isf issue paper dec 11
TRANSCRIPT
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Temporary Staffing In India:Issues and Prospects
ISF Discussion Paper
December 2011
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ContentsWhat is a Staffing Company? 1
Mandatory Features and Practices of Staffing Companies 2
Best Practices of Staffing Companies 3
Staffing Companies: The Global Experience 4
Staffing Companies: The Indian Experience 6
Temp Staffing in India: The Pending Reforms Agenda 7
Short Term Issues
A. Overall Issues 8B. Provident Fund 9C. Employees State Insurance 14D. Contract Labour 18Long Term Issues
A. Industrial Disputes Act, 1947 22B. Employees Compensation Act, 1923 25C. Payment of Gratuity Act, 1972 26D. Factories Act, 1948 27E. Shops and Establishment Act 29F. The Employees State Insurance Act, 1948 30G. The Employment Exchanges (Compulsory Notification of Vacancies) Act,
1959 31
H. Contract Labour Act 31I. Service Tax 32
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Temporary Staffing In India: Issues and Prospects, ISF Discussion Paper, December 2011 1
What is a Staffing CompanyA Staffing Company is any enterprise or person, independent of the public authorities,
which provides one or more of the following labour market functions:
a. services for matching offers of and applications for employment
b. services for employing people with a view to making them available to a third party
(user enterprise); and/or
c. other services relating to jobseeking, such as the provision of information, that do not
aim to match specific employment offers and applications.
Staffing company employment refers to employment where people are employed by a
staffing agency, and then hired out to perform his/her work at (and under the supervision
of) the user company. There is no employment relationship between the staffing agency
employee and the user company, although there could be legal obligations of the usercompany towards the staffing agency worker. The staffing agency offers employees a fixed
duration employment contract. The employment is often called temporary work,
temping or temporary staffing. The hiring firm pays fees to the staffing company, and
the staffing company pays the wages. Flexibility for both employee and employer is a key
feature of agency work.
The profile of contract staff in India is diversified. Frontline staff - customer services, sales
and customer prospecting, and telemarketing - account for nearly 80% of deployment.
Technical functions such as installation and commissioning, and repairs and maintenance
make up 15% of deployment, while 3-4% of contract staff are deployed in senior
management positions, including technical specialists and management experts.
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Mandatory Features and
Practices of Staffing
Companies1. Staffing Companies cannot charge employees for finding work
2. Staffing companies must adhere to all labour laws of the land e.g.:
Industrial Dispute Act
Minimum Wages Act
ESIC Act
CLR Act Provident Fund Act
Gratuity Act
Payment of Bonus Act etc.
3. Staffing Companies mandatorily covers each employee with all statutory Employee
benefits as is due to them and as per the statutes laid down in India. For eg. each
employee is covered under Minimum Wages and in most cases are paid wages at par
with the prevalent market range for the specific job. Each employee is paid PF and has
ESIC coverage as laid down in the statutes.
4. As a mandatory practice each staffing company generates and distribute payslips for
each and every temp employee.
5. As a mandatory practice each staffing company needs to run accurate payroll system
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Best Practices of Staffing
CompaniesAs a best practice, staffing companies:
1. Cover the temp workers under additional Group Mediclaim and personal accident
insurance coverage. This is over and above their coverage under ESIC
2. Facilitates opening of Bank Accounts/Payroll Cards for the Temp Workers and each
Temp Worker is either paid salary through an account payee cheque or through direct
bank transfer into their accounts.
3. Organize rewards and recognition programmes for their high performing temp workers
in consultation with the User Companies
4. Provides temp workers with ongoing support to address their issues or concerns around
their employment
5. Provide skill development opportunities to the temp workers in consultation with the
user companies
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Staffing Companies: The
Global ExperienceAccording to a CIETT / BCG report titled Adapting to Change: How private employment
services facilitate adaptation to change, better labour markets and decent work, staffing
companies globally support companies and workers in adapting to seasonal and cyclical
changes in the economy. It notes that the increased incidence of structural changes in
recent years has brought a new set of challenges to economies and labour markets.
Globalisation, demographic evolution, sectoral and IT shifts, unpredictability and complexity
combined with new attitudes to work have resulted in economies across the world
experiencing deep structural shifts. For labour markets, the consequences are severe:
persistent high level of unemployment (which hits young people disproportionately hard),
the need for new skills for new jobs, low occupational and geographic work mobility, a riskof segmentation of labour markets, low labour market participation rates (especially for
women and older workers) and the need to reconcile diverse forms of labour relations with
decent working conditions. According to the report staffing companies are well placed to
enable adaptation to these structural changes. With its international reach and specialised
market knowledge, the sector facilitates adaptation to change in labour markets that are
becoming increasingly complex, volatile and unpredictable.
Some of the key observations made in the study are:
Unemployment and staffing agency work rates follow inverse patterns: The higher the
agency work penetration rate, the lower the unemployment rate.
Staffing services create jobs: In the USA, staffing agency services provided 401,000 new
jobs in 2010, the largest annual growth posted since 1994. In Europe, since the low
point of the economic crisis in 2009, the sector has provided up to mid 2011 at least
900,000 new jobs on top of the 3 million agency workers that have remained employed
throughout the downturn. This builds on the performance during the period from 2002
to 2007 when there were 1.3 million new jobs in the industry.
Staffing agency work does not substitute permanent contracts: 74% of user
organisations would not consider hiring permanent workers as an alternative to taking
on agency workers and 62% of them would not have created jobs if they had no access
to private employment services.
Staffing services contribute to reducing undeclared work (unorganised sector): There is
an inverse correlation between the level of illegal economic activity and the level of
agency work penetration. In Italy, agency work was introduced legally by the
government in 1998 as a means to fight undeclared work. In Belgium, private
employment services play a key role in distributing services cheques turning
undeclared domestic cleaning staff into formal workers.
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Staffing agencies provide a stepping stone: In South Africa, just 15% of workers were in
jobs before accessing agency work; the figure rises to 61% afterwards. In France, just
11% of workers had jobs before they took up agency work, and this figure jumps to 66%
working due to agency work. In Norway, the percentage of people employed jumped
from 16% to 65% due to agency work. In Sweden, labour market participation of agency
workers rose from 34% to 85%.
Staffing agencies help young people to enter and stay in labour markets: 35% ofstaffing agency workers in Europe are under 25 years of age. Agency work is often their
first opportunity to gain work experience.
Target groups benefit from staffing agency services: 66% of staffing agency workers
were unemployed before seeking help from private employment agencies. In addition,
older workers (over 50 years) represent an increasing share of agency workers: in France
and Belgium, the share of older workers as a percentage of agency workers is increasing
at twice the rate of older workers in the wider labour market.
