Statutory or mandatory employee benefits - list of statutory employee benefits compulsory be given to employee

Although most employee benefits are provided at the employer’s discretion, others are required by law and mandatory. Statutory  benefits include Social Security, unemployment compensation, Pension and workers’ compensation.

Court held that 

"The direction for the payment of the deferred portions of the salaries and pensions is unexceptionable. Salaries are due to the employees of the State for services rendered. Salaries in other words constitute the rightful entitlement of the employees and are payable in accordance with law. Likewise, it is well settled that the payment of pension is for years of past service rendered by the pensioners to the State. Pensions are hence a matter of a rightful entitlement recognised by the applicable rules and regulations which govern the service of the employees of the State".

The bench directed that in substitution of the interest rate of 12% per annum which has been awarded by the High Court, the Government of Andhra Pradesh shall pay simple interest computed at the rate of 6% per annum on account of deferred salaries and pensions within a period of thirty days.

If an employee wants to avail this sort of leave he/she needs to request for three or more in one stretch. in order to avail Leave under this benefit, he/she must inform controlling/superior officer in advance but in case of casual leave giving information in advance may not be necessary.

Why  is it earned leave?

Unlike casual leaves, medical leaves and optional holidays, an employee can encash the unused earned leaves how many he/she has not availed or unutilized during the calendar year that is from 1st January to 31st December. But encashment  of earned leaves is allowed only at the time of retirement of an employee or separation of employee other than suspension or dismissal from  organization. Besides, few organizations  allow to encash maximum of 300 earned leaves from  total earned leaves accumulated at the time of retirement or separation of an employee, but not all unused earned leaves are allowed to encash.

INDIA

Employee can exceed earned leave limit: High Court Lays down law for calculating accumulated unutilised leave

Chandigarh, October 15-2016

In a significant judgment, the Punjab and Haryana High Court has ruled that the accumulated unutilised leave of an employee cannot be reduced to 300 days even if he is entitled to leave encashment for a maximum of 300 days.

The ruling came in case of Haryana Government employees after the High Court was told that accumulated earned leave was reduced to 300 days time and again during the course of service on the assumption that they were entitled to a maximum of 300 days earned leave.

Eventually, when the time came for encashment of unutilised earned leave, they were granted the benefit for lesser number of days.

“If an employee is entitled to leave encashment for a maximum limit of 300 days, that does not mean that the accumulated unutilised leave is to be reduced to 300 days if it exceeds the limit. The earned leave will continue to accumulate till the retirement of the petitioners and the petitioners are to be granted the maximum benefit of 300 days, as stated in the rules,” Justice Kuldip Singh ruled.

The ruling came on a petition by Jaipal Phogat and another petitioner against the State of Haryana and other respondents. Justice Kuldip Singh asserted the “unfortunate controversy” was regarding the method used to calculate unutilised earned leave of petitioners Jaipal Phogat and Jaibhagwan.

Retired mechanics, the petitioners had claimed that they were entitled to leave encashment of 300 days unutilised earned leave. Petitioner number one was is entitled to 300 days leave encashment, but was granted the benefit of 257 days. Petitioner number two, on the other hand, was entitled to 268 days leave encashment, but was granted the benefit of 211 days.

During the course of the hearing, Justice Kuldip Singh asked both parties to file calculation sheets. He added that the examination of calculation sheet regarding Phogat showed mischief was done while calculating unutilised earned leave on April 27, 1999, May 22, 2003, and October 31, 2007.

The unutilised earned leave for 362 days, 375 days and 335 days, respectively, was reduced to 300 days on the assumption that the petitioner was entitled to a maximum of 300 days earned leave.

Similarly, in Jaibhagwan’s case, earned leave was reduced on August 11, 2002, May 22, 2003, and August 22, 2003, from 308 days, 307 days and 305 days, respectively.

“The calculation done by the respondents is not only mischievous, but wrong application of the principle of calculation of unutilised earned leave is also there. As such, the calculations made by the petitioners are accepted and that of the respondents are set aside,” the High Court ruled.

https://www.tribuneindia.com/news/archive/features/employee-can-exceed-earned-leave-limit-hc-310111

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Government Servant Not Entitled To Full Pension/Gratuity During Pending Disciplinary/Judicial Proceedings: Allahabad HC

Read Judgement below

The Allahabad High Court has held that a Government servant is not entitled to full pension/death cum-retirement gratuity on/or during pending disciplinary/judicial proceedings against the government servant.

The full bench comprising of Justice Pankaj Mithal, Justice Suneet Kumar and Justice Rohit Ranjan Agarwal observed that the entitlement to full pension /death-cum-retirement gratuity to the government servant is subject to the outcome of the disciplinary/judicial proceedings and issue of final orders thereon by the competent authority. The bench was considering a reference to it on the issue of entitlement of the government servant to receive death cum-retirement gratuity on superannuation or otherwise pending judicial proceedings.

The court upheld a division bench judgment view that the term 'pension' would include 'gratuity' particularly in Article 351, 351-A of the Civil Service Regulations. Referring to these regulations, the bench observed:

• • Future good conduct is implied condition of ever grant of pension. Full pension is not to be given as a matter of course, or unless the service rendered has been thoroughly satisfactory.

  • Article 351 and/or 351-A can be invoked by the State Government or the Governor, as the case may be, if the pensioner (a) be convicted of serious crime; (b) be guilty of grave misconduct (c) caused pecuniary loss to the government in service. The power can be exercised in either of the eventualities. The action thereunder is punitive.

  • Pendency of disciplinary/judicial proceedings on the date of retirement, or instituted after retirement, provisional pension equal to maximum pension as mandated under Article 919-A may be sanctioned to the government servant for the period up to conclusion of the proceedings.

  • No gratuity is payable to the government servant during pendency of disciplinary/judicial proceedings/enquiry by Administrative Tribunal, until conclusion of the proceedings/enquiry and orders being passed thereon by the competent authority.

  • The Regulations mandates that government servant is entitled to provisional pension equal to maximum pension during pendency of the proceedings until conclusion. The Regulations does not mandate the entitlement of full pension/gratuity on the ground of 'hardship' being faced by the pensioner pending proceedings.

  • The nature of the charge/allegations against the government servant cannot be gone into during pendency of the proceedings. The government servant whether guilty of 'serious crime' and/or 'grave misconduct' in the opinion of the competent authority can be assessed/considered while passing final orders upon conclusion of the disciplinary/judicial proceedings.

  • The impact on pension/gratuity would arise after the competent authority has had the occasion to consider and issue final orders upon conclusion of the proceedings. The cause to the government servant arises thereafter and not at the stage pending proceedings/enquiry.

Govt. Servant Cannot File Complaint About Service Conditions Or Retiral Benefits Before Consumer Forums : Supreme Court

 [Read Judgment]

The issue raised before the Court, in Ministry Of Water Resources vs. Shreepat Rao Kamde, was whether in respect of retiral dues, a complaint could be maintained before the District Consumer Forum?

The Supreme Court has reiterated that a government servant is not a 'consumer' for the purpose of Consumer Protection Act and cannot raise any dispute regarding his service conditions or for payment of gratuity or GPF or any of his retiral benefits before any of the forum under the Act.

2. Social Security Benefits 

The word ‘Social’ is adjectival form of society, i.e. anything relating to the society. The word ‘Security’ is the measure of safety or protection from the danger or loss. Thus the phrase ‘Social Security’ refers to the measures of safety provided by the society to the needy for their protection and releasing them ‘free from want’.

The concept of such security is not new and some references of such measure are to be found in the ancient and medieval history where certain social or religious groups have endeavored to provide for similar security systems for the under-privileged or downtrodden people leaving in the same society. Therefore the realisation of a sense of moral, pious and religious responsibility of the society towards the weak sections of people is not unknown. However with the passage of time and the growing sense of civil and ethical responsibility of a civilised society, the Governmental and Non-Governmental efforts for the protection of the needy and to make them free from want also received social recognition.

In the field of industrial relations the phrase Social Security refers to those measures which are provided under the Labour Laws for the safety and protection of the employees from the most common hazards of their occupational life.

The establishment of International Labour Organisation (ILO) ever since its inception in the year 1919 helped evolution of social Security legislation in the field of industrial relations. Various ILO Conventions dealing with Social Security of Women, Children, and employees in almost all types of industries are found enacted by various member-countries in their Social Security legislations. The concept of Social Security is getting enlarged to include in its gamut the human rights also.

Types of Social Security

As mentioned earlier, that the task of providing social security to the needy is taken up both by governmental and non-governmental agencies and social organisations. Their efforts can be classified into two branches on the basis of the financial commitment and the contribution by the employees themselves towards such Social Security measure. Thus the two classifications of Social Security can be described as under:-

Thus Social Security concept is divided into two branches, namely, Social Assistance and Social Insurance.

