number of retired or disabled workers by age and sex

Awards to retired or disabled workers

The Social Security Trust Funds are the Old-Age and Survivors Insurance (OASI) Trust Fund
and the Disability Insurance (DI) Trust Fund. The OASI Trust Fund began in 1937; the DI Trust
Fund in 1957. These trust funds are managed by the Department of the Treasury.
Trust fund tables

Calendar year data

20

o OASI Trust Fund, 1937 and later

o DI Trust Fund, 1957 and later
o OASI and DI Trust Funds, combined, 1957 and later

Fiscal year data, OASI and DI Trust Funds, combined

Investment data

Investment transactions

Investment holdings

Interest rates on trust fund investments

INTRODUCTION
EMPLOYEE STATE INSURANCE ACT
The promulgation of Employees' State Insurance Act, 1948(ESI Act), by the Parliament was the
first major legislation on social Security for workers in independent India. It was a time when the
21

industry was still in a nascent stage and the country was heavily dependent on an assortment of
imported goods from the developed or fast developing countries. The deployment of manpower
in manufacturing processes was limited to a few select industries such as jute, textile, chemicals
etc. The legislation on creation and development of a fool proof multi-dimensional Social
Security system, when the country's economy was in a very fledgling state was obviously a
remarkable gesture towards the socio economic amelioration of a workface though limited in
number and geographic distribution. India, notwithstanding, thus, took the lead in providing
organized social protection to the working class through statutory provisions.
The ESI Act 1948, encompasses certain health related eventualities that the workers are generally
exposed to; such as sickness, maternity, temporary or permanent disablement, Occupational
disease or death due to employment injury, resulting in loss of wages or earning capacity-total or
partial. Social security provision made in the Act to counterbalance or negate the resulting
physical or financial distress in such contingencies, are thus, aimed at upholding human dignity
in times of crises through protection from deprivation, destitution and social degradation while
enabling the society the retention and continuity of a socially useful and productive manpower.
The scheme was simultaneously launched at Delhi as well and the initial coverage for both the
centres was 1,20,000 employees. Our first prime Minister was the first honorary insured person
of the Scheme and the declaration form bearing his signature is a prized possession of the
Corporation.
It is important to mention here that it blossomed as the first social security scheme in 1944, when
the Govt. of the day was still British.The first document on social insurance was "Report on
Health Insurance" submitted to the Tripartite Labour Conference, headed by Prof. B.P.Adarkar,
an eminent scholar and visionary. The Report was acclaimed as a worthy document and
forerunner of the social security scheme in India and Prof. Adarkar was acknowledged as
"Chhota Beveridge" by none other than Sardar Vallabhbhai Patel. Sir, William Beveridge, as all
know, was one of the high priests of social insurance. The report was accepted and Prof. Adarkar
continued to be actively associated with it till 1946. On his disassociation he strongly advocated
management of the Scheme by an expert from ILO. In 1948 Dr. C.L.Katial, an eminent Indian

22

doctor from London took over as the 1st Director General of ESIC and he steered the affairs of
the fledgling Scheme till 1953.
Since the red letter day of 24th February in the annals of social security in India , there has been
no looking back. A lighted lamp which is the logo of ESIC truly symbolises the spirit of the
Scheme, lighting up lives of innumerable families of workers by replacing despair with hope and
providing

help

in

times

of

distress,

both

physical

and

financial.

During the 61 years of its existence, ESIC has grown from strength to strength and the
Corporation owes it, most of all, to the commitment, dedication and perseverance of persons like
Prof. Adarkar and Dr. Katial

WORKMENT COMPENSATION ACT

A developed India, by 2020 or even earlier is not a dream. It need not even be a mere aspiration
in the minds of many Indians. It is a mission we can all take up-and accomplish. Ignited young
minds, we feel, are a powerful resource. This resource is mightier than any resource on the earth,
in the sky and under the sea1. We must all work together to transform our developing India into
a developed India, and the revolution required for this effort must start in our minds.
The whole concept of transformation of developing India to developed India is based on
capitalizing on huge human resource of India. The framework for vision 2020 can be seen as;
Human resources Massive workforce Industrial growth Economic growth Developed
India.
According to Census of India 20012 report the work participation rate (percentage of workers to
total population) is 39.1% with total number of workers being 402,234,724. Males outnumber
female in the working population. There are 127,220,248 numbers of female workers in
comparison to 257,014,476 male workers. Within this workforce there are 89,229,741 marginal
workers (who had worked for less than 6 months in the preceding year are termed as marginal

23

workers), rest 313,004,983 are main workers (who had worked for more than 6 months in the
preceding year are termed as main workers).
Workers are exposed to certain degree of injuries, physical illness and mental conditions together
termed as occupational diseases. The profile of occupational diseases also has changed over the
period of time as a result of modernization, market liberalization and globalization which now
encompasses minor allergy and injuries, systemic infections and diseases to life threatening
leukemia and cancers3. For industrial growth in turn economic growth health of the workers is
utmost important. Best practices of Occupational health and safety can yield better and safe
working environment.
However, apart from medical measures engineering measures and legislative measure are
important in promoting health at workplace. Simple engineering measure like design of the
building, good housekeeping, general ventilation, mechanization, protective devices add value to
the working environment. Society has an obligation to protect the health of the worker engaged
in diverse conditions. Republic of India is committed towards health of the workers by having
suitable statutory or legislative measures. To protect workers health and provide social security
several legislative measure are in place. The most notable among them are 4, The Workmens
Compensation Act, 1923; The Factories Act, 1948; The Employees State Insurance (ESI) Act,
1948;The Minimum Wages Act, 1948; the mines Act, 1952; The Contract Labour (Abolition &
Regulation) Act, 1970; The Dangerous (Regulation) Act, 1983; etc. The oldest legislative
measure in place is The Workmens Compensation Act, 1923. Low awareness among the client
and refusal by management is responsible its under-utilization5,6.
The salient points about The Workmens Compensation Act are as follows;
WORKMENS COMPENSATION ACT, 19237;
The Workmens Compensation Act is the only legislative measure providing social security to
workers from pre-independence days (1923). This legislative measure was enacted in 5th March
1923 and came in to effect in whole of India on First day of July 1924. The act got amended
twice since then, 1984 and 2000. The present version in place is The Workmens Compensation

24

Act, 1923 (Amended in 2000). The act is spelt out in four chapters and supplemented with four
schedules. Low
BENEFICIARIES:
Workman means any person (other than a person whose employment is of a casual nature and
who is employed otherwise than for the purposes of the employers trade or business). The Act
applies to railway servants and persons employed in any such capacity as is specified in
Schedule II of the Act. The schedule II includes persons employed in factories, mines,
plantations, mechanically propelled vehicles, construction works and certain other hazardous
occupations. Total disablement means such disablement, whether of a temporary or permanent
nature, as incapacitates a workman for all work which he was capable of performing at the time
of the accident resulting in such disablement. Partial disablement means, where the
disablement is of a temporary nature, such disablement as reduces the earning capacity of a
workman in any employment in which he was engaged at the time of the accident resulting in the
disablement, and, where the disablement is of a permanent nature, such disablement as reduces
his earning capacity in every employment which he was capable of undertaking at that time.
Compensation is provided to the employer as per the act, however in case of death the
dependants are eligible for the same; who are defined as
i.

A widow, a minor legitimate son, and unmarried legitimate daughter, or a widowed

mother; and

ii.

if wholly dependent on the earnings of the workman at the time of his death, a son or a
daughter who has attained the age of 18 years and who is infirm;

iii.

If wholly or in part dependent on the earnings of the workman at the time of his death,
a.

A widower.

b.

A parent other than a widowed mother,

25

c.

A minor illegitimate son, an unmarried illegitimate daughter or a daughter

legitimate or illegitimate if married and legitimate or illegitimate if married and a
minor or if widowed and a minor,

d.

A minor brother or a unmarried sister or a widowed sister if a minor,

e.

A widowed daughter-in-law,

f.

A minor child of a pre-deceased son,

g.

A minor child of a pre-deceased daughter where no parent of the child is alive, or

h.

A paternal grandparent if no parent of the workman is alive

WORKMENS COMPENSATION:
Employer shall be liable to pay compensation, if personal injury is caused to a workman by
accident arising out of and in the course of his employment. However the employer is not
responsible for in the following conditions;
1) In respect of any injury which does not result in the total or partial disablement of the
workman for a period exceeding 3 days;
2) In respect of any injury, not resulting in death, caused by an accident which is directly
attributable to:
A. The workman having been at the time thereof under the iMMFCLuence of drink or drugs,
or
B. The willful disobedience of the workman to an order expressly given, or to a rule
expressly framed, for the purpose of securing the safety of workmen, or
C. The willful removal or disregard by the workman of any safety guard or other device
which he knew to have been provided for the purpose of securing the safety of workmen.