Staffing companies adapt skills to sectoral shifts: In the USA, the professional sector
(i.e. higher skilled agency workers) today accounts for 55% of the staffing market
compared with just 36% back in 1995, reflecting the overall demand for a higher skilledworkforce. In France, the percentage of agency workers placed in service industries has
risen some 10% in the past ten years, reflecting and accompanying the shift to a more
services-oriented economy.
Staffing companies create skills: In 7 European countries (Belgium, France, Luxembourg,
Netherlands, Italy, Spain and Austria), sectoral training funds managed by social partners
have been established to facilitate access to vocational training for agency workers.
More than 500 million are invested every year by these training funds in schemes
specifically designed for agency workers.
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Staffing Companies: The
Indian ExperienceAccording to the CIETT / BCG report, in India, where the labour market is highly fragmented,
organised employment (based on formal, written employment contracts) has been stagnant
for many years leaving unorganised employment (without written employment contracts or
undeclared) that is responsible for some 80% of the workforce. By creating new, formal job
opportunities each year, the temporary staffing industry plays a key role at institutional
level in reducing both unemployment and undeclared work. For the workers, the industry
provides decent work, safe working conditions and a reassurance that they will be paid.
Rights such as social security which temporary staffing industry offer their agency workers
are rare in India where some 350 million workers are not organised formally and so receive
no such entitlements.
According to the TeamLease Temp Salary Primer 2011, India has an estimated 90 million
temp workforce, currently, of which about 500,000 are engaged by the organized sector
(about 0.55%). The contract duration of a typical temp job in India varies between 2 months
to 18 months this is very close to the global mean duration of 3 months to 24 months. The
Indian temp staffing industry has added close to 75,000 temp jobs in 2010-11.
The CIETT / BCG report notes that in emerging markets such as India, where employability is
a significant problem, Temporary Staffing firms are serving a crucial role. They deliver the
specialist knowledge needed to navigate the complex regulatory framework for organised
labour with different labour compliance requirements across the countrys 28 States and 7
territories, and no less than 22 recognised languages. As existing experiences show, one
change in an organisations social security scheme may require 26 different approvals and
many multi-national companies find they dont have the knowledge or the connections to
manage these complexities.
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Temp Staffing In India: The
Pending Reforms AgendaIndia has more than 100 labour laws, more than most other countries of the world.
Moreover, there is considerable over-lapping of several statutory provisions. For example,
there is requirement of a canteen, rest rooms and first aid facilities not only in the Factories
Act, 1948 but also in the Contract Labour (Regulation & Abolition) Act, 1970 and the Inter-
State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979. Lack
of uniformity in coverage both to establishments and employed persons causes a lot of
confusion. Variations in definition of words & expressions used in various labour laws adds
to this. In fact, basic terms such as employed persons and wages have been defined
differently in the various labour laws. A person covered under the labour laws has been
referred to either as an employee (e.g. E.S.I Act, 1948; M.W. Act, 1948; EPF & M.P Act,1952; P.B. Act, 1965; P.G. Act, 1972) or as a workman (e.g. W.C Act, 1923, I EL (S.O) Act,
1946, ID Act, 1947) or as a worker (e.g. Apprentices Act, 1961, Factories Act, 1948) or
simply as an employed person as in the Payment of Wages Act, 1936.
Even in the social security laws of ESI Act, 1948 and the EPF & MP Act, 1952, which define
the term employee in almost identical words, there is a marked difference in scope of the
term wages in these two acts. Under the EPF & M.P. Act, 1952, PF contributions are
payable only on basic wages, dearness allowance, retaining allowance. But under the ESI
Act, 1948, the term wages is very wide and all-embracing.
There is need to move from complexity to simplicity and from multiple labour laws to single
labour code. It may be argued that there are certain practical difficulties to formulate a
single common labour code having uniform definitions all through & applicable to all
categories of employees and establishments. However, a beginning can surely be made in
integrating those enactments, which cover subjects having common objectives. For instance
the T.U Act, 1926, I.E (S.O) Act, 1946 and ID Act, 1947 can be combined into a single law
entitled Industrial Relations Act Similarly, these can be a single Act on wages, covering P.W.
Act, 1936, M.W Act, 1948, P.B. Act, 1965 and E.R. Act, 1976. Like-wise these can be a single
law on social security measures amalgamating W.C act, 1923, E.S.I Act, 1948, E.P.F & M.P
Act, 1952 and M.B. Act, 1961 and P.G Act, 1972. A comprehensive social security cover
could make a single contribution and a single return possible instead of separate
contributions and returns under the E.S.I. Act, 1948 and E.P.F. & M.P. Act, 1952. The
judiciary also faces a difficulty while defining the term or components of Basic Wages.
Different courts have different rulings on PF and ESIC applicability. This has resulted in filing
of various writ petitions across the country by the aggrieved and leads to a tremendous
amount of confusion.
The following are issues that the Indian Staffing Federation would like to submit for
consideration.
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Short Term Issues
A.Overall Issues
1. Rationalization of Inspections:
Each establishment is liable for inspection by several Inspectors with little co-ordination.
There are half a dozen or so Inspectors appointed under various labour laws who drop in
quite often, one after the other, prima facie to look after the compliance of statutory
provisions.
Not only cumbersome provisions of law and procedures which virtually gag the industry are
needed to be done away with but the harassment caused by frequent inspections also have
to be eliminated.
Recommendation
Labour inspections should be regulated in such a manner that it serves the purpose of
guidance in compliance with the statutory provisions, instead of causing harassment. There
should be only one routine annual inspection by all the Inspectors (namely Labour Inspector,
Factory Inspection, ESI Inspector, Provident Fund Inspector, Welfare Inspector, Statistical
Inspector etc), which should be coordinated and organized jointly by different agencies and
that too after reasonable prior notice so that the clerk/officer concerned is there to make
available the requisite records.
Also, as the Inspections happen without any intimation, the person attending the Inspection
may not be aware of the availability of certain documents in their premises. Hence there is a
need for prior intimation.
2. Computerization of Records
Almost every Act requires the employer to maintain a set of registers and submit periodic
returns. The load of paper work involved is enormous. Moreover, the effort spent to
complete these formalities is not commensurate with the utility of such registers, returns
and notices. Besides, there is a lot of duplication and overlapping.
Most companies today have adopted the use of IT to maintain all their records. However,
the Inspecting Officers insist on maintenance of manual registers, which involves enormous
time and paper work.