Difference between Social Assistance and Social Insurance

Briefly speaking, the difference between Social Assistance and Social Insurance as the two types of Social Security can be summarised as under:-

• 1. In case of Social Assistance, there is no contribution made by the employees and the financial burden is shared by the employer. Government or social organisations. Whereas in case of Social Insurance, the workman himself is also contributing his share in the financial responsibility.

  2. In case of Social Assistance, it is gratuitously provided to the workman by the society, i.e. Government, employer or social organisation and therefore it cannot be claimed as a matter of right. Whereas in case of Social Insurance, it is a right of the workman to receive the social protection as he is also contributing towards the financial fund of such Schemes.

  3. In case of Social Assistance the benefit cannot always be claimed through Court’s intervention unless such scheme is provided as a statutory duty. Whereas in case of Social Insurance, it is a legal right of the workman also to claim it through the Court of Law.

Social Security for employees is a concept which over time has gained importance in the industrialized countries. Broadly, it can be defined as measures providing protection to working class against contingencies like retirement, resignation, retrenchment, maternity benefits, paternity leave, old age, unemployment, death, disablement and other similar conditions.

Following are some legal social security benefits for employees

• 1. Employees Welfare Fund.

  2. Provision for Group Insurance Policies.

  3. Provision for Provident Fund.

  4. Provision for Pension.

  5. Provision for medical and educational facilities for the clerks and their families/dependents.

  6. Financial assistance to needy clerks.

  7. Provision of payment of consolidated sum on death/disablement of any clerk.

  8. Provisions for common rooms with books and newspaper akin to Bar Room for Advocates.

  9. Provisions for periodical training programmes and symposiums to upgrade their skills and to train them.

Social Security for employees in India

Social Assistance is that measure of social action in which relief or protection is given by way of “assistance without taking any contribution from the workman” and such social assistance is to be found in the Governmental Scheme for various welfare measures for medical, financial or legal assistance gratuitously viz, Old-age pension, unemployment benefit, or various schemes for free medical treatment to the poor worker. Whereas in the case of ‘Social Insurance’, the scheme is prepared where in the concerned workman also pays his contribution to such schemes and get benefit in case of any calamity, disease or accidents. The good examples of these two types of Social Security can be found in the ‘Employee’s Compensation Act, 1923’ which is a non-contributory assistance given to the affected employees and the financial responsibility is shared by the employer. Whereas the Employees’ State Insurance Act, 1948 (ESI) is the measure of Social Security wherein the employees also contribute their share. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 is also a Scheme in which financial responsibility is shared between employers, employees and the Government.

With reference to India, the Constitution levies responsibility on the State to provide social security to citizens of the country. The State, here, discharges duty as an agent of the society in order to help those who are in adverse situations or otherwise needs protection owing to above mentioned contingencies. Article 41, 42 and 43 of the Constitution do talk about the same. Also, the Concurrent List of the Constitution of India mentions issues like-

• • Social Security and insurance, employment and unemployment.

  • Welfare of Labour including conditions of work, provident funds, employers' liability, workmen's compensation, invalidity and old age pension and maternity benefits.

Below mentioned are the important employment laws  on the Social Security benefits within India meant for the employees working in various industries and it is compulsory for employer to provide Social Security benefits to his employees according to this acts. If any contrivance with laws mentioned below by the employer shall be made liable for punishment by the Legislature.

a) Employee benefits through State Insurance Act, 1948

Employees State insurance provides following benefits to the employees whoever got covered according to The Employees State insurance Act 1948.

APPLICABILITY

Under Section 2(12) the Act is applicable to non-seasonal factories employing 10 or more persons.

Note: However the threshold for Coverage of establishments is still 20 Employees in Maharashtra and Chandigarh. The existing wage limit for coverage under the Act is Rs.21,000/- per month (w.e.f. 01/01/2017).

Contribution

Currently, the contribution rate is 1% of wages of Employee and 3% payable by Employers for first 24 months(w.e.f. 6.10.2016) Employees in receipt of a daily average wage upto Rs.137/- are exempted from payment of contribution. Employers will however contribute their own share in respect of these employees.

• • • Sickness benefit: ESIC provides 70% of average daily wages in cash during medical leave, upto 91 days in two consecutive benefit periods.

    • Medical benefit: ESIC provides reasonable Medical Care for self and family from day one of entering into insurable employment.

    • Disablement benefit: ESIC provides continuous monthly payment till injury lasts for temporary disablement and for whole life for permanent  disablement.

Temporary disablement benefit (TDB) : From day one of entering insurable employment & irrespective of having paid any contribution in case of employment injury. Temporary Disablement Benefit at the rate of 90% of wage is payable so long as disability continues.

Permanent disablement benefit (PDB) : The benefit is paid at the rate of 90% of wage in the form of monthly payment depending upon the extent of loss of earning capacity as certified by a Medical Board

Dependants Benefit (DB) : DB paid at the rate of 90% of wage in the form of monthly payment to the dependants of a deceased Insured person in cases where death occurs due to employment injury or occupational hazards.

• • • Maternity benefit: ESIC provides 100% of average daily wages in cash up to 26 weeks in confinement and 6 week in case of miscarriage, during maternity leave and 12 weeks for commissioning mother and adopting mother.

    • Unemployment allowance: ESIC Provides monthly cash allowance for a duration of maximum 24 months in case of involuntary loss of employment or permanent invalidity due to non-employment injury.

    • Funeral Expenses : An amount of Rs.10,000/- is payable to the dependents or to the person who performs last rites from day one of entering insurable employment.

b) Maternity Benefit

Women who constitute almost half of the segment of our society have to be honoured and treated with dignity at places where they work to earn their livelihood. Whatever be the nature of their duties, their  avocation and the place where they work; they must be provided all the facilities to which they are entitled. To become a mother is the most natural phenomena in the life of a woman. Whatever is needed to facilitate the birth of child to a woman who is in service, the employer has to be considerate and sympathetic towards her and must realise the physical difficulties which a working woman would face in per forming her duties at the work place while carrying a baby in the womb or while rearing up the child after birth. The Maternity Benefit (Leave) aims to provide all these facilities to a working woman in a dignified manner so that she may overcome the state of motherhood honourably, peaceably, undeterred by the fear of being victimised for forced absence during the pre or post-natal period.

The Maternity Benefit Act, 1961, protects the employment of women during the time of maternity and entitles them to a full paid absence from work to take care for the child. The amendments in 2017 seeks to increase maternity leave period to 26 weeks in all establishments, including private sector.

The Maternity Benefit Act, 1961 regulates the employment of women in factories, mines, the circus industry, plantations and shops or establishments employing 10 or more persons except the employees who are covered under the Employees' State Insurance (ESI) 1948 for certain periods before and after child-birth and provides for maternity and other benefits.

Contractual Employees also entitled to Maternity Benefits, Kerala HC

[Read Judgment below]

The Kerala High Court recently reiterated that women-employees are entitled to maternity leave, regardless of whether their employment is contractual or otherwise.

Allowing a petition filed by 35-year old Rasitha, who was denied maternity leave by the Calicut University on the ground that the terms of her contract did not envision the grant of such leave, Justice A Muhamed Mustaq held,

“The maternity benefit is not merely a statutory benefit or a benefit flowing out of an agreement. This court consistently held that it is attached with the dignity of a woman…. In Rakhi’s case (supra) it was held that a woman employee cannot be denied maternity benefits merely because her status is a contractual employee. Therefore, the University is bound to grant such benefits notwithstanding anything contained in the agreement of contract.”

Rasitha had been working as an employee at the Calicut University for a decade on a contract basis. In August 2017, her contract was renewed for another year.

While this was the case, the University denied her maternity leave, citing that since no such benefit was contemplated in her contract, at best she could only claim 15 days of casual leave and abstention from duty on account of medical conditions of maternity.

On the other hand, Justice Mustaq pointed out that there are several cases that have established that a woman cannot be compelled to choose between motherhood and employment. In particular, reference was made to the cases of Mini v Life Insurance Corporation of India and Rakhi PV and Others v State of Kerala & Another.

Notably, in Rakhi PV’s case, the Court had specifically held that contractual employees cannot be denied maternity leave merely because of their contractual status.

“In Rakhi’s case (supra) this Court has specifically referred to the claim of maternity leave due to women employees who are working under contract and this court held that such women cannot be denied the maternity benefits. It is submitted in the Bar that the judgment in Rakhi’s case (supra) was affirmed by the Division Bench as well.“

In view of these observations, the Court allowed Rasitha’s plea and directed the Calicut University to pay maternity benefits due to the Rasitha, as applicable in the case of other employees of the University, within two months.

