Recently, while I was changing jobs, I went through my previous employment contract and the appointment  letter to analyze what are the real-life implications of my resignation. Sadly, due to lack of legal knowledge, I could not claim my bonus based on the agreement.

I realized I had to know how to draft a resignation letter. However, the rest of the process was still unclear to me as an employee. This goes to show how clueless even a lawyer can be sometimes. In my defense, I was just excited to get my first job and went through the agreement for vulnerabilities. But I at that time did not think through about the implications of my resignation. There is no justification for my ignorance, even being a rookie.


Turns out that my employment agreement had made it binding for me to serve a notice period of three months before leaving the job. Imagine staying in a position you have formally given up on! It is not easy.

I had to either pay an equivalent of three month’s salary or serve the notice period. I, like many, had not thought through while signing the employment terms. But my ignorance had come back to bite me! Thankfully there was no non-compete or non-solicitation clauses; otherwise, I would have been restricted from working in the same industry for a while.

While I wait for my full and final settlement payment which has been due for over a month, I figured why not find out more about employment and labour laws. I have again signed a contract, which was one-sided. Who knows what I need to know this time around?

To say there is no method to this madness is untrue. There are laws and regulations in place which are to be adhered to. What all don’t I know? I have never paid much attention to the labour laws, and my rights or claims thereof. I mean, I did do that one semester (or two?) in college, but I don’t remember much of it.

I thought I would put down my papers and after three months, I will be free. But was I wrong or what? Turns out there are ‘inner mechanisms and protocols in place to facilitate a successful transition’. Not my words, it is a direct quote from my Human Resource Manager. As a lawyer, am trained to read between the lines, but this was a no-brainer. I had to fulfill and do a set of things before attaining freedom.

Some of the routine tasks were reasonable like fulfill my ongoing responsibilities and create a smooth handover of work. But then there were weird requests from bosses to share the hard disk before I had done the hand-over! I mean how can I possibly work till the end of three months if I hand over my hard drive 3 days prior! Then I had to remind my HR for my Form 16 repeatedly. By law, my employer has to provide me with certain documents. But it took a month of nagging, begging and cajoling to ensure that I get what is rightfully mine!

Not knowing about industrial and labour laws did not bode well for me in hindsight.

So here is a quick refresher for all the in-house lawyers, practicing lawyers and anyone who wishes to be employed someday- know your laws.

So what are the important rights of a private employee under by the Indian labour law?

Although there are terms of employment defining the specific terms, the employees in the organized private sector are governed by various laws such as Payments of Bonus Act, Equal Remuneration Act, Payment of Gratuity Act, Employees Provident Fund and Miscellaneous Provisions Act, Employees’ State Insurance Act, Maternity Benefit Act, etc.

The right to safe working place with basic amenities, right to appropriate working hours, right to any assured incentive etc. are protected under the law. Here’s a list of essential rights of an employee under the various laws and regulations:


Right against discrimination at workplace

It is a right of every citizen of India to be indiscriminated. According to article 16 (2) of the Indian Constitution, no citizen can be discriminated against, or be ineligible for any employment or office under the state, on the grounds only of religion, race, caste, sex, descent, place of birth or residence or any of them. Adherence to the rule of equality in public employment is a being feature of Indian Constitution and the rule of law is its core, the court cannot disable itself from making an order inconsistent with article 14 and 16 of the Indian Constitution.

In the United States, Title II of the Civil Rights act, 1964 prohibits discrimination of people on certain grounds. In this regard, employers implement equal employment opportunity policies and prohibit discrimination based on race of a person, colour, sex, religious creed, nationality, age, ancestry, marital status, disability, medical condition, genetic characteristics ( of those of a family member), political affiliation, et cetera.

The equality act, 2010 of the United Kingdom prohibits discrimination and mandates equal treatment in matters of employment as well as private and public services irrespective of race, age, sex, religion or disability .