26

D. Contract of an occupational disease in any employment wherein the total duration of

employment is less than 6 months.
AMOUNT OF COMPENSATION:
Amount of compensation is spelt out in the act as per the nature of injury and a multiplication
factor.
A. In case of death: An amount equal to Forty percent (40%) of the monthly wage of the
deceased workman, multiplied by the relevant factor or Rs. 20,000 whichever is more.
B. In case of total permanent disablement: An amount equal to fifty percent (50%) of the
monthly wage, multiplied by the relevant factor or Rs. 24,000 whichever is higher.
C. In case of partial permanent disablement: the compensation is a percentage of that
payable in case of total permanent disablement. The earning capacity is determined by a
registered medical practitioner.
D. In case of temporary (total or partial) disablement; A sum equivalent to twenty-five
percent (25%) of the monthly wage paid half monthly for the period of disablement or 5
years, whichever is shorter.
LEGAL FRAMEWORK:
The state government appoints Commissioners vested with the powers of a civil court to
investigate and to solve every case of workmens compensation.
In case of any delay in payment of workmens compensation for a period of one month after the
due date, a simple interest at the rate of 6% per annum can be recovered from the employer. Any
appeal against the orders of the appointed Commissioner can be made in the respective High
Court within 60 days.

MATURITY BENEFIT ACT

27

The Maternity Benefits Act, 1961 aims at regulating employment of women employees all over
the country. The act provides 12 weeks as the maximum period for which any working woman
shall be entitled to maternity benefit. She can avail this benefit as 6 weeks up to and including
the day of her delivery and 6 weeks immediately following the day of her delivery. (Section 4)
Applicability of the Act
The Act applies to:
Every factory, mine or plantation (including those belonging to Government),
An establishment engaged in the exhibition of equestrian, acrobatic and other performances,
irrespective of the number of employees.
Every shop or establishment wherein 10 or more persons are employed or were employed on
any day of the preceding 12 months.

Eligibility & Conditions for Claiming Benefits

The Act lays down that any women employed, whether directly or through any agency, for wages
in any establishment is eligible to claim maternity benefits if she is expecting a child and has
worked for her employer for at least 80 days in the 12 months immediately preceding the date of
her expected delivery. (Section 5)

A woman looking forward to maternity benefits could ask the employer to give her light work for
a month. Such request should be made atleast 10 weeks before the date of her expected delivery.
At that time she needs to produce a certificate confirming her pregnancy. (Section 5)
Also she needs to give a written notice to the employer about 7 weeks before the date of her
delivery regarding her absence period pre and post delivery. (Section 5).

Cash Benefits

28

 Leave with average pay for 6 weeks before and 6 weeks after the delivery.
Medical bonus of at least Rs. 1000 extending to Rs. 20000 if the employer is unable to provide
free medical care to the women employee.(Section 8) (Amended on 15-04-2008) [2]
Additional leave with pay for upto 1 month on production of proof, revealing illness due to
pregnancy,

delivery,

miscarriage,

or

premature

birth.

(Section

10)

In case of miscarriage, 6 weeks leave with average pay from the date of miscarriage. (Section
9)

Non Cash Benefits/Privilege

Light work for 10 weeks before the date of expected pregnancy if she asks for it.
Two nursing breaks in the course of her daily work until the child attain age of 15 months.
(Section 11)
In case of tubectomy operation leave with wages for 2 weeks. (Section 9A)
No discharge or dismissal while being on maternity leave. (Section 12)
No change to her disadvantage in any of the conditions of her employment while on maternity
leave. (Section 12)
Pregnant woman discharged or dismissed may still claim maternity benefit from the employer.
(Section 12)
* Women employee who is dismissed on grounds of gross misconduct loses her rights under the
Act for Maternity Benefit.

Miscarriage and Tubectomy Operations

Leave with wages at the rate of maternity benefit, for a period of 6 weeks for miscarriage and 2
weeks for tubectomy operation. (Section 9 & 13)

Illness Arising Out of Pregnancy

29

A woman suffering from illness on account of miscarriage, medical termination of pregnancy,

delivery, premature birth is entitled for further leave for 1 month in addition to the leave with
wages at the rate of maternity benefit. (Section 10)

Prohibition on Employment during Certain Periods

The Act prohibits an employer from knowingly employing a woman, or any women from
working, 6 weeks immediately following the day of her delivery or miscarriage. (Section 4)
Discharge from Employment
The Act prohibits dismissal or discharge or variation in conditions of service to the disadvantage
of any pregnant women, while she is absent due to reason under the Act. (Section 12)
She can claim maternity benefit or medical bonus, even if discharged or dismissed during
pregnancy. This shall not be applicable in case of dismissal for gross misconduct. (Section 12)

Benefits in Case of Death of a Pregnant Employee

In such case, the maternity benefit shall be paid only for the days up to and including the day of
death.

(Section

7)

The employer should pay such benefit or amount to the person nominated by the woman and in
case there is no such nominee, then her legal representative. (Section 7)

PAYMENT GRATUITY ACT

Gratuity is one of the most misunderstood and misconstrued components of a persons salary. In
simple terms, it is a retirement benefit paid as gratitude to the employees who have rendered a
continuous service for at least five years to incentivize them so that they continue working
efficiently. It is an amount paid to an employee based on the duration of his total service but an
30

employee becomes eligible only after he has completed 5 years of his service. Gratuity is paid to
an employee when he either retires or his employment is terminated or he resigns or upon his
death. Gratuity is given the force of law by the Payment of Gratuity Act 1972, which is further
administered and enforced by the Central Government and the designated establishments under
its control.
APPLICABILTY OF THE ACT
The Payment of Gratuity Act, 1972 is applicable to every factory, mine, oilfield, plantation, port
and railway company; every shop or establishment within the meaning of any law in which ten
or more persons are employed, or were employed, on any day of the preceding twelve
months; such other establishments or class of establishments, in which ten or more employees
are employed, or were employed, on any day of the preceding twelve months, as the Central
Government may, by notification, specify in this behalf. Once the Act becomes applicable to an
organization i.e. once an establishment hires more than 10 employees, the Act would continue to
apply to the same even after the number of employees gets reduced below the minimum
requirement. The Act extends to the whole of India excluding the State of Jammu and Kashmir.
ELIGIBILITY FOR GRATUITY
An employee who has rendered at least five years of service becomes entitled to the said benefit.
The pre-requisite of completion of continuous service of five years shall not be necessary where
the termination of the employment of any employee is due to death or disablement to the extent
that the person is literally unable to provide the required services. In the case of death of the
employee, gratuity payable to him shall be paid to his nominee or, if no nomination has been
made, to his heirs, and where any such nominees or heirs is a minor, the share of such minor,
shall be deposited with the controlling authority who shall invest the same for the benefit of such
minor in such bank or other financial institution, as may be prescribed, until such minor attains
majority.

31

HOW DOES IT WORK?

An employer may offer gratuity out of the establishments funds or may approach an insurance
company in order to purchase a group gratuity plan. In case the employer chooses a life insurer,
he has to pay annual contributions as decided by the insurer. The employee is also free to make
contributions to his gratuity fund.
MEANING OF CONTINUOUS SERVICE
According to the Act, gratuity shall be payable to an employee on the termination of his
employment after he has provided continuous service for not less than five years. The question
that arises is, what is the meaning of continuous service? An employee shall be said to be in
continuous service for a period if he has, for that period, been in uninterrupted service and
includes service which may be interrupted on account of sickness, accident, leave, absence from
duty without leave, lay off, strike or a lock-out or cessation of work not due to any fault of the
employee, whether such uninterrupted or interrupted service was rendered before or after the
commencement of this Act.
CALCULATION OF AMOUNT OF GRATUITY
GRATUITY = LAST DRAWN SALARY 15/26 NO. OF YEARS OF SERVICE
The ratio 15/26 represents 15 days out of the 26 working days in a month
Last drawn salary = Basic Salary + Dearness Allowance
Years of Service are rounded down to the nearest full year.
For example, if the employee has a total service of 20 years, 10 months and 25 days, only 20
years will be factored into the calculation.
1.

In the case of a piece-rated employee or a person who works on commission, daily wages
shall be computed.

32

2.

For the purpose of computing the gratuity payable to an employee who is employed, after
his disablement, on reduced wages, his wages for the period preceding his disablement shall be
taken to be the wages received by him during that period, and his wages for the period
subsequent to his disablement shall be taken to be the wages as so reduced.
PAYMENT OF GRATUITY
The employer shall arrange to pay the amount of gratuity within 30 days from the date it
becomes active i.e. from the day the person retires or his employment is terminated, to the person
to whom the gratuity is awarded. If the amount of gratuity payable under the section is not paid
by the employer within the period specified, he will have to pay simple interest on it from the
date on which the gratuity becomes payable at the rate in coherence with the guidelines laid
down by the by the Central Government. Gratuity can be paid in cash, demand draft or bank
cheque to the employee via his preferred mode of payment.
FORFEITURE OF GRATUITY
The employer can withhold or forfeit gratuity wholly or partially even if employee has
completed 5 years if the employment of the said employee has been terminated for disorderly
conduct or any other misdemeanour or an act tantamount to violence provided that such offense
is committed by him in the course of his employment. It may be noted that above act should have
been committed by employee during his employment.
EXEMPTION FROM TAX
Taxability of gratuity depends on the recipients job. In case of government employees there is
no tax on the gratuity. In case of private sector employees, the gratuity is exempt from tax
subject to a maximum of Rs 10 lakhs or 15 days salary for each completed year of service
If a person has received gratuity before and if any exemption was allowed for the same, then the
exemption to be allowed during the retirement year gets reduced to the extent of exemption
already allowed, subject to the overall limit of Rs 10 lakhs.