L’Oreal India enhances maternity leave to 26 weeks

L’Oreal India has enhanced maternity leave to 26 weeks from 14 weeks earlier in an effort to retain high-potential employees.

The new parental benefits include pre-commute assistance for expecting women employees starting from the sixth month of pregnancy and child care allowance for two years from the date of delivery. “The business case of an enhanced maternity leave policy and other parental benefits is to retain high potential talent, enhance productivity and make the company an attractive employer,” said Mohit James, director, human resources, L’Oréal India.

To help new mothers ease back into work, they can also avail of reduced work hours for two continuous weeks immediately after resuming work, said James. The policy also entitles fathers to paid leave of two weeks. Additionally, the adoption leave has been increased to 12 weeks for mothers and one week for fathers. L’Oréal India will also offer flexible working options to each parent as well as pre- and post-natal support and employee well-being sessions and dedicated HR and management support.

Deloitte declares 26 weeks of maternity leave for women employees; PWC, EY, KPMG to follow suit

The labour ministry is busy putting the amended Maternity Benefit Act together that would entitle working women in private sectors to 26 weeks of maternity leave from the existing 12, the big four consulting firms have already taken a leap. While Deloitte has declared 26 weeks of maternity leave for its woman employees, PricewaterhouseCoopers, EY and KPMG are in the process of finalising such policies.A severe crunch of woman employees at the top has pushed these companies to not only extend the maternity leave benefit, but also in introducing a slew of other initiatives to retain the valuable resource.

To be piloted for the first time in India, EY is also working out a programme called 'Maternal Coaching', where all the women at the leadership and senior positions will be trained to coach other women in their teams before and after maternity leave on not quitting the job.PwC is planning to retain women who leave for maternity with an 'umbilical cord' of up to seven years or so. This would allow women on maternity leave to be on the rolls of the company without actively working and without pay. "Though this is in the pipeline, they intend to offer all the training and updates to the women who go on maternity leave so that they are connected with the firm.

ET Bureau | Feb 19, 2016 

https://economictimes.indiatimes.com/jobs/deloitte-declares-26-weeks-of-maternity-leave-for-women-employees-pwc-ey-kpmg-to-follow-suit/articleshow/51047935.cms#:~:text=While%20Deloitte%20has%20declared%2026,process%20of%20finalising%20such%20policies.&text=This%20would%20allow%20women%20on,actively%20working%20and%20without%20pay.

International Comparison of  Maternity Leave

Ref:http://www.prsindia.org/uploads/media/Maternity%20Benefit/ LB%20Maternity%20Benefit%20Bill%202016.pdf

Various countries have implemented different funding models in relation to maternity benefits. A 2014 ILO study on maternity leave provisions in 185 countries observed: 

• • In 25% of the countries, maternity benefits are paid solely by the employer (e.g. Kenya, Puerto Rico, Nigeria, Pakistan).

  • In 16 % of the countries, maternity benefits are financed by a combinations of funds from the employer and the government (e.g. United Kingdom, Germany).

  • In 58% of the countries, cash benefits are provided to pregnant women through national social security benefits (e.g. Norway, Australia).

  • In the remaining 1% of the countries, there was no provision for maternity benefits (namely, US and Papua New Guinea).

Improved maternity benefits could prove counterproductive: Survey

ET Bureau Updated: May 01, 2018, A little over one year after India increased the maternity leave benefit to 26 weeks from 12 weeks, a survey said the move could be counterproductive to the cause of a diverse workplace in certain sectors unless other support measures are also undertaken.

According to a survey on the costs and benefits of the new regulations by leading employment services company TeamLease, at least 26 per cent of the 350 startups and small and medium enterprises (SMEs) that responded said they will prefer hiring a male candidate, given the cost of the six-month maternity leave benefit. About 40 per cent of respondents said they will hire women but will consider whether such a cost is worth the candidate.

However, 39 per cent of organisations said the move will have a positive impact and will lead to a happier workforce but 35 per cent of the respondents said that the six-month maternity leave will impact both cost and profitability.

“While many of the startups and SMEs are progressive, a significant number seems to be considering the consequences of this regulation.” Plus, even when organisations do have a policy of non-discrimination in hiring, the recruiting manager could take a short-term view. Therefore, just changing the law is not enough; reinforcements are needed at multiple levels.

According to Maternity Benefit Act,1961 [Section 5 (4)] A woman who legally adopts a child below the age of three months or a commissioning mother shall be entitled to maternity benefit for a period of  twelve weeks from the date the child is handed over to the adopting mother or the commissioning mother, as the case may be. 

IT majors, banks take lead for adoption of child and child birthed through surrogacy

Accenture joins a club of corporates such as Standard Chartered, Citibank, Barclays, Murugappa group and HCL who choose to give 22-28 weeks leave for adoption surrogacy. Accenture  increased its adoption leave from the current eight weeks to 22 weeks and included a clause that puts surrogacy leave at 22 weeks. The move gains particular significance as the current statutory requirement is at three months or 12 weeks. While some companies choose to give parents as much as 28 weeks leave, others give their workforce one week leave, said the study.

On average, Indian companies choose to give their workers nine weeks leave to celebrate the latest entrant to their family. IT majors like HCL Tech lead the pack with 26 weeks surrogacy leave -on a par with maternity. Not far behind is Infosys with 16 weeks for the primary caregiver. International banks such as Standard Chartered, Citibank and Barclays, who choose to give between 22 and 28 weeks leave, have a liberal adoption policy globally. In India, they retain the same guidelines -proving highly beneficial to heterosexual couples who want to adopt, couples in a live-in relationship, same-sex couples and the rising population of single dads. Barclays, which has revised its maternity policy from 84 days to 154 days, introduced adoption leave in 2014.

At Mondelez India, mothers, who choose to adopt, get three months leave versus six-month maternity leave. But the company is offering a 15-month-flexi work option for all new parents, irrespective of whether they chose to adopt. Family-run business Murugappa Group also offer 24 weeks for adoption.

http://economictimes.indiatimes.com/articleshow/56214740.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Accenture increased the adoption leave its staff can take to 22 weeks from the current eight and added surrogacy leave, also of 22 weeks, as a new category, making the company one of the first in India to equate surrogacy and adoption leaves to maternity leave practices. In the year 2015, company extended its maternity benefits (to five months) and that has had a tremendous impact on retention of women. Realising that it has extended the same benefits to adoption and surrogacy. The first few months is crucial for child nurturing and to bond with the child. It is not just in case of maternity but also in case of surrogacy and adoption. Hence organisation decided to extend the benefits so that all its woman employees that it care to support them in this crucial life stage and so that senior high-potential woman employees do not leave the organisation at this care-giving stage to never return.

Several companies, including the Tata Group, Mondelez India Foods and Microsoft, have framed policies offering leave to employees who have a child through surrogacy. Companies offer such flexible options to allow women an opportunity to boost their careers even as they manage the demands of home and family.  The Tata Group, for instance, offers six months paid maternity leave for child born thorough surrogacy. Under its refurbished parental policy, Mondelez India Foods also formally covers alternative forms of parenthood like surrogacy. Such internal policies apply to all employees and they have been framed given the transforming social conventions.

Technology company Pitney Bowes introduced a new policy ‘Mayeri’, which provides a six-month maternity leave for women employees in India and same applies to employees who wants to have child by way of adoption and to have a child by surrogacy (surrogate pregnancy).

The Madras High Court held that the government employees opting for children through surrogacy would be entitled to maternity leave in the form of child care leave

March - 2013: The Madras High Court held that the government employees opting for children through surrogacy would be entitled to maternity leave in the form of child care leave. Honourable High Court said that if law can provide childcare leave in case of adoptive parents, then it should also apply to parents who obtained child through surrogate agreement. The object of such a leave is  to take care of the child and develop a good bond between the child and the parents.in the form of child care leave. Honourable High Court said that if law can provide childcare leave in case of adoptive parents, then it should also apply to parents who obtained child through surrogate agreement. The object of such a leave is  to take care of the child and develop a good bond between the child and the parents.

India - The Surrogacy (Regulation) Bill, 2016 was introduced by Minister of Health and Family Welfare, Mr. J. P. Nadda in Lok Sabha on November 21, 2016. Current Status: Pending.

In case of birth by surrogacy the parents who have lent the ova and the sperm would be entitled to avail leave :Bombay High Court.

[Read Judgement below]

Dr.Ms.Pooja Jignesh Doshi Vs The State of Maharashtra and another.

