Labour Laws compliance and Human Resource Management (including expats)

The new Wage definition provides that the allowance of an employee cannot be more than 50 per cent of the total salary. This would increase the social security deductions like provident fund.

Presently, the employer and employee contribute 12 per cent each towards the social security schemes run by the Employees' Provident Fund Organisation.

At present, a large number of employers split salaries into numerous allowances to reduce the social security contributions. This helps employees as well as employers. The workers' take-home pay increases while the employers reduce provident fund contribution liability.

Restricting allowance to 50 per cent of the total pay would also increase employer’s payout on gratuity payments to those employees who work for more than five years in a firm. The gratuity is also worked out as proportion of the average pay.

The source said that the industry bodies agree that this would enhance the social security benefits for workers but are not ready for it due to economic slowdown.

The industry bodies want that the implementation should be put on hold till the economy rebounds again and buoyancy returns. they will press for this at their meting dated 24thDec2020.

CODE on WAGES 2019 

The new minimum wage norms would be applicable for all workers irrespective of their pay. At present, the minimum wages fixed by the Centre and states are applicable to workers getting up to Rs 18,000 pay monthly and does not cover workers getting a monthly wage of more than Rs 18,000. If the bill is approved in the Parliament, workers getting a monthly pay of higher than Rs 18,000 would also be legally entitled to a minimum wage. Also, until now the central government was the decision maker for fixing wages in its own sphere and the States were responsible for their areas leading to non-uniformity. The lack of proper methodology to arrive at the wages of unskilled workers added to the woes. This wage code bill could solve all of these to some extent. 
Let us have a quick look into what it talks about:
·         It will have consolidation of four Labour Laws - the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.

·         Under this bill, the Centre will set a minimum wage across all sectors in the country.  All states will have to maintain the minimum wage that has been fixed by the center.

·         States will have the power to provide for higher minimum wage in their jurisdiction apart from the one fixed by the central government.

·         This bill universalizes the provisions of minimum wages and ensures timely payment of wages to all employees.
Some of the benefits this new wage code bill will bring to us are:
·         Multiplicity of definitions will be removed through this change.

·         There will be ease of compliances which in turn will incentivize setting up of more enterprises.

·         The role and designation of the inspector will change from mere inspection to that of the facilitator who would guide and advise the employers as well as the worker class.

·         The move will be popular among trade unions and those currently employed.

·         Historically, the wage conditions of unskilled workers who are outside the central sphere are dismal. Hence this Bill will be the harbinger of good news to them.
The challenges
After the goods and services tax (GST) implementation, the ability to offer Value Added Tax (VAT) sops by the State Government has already reduced. And with this new change now, the capacity of states to attract investments on the basis of lower wage rates too will take a hit. The latest Economic Survey points to the fact that 78% of Indian firms employ less than 50 workers. Just 10% employs more than 500 workers. The comparable figures for China are 15% and 28% which speaks for itself.  Countries like Brazil too had suffered regional income disparities as a result of the implementation of a similar minimum wage law in the past.
 Let us look at more challenges which this new wage bill may bring for us:
·         This law will affect the competitiveness of trade and industry.

·         The Bill may lead to wide regional income disparity due to some low-income states suffering current de-industrialization.

·         This new change will ensure that more of the organizations remain in the informal sector where policing wages is difficult.

·         The applicability of current act is restricted to scheduled establishments due to which a sizeable number of workers are left out. If Parliament approves the code, the minimum wage will be applicable to all classes of workers. This will certainly make it more difficult for smaller companies to function efficiently.

·         The unorganized sector will eventually find ways around to bypass the law if economics tells them that they can't afford it.
The good news is that the Indian Government is in full swing to bring in reforms with the aim of creating a more effective, rationalized, transparent and user-friendly Labour law system in the country. But with this higher, uniform minimum wages across the country in the offering, there seems to be a possibility of low-income states suffering de-industrialization, leading to wide regional income disparity. On one hand, due to such changes technology and mechanization will move a step ahead leading to higher productivity. However, if not tackled correctly may lead to a fall in employment level across all industries.


The primary objectives of Shram Suvidha are:

·         A unified portal for all compliance pertaining to Chief Labour Commissioner of India, Director General Mines and Safety, Employee State Insurance Corporation, and Employee Provident Fund Organization. There are 16 laws that are covered here like Payment of Wages Act, Minimum Wages Act, Contract Labour (Abolition and Regulation) Act.

·         Creation of a unique number known as the Labour Identification Number or LIN to supplement all other registration numbers such as PF Establishment Code, ESIC Registration Number, Contract Labour Registration Number, etc.

·         Online servicing of notices from the labour department and online submission of answers with document.

·         Employee grievances can now be received online and employer has to clear them and submit proof of clearance.


Shram Suvidha allows an organization to know what labour laws apply to it.

Compliances are reportable in a single form that makes it simple for those filing such forms. Performance is monitored using key indicators thus making the evaluation process objective. It promotes the use of a common Labour Identification Number (LIN) by all Implementing agencies.



I left my previous job in December 2021 (4.5 years after being in the job) and joined the new job in mid-February 2022. I will get my employees' provident fund (EPF) transferred to the new employer. I want to know will this gap of 1.5 months affect continuous service of 5 years? 