33

TIME LIMIT FOR MAKING PAYMENT OF GRATUITY AMOUNT

1.

A person can himself, or via his authorized person send an application to the employer for
payment of the desired gratuity.

2.

As soon as gratuity becomes payable, it is calculated by the employer. Furthermore, the

employer gives a notice in writing to the eligible person and also to the controlling authority
specifying the amount determined.

3.

The employer must pay the amount of gratuity within thirty days from the date it
becomes payable to the person to whom the gratuity is payable.
FAILURE TO PAY GRATUITY AMOUNT
Payment of gratuity is a statutory requirement. In case an employer fails to pay gratuity amount
to an employee, he shall be liable for punishment. Where the employer fails to make payment of
any gratuity payable to the employee, he shall be punishable with imprisonment for a term which
shall not be less than six months but which may extend to two years. Any employer who
contravenes or makes default in complying with any of the provisions of the Act or any rule or
order made there under shall be punishable with imprisonment for a term which shall not be less
than three months but which may extend to one year or with fine which shall not be less than ten
thousand rupees but which may extend to twenty thousand rupees, or with both. If an employer
makes any false statement or false representation in order to avoid any payment to be made by
himself under the Act or of enabling any other person to avoid such payment shall be punishable
with imprisonment for a term which may extend to six months or with fine which may extend to
ten thousand rupees or with both.
PROTECTION OF GRATUITY
The gratuity amount payable shall not be twisted in a serpentine manner in execution of any
decree or order of any civil, revenue or criminal court.
REMEDY IN CASE THE EMPLOYER DOES NOT PAY GRATUITY
If the amount of gratuity is not paid by the employer within the prescribed time to the said
person, he/she has the right to file a complaint to the Controlling Authority under the Payment of
Gratuity Act within the area where the employers establishment is situated or where the
34

employee was working at the time of termination. Moreover, the aggrieved person can also
approach Labour Courts to get relief and justice.
DIFFERENCE BETWEEN GRATUITY AND SEVERANCE
Severance is paid when an employee is declared redundant. Gratuity is a lump sum amount that
an employer pays an employee if he/she retires or resigns from employment. An employee does
not contribute any portion of her salary towards this amount. Gratuity is only paid out at the time
of retirement or resignation, and in the event of death or being rendered disabled because of an
accident or illness. On the other hand, severance is offered to an employee upon being laid off
from a company. The receipt of a severance package is contingent upon signing a severance
agreement.

EMPLOYEE PROVIDENT FUND 1923

The Employee's Compensation Act, 1923
THE EMPLOYEE'S COMPENSATION ACT, 19231
1 Short title, extent and commencement.
(1) This Act may be called the 1 [Employee's] Compensation Act, 1923.
2

[(2) It extends to the whole of India 3 [***]].

(3) It shall come into force on the first day of July, 1924.
2 Definitions.
(1) In this Act, unless there is anything repugnant in the subject or context, 4 [***]
(d) a person recruited for work abroad by a company, and who is employed outside India in any
such capacity as is specified in Schedule II and the ship, aircraft or motor vehicle, or company, as
the case may be, is registered in India; or
(iii) employed in any such capacity as is specified in Schedule II, whether the contract of
employment was made before or after the passing of this Act and whether such contract is
expressed or implied, oral or in writing; but does not include any person working in the capacity
35

of a member of the Armed Forces of the Union; and any reference to any employee who has been
injured shall, where the employee is dead, include a reference to his dependants or any of them;]
(e) employer includes any body of persons whether incorporated or not and any managing
agent of an employer and the legal representative of a deceased employer, and, when the services
of 5 [an employee] are temporarily lent or let on hire to another person by the person with whom
the 6 [employee] has entered into a contract of service or apprenticeship, means such other person
while the 6 [employee] is working for him;
(f) managing agent means any person appointed or acting as the representative of another
person for the purpose of carrying on such other person's trade or business, but does not include
an individual manager subordinate to an employer;
State Amendment West Bengal. in section 2, in sub-section (1), after clause (f), insert the
following clause, namely: (ff) "medical reference" means a qualified medical practitioner
appointed under section 24A as a medical reference for the purposes of this Act'. [ Vide Bengal
Act 6 of 1942, sec. 3 (w.e.f. 19-11-1942).]
(ff) minor means a person who has not attained the age of eighteen years;]
(g) partial disablement means, where the disablement is of a temporary nature, such
disablement as reduces the earning capacity of a 6 [employee] in any employment in which he
was engaged at the time of the accident resulting in the disablement, and, where the disablement
is of a permanent nature, such disablement as reduces his earning capacity in every employment
which he was capable of undertaking at that time: provided that every injury specified 8 [in Part II
of Schedule I] shall be deemed to result in permanent partial disablement;
(h) prescribed means prescribed by rules made under this Act;
(i) qualified medical practitioner means any person registered 9 [***] under any 10 [Central Act,
Provincial Act, or an Act of the Legislature of a 11 [State]] providing for the maintenance of a
register of medical practitioners, or, in any area where no such last-mentioned Act is in force, any
person declared by the State Government, by notification in the Official Gazette, to be a qualified
medical practitioner for the purposes of this Act; 12 [***]
(k) seaman means any person forming part of the crew of any 13 [***] ship, but does not
include the master of 14 [the] ship;
(l) total disablement means such disablement, whether of a temporary or permanent nature, as
incapacitates 15 [an employee] for all work which he was capable of performing at the time of the
36

accident resulting in such disablement: 16 [Provided that permanent total disablement shall be
deemed to result from every injury specified in Part I of Schedule I or from any combination of
injuries specified in Part II thereof where the aggregate percentage of the loss of earning
capacity, as specified in the said Part II against those injuries, amounts to one hundred per cent.
or more;]
(m) wages, includes any privilege or benefit which is capable of being estimated in money,
other than a travelling allowance or the value of any travelling concession or a contribution paid
by the employer of 15 [an employee] towards any pension or provident fund or a sum paid to 15 [an
employee] to cover any special expenses entailed on him by the nature of his
employment; 17 [***]
(2) The exercise and performance of the powers and duties of a local authority or of any
department 18 [acting on behalf of the Government] shall, for the purposes of this Act, unless a
contrary intention appears, be deemed to be the trade or business of such authority or
department.
19

[(3) The Central Government or the State Government, by notification in the Official Gazette,

after giving not less than three months' notice of its intention so to do, may, by a like notification,
add to Schedule II any class of persons employed in any occupation which it is satisfied is a
hazardous occupation, and the provisions of this Act shall thereupon apply, in case of a
notification by the Central Government, within the territories to which the Act extends, or, in the
case of a notification by the State Government, within the State, to such classes of persons:
Provided that in making addition, the Central Government or the State Government, as the case
may be, may direct that the provisions of this Act shall apply to such classes of persons in respect
of specified injuries only.] (n) workman means any person who is
(i) a railway servant as defined in clause (34) of section 2 of the Railways Act, 1989 (24 of
1989), not permanently employed in any administrative, district or sub-divisional office of a
railway and not employed in any such capacity as is specified in Schedule II, or
(ia) (a) a master, seaman or other member of the crew of a ship,
(b) a captain or other member of the crew of an aircraft,
(c) a person recruited as driver, helper, mechanic, cleaner or in any other capacity in connection
with a motor vehicle, (d) a person recruited for work abroad by a company, and who is employed

37

outside India in any such capacity as is specified in Schedule II and the ship, aircraft or motor
vehicle, or company, as the case may be, is registered in India, or;
(ii) employed in any such capacity as is specified in Schedule II, whether the contract of
employment was made before or after the passing of this Act and whether such contract is
expressed or implied, oral or in writing; but does not include any person working in the capacity
of a member of the Armed Forces of the Union; and any reference to a workman who has been
injured shall, where the workman is dead, include a reference to his dependants or any of them.
3 Employer's liability for compensation.
(1) If personal injury is caused to 20 [an employee] by accident arising out of and in the course of
his employment, his employer shall be liable to pay compensation in accordance with the
provisions of this Chapter: Provided that the employer shall not be so liable
(a) in respect of any injury which does not result in the total or partial disablement of
the 21[employee] for a period exceeding 22 [three] days;
(b) in respect of any 23 [injury, not resulting in death 24 [or permanent total disablement] caused
by] an accident which is directly attributable to
(i) the 21 [employee] having been at the time thereof under the iMMFCLuence of drink or drugs,
or
(ii) the wilful disobedience of the 21 [employee] to an order expressly given, or to a rule expressly
framed, for the purpose of securing the safety of 25 [employees], or
(iii) the wilful removal or disregard by the 21 [employee] of any safety guard or other device
which he knew to have been provided for the purpose of securing the safety
of 21[employee], 26 [***]. 27 [***]
28