Facts of the case

Petitioner chose the route of surrogacy and the surrogate mother gave birth to a baby girl on5 November 2012.

Petitioner sought maternity leave to take care of the surrogate child, which was denied by the respondent on the ground that the Leave Rules and the policy governing the Rules do not permit maternity leave for a surrogate child.

Court Held that

Referring to the judgements dated 22 July 2015 in Writ Petition No.3288 of 2015 Dr.Mrs.Hema Vijay Menon vs. State of Maharashtra, a Division Bench of this Court relying upon a decision of the Delhi High Court dated 17 July 2015in the case of Rama Pande vs. Union of India, held that even in case of birth by surrogacy the parents who have lent the ova and the sperm would be entitled to avail leave.  The mother being entitled to maternity leave and the father paternity leave.

The Petitioner is held entitled to the relief sought for interms of prayer clause [C]; being that the Earned Leave and Half-pay Leave availed of by her should be entered in the record as maternity leave for the purposes of the leave account and that the said leave availed by the Petitioner during various intervals be converted into maternity leave.

March - 2013: The Madras High Court held that the government employees opting for children through surrogacy would be entitled to maternity leave in the form of child care leave. Honourable High Court said that if law can provide childcare leave in case of adoptive parents, then it should also apply to parents who obtained child through surrogate agreement. The object of such a leave is  to take care of the child and develop a good bond between the child and the parents. 

e) Leave for miscarriage or medical termination of pregnancy.

In case of miscarriage or medical termination of pregnancy, a woman shall, on production of such proof, be entitled to leave with salary for a period of 6 weeks immediately following the day of her miscarriage or her medical termination of pregnancy. [Section 9 of the Maternity Benefit Act, 1961 ]

f) Leave with wages for tubectomy operation

In case of tubectomy operation, a woman shall, on production of such proof as may be prescribed, be entitled to leave with wage or salary for a period of 2 weeks immediately following the day of her tubectomy operation.[Section 9A of the Maternity Benefit Act, 1961]

g) Paternity Leave (INDIA)

There is no law in India mandating the private sectors in India to provide paternity leave for working fathers. However, the Central Civil Services (Leave) Rules, 1972 provides with paternity leave

It was during the first International Labour Conference (ILO) in 1919 that, the first convention on maternity protection (Convention No.3) was adopted. Significantly, the adoption of the International Labour Organisation (ILO) workers with Family Responsibilities Convention, 1981 marked the recognition that “a change in the traditional role of men as well as the role of women in society and in the family is needed, to achieve full equality between men and women”, as stated in the United Nations Convention on the Elimination of All Forms of Discrimination against Women, 1979. Over the past 20 years, paternity leave provisions have also become more common, which is an indicator of the growing importance attached to the presence of the father around the time of child birth. In 1994, statutory paternity leave provisions existed in 28% of the 141 countries for which data were available at the International Labour Organisation. As on date, a majority of countries have establised legislative provisions to protect and support maternity and paternity, even if those provisions do not always meet the ILO standards.

Though it is  the mother who actually delivers the child, father plays an equally important role. A father is expected to be emotionally and physically available for both, mother and child, before and after the delivery. Infact, legally accepting and providing two months of paternal leave has resulted in a reduced divorce rate in Sweden.

In India, the Central Government in 1999 by notification under Central Civil Services (Leave) Rule 551 (A) made provisions for paternity leave for a male Central Government employee (including an apprentice and probationer) with less than two surviving children for a period of 15 days to take care of his wife and new born child. He can avail this leave 15 days before or within 6 months from the date of delivery of child. If such leave is not availed within the period, it shall be treated as lapsed. For paternity leave he shall be paid leave salary equal to the pay last drawn immediately before proceeding on leave. Also, the same rule applies when a child is adopted.

While paternity leave is sanctioned for government employees, there isn't any such law that indoctrinates the private sector to make it obligatory. Hence, paternity leave is open to interpretation by individual companies.

We all know and understand that for a healthy work culture and to get the optimum efficiency out of an employee, an employer must ensure to provide certain basic amenities like a comfortable work place, healthy working hours, giving the employee enough physical and mental rest etc. Being India where  family is of first and foremost importance, an employer needs to keep in mind that having a child is a start to the chapter of family for almost all, hence, it is an utter necessity to provide reasonable amount of maternity as well as paternity leaves. We must not forget that for a vulnerable new mother and her newly born child, father is the most important person to be around.

Refusing paternity leave  would amount to violation of Article 21 of the Constitution of India - High Court of Madras. - THE MADURAI BENCH OF MADRAS HIGH COURT

Read Judgment below

The petitioner’s wife got conceived through In Vitro Fertilization (IVF) method. IVF is a high risk pregnancy procedure, which caters to the needs of infertile couple. Hence, the women undergoing IVF procedure, needs complete attention and wholistic care for a risk free delivery. Hence, the petitioner, apart from serving his post, was also in a compulsion to give special care to his pregnant wife at that point of time.

Therefore, he gave a leave letter to the second respondent seeking paternity leave from 01.05.2023 to 29.07.2023 for a period of 90 days.

Considering the same, the second respondent, vide order dated 25.04.2023, granted leave for the said period. But shockingly, even before the commencement of the paternity leave period, the second respondent had sent a communication on the previous date of his leave period ie., on 30.04.2023, by a cryptic order cancelling his leave, citing law and order problem prevailing in the locality.

Since the date of delivery of the petitioner’s wife was fixed by the Doctors on 30.05.2023, the petitioner left with no other option, approached this Court by filing Writ Petition. 

This Court, disposed of the said writ petition directing the petitioner to report duty by 16.06.2023 and permitted the petitioner to give a representation to the first respondent and consequently directed the first respondent to re-visit the issue and issue appropriate orders favourably by considering his representation. The first respondent also, in compliance of order passed by this Court, by revisting the cancellation order, on 23.05.2023, sanctioned leave to the petitioner for a  period of 30 days from 01.05.2023 to 30.05.2023.

However, unfortunately the delivery date of the petitioner’s wife was extended and finally, she gave birth to the child only on 31.05.2023. As a result of which, the petitioner was not able to report duty on 31.05.2023.

However, he had sent a WhatsApp message to the Superintendent of Police, Tenkasi District, stating that due to the critical condition of his wife, he was not able to reach in person and submit an application seeking extension of leave. The condition of his wife required absolute attention and full care as a result of which, he could not move ahead from his wife. He was fully taking care of his wife and the new born IVF child.

Shockingly, on 22.06.2023, the impugned desertion order came to be passed. The petitioner was directed in the impugned order to appear before the Deputy Inspector General of Police, Tirunelveli Circle within 60 days from the date of commencement of desertion ie., 31.05.2023 and submit his explanation. The said 60 days expired on 29.07.2023. Under such circumstances, assailing the impugned desertion order, this writ petition came to be filed.

Court Held

The role of both the mother and father during the prenatal care and post-natal care days gains importance from the perspective of the  child’s right to survive. A welfare state is at the bounden duty to provide the foetus with a dignified pre-natal care and the child with proper health care, hygiene and sanitation in the post-natal care days.

The right to protection of life guaranteed to every child by Articles 21 and 15(3) of the Constitution of India, culminates in the fundamental human right of the biological parents/adopting parents seeking  maternity/paternity/parental leave. Thus, the action of the respondents cancelling and refusing paternity leave to the petitioner would amount to violation of Article 21 of the Constitution of India.

Considering the peculiar nature of the case and plight of the petitioner, who has knocked the doors of this Court seeking mercy, I am inclined to gracefully consider the petitioner’s IVF child’s right to life and protection of life as guaranteed under Article 21 of the Constitution of India. The petitioner’s child’s right to live, survive, health and development of childhood which flows from Article 21 of the Constitution of India, guarantees the petitioner’s right to seek paternity leave to attend his wife’s delivery. Hence, this Court concludes this case in favour of the petitioner quashing the impugned desertion order passed by the first respondent.

CA Technologies rolls out parent leave policy to promote greater work-life-balance

CA Technologies has rolled out a new parent leave policy to promote greater work-life-balance for parents across all countries for its employees. The company is offering all employees globally — male and female — a minimum of 12 weeks paid leave during the first 12 months following the birth or adoption of their child.

While the women employees at CA (India) continue to be eligible for a maternity leave of 26 weeks; the paternity leave policy allows all male employees who have babies born or adopted; a 12-week paid leave, according to a release.

“Our new family leave policy demonstrates that CA not only champions and supports diversity and inclusion, but also recognizes the importance of giving employees time to spend with their young families. We believe that this will encourage male as well as female employees to be actively involved in the initial months of caring for their new child," said Sunil Sankar, VP People Business Partner, CA India.