Scheduled castes and Tribes ( prevention of atrocities) act, 1989 is constituted as a social justice oriented law, which is enacted to prevent atrocities and other form of derogatory behaviour towards member of the scheduled caste and scheduled Tribes. According to this law no person should be used towards either written or spoken or by signs or by visible representation or otherwise which promotes or attempts to promote feeling soft and committee hatred or ill will against scheduled caste and scheduled tribe members.

According to the recent supreme court judgment in 377 of Indian Penal Code 1860, LGBTQ ( lesbian, gay, bisexual and transgender queer) shall not be shown discrimination or derogate them in any manner.

Employment Agreement

These days the norm is to enter into an employment agreement which details out the terms of employment like, compensation, place of work, designation, work hours, etc. The rights and obligations of both the employer and employee are listed out clearly like non-disclosure of confidential information and trade secrets, timely payment, provident fund etc. In case of a dispute, the agreement also contains a mechanism for effective dispute resolution.

I remember when a client came to me with his first employment agreement after 30 years of service! He wanted me to have a look and tell him whether or not to agree to those terms. In a cursory glance, it was evident how one-sided the whole agreement was. From retrospective deductions and penalties to an ineffective dispute resolution mechanism, it was dreadful! The owner had made appointed himself as the binding authority in case of a dispute. After my advice, the client went and renegotiated and got his old terms of service renewed.

But the point remains that without a written employment agreement in place, the employee does not have much protections afforded to him in case of a dispute.

Maternity Benefit

The Maternity Benefit Act, 1961, provides for prenatal and postnatal benefits for a female employee in an establishment. Post-2016 amendments, the duration of paid leave for a pregnant female employee has been increased to 26 weeks, including eight weeks of postnatal paid leaves.

In case of a complicated pregnancy, delivery, premature birth, medical termination, female employees are entitled to one month paid leave. In case of tubectomy procedure, only two weeks of additional paid leave is provided for.

Pregnant female employees cannot be discharged or dismissed on account of such absence. Such employees are not to be employed by the employer within six weeks of delivery or miscarriage. If dismissed, they can still claim maternity benefits.

In India, men do not get any paid paternity leave. The Central Government provides for child care leave and paid paternal leave. But in case of private sector, it is a discretionary right of the employer.

Uttarakhand HC Strikes Down Rule Denying Maternity Leave For Third Child As Unconstitutional [Read Order]
Writ Petition No. 1778 of 2015 (S/S)

The Uttarakhand High Court on Monday struck down as unconstitutional a State rule denying maternity leave to female government employees for their third child. The order was issued by Justice Rajiv Sharma on a petition filed by one Ms. Urmla Masih, challenging the second proviso to Fundamental Rule 153 of the Financial Hand Book of the U.P. Fundamental Rules, as adopted by the State of Uttarakhand. The proviso disentitled from maternity leave female government employees who have two or more living children.

Ms. Masih had applied for maternity leave for almost five months in 2015, but had been denied the same on the ground that maternity leaves can only be granted for the first two children and not for the third child.

Allowing the petition, the Court opined that the proviso runs contrary to Section 27 of the Maternity Benefit Act, 1961, which gives primacy to the Act when it comes to laws and agreements inconsistent with its provisions. It further ruled that the proviso goes against the letter and spirit of Article 42 of the Constitution of India, which stipulates that the State shall make provision for securing just and humane conditions of work and for maternity relief.

Furthermore, Justice Sharma relied on the judgment in the case of Ruksana v. State of Haryana & others, wherein Punjab and Haryana High Court had struck down a similar Punjab Civil Services rule, which denied the benefit of maternity leave on the birth of a third child.

The petition was therefore allowed, with Justice Sharma ruling, “Thus, this Court is also of the considered view that second proviso of Fundamental Rule 153 is not in conformity with Section 27 of the Maternity Benefit Act, 1961 and is also against the spirit of Article 42 of the Constitution of India.

Accordingly, the writ petition is allowed. The proviso Second of the Fundamental Rule 153 of the U.P. Fundamental Rules, as adopted by the State of Uttarakhand is declared ultra vires and unconstitutional and the same is struck down.”