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Recommendation
It is suggested that Inspecting Officers be directed to accept computerized printouts and not
insist on the maintenance of manual records.
Also as per provisions of the Information Technology Act, 2000, records maintained in
electronic form are admissible as evidence in any court of law. Therefore, all records
maintained in electronic form or in digital form should be admissible and acceptable by one
and all authorities set up under various labour laws.
In addition, the filing of returns other than those that are annual in nature should be
allowed online or in soft copies as duly authorised by the relevant signatory. Gradually all
the returns should be allowed to file online and/or in soft copies.
3. Minimum Wages
Definition
Suggestion
It is suggested that a clear notification is issued as to what is to be considered as Minimum
Wage i.e. Basic + DA or Gross (sum of all Allowances).
Harmonisation of minimum wages
Some industries fall under Central Government jurisdiction and yet others in state
government jurisdiction. The minimum wage rates in both cases differ. For example,
Coimbatore falls under Zone B as per Central Minimum Wage Act. Minimum Wage as per
Central Zone B for Skilled is Rs.7,098/- while as per Tamil Nadu State rules it is Rs.3,654/-.
Suggestion
There is a need to harmonise the minimum rate and remove anomalies such as the one
cited above.
B.Provident Fund
1. Code Number AllotmentThe process to obtain registration for an employer is very tedious. The application requires
details and documents that may not be relevant from the Provident Fund perspective. The
process takes a minimum of a month to complete.
As a result, contributions are remitted without the code number. There is a delay in filing of
initial returns detailing the employees as well as in filing the regular monthly returns.
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Recommendations
There is a need to simplify the application form with the following details:
Certificate of incorporation, PAN/TAN allotment letter issued by Income Tax Authorities,
to substantiate ownership.
Of Responsible Person(s) for the relationship with EPFO with the details such as his/her
address, phone number, email id etc Number of employees for whom coverage is sought.
2. Remittances
Remittances of contribution and charges are done through the branches of State Bank of
India (SBI) by way of challans and cheques. It has been noticed that SBI branches return the
challans with acknowledgement only after realization of cheques. SBI branches also go by
jurisdiction and refuse to accept challans of other jurisdictions.
There is a delay in reporting the remittance to EPFO. The process is very tedious as each
company need to make several visits to the SBI Branch.
Recommendation
There is a need to switch to electronic transfers enabling remittance of Contribution directly
to the EPFO account.
3. Returns
Companies are required to submit multiple returns to the EPFO. These include:
Monthly Returns detailing the contributions and charges paid and the others detailingthe new additions and deletions for the earlier month
Yearly returns detailing individual employee wise contributions as well as the
consolidated detail for each employer.
While the EPFO accepts soft copies, the same is only accepted when it submitted along with
the hard copies. This also leads to clutter at the EPFO offices and is causing huge storage
and record maintenance issues.
Recommendation
It is suggested that EPFO design a single monthly return which can be submitted as a soft
copy and can be uploadable directly into the EPFO data base.
The EPFO could create an Electronic Data Interface, to enable submission of return online
through internet or file transfer through internet. Once that is done the facility could be
linked to e-payment of contributions and charges.
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4. Procedure for Transaction Processing
The EPFO requires companies to fill out multiple forms for various transactions, such as
Transfer-ins & Transfer-outs due to job changes, Settlements due to termination of job &
Withdrawal for housing etc. There are different processes for each type of transaction.
There are also differences in processes between EPFO offices. It has been found that for
want of proper records, EPFO relies on Employers for processing transactions of theemployee members.
This has led to employers and employee members not being clear about the processes and
requirements. The lack of clarity often leads to incomplete applications being files which
leads to delays in processing and multiple visits to the EPFO.
Suggestion
There is a need to simplify the forms and devise one common form for all transactions.
In the long-term, there is a need to:
Create an integrated national database of all the PF members and Employers.
Provide an employee wise identification number which can be carried across
employments and Locations.
Standardize application formats and web enable entire transaction processing
5. Turnaround Time for Transaction Processing
Currently, there is no fixed timeline for completion of any transaction. Internally, EPFO
offices insist on a 30 day timeline for settlements. It has also been noticed that to meet
internal deadlines, EPFO staff refuse to accept application forms beyond a certain number.
This sometimes leads to rejections on frivolous grounds.
Suggestion
There is a need to adopt stringent Service Level Agreements (SLAs) for every transaction.
Interest should be payable to the employee member if the EPFO delays payments beyond
SLAs.
6. Individual Account Information
The PF Scheme provides that the Members to be updated every year about their balance.
However, there is no time limit for the same and members are not informed of the status of
their application on transfer in/outs
This leads to the Employee / member being in the dark about the quantum of corpus in his
name at any time.
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Suggestion
There is a need to:
Create an integrated national database of all the PF members and Employers. Provide an
employee wise identification number which can be carried across employments and
locations.
Standardize application formats and web enable entire transaction processing
7. Inspections, Hearings and Proceedings
Show Cause Notices and Inspections have generally been perceived as instruments for
harassment. It has been found that companies need to make frequent visits to EPFO offices
to settle issues that need not have arisen.
Suggestion
It is suggested that as a one-time effort, all the offices of the EPFO need to update their
database based on the latest returns and challans and if there are gaps take the help of the
employers to fill the same. This would ensure EPFO has the correct info on compliance
status and the Regulatory wing of EPFO could concentrate on the enforcement of the PF Act
and its schemes on the errant employers, while the compliant ones are served adequately.
8. High Administration Charges
The EPFO Charges Employer 1.11% of the Basic Pay of all employees for providing the PF
Services. With the process of exemption (process allowing the employer to run the PF
scheme internally with no intervention from EPFO) being completely stopped; employers
are forced to pay these high fees.
As a result of this, there is resistance from employees to participate in the PF scheme
Suggestion
It is suggested that the process of granting exemption, which is a right of an employer under
the PF Act and Scheme, should be immediately reinitiated.
9. Third Party Outsourcing
Many employers have outsourced the activity pertaining to PF to third parties/consultants.
The consultants are unorganized and thrive on their rapport with the EPFO staff. There are
professionally organized corporates providing service relying on process capabilities and
knowledge base who are not recognized by EPFO.
In spite of being professionals with adequate knowledge base and understanding of EPFO
workings, such outsourcers are not in a position to play the role of bridge between EPFO
and employers.
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Suggestion
It is suggested that outsourcing service providers in the area of PF administration based on
certain minimum criteria such as infrastructure, professional capability etc. be recognised.
These Recognized Outsourcers should be made responsible for the compliance of their
clients and allow them to play the role of facilitators between EPFO and Employers.