Male employees will be eligible for the paternity leave if they have 12 months service at the date the child is born, or for adoptive parents where a child is matched or newly placed with them. "Employees can opt to take a shorter period of leave if they choose, and salaries and benefits will continue to be paid in the normal way," the company release stated.

h) Payment of Gratuity

Gratuity is a lump sum amount paid by the employer to his employee who has put up minimum five years of continuous service  at the time of permanently leaving the organisation.

• • provides for payment of gratuity @ 15 days’ wages for every completed year of service or part thereof, in excess of seven months

  • maximum amount of gratuity payable under the Act was raised from Rs. 10,00000/-

h) Pension benefit after retirement/superannuation 

(A superannuation pension shall be granted to a Government servant who is retired on his attaining the age of 60 years. However some state Governments employees retirement age  is 58 years )

Pension payable to its employees upon superannuation is a property under Article 300-A of the Constitution of India and it constitutes a fundamental right  to  livelihood  under  Article  21  of  the  Constitution  of India.    The  deprivation  of  even  a  part  of  this  amount cannot  be  accepted,  except  in  accordance  with  law,  as pension  is  neither  a  bounty,  charity  or  a  gratuitous payment but an indefeasible right of an employee in terms of  the  Rules.  Terminal  benefits  will  enable  a  retired employee  to  live  a  life  free  from  want,  with  decency, independence  and  self-respect.  Depriving  such  right  to livelihood, will leave a pensioner fall on the thorns of life and bleed.

The minimum eligibility period for receipt of pension is 10 years. A Central Government servant retiring in accordance with the Pension Rules is entitled to receive superannuation pension on completion of at least 10 years of qualifying service.

In the case of Family Pension the widow is eligible to receive pension on death of her spouse after completion of one year of continuous service or before even completion of one year if the Government servant had been examined by the appropriate Medical Authority and declared fit for Government service.

W.e.f 1.1.2006, Pension is calculated with reference to average emoluments namely, the average of the basic pay drawn during the last 10 months of the service or last basic pay drawn whichever is beneficial. Full pension with 10/20 years of qualifying service is 50% of the average emoluments or last basic pay drawn whichever is beneficial. Before 1.1.2006, for qualifying service of less than 33 years, amount of pension was proportionate to the actual qualifying service broken into completed half-year periods. For example, if total qualifying service is 30 years and 4 months (i.e. 61 half-year periods), pension will be calculated as under:-

Pension amount = R/2(X)61/66

where R represents average reckonable emoluments for last 10 months of qualifying service or the last pay drawn as opted by the govt servant.

Minimum pension presently is Rs. 3500 per month. Maximum limit on pension is 50% of the highest pay in the Government of India (presently Rs. 45,000) per month. Pension is payable up to and including the date of death.

Commutation of Pension

A Central Government servant has an option to commute a portion of pension, not exceeding 40% of it, into a lump sum payment with effect from 1.1.1996. No medical examination is required if the option is exercised within one year of retirement. If the option is exercised after expiry of one year, he/she will have to under go medical examination by the specified competent authority.

Retirement Pension plans in India detailed >>

J.S. Cheema Vs. State of Haryana and others, 2014(13) RCR (Civil) 355,

The Court  held that where an amount for which an employee was entitled for after his/her retirement and has been withheld and used by the respondents, the employee will be entitled for interest.

Ram Karan Vs. Managing Director, Pepsu Road Transport Corporation and another, 2005(3) PLR 580,

Wherein Division Bench of this Court has already held that financial difficulty is not a valid ground to withhold the pensionary benefits of an employee as the only source of livelihood for a retired employee is the benefit, which he/she receives after his/her retirement in order to live a dignified life.

No Pension For Past Service  If  Central Govt Employee  Gives Resignation To A Service And Joins Another Post, Without Due Permission  -  Supreme Court of India

 Read the judgment below

Facts of the Case

The present matter relates to entitlement of the respondent to pro rata pension benefits from his erstwhile employer i.e., Central Industrial Security Force (CISF) from where he resigned and joined the Hindustan Aeronautics Limited (HAL). The duration of the respondent’s service in CISF was around 13 years and he joined the HAL in the year 1998 after submitting his resignation to his former employer.

The employer noted that the respondent had not applied for employment through proper channel with due permission of the competent authority of the CISF and instead applied directly to the HAL in his private capacity. Accordingly, keeping in mind the Central Civil Services (Pension) Rules, 1972 (hereinafter referred to as “CCS Pension Rules”), he was held to be disentitled to pro rata monthly pension retirement/service gratuity for the service rendered in the CISF.

Rule 26- Forfeiture of service on resignation

(2) A resignation shall not entail forfeiture of past service if it has been submitted to take up, with proper permission, another appointment, whether temporary or permanent, under the Government where service qualifies.”

Court held that

This Court in Union of India and Others vs Braj Nandan Singh reported in (2005) 8 SCC 325, while considering Rule 26 of the CCS Pension Rules observed that Rule 26 in clear terms provides that resignation from a service for another post, without due permission will entail forfeiture of service. In this case, although the respondent did seek permission of his employer to apply for the opening in HAL, such permission was not  forthcoming. In the meantime, the respondent applied directly, appeared in the selection process availing leave despite denial of permission, and then took up the new assignment.

If the relevant Rules were to be considered, the only reasonable conclusion would have been that the writ petitioner would be disentitled to relief.

Pensionary provisions must be given a liberal construction as a social welfare measure: Supreme Court

[Read Judgment below]

CIVIL APPEAL NO. 3984 OF 2010

V. SUKUMARAN Versus STATE OF KERALA & ANR.

V. Sukumaran, the appellant before the Court, joined the Department of Fisheries of the State Government of Kerala as a Casual Labour Roll worker on 7.7.1976. He worked there upto 29.11.1983 rendering 7 years, 4 months and 23 days of service as a CLR worker. District Officer, Kerala Public Service Commission advised him to join the Revenue Department, Kannur District as Lower Division Clerk, which he did. He was subsequently regularised on 18.9.1989 and later got promotion as Upper Division Clerk (Higher Grade). He retired on attaining the age of superannuation on 31.12.2008. He filed a writ petition claiming pensionary benefits he was to receive at the time of retirement with the prayer that his service as a CLR worker from 7.7.1976 to 29.11.1983 be counted as 8 years of qualifying service for pension, His writ petition was dismissed by the High court.

Court held that

Pension is succour for post-retirement period.  It is not a bounty payable at will, but a social welfare measure as a post-retirement entitlement to maintain the dignity of the employee.

The pensionary provisions must be given a liberal construction as a social welfare measure.  This does not imply that something can be given contrary to rules, but the very basis for grant of such pension must be kept in mind, i.e., to facilitate a retired Government employee to live with dignity in his winter of life and, thus, such benefit should not be unreasonably denied to an employee, more so on technicalities.

The arrears of pension be remitted to the appellant within a maximum period of eight (8) weeks from today with admissible interest as applicable to outstanding pension amounts.

Right To Pension Cannot Be Taken Away By A Mere Executive Fiat Or Administrative Instruction - in case of Pending enquiry: Supreme Court of India

[Read Judgment below]

The Supreme Court has observed that the right to pension is covered under a right to property protected under Article 300A of the Constitution of India and it cannot be taken away by a mere executive fiat or administrative instruction.

The court held that

Pension and gratuity are not mere bounties, or given out of generosity by the employer. An employee earns these benefits by virtue of his long, continuous, faithful and unblemished service. The right to receive pension of a public servant has been held to be covered under the "right to property" under Article 31(1).

State of Jharkhand and Ors. vs. Jitendra Kumar Srivastava  and Ors. (2013) 12 SCC 210, wherein it has been that Rule 43(b) does not permit  withholding of pension and gratuity when departmental or  judicial proceedings are still pending.

The right to receive pension has been held to be a right to property protected under Article 300A of the Constitution even after the repeal of Article 31 (1) by the Constitution (Forty-Fourth Amendment) Act, 1978 w.e.f. 20.06.1979.

 In view of the above, we hold that the Respondent-State  was unjustified in withholding 10% pension of the Appellant  under administrative Circulars dated 22.08.1974 and  31.10.1974, and Government Resolution No. 3104 dated  31.07.1980 after the Appellant had superannuated on  31.03.2008.

We direct that 10% of the pension amount which had  been withheld after superannuation on 31.03.2008 till  19.07.2012 is liable to be paid to the Appellant within a period  of 12 weeks from the date of this Judgment.