[(2) If 20 [an employee] employed in any employment specified in Part A of Schedule III

contracts any disease specified therein as an occupational disease peculiar to that employment, or
if 20 [an employee], whilst in the service of an employer in whose service he has been employed
for a continuous period of not less than six months (which period shall not include a period of
service under any other employer in the same kind of employment) in any employment specified
in Part B of Schedule III, contracts any disease specified therein as an occupational disease
peculiar to that employment, or if 20 [an employee] whilst in the service of one or more
employers in any employment specified in Part C of Schedule III for such continuous period as
the Central Government may specify in respect of each such employment, contracts any disease
38

specified therein as an occupational disease peculiar to that employment, the contracting of the
disease shall be deemed to be an injury by accident within the meaning of this section and, unless
the contrary is proved, the accident shall be deemed to have arisen out of, and in the course of,
the employment: 29 [Provided that if it is proved,
(a) that [an employee] whilst in the service of one or more employers in any employment
specified in Part C of Schedule III has contracted a disease specified therein as an occupational
disease peculiar to that employment during a continuous period which is less than the period
specified under this sub-section for that employment; and
(b) that the disease has arisen out of and in the course of the employment,
the contracting of such disease shall be deemed to be an injury by accident within the meaning of
this section: Provided further that if it is proved that 30 [an employee] who having served under
any employer in any employment specified in Part B of Schedule III or who having served under
one or more employers in any employment specified in Part C of that Schedule, for a continuous
period specified under this sub-section for that employment and he has after the cessation of such
service contracted any disease specified in the said Part B or the said Part C, as the case may be,
as an occupational disease peculiar to the employment and that such disease arose out of the
employment, the contracting of the disease shall be deemed to be an injury by accident within
the meaning of this section.
31

[(2A) If 30 [an employee] employed in any employment specified in Part C of Schedule III

contracts any occupational disease peculiar to that employment, the contracting whereof is
deemed to be an injury by accident within the meaning of this section, and such employment was
under more than one employer, all such employers shall be liable for the payment of the
compensation in such proportion as the Commissioner may, in the circumstances, deem just.]
32

[(3) ] 33 [The Central Government or the State Government], after giving, by notification in the

Official Gazette, not less than three months' notice of its intention so to do, may, by a like
notification, add any description of employment to the employments specified in Schedule III
and shall specify in the case of employments so added the diseases which shall be deemed for the
purposes of this section to be occupational diseases peculiar to those employments respectively,
and thereupon the provisions of sub-section (2) shall apply 34 [, in the case of a notification by the
Central Government, within the territories to which this Act extends or, in case of a notification

39

by the State Government, within the State] 35 [***] as if such diseases had been declared by this
Act to be occupational diseases peculiar to those employments.]
(4) Save as provided by 36 [sub-sections (2), (2A)] and (3) no compensation shall be payable
to 37[an employee] in respect of any disease unless the disease is 38 [***] directly attributable to a
specific injury by accident arising out of and in the course of his employment.
(5) Nothing herein contained shall be deemed to confer any right to compensation on 37 [an
employee] in respect of any injury if he has instituted in a Civil Court a suit for damages in
respect of the injury against the employer or any other person; and no suit for damages shall be
maintainable by 3 [an employee] in any Court of law in respect of any injury
(a) if he has instituted a claim to compensation in respect of the injury before a Commissioner; or
(b) if an agreement has been come to between the 39 [employee] and his employer providing for
the payment of compensation in respect of the injury in accordance with the provisions of this
Act.
40

[ 4A Compensation to be paid when due and penalty for default.

(1) Compensation under section 4 shall be paid as soon as it falls due.

(2) In cases where the employer does not accept the liability for compensation to the extent
claimed, he shall be bound to make provisional payment based on the extent of liability which he
accepts, and, such payment shall be deposited with the Commissioner or made to
the 41[employee], as the case may be, without prejudice to the right of the 41 [employee] to make
any further claim.
42

[(3) Where any employer is in default in paying the compensation due under this Act within

one month from the date it fell due, the Commissioner shall
(a) direct that the employer shall, in addition to the amount of the arrears, pay simple interest
thereon at the rate of twelve per cent. per annum or at such higher rate not exceeding the
maximum of the lending rates of any scheduled bank as may be specified by the Central
Government, by notification in the Official Gazette, on the amount due; and
(b) if, in his opinion, there is no justification for the delay, direct that the employer shall, in
addition to the amount of the arrears and interest thereon, pay a further sum not exceeding fifty
per cent. of such amount by way of penalty: Provided that an order for the payment of penalty
shall not be passed under clause (b) without giving a reasonable opportunity to the employer to
show cause why it should not be passed. Explanation. For the purposes of this sub-section,
40

scheduled bank means a bank for the time being included in the Second Schedule to the
Reserve Bank of India Act, 1934 (2 of 1934).
43

[(3A) The interest and the penalty payable under sub-section (3) shall be paid to

the 44[employee] or his dependant, as the case may be.]]

5 Method of calculating wages. 45 [***] 46 [In this Act and for the purposes thereof the
expression monthly wages means the amount of wages deemed to be payable for a month's
service (whether the wages are payable by the month or by whatever other period or at piece
rates), and calculated] as follows, namely:
(a) where the 47 [employee] has, during a continuous period of not less than twelve months
immediately preceding the accident, been in the service of the employer who is liable to pay
compensation, the monthly wages of the 47 [employee] shall be one-twelfth of the total wages
which have fallen due for payment to him by the employer in the last twelve months of that
period;
48

[(b) where the whole of the continuous period of service immediately preceding the accident

during which the 47 [employee] was in the service of the employer who is liable to pay the
compensation was less than one month, the monthly wages of the 47 [employee] shall be 49 [***]
the average monthly amount which, during the twelve months immediately preceding the
accident, was being earned by 50 [an employee] employed on the same work by the same
employer, or, if there was no [employee] so employed, by a workman employed on similar work
in the same locality;]
51

[(c) ] [in other cases [including cases in which it is not possible for want of necessary

information to calculate the monthly wages under clause (b)]], the monthly wages shall be thirty
times the total wages earned in respect of the last continuous period of service immediately
preceding the accident from the employer who is liable to pay compensation, divided by the
number of days comprising such period.

Explanation. A period of service shall, for the

purposes of be deemed to be continuous which has not been interrupted by a period of absence
from work exceeding fourteen days.
6 Review .
(1) Any half-monthly payment payable under this Act, either under an agreement between the
parties or under the order of a Commissioner, may be reviewed by the Commissioner, on the
application either of the employer or of the 57 [employee] accompanied by the certificate of a
41

qualified medical practitioner that there has been a change in the condition of the [employee] or,
subject to rules made under this Act, on application made without such certificate.
(2) Any half-monthly payment may, on review under this section, subject to the provisions of
this Act, be continued, increased, decreased or ended, or if the accident is found to have resulted
in permanent disablement, be converted to the lump sum to which the 1 [employee] is entitled
less any amount which he has already received by way of half-monthly payments.
7 Commutation of half-monthly payments .Any right to receive half-monthly payments may,
by agreement between the parties or, if the parties cannot agree and the payments have been
continued for not less than six months, on the application of either party to the Commissioner, be
redeemed by the payment of a lump sum of such amount as may be agreed to by the parties or
determined by the Commissioner, as the case may be.
8 Distribution of compensation.
(1) No payment of compensation in respect of [an employee] whose injury has resulted in death,
and no payment of a lump sum as compensation to [an employee] or a person under a legal
disability, shall be made otherwise than by deposit with the Commissioner, and no such payment
made directly by an employer shall be deemed to be a payment of compensation: [Provided that,
in the case of a deceased [employee], an employer may make to any dependant advances on
account of compensation [of an amount equal to three months' wages of such 59[employee] and
so much of such amount] as does not exceed the compensation payable to that dependant shall be
deducted by the Commissioner from such compensation and repaid to the employer.]
(2) Any other sum amounting to not less than ten rupees which is payable as compensation may
be deposited with the Commissioner on behalf of the person entitled thereto.
(3) The receipt of the Commissioner shall be a sufficient discharge in respect of any
compensation deposited with him.]
(4) On the deposit of any money under sub-section (1), 62 [as compensation in respect of a
deceased 59 [employee]] the Commissioner 63 [***] shall, if he thinks necessary, cause notice to
be published or to be served on each dependant in such manner as he thinks fit, calling upon the
dependants to appear before him on such date as he may fix for determining the distribution of
the compensation. If the Commissioner is satisfied after any inquiry which he may deem
necessary, that no dependant exists, he shall repay the balance of the money to the employer by