10. Exemption Process for New Companies
New companies that cross the threshold of 20 employees are compulsorily required to
comply as un-exempt by remitting their contributions to the EPFO. This involves:
Remittance of contributions till grant of exemption to be remitted to EPFO
On obtaining exemption, transfer of balances of individual employees back to the
exempt trust.
A number of new companies (IT, Multinationals, etc) that have large growth plans would like
to provide retirement benefits including Provident Fund by setting up a private trust from
day one. However, these companies are forced to comply as un-exempt for their
application for exemption to be considered. This exercise involves the EPFO allocating
resources for an employer who, in any case, wants an exemption
Suggestion
It is suggested that companies may be granted exemption under clearly laid guidelines
within 30 days of their meeting any criteria of coverage under the PF Act. They may be
allowed from the date of coverage continued to remit their PF contributions to their own
Provident Fund Trust. This ensures that the resources of EPFO are not wasted on anemployer who is capable of administering the Provident Fund for the benefit of his
employees. To safeguard against these companies folding up and leaving the employees in
the lurch, EPFO may insist on a Bank Guarantee for a percentage of salary based on time
bound approval of exemptions.
11. Exemption Process
The process of granting exemption has been found to be very tedious. The entire process
takes more than a year and depending upon the appropriate government, often gets
delayed beyond that period. The power granted to RPFCs under Para 79 of the EPF Scheme1952 to issue relaxation orders now stand withdrawn. This order would have allowed the
employer to avail the benefits of Exemption till the final approval is granted by EPFO at
Delhi.
The delay causes avoidable friction between the Companies and the EPFO, with the
applicants for exemption feeling aggrieved at the whole situation.
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Suggestion
It is suggested that clear guidelines (size of employees, base of calculation, profitability, etc)
and simple documentation need to be specified.
Any employer employing more than 500 employees should be given automatic exemption.
There is a need to re-instate the power of relaxation to RPFCs with a caveat that it should
only do so if it is satisfied compliance status of the applicant.
There is a need to delegate the power to notify exemption to the CPFCs or even RPFCs.
There is a need to prescribe an automatic approval or time-bound approvals for the process.
12. Regulator vs. Administrator
EPFO enjoys the power of Regulator while being the administrator of PF Scheme.
As a result, it has been found that EPFOs role as a service provider role is compromised and
the regulator role is emphasized. There is often a conflict of interest in decisions regarding
granting of exemption. The focus of the EPFO staff is not on service but on compliance.
Suggestion
It is suggested that EPFO should only be a administrator providing PF services to the
Employers and Employee members. All regulatory powers should be shifted to the recently
constituted Pension Fund Regulatory and Development Authority.
13. PF Withdrawal submission limit
The EPFO has asked companies to submit only 500 Forms per month and that too within 1st
week of the month. This becomes a major hindrance for staffing companies who have many
more people on their rolls.
Suggestion
It is suggested that the PF Office create a special cell for staffing companies as there will be
high turnover due to which, there will be high No. of PF withdrawal submissions.
C.Employees State Insurance
1. Centralized Compliance Sub-Code Number Allotment
As per ESIC rules, companies are required to obtain a sub-code number in every location
where there are employees eligible for ESI benefits. This is in addition to the registration at
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the principal place of business. A local Address is a requirement for a Sub-Code which is
allotted by the local Branch of Office of the ESIC.
For employers with dispersed employee basis, typically for service oriented companies with
national/state wide presence, they may not have offices in a location but will have number
of employees in that location.
Employers are not able to obtain sub-codes at remote locations away from the cities/towns
where they do not have offices. Their employees located at such locations being denied ESIC
benefits.
Suggestion
It is suggested that ESIC:
Accepts the corporate address of an employer as the address for communication for all
the sub-codes across the country.
Allot sub-code numbers at all locations where ever employees are present
Such sub-code could be issued with the prefix/suffix of the locations from the mainbranch office itself.
Internally the communication could be forwarded to the respective branch offices of
ESIC by the main branch as and when they are allotted.
2. Insurance Numbers and Identity Cards
Employees are required to file a declaration (the basic details of employee, their
dependants) with the family photographs at the time of joining with their employer. The
Employer in turn is required to submit the same to ESIC offices within 10 days of the
employee submitting the declaration with his employer. Employees are issued an insurancenumber and a temporary insurance card (essentially an identity card) which is a must to get
the benefits.At the end of three months from the date of joining, the temporary cards are
substituted by permanent cards. The cards are issued to the employer and employers
distributes to his employees.
This process ideally suited for a single location employer. It takes a lot of time and results in
substantial time gap since the time of the employee joins and starts contribution to the time
he is in possession of the identity card to avail benefits. When the employees are asked to
join at a short notice during which time he or she is not able to get the family photographs
as required. In the case of employees required to travel immediately on joining duty whichagain delays the process of submitting the declaration forms. With issues related to sub-
code discussed earlier, the employees at locations where their employer is not able to
obtain sub-codes will not be able to get the identity cards issued by the local ESIC office.
Suggestion
It is suggested that employees should be allowed to avail medical benefits at any of the ESI
Facilities for the first 6 months from the date of joining based on that certificate.
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ESIC could insist on safeguards such tamper proof certificate with proper authentication to
ensure that only genuine employees and their dependants are issued such certificate
ESIC should allow the employers to serially number the Temporary Identification Certificates
and use the same numbers in the half yearly returns and the Registers.
3. Permanent Identity CardsAt the end of three months from the date of joining, the temporary cards are substituted by
permanent cards. The cards are issued by ESIC offices to the employer and employers
distributes to his employees.
This again designed for a single location employer and the employee does not get the
permanent card in time. Employees at distant locations will not be able to avail benefits till
the card reaches him.
Suggestion
It is suggested that ESIC:
Removes the requirement of Temporary Card followed by Permanent Card
Allots the Permanent Card or the ID card (issued by Employer) to all employees from 1st
day of employment. The ID Cards should be printed with holograms of the employer and
the ESIC and could be made tamper proof in many ways such as Bar Coding.The same
can be deactivated the moment an employee goes above the ESI threshold or leaves the
employment.
4. ESIC Benefits for Employees
a) Accident Claim benefit
A claim benefit is required to be made off-line with multiple follow-up and process for
realizing the benefit. This leads to delays in getting benefit for the employee and
dependants and hassled for employer in the administrative follow up route.