Court further held that

The State is directed to release 90% of the gratuity  payable to the Appellant within a period of 12 weeks from the  date of this judgment. The balance 10% will be released subject  to the outcome of the criminal proceedings pending against him  in R.C. Case No. 48A/1996.

Employee pension is not a bounty, charity or a gratuitous payment but an indefeasible right of an employee. :HIGH COURT OF KARNATAKA 

[Read Judgement below]

WRIT PETITION No.11517/2018 (S – R)

Petitioner's two-decade-old legal fight began after he was terminated from service on May 24, 1999 for misconduct and theft, by KPTCL without holding any inquiry. The  petitioner  was  a  permanent  employee  of  the respondent  -  Karnataka  Power  Transmission  Corporation Limited (hereinafter referred to as ‘KPTCL’ for short) and at the relevant point of time, was working as a Store Keeper.  Alleging  that  the  petitioner  had  committed  theft  of store materials,  a  complaint  was  lodged  with  the  jurisdictional police against  the  petitioner. On such allegation of theft,  the  KPTCL  without  holding  any  enquiry,  terminated  the services of the petitioner.

Court held that.

"The deprivation of even a part of this amount cannot be accepted, except in accordance with law, as pension is neither a bounty, charity or a gratuitous payment but an indefeasible right of an employee in terms of the Rules. Terminal benefits will enable a retired employee to live a life free from want, with decency, independence and self-respect. Depriving such right to livelihood, will leave a pensioner fall on the thorns of life and bleed," the court stated.

"Therefore, it is imperative to issue a mandamus for release of all the terminal benefits that are accrued in favour of the petitioner along with interest and also mulct the KPTCL with exemplary costs for harassing and driving its employee to this Court time and again and now for release of terminal benefits," Bench directed KPTCL to pay 9 percent interest on the entire amount due to the 77-year-old petitioner since his retirement in 1999 along with ₹50,000 as costs. the court ruled.

Employer's Financial Difficulty Not A Ground To Restrain The Pension Benefits Of Retired Employee: Punjab and Haryana HC

Read Judgment below

The employer's financial instability is not a valid ground to suppress the pension benefits of a retired employee as the pension is the only source of livelihood for a pensioner to live a dignified life after retirement held by Punjab and Haryana High Court.

The petitioner is that she retired on attaining the age of superannuation while working as Inspector from Municipal Council, Abohar on 31.10.2011 and all the benefits for which she was entitled upon her retirement, were not released immediately and the same were delayed by the respondents without any valid justification.

The justification which has come forward from the respondents is that due to the financial instability, the payments could not be made to the petitioner after her retirement and, therefore, justification given by the respondents in the delayed release of the pensionary benefits is financial constraints.

The court stated that under Article 21 of the Indian Constitution where life is interpreted as a dignified life where mere existence not enough but to enjoy the facilities, proper living condition with adequate standard of life which a person is entitled to. It is the duty of the state to preserve these human rights of a citizen by taking appropriate steps to ensure the recognition of these fundamental rights.

On Article 21 the Supreme Court of India laid down in Chameli Singh v. State of U.P. 1996(2) SCC 549 that-

"In any organised society right to live as a human being is not ensured by meeting only the animal needs of man. It is secured only when he is assured of all facilities to develop himself and is freed from restrictions which inhibit his growth. All human rights are designated to achieve this object. Right to live guaranteed in any civilised society implies to right to food, water, decent environment, education, medial care and shelter. These are basic human rights known to any civilised society".

The fundamental question of standard of living and a dignified life interpreted in many landmark judgments pronounced by the Apex Court, where right to shelter is a guaranteed right and state is under obligation to provide the shelter to the citizens. In this case the financial uncertainty is the main ground in violation of the fundamental right of the petitioner and on this issue Supreme Court in cases like Municipal Council, Ratlam, (1980)4 S.C.C. 163, B.L Wadhera v. Union of India, All India Imam Organisation and Ors. v. Union of India and Ors., Kapila Hingorani v. State of Bihar. All India Organisation's case already laid down the principle that "Financial stringency may not be a ground for not issuing requisite directions when a question of violation of fundamental rights arises and Financial difficulties of the institution cannot be above the fundamental right of a citizen".

The Court held that 

The petitioner is entitled for interest @ 9% per annum from the date, the amount became due i.e. 01.11.2011 till the same are released in her favour. Let calculation of the interest be done by the respondents within a period of two months from the receipt of certified copy of this order and the amount so calculated by the respondents, shall be released to the petitioner within a period of one month thereafter.

i) Employees' Provident Fund

Employees’ Provident Fund is compulsory for every company in which 20 or more people are employed.

To go into the background of Provident Fund, it is basically a social security provision and provides some financial stability post retirement to employees. It isn't an idea specific to India, and may generally be found across the globe. The United States imposes Social Security and Medicare contributions towards old age, disability, pension and medical benefits. As early as the 1880s, Germany had built a social insurance programme (one requiring contributions from workers) that provided for sickness, maternity, and old-age benefits. Volatility of income especially hurt the older workers, as they often bore the brunt of economic downturns.

India: Employee’s Provident Fund or EPF is probably the most popular retirement saving scheme amongst salaried people. The government-run scheme is a savings scheme which is good for people who are looking for risk-free, guaranteed-return plans for retirement. Employees' Provident Fund is applicable to every employee who works under following establishments and  takes salary less than or equals to Rs. 15000/- per month.

• • Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by Central Government in the Official Gazette. (List of Industries/Establishments)

  • Employing 20 or more persons .

  • Cinema Theatres employing 5 or more persons.

Contributions

By employee 12% of his/her salary

By employer 12% which is an amount equal to an employee contribution.

Withdrawal of Employee’s Provident Fund

(in-case of unemployment)

Employee who is a members can now withdraw 75% 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%  of their fund after two months of unemployment.

On retirement from service after attaining the age of 55 years. A member who has not attained the age of 55 years at the termination of the service shall withdraw the full amount standing to his/her credit.

In cases of migration from India for a permanent settlement abroad, the withdrawal is allowed. In cases of taking employment abroad, withdrawal is allowed.

In case of permanent disablement

A member can withdraw the total amount from the retirement kitty on retirement on account of permanent and total incapacity for work due to bodily or mental infirmity. This incapacity has to be certified by a medical practitioner. A member who is suffering from tuberculosis or leprosy even if contracted after leaving the service of an establishment on grounds of illness but before the payment has been authorised, shall be deemed to have been permanently incapacitated for work.

Contractual Employees Engaged By A Company Entitled To Provident Fund Benefit: Supreme Court of India

[Read Judgment below]

The Supreme Court has observed that contractual employees engaged by a Company, who draw their wages/salary directly or indirectly from the Company, are entitled to the benefit of provident fund under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

The Government of India holds 51% shareholding in PAWAN HANS LIMITED and the remaining 49% is held by Oil and NaturalGas Company Ltd. (ONGC). Allowing a writ petition filed by a Trade Union, the High court had held that the benefits under the EPF Act be extended to the members of the Union, and other similarly situated employees. It was held that a liberal view must be taken in extending social security benefits to the contractual employees.

Provident Fund, Pension Fund, Gratuity Fund not part of corporate debtor's liquidation estate for distribution under Sec 53 IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has held that Provident Fund, Pension Fund and Gratuity Fund payable to workmen are not part of the liquidation estate of the corporate debtor for the purpose of distribution of assets under Section 53 of the Insolvency and Bankruptcy Code, 2016.

The judgment was passed by a three-member bench of Chairperson, Justice SJ Mukhopadhaya, Member (Judicial), Justice AIS Cheema and Member (Technical) Kanthi Narahari in an appeal preferred by the State Bank of India against an order passed by the National Company Law Tribunal, New Delhi (NCLT).

Pursuant to an application under Section 7 IBC, a Corporate Insolvency Resolution Process was initiated against the Corporate Debtor.

Finally, an order of liquidation was passed by the NCLT and the workmen stood discharged under Section 33(7) of IBC. Subsequently, the Liquidator denied the preferential payment of the gratuity fund, the provident fund and the pension fund to the workmen and included the same for the payments under the waterfall mechanism under Section 53.

As a result, Moser Baer Karamchari Union moved an application before the NCLT, praying for directions for the exclusion of the amount due to them towards Provident Fund, Pension Fund and Gratuity Trust Fund from the purview of Section 53.

The Adjudicating Authority ruled in favour of the Union and held that the Provident Fund, Pension Fund and Gratuity Fund did not constitute part of the liquidation estate of the corporate debtor.

Aggrieved by the order, State Bank of India who is a secured creditor moved the NCLAT in appeal.