42

whom it was paid. The Commissioner shall, on application by the employer, furnish a statement
showing in detail all disbursements made.
[(5) Compensation deposited in respect of a deceased 59 [employee] shall, subject to any
deduction made under sub-section (4), be apportioned among the dependants of the
deceased 59[employee] or any of them in such proportion as the Commissioner thinks fit, or may,
in the discretion of the Commissioner, be allotted to any one dependant.
(6) Where any compensation deposited with the Commissioner is payable to any person, the
Commissioner shall, if the person to whom the compensation is payable is not a woman or a
person under a legal disability, and may, in other cases, pay the money to the person entitled
thereto.
(7) Where any lump sum deposited with the Commissioner is payable to a woman or a person
under a legal disability, such sum may be invested, applied or otherwise dealt with for the benefit
of the woman, or of such person during his disability, in such manner as the Commissioner may
direct; and where a half-monthly payment is payable to any person under a legal disability, the
Commissioner may, of his own motion or on an application made to him in this behalf, order that
the payment be made during the disability to any dependant of the [employee] or to any other
person, whom the Commissioner thinks best fitted to provide for the welfare of the 65[employee]
66

[(8) ] Where, on application made to him in this behalf or otherwise, the Commissioner is

satisfied that, on account of neglect of children on the part of a parent or on account of the
variation of the circumstances of any dependant or for any other sufficient cause, an order of the
Commissioner as to the distribution of any sum paid as compensation or as to the manner in
which any sum payable to any such dependant is to be invested, applied or otherwise dealt with,
ought to be varied, the Commissioner may make such orders for the variation of the former order
as he thinks just in the circumstances of the case: Provided that no such order prejudicial to any
person shall be made unless such person has been given an opportunity of showing cause why
the order should not be made, or shall be made in any case in which it would involve the
repayment by a dependant of any sum already paid to him.
67

[(9) Where the Commissioner varies any order under sub-section (8) by reason of the fact that

payment of compensation to any person has been obtained by fraud, impersonation or other
improper means, any amount so paid to or on behalf of such person may be recovered in the
manner hereinafter provided in section 31.] STATE AMENDMENTS Andhra Pradesh. In
43

section 8, to sub-section (4), add the following proviso, namely: Provided that in respect of a
workman belonging to an establishment to which the Andhra Pradesh Labour Welfare Fund Act,
1987 applies, the Commissioner shall pay the said balance of the money into the fund constituted
under that Act in lieu of repaying to the employer. [ Vide Andhra Pradesh Act 34 of 1987, sec.
40 (w.e.f. 1-5-1988).]
Goa Same as in Andhra Pradesh except the name of the Act is Goa, Daman and Diu Labour
Welfare Fund Act, 1986. [ Vide Goa Act 4 of 1987, sec. 40 (w.e.f. 26-1-1990).]
9 Compensation not to be assigned, attached or charged. Save as provided by this Act no lump
sum or half-monthly payment payable under this Act shall in any way be capable of being
assigned or charged or be liable to attachment or pass to any person other than the 68 [employee]
by operation of law nor shall any claim be set off against the same.
10 Notice and claim.
(1) [No claim for compensation shall be entertained by a Commissioner unless notice of the
accident has been given in the manner hereinafter provided as soon as practicable after the
happening thereof and unless the claim is preferred before him within 70 [two years] of the
occurrence of the accident or in case of death within 70 [two years] from the date of death:]
Provided that where the accident is the contracting of a disease in respect of which the provisions
of sub-section (2) of section 3 are applicable, the accident shall be deemed to have occurred on
the first of the days during which the [employee] was continuously absent from work in
consequence of the disablement caused by the disease: [Provided further that in case of partial
disablement due to the contracting of any such disease and which does not force the [employee]
to absent himself from work, the period of two years shall be counted from the day the
[employee] gives notice of the disablement to his employer: Provided further that if 73 [an
employee] who, having been employed in an employment for a continuous period, specified
under sub-section (2) of section 3 in respect of that employment, ceases to be so employed and
develops symptoms of an occupational disease peculiar to that employment within two years of
the cessation of employment, the accident shall be deemed to have occurred on the day on which
the symptoms were first detected:] [Provided further that the want of or any defect or
irregularity in a notice shall not be a bar to the [entertainment of a claim]
(a) if the claim is [preferred] in respect of the death of a [an employee] resulting from an
accident which occurred on the premises of the employer, or at any place where the 78[employee]
44

at the time of the accident was working under the control of the employer or of any person
employed by him, and the 78 [employee] died on such premises or at such place, or on any
premises belonging to the employer, or died without having left the vicinity of the premises or
place where the accident occurred, or
(b) if the employer [or any one of several employers or any person responsible to the employer
for the management of any branch of the trade or business in which the injured [employee] was
employed] had knowledge of the accident from any other source at or about the time when it
occurred:] Provided further that the Commissioner may [entertain] and decide any claim to
compensation in any case notwithstanding that the notice has not been given, or the claim has not
been 81 [preferred], in due time as provided in this sub-section, if he is satisfied that the failure so
to give the notice or 82 [prefer] the claim, as the case may be, was due to sufficient cause.
(2) Every such notice shall give the name and address of the person injured and shall state in
ordinary language the cause of the injury and the date on which the accident happened, and shall
be served on the employer or upon 83 [any one of] several employers, or upon any person 84 [***]
responsible to the employer for the management of any branch of the trade or business in which
the injured workman was employed.
85

[(3) The State Government may require that any prescribed class of employers shall maintain

at their premises at which 78 [employees] are employed a notice book, in the prescribed form,
which shall be readily accessible at all reasonable times to any injured 78 [employee] employed
on the premises and to any person acting bona fide on his behalf.
(4) A notice under this section may be served by delivering it at, or sending it by registered post
addressed to, the residence or any office or place of business of the person on whom it is to be
served, or, where a notice-book is maintained, by entry in the notice-book.]
86

[ 10A Power to require from employers statements regarding fatal accidents .

(1) Where a Commissioner receives information from any source that a 87 [an employee] has died
as a result of an accident arising out of and in the course of his employment, he may send by
registered post a notice to the workman's employer requiring him to submit, within thirty days of
the service of the notice, a statement, in the prescribed form, giving the circumstances attending
the death of the 88 [employee], and indicating whether, in the opinion of the employer, he is or is
not liable to deposit compensation on account of the death.

45

(2) If the employer is of opinion that he is liable to deposit compensation, he shall make the
deposit within thirty days of the service of the notice.
(3) If the employer is of opinion that he is not liable to deposit compensation, he shall in his
statement indicate the grounds on which he disclaims liability.
(4) Where the employer has so disclaimed liability, the Commissioner, after such inquiry as he
may think fit, may inform any of the dependants of the deceased 88 [employee] that it is open to
the dependants to prefer a claim for compensation, and may give them such other further
information as he may think fit.

46

EMPLOYEE WELFARE
Welfare includes anything that is done for the comfort and improvement of employees and
is provided over and above the wages. Welfare helps in keeping the morale and motivation of
the employees high so as to retain the employees for longer duration. The welfare measures
need not be in monetary terms only but in any kind/forms. Employee welfare includes
monitoring of working conditions, creation of industrial harmony through infrastructure for
health, industrial relations and insurance against disease, accident and unemployment for the
workers and their families.
Employee welfare entails all those activities of employer which are directed towards providing
the employees with certain facilities and services in addition to wages or salaries.
In general these are the benefits that an employee must receive from his/her company, like
allowances, housing for those companies which provide transportation, medical, insurance,
food and some other way where the employee has right to demand.
Employee welfare defines as efforts to make life worth living for workmen. These efforts
have their origin either in some statute form formed by the state or in some local custom or in
collective agreement or in the employers own initiative.
PRINCIPLES OF EMPLOYEE WELFARE SERVICE
The principles which are to be followed in setting up a employee welfare service are as
follows: The service should satisfy real needs of the workers. This means that the manager must
first determine what the employees real needs are with the active participation of
workers.
The service should be such that can be handled by cafeteria approach. Due to the
differences in sex, age, marital status, number of children, type of job and the income
level of employees, there are large differences in the choice of a particular benefit. This
is known as the cafeteria approach. Such an approach individualises the benefit system,
though it may be difficult to operate and administer.

47

 The employer should not assume a benevolent posture.

The cost of the service should be calculated and its financing should be established on a
sound basis.
There should be periodical assessment or evaluation of the service and necessary or
timely action should be taken on the basis of feedback.
The purpose of the benefits is to increase the economic security of the employees.

Types of Employee Welfare Services

Safety Services
Prevention of accidents is an objective which requires no explanation.
The costs of accidents are enormous in suffering to the injured, in reduction or loss of earnings,
in disabilities and incapacities which afflict those involved and in compensation, insurance and
legal costs, in lost time, filling in reports and attending to enquiries, and in spoilage of
materials, equipment and tools to management.
Accidents are the consequence of two basic factors: technical and human. Technical
factors include all engineering deficiencies, related to plant, tools material and general work
environment. Thus, for example, improper lighting, inadequate ventilation, poor machine
guarding and careless housekeeping are some hazards which may cause accidents. Human
factors include all unsafe acts on the part of employees. An unsafe act is usually the result of
carelessness.
Young and new employees, because of their difficulty in adjusting to the work situation
and to life in general, also have many more accidents than do old and nature workers.
The Phenomenon of Accident Proneness. Some persons believe wrongly in the theory that
certain individuals are accident prone, that is , they have some personality trait as opposed to
48

some characteristic of the environment which predisposes them to have more accidents than
others in work condition where the risk of hazards is equal to all.