Provident Fund

Employee Provident Fund Organisation (EPFO) is the national organisation which manages this retirement benefits scheme for all salaried employees. Any organisation with more than 20 employees is legally required to register with EPFO.

Any employee can opt out of the scheme provided they do it at the beginning of their career. The amount cannot be withdrawn at will. The rules limit the withdrawal amount and term of years in service. Once registered, both employer and employee have to contribute 12 % of the basic salary to the fund. If the employer does not pay his share or deduct the entire 12 % from the employee’s salary, he can be taken to PF Appellate Tribunal for redressal.

The amount can be withdrawn subject to a waiting period of maximum two months for emergent needs and necessary expenses. The rules specify limits of withdrawal and the necessary years of service for each purpose. An employee can withdraw a maximum of 3 times, and if withdrawn before five years the amount becomes taxable. A list of withdrawal rules of EPF .

EPF withdrawal: How to withdraw 75% money from PF account? Check step-by-step guide

EPF withdrawal: The Employees’ Provident Fund Organisation (EPFO)  announced that its members can now withdraw 75 per cent of their funds after one month of unemployment and maintain their PF account with the body. The retirement fund body also gave an option to its members to withdraw the remaining 25 per cent of their fund after two months of unemployment.

Labour Minister Santosh Kumar Gangwar, who is also the Chairman of EPFO’s Central Board of Trustees decided to amend the scheme to allow members to take advance from their account on one month of unemployment. They can withdraw 75 per cent of the funds as advance from their account after one month of unemployment and keep the account with the EPFO.

The minister was of the view that this new provision would give an option to the members to keep their account with the EPFO, which they can use after regaining employment again.

What is the process to withdraw 75% money from account?

Step 1- Sign in to the UAN Member Portal with your UAN and Password.

Step 2- From the top menu bar, click on the ‘Online Services’ tab and select ‘Claim (Form-31, 19 & 10C)’ from the drop-down menu.

Step 3- The next page will show Member Details, KYC Details and Service Details. Click the ‘Proceed for Online Claim’ button.

Step 4- You will be redirected to the Claims Section. You will find more details such as PAN, Mobile Number, UAN, etc. Choose the type of claim- withdraw PF only or withdraw pension only.

Step 5- Fill out the claim form carefully. Once completed, an OTP will be sent to your registered mobile number which, when entered in the form, will initiate the withdrawal claim. When the claim form is successfully submitted, an SMS notification will be sent to your registered mobile number. Once the claim is processed, the amount will be transferred into your bank account.

At the time of filing an online withdrawal claim, you will find two options-

– Only PF Withdrawal- Form 19

– Only Pension Withdrawal- Form 10C

Composite Claim Form:

When applying for the withdrawal offline, you are required to fill out the Composite Claim Form which serves the purpose of three forms- Form 19 (For Final PF Settlement), Form 10C (For Pension Withdrawal) and Form 31 (For Part Withdrawal of PF amount).



Gratuity

The Payment of Gratuity Act, 1972 provides a statutory right to an employee in service for more than five years to gratuity. Gratuity is paid as 15 days of salary for every year of service of an employee done in that organization.  It is one of the retirement benefits given to the employee. It is a lump sum payment made in a gesture of gratitude towards the employee for their service. The amount of gratuity increases with increment and number of years of service.

Gratuity payment =  Last month salary X  15 (days) X Number of years of service
                                 26 (working days)
  • Monthly salary= last month drawn salary by the employee.
  • 26 = total number of working days in a month.
  • 15 = number of days in half of the month.

[Sec 4(3)] The maximum amount of gratuity payable to an employee should not exceed Rs.3,50,000/- rupees.
                (According to the latest 2010 amendment the maximum gratuity payable amount was increased to
                Rs. 10,00,000/-)

According to the  (THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2018) The maximum amount of gratuity payable to an employee should not exceed Rs. 20,00,000/- rupees.

However, the employee if dismissed for proven lawless or disorderly conduct, forfeits this right upon dismissal.