Placing reliance on the Explanation to the Section 53, SBI argued that ‘workmen’s dues’, which are mentioned under Section 53(1)(c), shall have the same meaning as assigned to it in Section 326 of the Companies Act, 2013 and would thus include Provident Fund.

SBI also relied on Explanation (iv) and (iv) below Section 326 and Section 327 of the Companies Act, 2013 to state that all sums due to any workman from the provident fund, the pension fund, the gratuity fund or any other fund for the welfare of the workmen, maintained by the Company is covered by term “workmen’s dues”.

The Resolution Professional submitted that as per Section 36(3) read with Section 36(4) of the IBC, all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund were excluded from the liquidation estate. Thus, it was submitted that workmen had the first charge on these funds.

After hearing the parties, the NCLAT noted that from Section 36(4)(a)(iii), it was clear that all sums due to any workman or employee from the provident fund, the pension fund, and the gratuity fund were not to be included in the liquidation estate assets and could not be used for recovery in the liquidation.

Therefore, the question of distribution of the provident fund, pension fund or the gratuity fund in order of priority and within such period as prescribed under Section 53(1) did not arise, it added.

The NCLAT further stated that since ‘workmen’s dues’ is specifically mentioned in Section 53(1)(b)(i) as dues for the period of twenty-four months preceding the liquidation commencement date, its meaning could not be derived through Section 326 of the Companies Act, 2013.

While clarifying that there was a difference between the distribution of assets and preference/priority of workmen’s dues under Section 53(1) (b) of the IBC and Section 326(1) (a) of the Companies Act, 2013, the NCLAT stated that for Section 53 IBC, Section 326 was relevant for the limited purpose of understanding ‘workmen’s dues” which could be more than provident fund, pension fund and the gratuity fund kept aside and protected under Section 36(4)(iii).

It concluded,

"..as the provisions of the ‘I&B Code’ have overriding effect in case of consistency in any other law for the time being enforced, we hold that Section 53(1) (b) read with Section 36(4) will have overriding effect on Section 326(1) (a), including the Explanation (iv) mentioned below Section 326 of the Companies Act, 2013."

In view of the above, the appeal was dismissed with the finding that the provident fund, the pension fund, and the gratuity fund do not come within the meaning of ‘liquidation estate’ for the purpose of distribution of assets under Section 53.

J) General provident fund (GPF)

General  Provident fund is a Social Security benefit specifically for the purpose of state and central government employees working in the India. To become a member of general provident fund, employee has to subscribe for its membership by way of contribution from his monthly salary.

Rate of Subscription

The amount of subscription is fixed by the subscriber himself. However, it cannot be less than 6% of the basic pay and not more than the basic pay(For class IV employees the percentage is…..). The minimum subscription is determined on the basic pay drawn on 31st March of the preceding financial year. Subscription may be enhanced twice and/or reduced once during the financial year.

BENEFITS TO THE MEMBERS OF THE GENERAL PROVIDENT FUND

1) Advance for Purchase of Dwelling Site.

2) Advance for Purchase of Dwelling House/Flat.

3) Advance for Construction of a House.

4)  Advance  for  Repayment  of  Housing  Loan  to  State  Government  Housing Board or any other Government recognised Housing Finance Body.

5) Advance for Illness viz. Hospitalization for more than a month major surgical operations or suffering from T.B., leprosy, paralysis, cancer, heart ailment etc.

6) Advance for Marriage of Self/Son/Daughter/Sister/Brother.

7) Advance for Post Matriculation Education of Son/Daughter.

8)  Advance  for  Damage  to  the  property  Due  to  Natural  Calamity  (Flood/Earth Quake).

9) Advance for Member affected by cut in the supply of electricity.

10) Advance for Member who is physically handicapped.

The employees can withdraw their money and receive payments within 15 days. Employees can withdraw GPF for select purposes after completing 10 years of service, as against 15 years of service earlier. The money can be withdrawn for purpose of education (which includes primary, secondary and higher education), marriage of self and family members, in emergencies such as illness, buying property, cars and servicing bank loans. 

key points:

1. The relaxed rule for GPF withdrawal benefit  central government employees as subscribers can withdraw the outstanding money for purpose of children education - including primary, secondary and higher education, covering all streams and institutions. 

2. Money can also be withdrawn for expenses such as marriage and other ceremonies of self or family members and dependents, illness of self, family members or dependents and purchase of consumer durables.

3. Government has permitted GPF withdrawal of up to twelve months pay or three-fourth (75%) of the outstanding money in the General Provident Fund, whichever is less. In some cases such as for illness, the withdrawal may be allowed up to 90 per cent of the amount standing at credit of the subscriber.

4. 3/4th or 75% of the total outstanding amount in GPF can be withdrawn for purpose of buying a house, repayment of outstanding housing loan, purchase of land for building a house, constructing a house, reconstructing or making additions on a house already acquired and renovating, additions or alterations of ancestral house.

5. GPF money can also be withdrawn for the purpose of purchasing vehicles, repayment of car loans, repair and overhauling of vehicles and making deposit to book a vehicle.

6. For purchase of vehicle, a central government employee can withdraw 75 % of the amount at disposal in the GPF account or 75 per cent of the cost of vehicle whichever is less.

7. Employees can also withdraw 90% of the money without giving any reason from their provident fund accounts two years before retirement from the job. Earlier the employees were allowed to withdraw 90 per cent of money only a year before their retirement.

8. In further relaxation, head of department of the concerned employee will have the power to sanction withdrawal from the provident fund accounts and no documentary proof will be required to be furnished. An employee would be required to give a simple declaration for the purpose of withdrawal.

9. In case of emergencies such as illness of employee or his or her family member the money from the GPF can be withdrawn within 7 days.

10. The notification on GPF was dated March 7, 2017.

3. SABBATICAL BENEFIT

 [Sabbatical :any extended period of leave from one's customary work, especially for rest, to acquire new skills or training, etc.]

Coming soon: Up to 2 years' sabbatical for women bank staff

New Delhi, March 2012 : Come April, and women employees of public sector banks (PSBs) may be able to get sabbatical of up to two years during their career.

The Finance Ministry has asked PSBs to place this proposal before their respective boards for decision and its introduction with effect from April 1,2012, official sources said.

This follows the Government agreeing to the Khandelwal Committee's recommendation to introduce sabbatical for women employees of PSBs. The sabbatical benefit will be available only to employees who have put in a minimum of five years of service. The leave will have to be taken for a period of at least three months at a time and it should not be taken more than once in a year.

But, the Government's decision has somewhat irked trade unions, as they contend that such a move would be unilateral and in violation of the service conditions provided in the bilateral settlement between the Indian Banks' Association (IBA) and the unions.

The Khandelwal Committee was set up in October 2009 to study human resource issues in public sector banks. The Committee had made 105 recommendations, of which the Centre has given its green signal for 56.

https://www.thehindubusinessline.com/money-and-banking/coming-soon-up-to-2-years-sabbatical-for-women-bank-staff/article23067029.ece

United States

401(k) plan (Retirement Benefit)

Employer-sponsored employee benefit scheme supported by the US tax code. Under this plan, a limited amount of an employee's before-tax salary is deposited into tax-deferred retirement plan where it accumulate free of tax. Withdrawals by the employee before he or she reaches the age of 59½ years attract penalties except in certain cases of hardship.      More Detailed >>   

The long-term viability of the social security system is facing serious issues. People are living longer, baby boomers are nearing retirement, and the birth rate is low. The result is the worker-to-beneficiary ratio has fallen from 17 to 1 in 1950 to 3 to 1, and within 40 years 2-to-1. At this rate there will not be enough workers to pay scheduled social security benefits at current tax rates.

A survey of recent retirees conducted by Putnam Investments found over 78 percent regretted not saving more during their work years. Fifty-nine percent felt they should have started saving for retirement earlier in their careers. More than a third wished their employer or plan manager had encouraged them to save more aggressively.

4. Leave Travel Concession

Leave Travel Allowance which means is an benefit/allowance paid to the employee by the employer when He/She is travelling with their family or alone. In many organisations, the year-end holidays are a norm. In others, the employees apply for long leave in advance, well ahead of their travel schedule. And if the travel costs are reimbursed by the employer, The LTC allows the grant of leave and ticket reimbursement to employees who are entitled under the rules to travel to their home towns and other places.

Any incidental expenses and the expenditure incurred on local journeys shall not be admissible under LTC. In case of a journey between places not connected by any public means of transport, the government employee will be allowed reimbursement for journey on transfer for a maximum limit of 100km covered by the private/personal transport based on self-certification.