Components of a Safety Service

Among the many components of a safety service the following have proved effective
when applied in combination:

Appointment of safety officer

In big organizations, the appointment of a safety officer to head the safety department is a
must. In small organizations, the personnel manager may look after the functions of this
department. The head of the safety department, who is usually a staff man, is granted power to
inspect the plant for unsafe condition, to promote sound safety practices (through posters and
safety campaigns), to make safety rules, and to report violations to the plant manager.

Support by line management

The head of the safety department, whether enjoying a staff or a functional position, by him,
cannot make a plan safe. His appointment lulls line management into assuming that all its
safety problems have been solved.

Elimination of hazards
Although complete elimination of all hazards is virtually an
impossibility but following steps can be taken to help reduce them:

Job safety analysis

All job procedures and practices should be analysed by an expert to discover hazards. He
should then suggest changes in their motion patterns, sequence and the like.

Placement
A poorly placed employee is more apt to incur injury than a properly placed employee.
Employees should be placed on jobs only after carefully estimating and considering the job
49

requirements with those which the individual apparently possesses.

Personal protective equipment

Endless variety of personal safety equipment is available nowadays which can be used to
prevent injury.

Safeguarding machinery
Guards must be securely fixed to all power driven machinery.

Materials handling
Though often ignored, the careless handling of heavy and iMMFCLammable materials is an
important source of several injuries and fire.

Hand tools
Minor injuries often result from improperly using a good tool or using a poorly designed tool.
Therefore, close supervision and instruction should be given to the employees on the proper
tool and its usage.

Safety training, education and publicity

Safety training is concerned with developing safety skills, whereas safety education is
concerned with increasing contest programmes, safety campaigns, suggestion awards, and
various audiovisual aids can be considered as different forms of employee education.

Safety inspection
An inspection by a trained individual or a committee to detect evidence of possible safety
hazards (such as poor lighting, slippery floors, unguarded machines, faulty electrical
installations, poor work methods and disregard of safety rules) is a very effective device to

50

promote safety.
Health Services
The prevention of accident constitutes only on segment of the function of employee
maintenance. Another equally important segment is the employees general health, both
physical and mental.
There are two aspects of industrial health services: Preventive
Curative
The former consists of pre-employment and periodic medical examination, removal or
reduction of health hazards to the maximum extent possible, Surveillance over certain
classes of workers such as women, young persons and persons exposed to special risks.
Counselling Services
An employee very often comes across problems which have emotional content. For
example, he may be nearing retirement and feeling insecure or he may be getting promotion
and feeling hesitant to shoulder increased responsibility or he may be worried due to some
family problem.

Employee Welfare in India

The chapter on the Directive Principles of State Policy in our Constitution expresses the
need for labour welfare thus: The State shall strive to promote the welfare of the people by securing and protecting as
effectively as it may a social order in which justice, social, economic and political, shall
inform all the institutions of the national life.
The State shall, in particular, direct its policy towards securing:
That the citizens, men and women equally, have the right to an adequate means of
livelihood;
That the ownership and control of the material resources are so distributed as to sub

51

serve the common good.

o The State shall make provision for securing just and humane conditions of work
and for maternity relief.
Factories Act, 1948
The principal Act to provide for various labour welfare measures in India is the
Factories Act, 1948. The Act applies to all establishments employing 10 or more workers where
power is used and 20 or more workers where power is not used, and where a manufacturing
process is being carried on.
Employee Welfare Officer
Section 49 of the factories act provides that in every factory wherein 500 or more
workers are ordinarily employed the employer shall appoint at least one welfare officer.
The welfare officer should possess; (i) a university degree; (ii) degree or diploma in
social service or social work or social welfare from a recognized institution; and (iii) adequate
knowledge of the language spoken by the majority of the workers in the area where the factory
is situated.

Supervision

Counselling workers

Advising management

Establishing liaison with workers

Working with management and workers to improve productivity.

Working with outside public to secure proper enforcement of various acts.

Health of Employees

Cleanliness. Every factory shall be kept clean by daily sweeping or washing the floors
and work rooms and by using disinfectant where necessary.

Disposal of wastes and effluents. Effective arrangements shall be made for the disposal

52

of wastes and for making them innocuous.

Ventilation and temperature. Effective arrangements shall be made for ventilation and
temperature so as to provide comfort to the workers and prevent injury to their health.

Dust and fume. Effective measures shall be taken to prevent the inhalation and
accumulation of dust and fumes or other impurities at the work place.

Artificial humidification. The State Government shall make rules prescribing standard
of humidification and methods to be adopted for this purpose.

Overcrowding. There shall be in every work room of a factory in existence on the date
of commencement of this act at least 9.9cubic meters and of a factory built after the
commencement of this act at least 4.2 cubic meters of space for every employee.

Lighting. The State Government may prescribe standards of sufficient and suitable
lighting.

Drinking Water. There shall be effective arrangement for wholesome drinking water for
workers at convenient points.

Latrines and urinals. There shall be sufficient number of latrines and urinals, clean,
well-ventilated, conveniently situated and built according to prescribed standards separately
for male and female workers.

Spittoons. There shall be sufficient number of spittoons placed at convenient places in

the factory.

53

Safety of Employees

Fencing of machinery. All dangerous and moving parts of machinery shall be securely
fenced. Screws, bolts and teeth shall be completely encased to prevent danger.

Work on or near machinery in motion. Lubrication or other adjusting operation on

moving machinery shall be done only by a specially trained adult male worker.

Employment of young persons on dangerous machines. No young person shall be

allowed to work on any dangerous machine (so prescribed by the state government) unless he
is sufficiently trained or is working under the supervision of knowledgeable person.

Device for cutting off power. Suitable device for cutting of power in emergencies shall
be provided.

Hoists and lifts. These shall be made of good material and strength, thoroughly
examined at least once in every six months and suitably protected to prevent any person or
thing from being trapped.
Welfare of Employees
Chapter V of the factories Act contains provisions about the welfare of employees.
These are as follows:

There shall be separate and adequately screened washing facilities for the use of male
and female employees.

There shall be suitable places provided for clothing not worn during working hours and
for the dying of wet clothing.

There shall be suitable arrangement for all workers to sit for taking rest if they are
obliged to work in a standing position.

There shall be provided the required number of first-aid boxes or cupboard (at the rate
of one for every 150 workers) equipped with the prescribed contents readily available during
the working hours of the factory.

The State Government may make rules requiring that in any specified factory
54

employing more than 250 employees a canteen shall be provided and maintained by the
occupier for the use of the employee.

There shall be provided sufficiently lighted and ventilated lunch room if the number of
employees ordinarily employed is more than 150.
Restrictions in the Factories Act on the employment of young persons:
1.

Prohibition as to employment of children (Section 67)

No child who has not completed his fourteenth year shall be required or allowed to work in any
factory.
2.

Employment of Children and Adolescent (Section 68)

A child who has completed his fourteenth year or an adolescent shall not be required or allowed
to work in any factory unless following conditions are fulfilled:
The manager of the factory has obtained a certificate of fitness granted to such young
While at work, such child or adolescent carries a token giving reference to such
certificate.
3.

Certificate of fitness (Section 69)

Before a young person is employed in the factory, a certifying surgeon has to certify that such
person is fit for that work in the factory.
Welfare Funds
In order to provide welfare facilities to the workers employed in mica, iron, ore,
manganese ore and chrome ore, limestone and dolomite mines and in the beedi industry, the
welfare funds have been established to supplement the efforts of the employers and the State
Government under respective enactments.
The welfare measures financed out of the funds relate to development of medical
facilities, housing, supply of drinking water, support for education of dependents and
recreation, etc.
Voluntary Benefits
Benefits are also given voluntarily to workers by some progressive employers. These
include loans for purchasing houses and for educating children, leave travel concession, fair
55

price shops for essential commodities and loans to buy personal conveyance.
Machinery Connected with Employee Welfare Work
1.

Chief inspector of Factories

It is the duty of the Chief inspector of factories (who generally works under the administrative
control of the labour commissioner in each state) to ensure enforcement of various provisions
of Factories Act i8n respect of safety, health and welfare of workers.
2.

Central Labour Institute

The institute was set up in Bombay in 1966 to facilitate the proper implementation of the
Factories Act, 1948; to provide a centre of information for inspectors, employers, workers and
others concerned with the well being of industrial labour and to stimulate interest in the
application of the principles of industrial safety, health and welfare.
3.

National Safety Council

The National Safety Council was wet up on 4th March, 1966 in Bombay at the initiative of the
Union Ministry of Labour and Rehabilitation, Government of India, as an autonomous national
body with the objective of generating developing and sustaining a movement of safety
awareness at the national level.
4.

Director General of Mines Safety

The Director General of Mines Safety enforces the Mines Act, 1952. He inspects electrical
installation and machinery provided in the mines and determines the thickness of barriers of 2
adjacent mines in order to prevent spread of fire and danger of inundation.
Appraisal of Welfare Services
One of the main obstacles in the effective enforcement of the welfare provisions of the
Factories Act has been the quantitative and qualitative inadequacy of the inspection
staff.
At present, a labour welfare officer is not able to enforce laws independently because he
has to work under the pressure of management.
Women workers do not make use of the crche facilities either because they are
dissuaded by the management to bring their children with them or because they have to
56

face transport difficulties.