The primary condition of five years of continuous service is mandatory to enjoy the exemption from the tax on the withdrawal. However, it is pertinent to note that while calculating five years of continuous service, the period served under the former employer/employers is also considered.

If, on the cessation from his employment, the employee gets work with the other employer, to the extent the accumulated balance due and becoming payable to him is transferred to his account in any recognized fund maintained by such other employer (the PF authorities have now simplified the process of transferring).

In that scenario , to calculate the period of continuous service of 5 years, the time spent with the previous employer shall also be counted. However, the gap in employment will not be considered to calculate the continuous period of 5 years since you have worked for 4.5 years and did not withdraw your accumulated balance lying in the PF account. After a gap of 1.5 months, you joined a new job and transferred your accumulated PF balance to your account in a recognized PF maintained by the new employer.

In this case, if you serve six months with the new employer, then you would fulfil the condition of rendition of service for a continuous period of 5 years. Hence, the gap in employment for 1.5 months will not be considered to calculate the continuous period of 5 years.

- Amit Maheshwari, tax partner, AKM Global, a tax and consulting firm. 

Non muster rolls

Non muster rolls imply those who are not under the regular muster rolls of the company. Casual employees who do not sign the muster rolls come under this category. 

Employees who are taken on need basis are called as casual or temporary or NMR  workmen. They are not guaranteed to be continued.

Status under Labour Laws

However, as per labour statutes, at least a separate attendance register (muster roll) is required to be maintained to regulate engagement of temporary or casual employees


Contract Labor Act

Agreement terms to be included in contractors work order to ensure EHS compliance.This will help to sheild the employer to get sheilded against possibility of being held responsible as principle employer

Omitted Wages demand raised by labour officers on principal employers

At times, the PF / ESI department is  raising claims on principal employers based on payments made for

1) repairs and maintenance , 2) erection of plant and machinery  3)Any job contract work done in the factory 

as omitted wages under labour welfare laws.

It is advisable that while accounting repairs, labour charges and material charges are recorded separately.

When no labour charges are involved the supplier/ contractor should provide a certificate to this effect.

Statutory protection for human resources which employers should be aware (US)

Ten things that can explode into costly lawsuits, unionization and an unhappy workforce.

What are the biggest employee-related mistakes employers make these days? And how can you defuse these potential time bombs before they explode into costly disputes? Here's a quick overview of the top 10 employer mistakes and how to avoid them.

1. Failing to establish an effective sexual harassment policy.
Recent Supreme Court decisions hold employers liable for their supervisors' actions unless complaining employees fail to take advantage of company complaint procedures. In light of these rulings, implementing policies and procedures for dealing with sexual harassment is more important than ever. It is also essential that supervisors be trained on these policies and procedures. Finally, an employer must act in a timely manner to investigate all sexual harassment complaints that are brought to its attention.

2. Failing to pay overtime to nonexempt employees.
Many employers pay employees a salary regardless of the number of hours they work and whether they are subject to the wage and hour laws. Unless they are exempt as administrative, executive or professional employees, you must pay them time-and-a-half their regular hourly pay for all hours worked in excess of 40 per week. When in doubt about whether an employee is exempt, pay him or her hourly wages. This will avoid having to pay back wages if you're audited by the Department of Labor's Wage and Hour Division.

3. Failing to complete I-9 forms for new employees.
Many employers merely photocopy employee-produced documents without filling out the parts of the forms that describe the documents. This can be a costly mistake if the Immigration and Naturalization Service audits you. (One employer was reportedly fined $100,000.) You are not required to photocopy employee-produced documents, but even if you do, you must fill out the forms completely.

4. Failing to take and document disciplinary actions.
Supervisors, not wanting to be perceived as villains, hate to write up employees. Then, when the company can no longer tolerate unsatisfactory performances, the files do not document the poor records and you have no grounds on which to justify discharges. This leaves you open to lawsuits alleging discrimination. Employees who have been discharged for poor performance often have glowing evaluations in their files. This can expose you to lawsuits.

5. Failing to quickly discharge poor performers.
Employers are advised to progressively discipline employees and to give one warning too many rather than one too few. But often a time comes when failure to act is as bad as overreacting. If you have retained employees for many years despite poor attendance records, multiple infractions and even several "final" warnings in their files, you are asking for trouble. These employees are most likely to sue when finally discharged. The best course is to discharge a poor performer as soon as prudently feasible. The more seniority an employee has, the harder to justify discharging him or her.

6. You must be sure that laying off a group of employees has no disparate impact on any protected group.
To avoid lawsuits, verify that the group doesn't contain a disproportionately high percentage of age-protected employees or employees of a particular ethnic or racial group or sex compared to the rest of the work force. The decision of who will be laid off should be based on objective criteria, such as qualifications, experience, and ability to perform certain work essential to the company. If the decision to lay off one employee as opposed to another is based on such criteria, make sure the file supports this decision.