Suggestion
Any accident claim should be allowed to be made or registered on line. Death/Permanent
disablement compensation should be at par of Workmen Compensation Act.
b) Maternity benefit under ESIC
There is a maternity benefit under ESIC as well as benefit under Maternity benefit Act,
which leads to confusion in actual benefit to be given
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Suggestion
The disparity for getting maternity benefit under ESI Act has to be removed. It should be as
stated in Maternity Benefit Act.
c) Employees travelling outside the ESIC Applicable Zone
Any employee traveling outside the ESIC applicable zone is required to notify ESIC
authorities prior to travelling in order to avail of benefits
This increases the administrative work for the employee and the ESIC authorities. Due to the
above and delays in the filing of this travel application, employee does not get benefit, if
required, while traveling since the Local ESIC Hospital is not notified in time. This leads to
employers paying out from their pocket to take care of medical expenses for their traveling
employees (like sales etc).
Suggestion
It is suggested that ESIC:
Issues Permanent Cards from 1st
day of employment
Issue Permanent Card which can be used all over India, at any ESIC hospital/ facility
Move towards connecting ESIC office electronically to facilitate the above
5. ESIC Biometric Cards
The introduction of biometric cards by the ESIC is a welcome measure and removes the
need for the employee to obtain Form 37 every 3-6 months. However, these cards have not
been received as yet.
Suggestion
It is suggested that the issuance of these cards is expedited.
6. Central payment of ESIC and Central Half Yearly Returns
Central payment of ESIC and Central Half Yearly Returns are allowed. However, companies
still get notices stating that their returns are not submitted on time. Also, employees are
denied ESIC benefits on the grounds that the company has not submitted their returns.
This is despite making all payments on time and submitting Returns on time centrally and
providing a copy of this submission to the Branch Offices.
It is suggested that this process be streamlined and all ESI branch offices be intimated by the
ESIC headquarters electronically once a company has filed its returns.
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D.Contract Labour
1. National/State-wise Registration of Principal Employer
Rule 17(1) of the Contract Labour Central/state Rules currently requires the Principal
Employer to apply for Registration at the location where Contract Labour is to be engaged.
Suggestion
It is suggested that Rule 17 (1) should be replaced by the following rule:
Every application by a Principal Employer for the grant of a Registration shall be made in
triplicate in Form I to the appropriate National (State) licensing officer at Delhi (State
Capital)
This will remove one of the biggest constraints on compliance which requires the Principal
Employer to obtain location-wise Registration.
2. Form I - Application for Obtaining Registration
Suggestion
The Application format should be changed to collect general information about the Principal
Employer and the Contract Labour likely to be engaged across the State/Country as the case
may be.
The application for Registration should capture all the info required by the authorities toissue the Registration.
3. Contract by Contract License for Temping firms
Rule 21(1) of the Contract Labour Central/state Rules currently requires the contractor to
apply for license at the location where the establishment to which the contractor is
supplying Contract Labour is situated.
Suggestion
It is suggested that Rule 21(1) should be replaced by the following rule:
Every application by a Contract for the grant of a license shall be made in triplicate in Form
IV to the appropriate National (State) licensing officer at Delhi (State Capital)
This removes one of the biggest constraints on compliance which requires the contractor to
obtain location wise licenses.
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4. State / Nationwide Licenses
Suggestion
The state/nationwide licenses could be issued subject to certain guidelines/norms. It is
suggested that a new Rule 21(1a) be introduced which would prescribe the conditions for
granting state / nationwide license as follows:
Every such as under Rule 21(1) shall be granted only if the following conditions are fulfilled
by a contract:
a) Should be a Company incorporated under the Companies Act, 1956
b) Should have offices in all the metropolitan cities
c) Should have PF/ESI registrations.
d) Should employ one direct employee for every 150 contract labour
e) Should possess IT infrastructure to provide help desks on salary, benefits and rights
of Contract Labour.
5. Form IV - Application for Obtaining State / Nationwide
Licenses
Suggestion
The Application format should be changed to collect information regarding the conditions
for license as prescribed above. The application for license should capture all the info
required by the authorities to issue the licence.
6. Cumbersome and redundant paperwork
Rules 67/68/69 & 71 provides that the wages shall be paid on working day / working hours,
in currency etc, date of payment etc to intimated to the Contract labour etc
Suggestion
It is suggested that these rules should be replaced with the following rule:
All the payment of wages shall be by way of cheque or by way of transfer of funds to the
bank account of the Contract labour
Provided that a Contract Labour does not have a Bank Account, the wages could be paid by
Cash and such payment shall be acknowledged by way of signed receipt by the Contract
Labour.
Rules should reflect the current realities of the payment wages methods adopted by the
Industry
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7. Format of Register of Workmen and Muster Roll
Rules 75, 78 & Forms XIII & XIV provide the format of Register of Workmen & Muster Roll
which again requires the Principal Employer and contain mostly the same information.
Suggestion
Only the Register of workmen should be retained and the details relating to the Client to be
provided against each workmen as the place where he/she is working to avoid the
duplication of forms.
8. Format of the Wages Register
Rule 78 & Form XVII specifies the format of the wages register and again asks for Client wise
register and requires the signature or thumb impression of the Contract Labour.
Suggestion
It is suggested that the Wages Register should contain the details of the Bank
Account/Cheque Number/Receipt Details depending upon the mode of salary payment. This
should be allowed to be maintained in soft copy doing away with the requirement of
signature/thumb impression of the Contract Labour. This will enable the maintenance of the
Wage Register with updated information on a monthly basis.
9. Rule 79 & 81
Rule 79 & 81 refer to requirement display an abstract of the Act and display notices showing
the rates of wages, hours of work, wage periods, dates of payment of wages, names and
addresses of the Inspectors having jurisdiction and date of payment of unpaid wages. The
rules require that the Contractor should display the same in English, Hindi and in the
language spoken by the majority of workers.
Suggestion
It is suggested that the Principal Employer should be made liable for the same as the
contract employees are on the worksite of the Principal Employer.
10. Rule 80(1)
Rule 80(1) of the Contract Labour Central/state Rules requires the contractor /Principal
Employer to maintain all records in hard copy and within a particular distance.
Suggestion
It is suggested that Rule 80(1) be replaced by the following rule:
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All registers and other records required to be maintained under the Act and rules, shall be
maintained complete and up-to-date in either physical or any electronic format by the
Contractor.
This Rule should be made applicable and mandatory across India and not left to the
discretion of the Local Labour office.
11. Uniform rates of Security Deposit and License Fees
under CLRA
It has been observed that the rate for security deposit and license fees vary from state to
state thereby leading to a lot of confusion.
Suggestion
This process needs to be made uniform across the country as the process to be followed is
the same.
12. Termination
Suggestion
In cases of termination, it is suggested that the Principal Employer be held responsible as all
terminations are as per instructions of the client and not of the staffing company.