National Commission on Employee Recommendations

The statutory provisions on safety are adequate for the time being effective enforcement
is the current need.
Every fatal accident should thoroughly be enquired into and given wide publicity
among workers.
Employers should play a more concerted role in safety and accident prevention
programme and in arousing safety consciousness.
Safety should become a habit with the employers and workers instead of remaining a
mere ritual as at present.
Unions should take at least as much interest in safety promotion as they take in claims
for higher wages.

SOCIAL SECURITY
The connotation of the term Social Security varies form country to country with
different political ideologies. In socialist countries, the avowed goal is complete protection to
every citizen form the cradle to the grave.
There are some components of Social Security:

Medical care

Sickness benefit

Unemployment benefit

Old-age benefit

Employment injury benefit

Family benefit

Maternity benefit

Invalidity benefit and

Survivors benefit
57

Social Securities may be of two types

Social assistance under which the State finances the entire cost of the facilities and
benefits provided.

Social insurance, under the State organizes the facilities financed by contributions from
the workers and employers, with or without a subsidy from the state.

Social Security in India

At present both types of social security schemes are in vogue in our country. Among
the social assistance schemes are the most important.
The social insurance method, which has gained much wider acceptance than the social
assistance method, consists of the following enactments.
The workmens Compensation Act, 1961.
The Employees State Insurance Act, 1948.
The employees State Insurance Act, 1948.
The Maternity Benefit Act, 1961.
Employees compensation Act, 1923
a. Coverage. This Act covers all workers employed in factories, mines, plantations, transport
undertakings, construction works, railways, ships, circus and other hazardous occupations
specified in schedule II of the Act.
The Act empowers the State Government to extend the coverage of the Act by adding any
hazardous occupation to the list of such occupations is schedule II.

Administration. The Act is administered by the State Government which appoints

Commissioners for this purpose under sec. 20 of the Act.
Benefits. Under the Act, compensation is payable by the employer to a workman for all
personal injuries caused to him by accident arising out of and in the course of his
employment which disable him for more than 3 days.
58

2.

Employees State Insurance Act, 1948

1. Other than seasonal factories, run with power and employing 20 or more workers.
2. Administration. The Act is administered by the ESI Corporation, an autonomous body
consisting of representatives of the Central and State Governments, employers,
employees, medical profession and parliament.
3. Benefits. The Act, which provides for a system of compulsory insurance, is a landmark
in the history of social security legislation in India.

1.

Medical Benefit. An insured person or (where medical benefit bas been

extended to his family) a member of his family who requires medical treatment is entitled to
receive medical benefit free of charge.

2.

Sickness Benefit. An insured person, when he is sick, is also entitled to get

sickness benefit at the standard benefit rate corresponding to his average daily wage.

3.

An insured woman is entitled to receive maternity benefit (which is twice the

sickness benefit rate) for all days on which she does not work for remaining during a period
of 12 weeks of which not more than 6 weeks shall precede the expected date of
confinement.

4.

The Act makes a three-fold classification of injuries in the same way as is done
in the workmens compensation Act.

5.

Dependants Benefit. If an insured person meets with an accident in the course

of his employment a dies as a result thereof, his dependants, i.e. his widow, legitimate or
adopted sons and legitimate unmarried daughters get this benefit.

3. The Maternity Benefit Act, 1961

Maternity benefit is one of the important benefits provided under the
Employees State Insurance Act, 1948. Another important legislation in this respect is the
Maternity Benefit Act, 1961. The Act covers only those persons who are not covered by the
Employees State Insurance Act. The Act entitles a woman employee to claim maternity leave
from her employer if she has actually worked for a period of at least 160 days in the 12 months
immediately preceding the day of her expected delivery.
The act further provides for the payment of medical bonus of Rs. 250

59

to the confined woman worker.

The committee on the status of women in India 1974 has, therefore,
recommended the following changes in the Act:
1.

The administration of the fund should follow the pattern already established by the
ESIC.

2.

For casual labour a minimum of 3 months of service should be considered as

qualification service for this benefit.

3.

This will provide greater incentive to women workers to participate in trade union
activities.
1. The Payment of Gratuity Act, 1972
2. Coverage. The Act applies to every factory, mine, oilfield, plantation, port and Railway
Company and to every shop or establishment in which 10 or more persons are
employed, or were employed, on any day of the preceding 12 months.
3. Administration. The Act is administered by a controlling authority appointed by the
appropriate Government.
4. Benefits. Under the Act gratuity is payable to an employee on the termination of his
employment after he has rendered continuous service for not less than five years. The
completion of continuous service of five years is, however, not necessary where the
termination of the employment is due to death or disablement Gratuity is payable at the
rate of 15 days wages based on the rate of wages last drawn by the employee for every
complete year of service or part thereof in excess of six months. But the amount of
gratuity payable to an employee shall not exceed Rs. 3.5 lakh.
5. Source of Funds. Under the Act gratuity is payable entirely by the Employer. For this
purpose is required either (i) to obtain insurance with the Life Insurance Corporation, or
(ii) to establish a gratuity fund. Thus it is his liability to pay the premium in the first
case to make the contribution in the second case.

Employee welfare has the following objectives:

1. To provide better life and health to the workers.
60

2. To make the workers happy and satisfied.

3. To relieve workers from industrial fatigue and to improve intellectual, cultural and
material conditions of living of the workers.
The basic features of employee welfare measures are as follows:
1. Employee welfare includes various facilities, services and amenities provided to workers
for improving their health, efficiency, economic betterment and social status.
2. Welfare measures are in addition to regular wages and other economic benefits available
to workers due to legal provisions and collective bargaining.
3. Employee welfare schemes are flexible and ever-changing. New welfare measures are
added to the existing ones from time to time.
4. Welfare measures may be introduced by the employers, government, employees or by
any social or charitable agency.
5. The purpose of employee welfare is to bring about the development of the whole
personality of the workers to make a better workforce.

The very logic behind providing welfare schemes is to create efficient, healthy, loyal and
satisfied labour force for the organization. The purpose of providing such facilities is to make
their work life better and also to raise their standard of living. The important benefits of welfare
measures can be summarized as follows:

They provide better physical and mental health to workers and thus promote a healthy
work environment.

61

Facilities like housing schemes, medical benefits, and education and recreation facilities
for workers families help in raising their standards of living. This makes workers to pay
more attention towards work and thus increases their productivity.

Employers get stable labour force by providing welfare facilities. Workers take active
interest in their jobs and work with a feeling of involvement and participation.

Employee welfare measures increase the productivity of organization and promote

healthy industrial relations thereby maintaining industrial peace.

The social evils prevalent among the labours such as substance abuse, etc are reduced to a
greater extent by the welfare policies.

The employee welfare schemes can be classified into two categories viz. statutory and nonstatutory welfare schemes. The statutory schemes are those schemes that are compulsory to
provide by an organization as compliance to the laws governing employee health and safety.
These include provisions provided in industrial acts like Factories Act 1948, Dock Workers Act
(safety, health and welfare) 1986, Mines Act 1962. The non statutory schemes differ from
organization to organization and from industry to industry.

STATUTORY WELFARE SCHEMES

The statutory welfare schemes include the following provisions:
1. Drinking Water: At all the working places safe hygienic drinking water should be
provided.
2. Facilities for sitting: In every organization, especially factories, suitable seating
arrangements are to be provided.

62

3. First aid appliances: First aid appliances are to be provided and should be readily
assessable so that in case of any minor accident initial medication can be provided to the
needed employee.
4. Latrines and Urinals: A sufficient number of latrines and urinals are to be provided in
the office and factory premises and are also to be maintained in a neat and clean
condition.
5. Canteen facilities: Cafeteria or canteens are to be provided by the employer so as to
provide hygienic and nutritious food to the employees.
6. Spittoons: In every work place, such as ware houses, store places, in the dock area and
office premises spittoons are to be provided in convenient places and same are to be
maintained in a hygienic condition.
7. Lighting: Proper and sufficient lights are to be provided for employees so that they can
work safely during the night shifts.
8. Washing places: Adequate washing places such as bathrooms, wash basins with tap and
tap on the stand pipe are provided in the port area in the vicinity of the work places.
9. Changing rooms: Adequate changing rooms are to be provided for workers to change
their cloth in the factory area and office premises. Adequate lockers are also provided to
the workers to keep their clothes and belongings.
10. Rest rooms: Adequate numbers of restrooms are provided to the workers with provisions
of water supply, wash basins, toilets, bathrooms, etc.