SUPREME COURT OF INDIA JUDGEMENT

Forfeiture of Gratuity under Payment of Gratuity Act not automatic on dismissal from service, SC

SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8251 OF 2018
(Arising out of S.L.P.(Civil) No. 3852/2017)

The Supreme Court has held that dismissal from service does not automatically result in forfeiture of gratuity under the Payment of Gratuity Act, 1972 (Act). The same is subject to Sections 4(5) and 4(6) of the Act.

The Supreme Court has held that dismissal from service does not automatically result in forfeiture of gratuity under the Payment of Gratuity Act, 1972 (Act). The same is subject to Sections 4(5) and 4(6) of the Act.

The judgment was passed by a Bench of of Justice Kurian Joseph and Justice Sanjay Kishan Kaul in the case of Union Bank of India v. CG Ajay Babu.

By way of background, the Respondent in the case, Ajay Babu, was employed by the Petitioner-Bank as a Branch manager. During the course of his service, disciplinary proceedings were initiated against him on the ground that he failed to take all steps to ensure and protect the interests of the Bank, failed to discharge his duties with utmost devotion, and conducted himself in a manner “unbecoming of an officer.”

On the abovementioned charges, the respondent was dismissed from service in June 2004. A few months before the dismissal order attained finality, the respondent was served a show-cause notice and was asked to furnish his response on why the gratuity due to him should not be forfeited on account of Respondent’s “acts involving moral turpitude.”

The Respondent submitted his response to this show-cause notice in February 2004. However, his response was rejected and vide an order passed in April 2004, the petitioner Bank forfeited the gratuity due to the respondent citing provisions of the Act and the Bank’s Gratuity Rules.

This forfeiture of gratuity was challenged before the High Court wherein the Single Judge, without interfering in the dismissal from service, held that since the misconduct did not lead to financial loss to the Bank, the Respondent was entitled to gratuity.

It was also held that as per the bipartite settlement prevailing in the bank, forfeiture of gratuity is permissible only in case the misconduct leading to the dismissal has caused financial loss to the Bank and only to the extent of the loss.

An appeal against this judgement was dismissed by a Division Bench of the High Court leading to the appeal in Supreme Court.

The Court proceeded to analyse Section 4(5) and Section 4(6) of the Payment of Gratuity Act.

Section 4(5) says that “nothing will affect the right of a person to receive better terms of the gratuity.”

Section 4(6) lays down that gratuity of an employee who has been terminated on the grounds that he has wilfully caused damage to the employer, can to the extent of that loss or damage be forfeited.

Further, it also provides that gratuity payable to an employee may be wholly or partially forfeited – (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or (ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is  committed by him in the course of his employment.

The Court observed that sub-section (5) of Section 4 of the Act has an overriding effect on all other sub-sections of Section 4. Additionally, the Court noted that there exists a bipartite settlement in the appellant-Bank which has a clause relating to gratuity and reads as follows:

“12.2 There will be no forfeiture of gratuity for dismissal on account of misconduct except in cases where such misconduct causes financial loss to the bank and in that case to that extent only.”


The Counsel appearing for the Bank submitted that Section 4(5) dealt with only the “better terms of gratuity”, that is quantum of gratuity, and not with the entitlement of the gratuity under an award or contract. This argument, the Court said, was not appreciable.

Agreeing with the view taken by the High Court, the Supreme Court noted that the fact that the bipartite settlement clause exists is not disputed and neither is it contended that the respondent employee caused any financial loss to the Bank. Therefore, Section 4(6) of the Act which allows forfeiture of gratuity to the extent of loss caused, cannot be resorted to.

The Court then proceeded to deal with the contention of the appellant-Bank that the conduct of the respondent which led to the framing of charges in the departmental proceedings involved moral turpitude.

It is not the conduct of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the act should constitute an offence involving moral turpitude, the Court held.

“To be an offence, the act should be made punishable under law. That is absolutely in the realm of criminal law. It is not for the Bank to decide whether an offence has been committed. It is for the court.”