13. Overtime
Suggestion
It is suggested that the Principal Employer or the client should be held responsible for
authorising and maintaining a record of overtime as it is principal employer who is getting
work done from the employee.
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Long Term Issues
A.Industrial Disputes Act, 1947
1. Section 25G: Procedure for Retrenchment Last come
First Go
This provision is hindering smooth enforcement due to stringency in flushing out employees
with greater calibre simply on the ground of being junior.
Suggestion
An amendment is required to this provision so as to ensure the employees with calibre,
competencies, knowledge & skills can be retained by employer irrespective of his/hercommencement of tenure with the employer. The provision should allow employer to
exercise his option to select employees to be retrenched based on performance, need and
disciplinary ground.
2. Proviso to Section 2(s) definition of workman
This provision of ID Act, 1947 should have clear and widespread coverage on all classes of
employees whereas the definition of workman specifies a specific class of employees in a
specific nature of work which simply puts other class of employees beyond coverage of the
Act and becomes a factor of confusion amongst employers, employees and theGovernments in determining the beneficiaries of the legislation.
Suggestion
Definition to be amended as employee which may include workman as a class of employee
with specific nature of job in specific nature of industries such as factory, mines, plantations,
port, railways, air transport services, etc.
3. Notice of Change (Sec.9A)
As per Sec 9A, no employer who proposes to effect any change in the conditions of services
applicable to workmen in respect of any matter specified in the fourth schedule to the Act,
shall effect any change without giving to the workmen a notice of twenty-one days for
change, in the prescribed manner. Two of the matters included in the fourth schedule,
which are relevant to the issue are Item No. 10 (Rationalization, Standardization or
improvement of plant, or techniques which is likely to lead to retrenchment of workmen)
and Item No. 11 (increase or decrease in the number of persons employed).
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This is leading to employers suffering due to slower execution of issues pertaining to Fourth
Schedule which often leads to losing business due to a delay in decision making in line with
the market needs.
Suggestion
Section 9B of the Act empowers the State (appropriate) Government to grant exemptions
from the provisions of Sec 9A. Items No. 10 and 11 of the fourth schedule should be deleted
in view of the changing industrial scenario as it will be in the larger interests of the workmen
to ensure competitiveness of the unit in which they are working.
4. Special Provisions relating to Lay-off, Retrenchment and
Closure (Chapter V-B)
Chapter V-B of ID Act, 1947 applies to an industrial establishment (not being an
establishment of a seasonal character or in which work is performed only intermittently) in
which not less than 100 workmen were employed on an average per working day for thepreceding 12 months.
The stipulation of 100 workmen has become totally obsolete. In several segments of the
service industry e.g. BFSI, Retail, several establishments have much larger employee
strength and therefore obtaining permission for various issues from the department
becomes a problem and leads to huge financial losses for the employers.
Suggestion
The number filter of 300 was the limit prescribed originally when chapter V-B was added in
the ID Act in 1976. It was reduced to 100 through an amendment in 1982. This number of
100 workmen should be increased to 300 employees to ensure higher investment, which
would in turn result in increased employment opportunities. Simultaneously, it will also
attract foreign companies to invest more in India.
5. 25N (b) the prior permission of appropriate Government
on an application made in this behalf.
Existing provisions call for prior permission to be obtained from the authority for
retrenchment which again delays the process and defeats the purpose of the employer
Suggestion
Additional retrenchment compensation @15 days for every completed year of continuous
service or part thereof in excess of six months subject to a maximum limit upto Rs.5.0 lakhs
should replace the existing provision for a smooth settlement of industrial disputes.
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6. Abandonment of Service
Sometimes the workmen just leave the establishment and cease to come, or over-stay the
sanctioned leave without intimation. Their intention in such situations is mostly to abandon
the service but they do not submit a formal letter of resignation and this creates problems
for the employer to plan his manpower requirements.
Suggestion
Retrenchment, which in common parlance, means the termination of the services of surplus
workmen has been given wide meaning in Section 2(oo) to include all types of termination
of services of the workmen except resignation, expiry of the specified period of
employment, dismissal for misconduct and continued ill health. It is therefore, suggested
that scope of the term retrenchment under sub-clause (a) of Section 2(oo) should be
confined only to termination of surplus labour and may be amended to include
abandonment of service in terms of standing orders, or conditions of employment as
voluntary retirement of the workman.
7. Go-Slow
In recent times the practice of go-slow/ work to rule has become a major means of
industrial action by workmen as there is deliberate delay of production by them. The
Supreme Court has held that go-slow is a pernicious and dishonest practice which cannot
be regarded as anything but very serious misconduct and a worker who wilfully holds up the
wheels of production deserves to be removed without tears. But it is not a strike as the
term is defined in Section 2(q) of the Act because there is no cessation of work.
Strike under section 2(q) means a cessation of work by a body of persons employed in any
industry acting in combination, or a concerted refusal, or a refusal under common under-
standing of any number of persons who are, or have been so employed to work or to accept
employment.
Suggestion
Section 2(q) defining the term strike needs to be enlarged to include obstructive practices
such as go-slow or work to rule and mass casual leave, which are more pernicious than
strike per se, It may be mentioned that go slow and sit down have been listed as unfair
labour practices on the part of the workmen at item number 5 of part II of the 5th scheduleread with Section 2(ra) of the Act.
8. Grievance Settlement Authority: Formal notification of
Section 9-C
Section 9-C which provides for setting up of grievance settlement authorities in industrial
establishments employing 50 or more workmen, was inserted in the main Act more than
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two decades ago by the Industrial Disputes (Amendments) Act, 1982. However, no formal
notification has been issued so far.
Suggestion
It is suggested that necessary formal notification to enforce this Section may be issued
without further loss of time. This would expedite settlement of grievances at the shop floor
level, which may otherwise snowball into major industrial conflicts resulting in interruption
in production programmes.
9. Proviso to Section 2(s) definition of workman
This proviso covers all the workmen by nature of work and not by salary/wages, which
covers even a Pilot.
Suggestion
Clause VI in Section 2(s) of definitions be amended so that it is line with other labourenactments like ESI, Bonus Act, PF Act etc.
B.Employees Compensation Act, 1923
Major Amendments under the Act (Notification No. S.O. 1258(E), dated 31-5-2010):
The move to amend the title of the Act to Employee from Workmen is welcome and will
lead to a more widespread coverage to include persons in clerical cadre and casual
employees. The amendment will benefit a large section of the working class who were
deprived of the fruits of the legislation until the amendment took place. An enhancement in
the wage limit for calculation of compensation is a big leap to social security amelioration
which would enable receiving of a higher quantum of benefit by beneficiaries. It proves the
transformation of governments view to maximise the security to working class for
strengthening the economic growth of the country. However, a few such provisions are still
considered archaic and needs to amended, as discussed below.