5. UNEMPLOYMENT COMPENSATION

In USA an individual laid off by an organization covered by the Social Security Act may receive unemployment compensation for up to 26 weeks. Although the federal government provides certain guidelines, unemployment compensation programs are administered by the states, and the benefits vary state by state.

India: can withdraw 75% money from PF account in case of unemployment

The Employees’ Provident Fund Organisation (EPFO) announced that its members can withdraw 75% 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%  of their fund after two months of unemployment.  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).

Facts [+]

Feb 2012, WASHINGTON: The US House of Representatives passed a compromise bill on Friday extending a payroll tax cut and jobless benefits through 2012, measures aimed at boosting the US economy.  The bill passed by a vote of 293 to 132 and nine abstentions, with broad support from Democrats and Republicans, after a bipartisan deal was reached to end a long and bitter fight over a key proposal by President Barack Obama. The cost of the package has been estimated at $150 billion.

The plan is expected to extend a cut in the Social Security tax rate -- from 6.2 to 4.2 per cent -- for another 10 months, and extend unemployment benefits through the end of the year. It will mean a salaried worker making $50,000 a year will be getting about $1,000 more in take-home pay over the course of the year.

6. WORKER'S COMPENSATION

Until the early part of the 20th century, workers had little recourse in the event that they were to become the victim of a workplace accident. But the new processes and machines that were incorporated into many jobs with the spread of industrialization created a sufficient increase in the level of occupational danger to warrant the attention of legislators. In response to the growing problem, laws were enacted to grant workers access to financial benefits that their employers would be obligated to provide, free of any considerations about liability. In some ways, it was a tremendous victory, and in others it was less so. Workers’ compensation benefits provide a degree of financial protection for employees who incur expenses resulting from job-related accidents or illnesses.    More Detailed >>

7. PAID LEAVES

Employees who work all day, every day, without a break in sight, will generally be less productive on the job. Offering paid vacation as part of your benefits package will create a more positive work environment and will help your employees avoid burnout. According to Salary.com, there are several ways in which paid vacation can be structured.

For example, some employers offering basic employee benefits allow employees to "earn" paid vacation through years of service. It is also important to determine whether or not your employees will be allowed to carry over unused paid vacation days when a new year begins.

Facts [+]

Italy, France, and Germany top the list of average number of vacation days per year, according to the World Tourism Organization. Italians receive an average of forty-two vacation days per year. Korea, Japan, and the U.S. are at the bottom of the list. Americans receive an average of thirteen vacation days per year.

Statutory holiday entitlements:

• • U.K. (28 days)

  • Poland (26 days)

  • Greece, Austria, France, Sweden, Luxemburg, Finland and Denmark (25 days)

  • Venezuela (24 days)

  • Brazil, Peru, Spain, Portugal, United Arab Emirates (22 days)

  • Norway (21 days)

  • Argentina, Italy, Belgium, Germany, Cyprus, Ireland, Switzerland, the Netherlands, Latvia, Russia, Slovenia, Serbia, Slovakia, Lithuania, Croatia, the Czech Republic, Romania, Japan, Australia and New Zealand (20 days)

  • South Korea (19 days)

There is no federal law that requires employers to provide vacation time, paid or unpaid, to its employers. Most employees consider it to be one of their most important benefits. Workplace experts agree that it is important to productivity and morale for employees to take time off in order to rest and rejuvenate. The typical U.S. worker receives ten vacation days per year.

It takes twenty-five years of service in the United States to achieve the mandated minimum vacation allotments in other comparable countries, according to an Economic Policy Institute study. France, Austria, and Denmark mandate at least 25 vacation days per year to employees. There is no mandated vacation time in the United States.

American workers receive on average about twelve vacation days a year. The typical American worker gives back an average of three vacation days, according to a recent survey by Expedia.com, leaving nearly 421 million vacation days unused. The survey estimates that 31 percent of employees do not take all their vacation days.

Every legal worker in the U.S. is entitled by federal law to three basic benefits. Workers' compensation provides insurance for work-related injuries or death. Social security provides retirement income and disability coverage for workers and their dependents. Unemployment insurance provides payments for a period of time presumably long enough to allow workers to find new jobs.

Many U.S. employers recognize 10 federal holidays, if not more.

Organizations commonly provide nine or ten days per year as public holidays, although there is no standard. Federal holidays, or legal public holidays, are recognized by Congress but are not observed by all employers.

Legal public holidays:

• 1. New Year's Day, January 1

  2. Martin Luther King, Jr. Day, the third Monday in January

  3. Washington's Birthday, the third Monday in February

  4. Memorial Day, the last Monday in May

  5. Independence Day, July 4

  6. Labour Day, the first Monday in September

  7. Columbus Day, the second Monday in October

  8. Veterans Day, November 11

  9. Thanksgiving Day, the fourth Thursday in November

  10. Christmas Day, December 25

India

It consists of holidays which have to be observed compulsorily across India.These holidays are:

• 1. Republic Day,

  2. Independence Day,

  3. Mahatma Gandhi's Birthday,

  4. Budha Purnima

  5. Christmas Day

  6. Dussehra (Vijay Dashmi)  An additional day for Dussehra

     • Holi

     • Janamashtami (Vaishanvi)

     • Ram Navami

     • Maha Shivratri

     • Ganesh Chaturthi / Vinayak Chaturthi

     • Makar Sankrantili

     • Rath Yatra

     • Onam

     • Sri Panchami / Basanta Panchami

     • Vishu / Vaisakhi / Vaisakhadi / Bhag Bihu / Mashadi Ugadi / Chaitra Sakladi / Cheti Chand / Gudi Pada 1st Navratra / Nauraj

  7. Diwali (Deepavali)

  8. Good Friday

  9. Guru Nanak's Birthday

  10. Eid ul-Fitr

  11. Eid al-Adha (Bakrid)

  12. Muharram

  13. Prophet Mohammad's Birthday (Id-e-Milad)

  14. Dussehra (Maha Navami)

  15. Dussehra (Vijay Dashami)

  16. Deepawali

  17. Eid al-Adha (Bakrid)

  18. Guru Nanak's birthday/Kartik Poornima

  19. Dr. B R. Ambedkar's Nirwan Diwas

  20. Moharram

  21. Christmas

Details of Hindu festivals >>

8. MEDICAL BONUS

Every woman entitled to maternity benefit under Maternity Benefit Act,1961 (Maternity Benefit (Amendment) Act, 2017)b& also be entitled to receive from her employer a medical bonus of Rs.1,000/-, if no pre-natal confinement and post-natal care is provided for by the employer free of charge. Pre-natal Confinement Care means all the care before expected delivery and post natal care means care after delivery of child.

Is this medical bonus paid in addition to maternity leave?

Yet it is given to take care of the above pre-natal and post natal expenses.

9. NIGHT-SHIFT ALLOWANCE

According to the labour law, mandates the employer to pay double wage to the worker who works beyond the prescribed working hours or for extra working hours. In addition to the payment of double wage for extra working hours, Night-shift allowance is paid to the workers who does job at night-shift  or who does job beyond the prescribed day working hours. Under this allowance, employee will pay some amount for the purpose of transportation/commuting from his residence to workplace. 

In fact, especially in the software companies, many employees who are working at night-shifts are complaining about non-payment of  night-shift  allowance, but it has mentioned  as paid in their salary payslip.

10. Conveyance allowance

Conveyance allowance is one of the compulsory employee benefits provided for meeting an expenditure incurred by an employee ( especially government employee) for commuting from home to office and office to home. In order to claim conveyance allowance by an employee, he or she should reside and work in towns only.

11.City compensatory allowance

City compensatory allowance is one of the employee benefits provided for meeting additional cost of living for working in cities.

12. Dearness allowance

13.Expenditure towards funeral in case of death of an employee.

It is mandatory for an organisation to pay expenditure towards funeral in case of death of an employee while in the course of employment. According to the Section 4(4) of Employee's compensation act 1923, employer is liable to pay funeral expenditure to the dependents of an employee who was killed or if dependents do not exist in such case, funeral expenditure should be paid to the person who actually incurred such expenditure.

14. Subsistence allowance - (Paid to an employee in case of suspension)

"To "subsist" means to manage to stay alive, especially with limited resources or money. The state of living as such is known as subsistence, which is indicative of the fact that one has enough resources to sustain life with basic minimum needs. This means of existence or continuance with meagre resources of livelihood for a salaried employee is known as a subsistence allowance, which is an advance payment to cover immediate living expenses while being kept away from service.

It is, therefore, an income that is sufficient to provide bare necessities and is an adequacy of support that exists as a reality while undergoing a compulsory distress. The idea is to preserve sustenance at the minimum economic level to sustain a minimum standard of living."

• Retirement Pension plans in India detailed >>

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