The Court noted that apart from the disciplinary proceedings initiated by the appellant Bank, the Bank has not set the criminal law in motion either by registering an FIR or by filing a criminal complaint so as to establish that the misconduct leading to dismissal is an offence involving moral turpitude.

Under sub-Section (6)(b)(ii) of the Act, forfeiture of gratuity is permissible only if the termination of an employee is for any misconduct which constitutes an offence involving moral turpitude, and convicted accordingly by a court of competent jurisdiction.

Hence, the Court turned down the contention of the appellant in this regard.

“Hence, there is no justification for the forfeiture of gratuity on the ground stated in the order dated 20.04.2004 that the “misconduct proved against you amounts to acts involving moral turpitude”. At the risk of redundancy, we may state that the requirement of the statute is not the proof of misconduct of acts involving moral turpitude but the acts should constitute an offence involving moral turpitude and such offence should be duly established in a court of law.”

It, therefore, summed up that forfeiture of gratuity is not automatic on dismissal from service but is subject to sub-Sections (5) and (6) of Section 4 of the Payment of Gratuity Act, 1972.



Fair Salary & Bonus for employees
The whole point of providing service for an employee is fair and appropriate remuneration. Article 39(d) of the Constitution provides for equal pay for equal work. The laws under The Equal Remuneration Act, The Payment of Wages Act, mandates timely and fair remuneration of an employee. If an employee is not receiving his/her remuneration as per the employment agreement, can approach the Labour Commissioner or file a civil suit for arrears in salary. An employee cannot be given wages less than the legal minimum wages, as per law.

Payment of bonus

Irrespective of loss or profits to an organization must pay Bonus to its employees who's salary is up to Rs. 21000/-  according to the procedure envisaged in the Payment of Bonus Act, 1965.

Eligibility: Any employee who draws salary or wage up to  Rs. 21,000 is having right for claiming bonus
Bonus calculation purpose: according to the 2015 Amendment, Rs. 7000/- is considered as Ceiling amount ( maximum limit ) as wage or salary for  calculation of bonus.
Percentage of bonus: 8.33% minimum or 20% maximum of salary or wage.


Appropriate Working Hours and Overtime

All employees have a right to work in a safe workplace with basic amenities and hygiene.

The Factories Act provides and the Shop and Establishment Acts (statewise) protects the rights of the workers and non-workmen.

Under the most recent laws, an adult worker shall work over 9 hours per day or 48 hours per week and overtime shall be double the regular wages. A female worker can work from 6 am to 7 pm. This can be relaxed to 9.30 pm upon explicit permission, and payment for overtime and safe transportation facility. Apart from this weekly holiday, half an hour break and no more than 12 hours of work on any given day is mandated. The working hours for child workers are limited to 4.5 hours a day.


Right to Leaves

An employee has the right to paid public holidays and leaves such as casual leave, sick leave, privilege leave and other leaves. For every 240 days of work, an employee is entitled to 12 days of annual leave. An adult worker may avail one earned leave every 20 days whereas its 15 days for a young worker. During notice period an employee can take leaves for emergencies, provided the employment agreement does not bar it.



Prevention of Sexual Harassment at workplace

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 protects women at the workplace from sexual harassment. The Indian Penal Code also provides a penalty of upto three years imprisonment with or without fine, for sexual harassment.

For organisations with ten or more employees, there has to be an internal complaint committee constituted for the aid of the victims of sexual harassment. The law mandates that a grievance redressal policy and mechanisms be in place in such organisations which outlines what constitutes sexual harassment, penalties, redressal mechanism, etc. The committee should also include a senior woman as a member, two other employees as members and a non-governmental member. The detailed duties of an employer are available in this article.

My attempt here is, simply to demystify the jargons used with an employee who does not fully understand and agree to it anyway. The HR or the company is not always going to educate you about all this. It is not their job, but yours to learn about your rights.

This is by no means an exhaustive list of rights and obligation of an employee under the laws and regulations. There are so many laws governing different aspects of labour and employment-related laws.


An incident of sexual harassment of a female at a place of work, amounts to violation of her fundamental right to gender equality under the article 16(2) of the Indian Constitution.