1. Liability of Contractor in the event of accidental injury
resulting death or disablement to the contract workman
at Principal Employers (PE) establishment
This unnecessarily puts the burden on the Contractor for not fault of his as the
establishment & workplace where the contract workman met the accident belongs to the
PE. For any defective machinery, or unsafe working condition, on which Principal Employer
is having the ultimate control, the liability of the Contractor is very much inappropriate
under the law.
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Suggestion
The Principal Employer should be held liable for any sorts of accidental injury to the contract
workman who is engaged in his establishment / office and ensuring safe & secured
environment is his prime responsibility.
2. Coverage of employees not covered by ESI ActESI Act, 1948 provides for day to day care to covered employees but in non-implemented
areas which are covered under the EC Act, 1923, employees are only entitled to receive
benefits in case of accidental injury out of employment and no daily medical care such as
sickness or medical benefits are provided under the EC Act, 1923.
Suggestion
It is suggested that a provision should be made for a Dispensary Service or service from a
State Hospital for enabling employees to avail sickness and medical benefit.
3. Other issues
Suggestion
It is suggested that the:
Period of disability should be reduced to 24 hours (1 day) from existing 72 hours (3 days)
for enabling an employee to avail the benefit.
Coverage for benefits to be extended to employees in any class specifically those who
are beyond ESI coverage. Aforesaid Acts must be exempted in case the Insurance schemes cover by the Principal
Employer or Contractor offers benefits that are better than those stipulated under the
above Acts. This would be more beneficial for the employees as they will get a better
coverage and medical benefits. This would also be beneficial for the contractors /
employers from dual payment of premium.
C.Payment of Gratuity Act, 1972
1. Contractor liable to pay gratuity to Contract employee
As per the Payment of Gratuity Act, 1972, contractors are liable to pay gratuity to contract
employees. This is a financial Burden on the contractor which is not met by the PE.
Contractors work on thin margins and hence it becomes difficult for them to pay Gratuity on
eligibility (or in Death or Permanent Disablement cases). Besides, the length of service of an
employee in contractors roll also depends on the PEs choice of retaining the old employee
on roll as he/she gets acquainted with the job. This may go upto 5 years / 4 years 240 days
at times.
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Suggestion
The Principal Employer should be held liable for payment of Gratuity to contract employee
like PF & ESI Contribution of Employer which is paid by the PE. Filing of Nomination Form
(Form-F) should be the responsibility of Principal Employer for contract employees.
The Contractors liability should be restricted to payment of wages / salary to contract
employees, provided the same is released by the PE in time.
D.Factories Act 1948
1. Working Hours of Female Employees
According to Section 66 of the Factories Act, no woman worker can be required to work
between 7.00 PM and 6.00 A.M. That is to say they cannot work in the night shift.
Restrictions on the working hours of female employees pose problems for the industryespecially in certain seasons where skilled manpower is not readily available. Also
restrictions in this regard are antiquated with women playing a more assertive role in
society today.
Suggestion
However, the proviso thereto empowers the government to authorize employment
between 5.00 am to 10.00 pm, by issuing a simple notification in this behalf in the official
gazette. The Government may exercise this power to facilitate two-shift operation with
women workers and may require the management to make adequate transport and security
arrangements for the women workers. The Punjab Government has already allowed
employment of women workers during night in the units dealing with information
technology covered under the Punjab Shops and Commercial Establishments Act, 1958, vide
notification dated 6th September 2000.
2. Full Time Medical Practitioner
State Factory Rules requires the ambulance room to be in the charge of a qualified medical
practitioner assisted by at least one qualified nurse and other subordinate staff as directed
by the Chief Inspector.
The requirement of having a full time qualified medical practitioner put unnecessary
additional burden on employer even when medical care is available nearby.
Suggestion
It is suggested that the rules may be suitably amended to empower the Chief Inspector of
Factories to exempt from companies providing of ambulance room where a dispensary is
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situated within 1 km. or a hospital is located within 10 kilometers and an ambulance service
van, with a person trained in first-aid is available within 1 km of the perimeter of the unit.
3. Safety Officers:
Lack of adequate safety training facilities in various states is leading to a shortage of
Qualified Safety Officers in the state as required under Section 40(B) of the Factories Act.
Also the Diploma in Safety offered at Kanpur is very detailed with a lot of focus on chemical
related safety whereas most industries may not require such detailed knowledge.
Suggestion
State Governments should organize such safety-training program in the State. It may hold
industry specific programs with relevant inputs for the industry concerned. Qualified
engineers attending such programs be made eligible for the Safety Officer role in concerned
industry.
4. Definition of Factory in Respect of Small Scale
Establishments
Section 2(m) defines factory as any premises including the precincts thereof:
(i) whereon ten or more workers are working or were working on any day of the
preceding 12 months, and in any part of which a manufacturing process is being
carried on with the aid of power, or
(ii) whereon twenty or more workers are working or were working on any day of the
preceding 12 months, and in any part of which a manufacturing process is beingcarried on without the aid of power.
Suggestion
The definition of Factory should be amended to exempt Small Scale Establishments from its
ambit. Establishments with power, employing upto 25 workers and without power upto 50
workers should be exempted.
In case of factories run by Labour Co-operatives the numbers could be 50 and 100
respectively.
5. Definition of manufacturing process
The definition of manufacturing process in the Factories Act includes packing/repacking or
labeling/stickering
Suggestion
To exclude specifically packing/repacking or labeling/stickering
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6. Extra Wages for Overtime (Section 59)
According to Section 59(1) of the Act, where a worker works in a factory for more than 9
hours in any day or for more than 48 hours in any week, he shall, in respect of overtime
work, be entitled to wages at the rate of twice his ordinary rate of wages.
Suggestion
An amendment in Section 59 of the Act may be made to enable the employer to grant
compensatory-off to the workmen for such no. of hours worked extra beyond 48 hours per
week, provided such compensatory-off is granted within 6 months of extra working in case
an employer is unable to grant such compensatory off shall be liable to pay overtime wages
for the extra hours worked over and above 48 hours per week, to the extent the overtime
working could not be offset by the compensatory off granted to the workman.
Accordingly the provision of extra wages for overtime under Section 59(1) may be amended
suitably to provide for overtime wages only to such number of hours worked beyond 48
hours in a week and to the extent cannot be set-off against compensatory-off within 6
months of such working.