NON STATUTORY SCHEMES

Many non statutory welfare schemes may include the following:

63

1. Personal Health Care (Regular medical check-ups): Some of the companies provide
the facility for extensive health check-up
2. Flexi-time: The main objective of the flexitime policy is to provide opportunity to
employees to work with flexible working schedules. Flexible work schedules are initiated
by employees and approved by management to meet business commitments while
supporting employee personal life needs
3. Employee Assistance Programs: Various assistant programs are arranged like external
counselling service so that employees or members of their immediate family can get
counselling on various matters.
4. Harassment Policy: To protect an employee from harassments of any kind, guidelines
are provided for proper action and also for protecting the aggrieved employee.
5. Maternity & Adoption Leave: Employees can avail maternity or adoption leaves.
Paternity leave policies have also been introduced by various companies.
6. Medi-claim Insurance Scheme: This insurance scheme provides adequate insurance
coverage of employees for expenses related to hospitalization due to illness, disease or
injury or pregnancy.
7. Employee Referral Scheme: In several companies employee referral scheme is
implemented to encourage employees to refer friends and relatives for employment in the
organization.

OBJECTIVE OF THE STUDY

To find out the employees satisfaction level.
To find the pitfalls in employees.
To throw light on the weak and strong points which effect employees
satisfaction?
To find out the reasons why does the employee want welfare schemes?
64

RESEARCH METHODOLOGY:-

TYPES OF RESEARCH:Blend of descriptive & conclusive method has been used in this research for the
collection of data. As the research is related to the study of employees satisfaction
about the welfare policy. Which can more efficiently be studied through direct
questions, personal interview and informal talks, experiment research will not
65

much effective also, considering the time constraints, descriptive research leading
to conclusive result is the most suitable design for this research.

SOURCES OF DATA COLLECTION:Primary sources:These sources include the data collected by the researcher himself for his own
study. It includes direct conversation with the company officers of different
departments and staff and that is with the help of the questionnaire.
SAMPLE DESIGN: - RANDOM SAMPLING.
SAMPLE SIZE: -

50.

SAMPLE UNIT: -

INDIVIDUAL.

GEOGRAPHICAL LOCATION: - Dehradun

DATA COLLECTION METHOD: - Questionnaires to be filled by employees.
Secondary sources:The preparation of this report has also made use of secondary sources like the
companys welfare policies which is available with the officers have been studied
deeply.

66

DATA ANALYSIS AND INTERPRETATION:Q1. From how much time are you with MMFCL?
a)
b)
c)
d)

-Less than 2 years

2-5 years
5-10 years
More than 10 years

75
15
10
0

67

 -Less than 2 years

2-5 years

5-10 years

More than 10 years

10%
15%

75%

As per the research the data collected shows that the 75% of the employees
are with MMFCL form 10 years. It clearly shows that MMFCL is well
established organisation and 15% employees are working in MMFCL from
5-10 years and 10% are working there from 2-5 years. MMFCL has also
recruited new employees that are working from less than 2 years.

Q2. Are you fully aware about the welfare schemes provided by MMFCL?
a) Yes
65
b) No
35
c) Approximately
00

68

a) Yes

b) No

c) Approximately

35%

65%

There are 65% of the employees who are fully aware with MMFCL
welfare schemes. And 35% of the employees were aware about the
welfare schemes approximately.

Q3. What are the welfare schemes provided by MMFCL?

a) Medical
17.5
b) Housing
12.5
c) Social security
10
d) All
60

69

Medical

Housing

Social security

All

18%

13%
60%
10%

There are so many schemes provided by MMFCL as medical, housing

facility, social security at the time of employees death etc. if we talk
about medical facility it is very useful for a MMFCL employee that he
or she can receive treatment from eminent hospital. 17.5% employees
are satisfied with the medical facility and 12.5% housing facility and
more than 60% are satisfied with all facilities. 10% employees are
satisfied with social security.

Q4. Are you fully satisfied with the welfare schemes of MMFCL?
a) Yes
59
b) No
41

70

Yes

No

41%
59%

As per data collected, it shows that MMFCL is fully able to satisfy its
employees with the welfare schemes. According to them these welfare
schemes are time consuming and that is provided only to a few. Other
reason is that MMFCL does not care for an employees and that are
provided only to a few.

Q5. Do you feel that MMFCL schemes are much better than other
government companies?
a) Yes
80
b) No
20

71

Yes

No

20%

80%

The ratio of schemes provided by MMFCL is 80%, it means this

organisation is much better than any other government company. The
government companies just offer only 60% schemes which are
mentioned in Factory Act, 1984. MMFCLs medical schemes are
providing cheap medical services as it has Indian famous hospital on
its penal for all units.

Q6. According to your point of view which scheme is best for

employees?
a) Social security scheme
b) Welfare excursion scheme
c) Long service award scheme

72

45
42
13

Social security scheme

Welfare excursion scheme

Long service award scheme

13%

45%
42%

A number of schemes are provided by MMFCL. In these schemes

45% of the employees are satisfied with the medical and 42% are
satisfied with all the schemes and 12.5% employees are satisfied with
social schemes.

Q7. Do you think social security scheme is beneficial for employees

family? Is there any need to increase its amount?
a) Yes
78
b) No
22

73

Yes

No

22%

78%

In this all the employees are more satisfied with the social security
scheme because it gives security to the employees family after death.
But the employees want to increase the amount of this scheme. 80%
of the employees are agreed on this question that the amount should
be increased.

Q8. Do you think the excursion scheme is beneficial?

a) Yes
95
b) No
5

74

Yes

No

5%

95%

Two excursion trips in a calendar year are arranged by the club at units
however, at marketing division and corporate office where there are no
clubs, such excursion trips are arranged by the concerned welfare/ industrial
relations department. Under the scheme, the place of 400kms each way from
the township/place of work. One night stay is also allowed for the said trip.
However company doesnt bear any extra expenses on account for boarding/
loading and the employees do make their own arrangement for night stay
and avail their own leave.
95% employees are satisfied with this scheme but 5% are not satisfied with
it because it is only for club member and not for all.
Q9. According to your point of view the scholarship and sports grant to the
outstanding children of MMFCL employees should be increased?
a) Yes
70
b) No
30

75

Yes

No

30%

70%

MMFCL also provides scholarship grant to the outstanding children of

MMFCL employees but this amount is very low, so the employees
want to increase this amount. 70% employees agree and 30%
employees do not agree with this point.

Q10. Are you fully satisfied with the medical policy of MMFCL?
a) Yes
67
b) No
33

76

Yes

No

26%

74%

68% of the employees are satisfied with the medical facility provided
by MMFCL and 33% are not satisfied because this policy has a long
process and needs detailed documents of the patient. MMFCL has
famous hospital on its panel, it is providing best medical facilities to
its employees but in other ways the policy is having some weak points
also.

FINDINGS
In Dehradun there are many companies, despite of tough
competition still good number of people is joining MMFCL.
Above 80% of the employees are satisfied with the welfare
schemes of MMFCL.
The schemes provided by MMFCL are durable. Moreover these
schemes are beneficial for the employees as well as their
family.
77

 Another plus point of MMFCL is that the company is providing

the welfare schemes to all employees irrespective of their
levels.
Other companies are providing less welfare schemes as
compared to MMFCL.
MMFCL is providing Long Service Award Scheme to the
employees as per their experience. 80% employees are satisfied
with the present scheme and 20% want extra medical facility.
The medical facility is very useful for the employees because it
provides cheap and quality treatment and the company has very
eminent hospital on its panel.
Recommendation for improvement in employees welfare policy
The following factors can play an important role for
improvement in the employee welfare policy: Spreading awareness regarding welfare policy among the
employees.
Motivating the

employees

for

giving

out

good

performance in order to achieve the awards of good

workers.
Time to time counselling is necessary for employee
awareness and for the amendments in the policy.
Some employees are not satisfied with the medical policy
of MMFCL, which needs some improvements.
70% employees agree upon the opinion that welfare
schemes should be amended after 5 years.
LIMITATIONS OF THE STUDY:-

78

In spite of the best efforts, there are always some problems or limitations
associated with market research that cannot be removed but can be minimized
only. In this survey also there could be certain errors due to those factors.
The study may have the following limitations: It was very difficult for me to get the forms filled because of the officers
busy schedule and therefore providing me insufficient time for filling up the
forms.
This study is based on the assumption that responses are true and factual
although at times that may not be the case.
Though every care has been taken to eliminate such biases, but considering
the human factor the possibility of small bias having come up cannot be
ruled out altogether.
Consumer behaviour is dynamic in nature and thus over the time, finding of
today may become invalid tomorrow.

CONCLUSION
In the end after completing the project I conclude that welfare policy is very
important for each and every organisation. These policies play a vital role for the
development of human resources well as the organisation as a whole.
Organisation may not be able to attain the required results which are expected if
the welfare policies are not followed properly. Proper control should be

79

implemented in the organisation in order to check whether welfare policies are

followed or not.
While working on the project, I came to know that employee welfare schemes play
significant role and should not be neglected at any cost.
At the end I would like to conclude that MMFCL is following the welfare policies
in a much better way than any other organisation. It is providing many welfare
schemes which are mentioned in Factories Act, 1948.
I had 6 weeks training in MMFCL. It was a great experience to work in such a
reputed organisation. Proper rules and regulations are being followed. Working
atmosphere is co-operative and friendly.

BIBLIOGRAPHY
WEBSITES:www.nationalfertilizers.com
80

www.wikipedia.com
A quarterly magazine of the company named Vani has also been referred.

81