E. Shops and Establishment Act
1. Coverage under provisions of the Act
Currently, the Shops and Establishment Act covers any shop or establishment engaging even
one employee.
Suggestion
The provisions of this Act should apply to corporates registered under the Companies Act.
operating premises as offices for 100 or more of their employees. These offices being
directly owned/leased by the company.
2. Definition of workmen or employee
Suggestion
The definition of employee or workman should exclude a workman or employee drawing
wages/salary, inclusive of allowances, over Rs.3,500/- p.m. or such higher amount as may be
specified by the appropriate Government from time to time by a notification in the official
gazette
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F. The Employees State Insurance Act 1948
1. Inadequate Infrastructure
Employees complain about the inadequate medical treatment at ESI hospitals /
dispensaries. This can be attributed to an inadequate number of ESI dispensaries andhospitals which are situated at distant places, insufficient number of doctors and
paramedical staff and non-availability of medicine, dressings and injections.
Suggestion
It is suggested that in addition to setting up more dispensaries and hospitals and appointing
more doctors and medical staff, the Medical Superintendents should have adequate
financial powers to make local purchases of medicines which may be out of stock.
In fact, the Central Government should make a sufficient budget for medical care available
to Medical Superintendents to remove the dissatisfaction amongst the workers for non-
availability or inferior availability of medical treatment or else allow medical facilities be
contracted through local leading Hospitals/Medical practitioners.
Under Section 58 of the Act, the state government is required to provide reasonable
medical, surgical and obstetric treatment for the insured persons. The state government
may, with the approval of the ESIC, arrange for medical treatment at clinics of medical
treatment at clinics of medical practitioners.
2. Delay in reimbursement of medicine bills
Suggestion
To avoid delays in the reimbursement of medicine bills, it is suggested that the powers and
duties of Medical Referee be vested in Medical Superintendent of ESI Hospital. The time
limit for reimbursement of medicine bills should be specified.
3. Annual Inspection
Suggestion
It is suggested that the annual inspection of each and every establishment may be
dispensed with. Random inspection, after giving due notice to selective employers, may take
place instead to check defaulters. In this regard a certificate of compliance could be
obtained from all employers in lieu of this inspection.
4. Partial reimbursement of Outside Bills
Bills of outside agencies are reimbursed at ESI rates which are below market rates.
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Suggestion
Medicines and paramedical services should be made available by the ESI
hospitals/dispensaries or the bills of certified outside agencies be reimbursed (certain
outside agencies could be nominated as certified agencies) .
5. Coverage to factory and establishmentsAt present, the ESI Act follows the definition of factory as defined by the Factories Act and
commercial establishments engaging 10 or more persons.
Suggestion
In view of changes we are seeking under Factories Act and Shops and Establishment Act, to
small and medium units, the ESI Act provisions should be also amended accordingly to
exclude coverage to small and medium units.
G.Employment Exchanges (CompulsoryNotification of Vacancies) Act 1959
1. Notification of Vacancies
Under this Act, the employer is under no legal obligation to recruit any person who is
sponsored by the Employment Exchange, though it is obligatory on his part to notify
vacancies (Section 4) submit quarterly and biennial returns (Section 5) and give access
(section 6) to authorised Government Officers to records and documents.
Suggestion
The Act should be amended to provide for notification of vacancies in private sector purely
on voluntary basis, to save the employers from unnecessary and unproductive obligations of
Section 4, 5 & 6 of the Act.
H.Contract Labour Act
1. Prohibition of employment of Contract Labour
Section 10 of the Act empowers the Government to prohibit contract labour in any process,
operation or other work in any establishment. There is no specific provision about the
absorption of such contract labour. However, the Supreme Court in the care of Air India v/s
United Labour Union (1997 LLR 288) has held that on abolition of contract labour system,
the principal employer is bound to absorb the contract labour, in their regular service. The
current provisions of the Contract Labour Act do not recognize the role of contractors.
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Suggestion
It is suggested that Section 10 providing for abolition of contract labour should be omitted
from the Act renaming it as the Contract Labour Regulation Act 1970. Regulatory provisions
may also be reviewed and the responsibility of the contractors should be enlarged &
defined. The trend worldwide is to outsource and hiring contract labour with a view to
create a hassle free, cost-effective and flexible atmosphere for the industry. Of courseregulatory provisions should be strengthened to enlarge the responsibility of the contractor
and to ensure that contract workers are paid minimum wages and enjoy the statutory cover
of social security measures provided under the ESI and EPF.
I. Service Tax
The Union Budget 2011 has changed the Point of Taxation Rules (POTR) with regard to the
levy of Service Tax from collection to accrual basis. Effective 01st
July 2011, service
providers will be required to follow the accrual basis to remit service tax charged on their
invoices.
In light of the proposed rules on POTR that would come into effect from 01st
July 2011,
service providers would be required to discharge their liability of Service Tax on accrual
basis, i.e. as soon as invoices are raised rather than on collection thereof as is the case
currently.
The rule does not take into account the principle of credit and From a cash flow perspective
this would mean service providers would have to arrange for increased working capital to
fund service tax payouts.
Suggestion
This rule needs to be revised and the earlier rules restored.
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About Indian Staffing Federation (ISF)
Indian Staffing Federation (ISF) has been founded by leading staffing companies with one
common goal - Staffing India's Growth.
Staffing, though is an established form of outsourcing, India is yet to recognise and adopt Staffing
as an effective means to running its businesses. With a penetration of just 2%, ISF is championingthis industry, with a suitable and supporting regulation. The Staffing Industry provides a platform
for recognised employment, work choice, even compensation, annual benefits and health
benefits for the temporary workforce that constitutes almost 70% of Indias total workforce.
The purpose of ISF is to enhance long-term growth and ensure its continued ability to make
positive contributions to the economy as well as the society through the services of the Staffing
Industry. The principal focus of the Federation's activities shall be triangular employment
relationships, in which the staffing company is the employer of the temporary worker, who works
under the supervision of the user company.
Objectives
Indian Staffing Federation has set upon itself, several objectives. The Federation shall:
1. Champion sustainable growth of the Staffing Industry
2. Be the authoritative voice of the Staffing Industry
3. Establish quality standards for the Staffing Industry at large & a code of conduct for the
members
4. Increase visibility and enhance the image of the Staffing industry & strengthen its
representation
5. Promote Staffing as an effective enabler of socio-economic growth
6. Develop Staffing Industry as a choice of employment
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Indian Staffing Federation
D-6, Sector 10, NOIDA, UP 201 301Ph: +91-120-4510900
E-mail: [email protected]: www.indianstaffingfederation.org