7. Failing to get a signed release from a terminated employee.
As an employer, you may have a legitimate reason for terminating an employee. However, you fear a lawsuit if the employee is a member of a protected class. Many employers are reluctant to use releases because they fear the release may educate the employee about rights and litigation possibilities of which he might otherwise be unaware. But this may be a case of sticking your head in the sand. In light of media attention given to employment discrimination verdicts, employers should not rely on a hope that workers do not know their rights. The right approach to avoid litigation often is to get signed releases from departing employees, particularly if any severance or separation pay is provided to the employees.

8. Conditioning employment offers on medical exams.
The Americans With Disabilities Act (ADA) bars employers from asking applicants about their disabilities or requiring medical exams before offering employment. You can ask applicants to take job-relevant medical exams only after offering jobs. The burden is on you to establish the medical exam's relevance to job requirements. In addition, employers often fail to accommodate their employees' disabilities after they are hired. The ADA requires employers to reasonably accommodate their employees' disabilities.

9. Failing to take proactive steps to keep your work force union free.
Employers must constantly communicate with their employees to deal with their grievances. If employees do not believe their employer is interested in their issues, they may look outside the workplace for representation.

10. Failing to retain labor and employment counsel to avoid making the first nine mistakes.
The proliferation of complex statutes prevents most employers from keeping on top of employment law without professional help.

Bank Accounts

Things to know about Provident Fund - Contribution rates , employer's duties ,taxability of Provident Fund withdrawl

Duties of Employer
Enrol all categories of employees including the employees engaged by or through contractors and also piece rated, hourly rated employees.

Remit the contributions and administrative charges before the 15th of the following month.

File the initial returns of Form 9, Form 3(P.S.), form 5A.

File the monthly returns in Form 12A, Form 5, Form 10 and Challans for remitting the dues.

Maintain the contribution card in respect of each employee in Form 3A and submit the annual returns in Form 3A and 6A after reconciliation with Challans and form 12A.

The employer has to ensure that statutory dues in respect of contractors employees are remitted and returns filed.

Employer should attest the form No.2 and the claims forms submitted by the member/ legal heirs/ nominees.

Make available all relevant records for inspection of visiting officials with due authorisation.
Exemptions under the Schemes

Subject: Grace days for PF remittance - removed

The grace days of 5 days has been removed for contributions payable from the month of Jan 2016.

Henceforth PF will have to be necessarily paid on or before 15th of the following month

Please ensure compliance accordingly

Accumulated balance withdrawn from PF is taxable if continuous service of 5 years is not rendered
The accumulated balance withdrawn from a recognized PF becomes taxable if an employee has not rendered continuous services for five years or more.

 While computing the continuous service, the period of previous employment is also included, if the accumulated balance with the old employer is transferred to the PF account of the new or current employer.
If the total years of service (including the previous employment in case of opting for transfer of balance) is less than five years, withdrawal of accumulated PF balance will be taxable in the financial year of withdrawal.

 The total of employer’s contribution plus interest thereon will be taxed as salary. 

Further, the amount of tax benefit claimed under section 80C on account of your own contribution to PF shall be taxed. The interest on your own contribution shall be taxed as “income from other sources”. The tax rate would depend upon your applicable income slab in each of the fiscals in which the contributions were made. Further, the surcharge (as applicable) and education cess, shall be applicable, for each year.

 So, you are required to calculate tax as if it was income of these fiscals, respectively, when the contributions were made/interest declared. Only payment of such tax liability is deferred till the withdrawal of PF. The tax  liability on PF withdrawl cannot be adjusted with sources of income during current year.

 PF withdrawal should be taxed at special rates (which relates to the rates applicable in each of the fiscal in which the initial contributions were made) and not at the current year’s progressive tax rates.

 In your income tax return (ITR), if you input the PF withdrawal amount and click on the icon “compute taxes”, the net tax liability will be computed applying progressive tax rates vis-a-vis special tax rates. You should calculate the appropriate taxes applying special rates, claim relief under section 89, consider TDS by the employer and pay balance taxes, if any.

 If the taxable income is up to Rs.5 lakh for FY14, you could file the ITR physically with the authorities. But if the taxable income is over Rs.5 lakh, you have to manually input the correct taxes in the ITR instead of clicking on the icon. 

Other than tax implications, the withdrawal of the PF will be as per the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which requires you to have a non-employment period of two months.

Ten Points on Provident Fund

A small part of your salary (12% of your basic salary) is invested in something called EPF (Employee Provident Fund) and an equal amount is matched by your employer each month. This is what 95% people know, but there are many things which a lot of people don't know and this article is going to open some not known secrets about EPF rules. So let's take them one by one in point's format. 

1: You can also nominate someone for your EPF Do you know that there is also "nomination" facility in EPF. The nominee will be contacted at the time of death of the person and handed over the money from the provided fund. However if nomination is not present (which you should check), it can raise to all sort of issues while claiming money. There is a form called Form 2 which has to be filled to change or update the nomination. Please contact your company finance department or directly send the form to EPFO department. 

2: One can get pension under EPF Do you know that there is something called EPS (Employee Pension Scheme) in provident fund. The EPF part is actually for your provided fund and EPS is for your pension. The 12% contribution made by you from your salary goes into your EPF fully, but the 12% contribution which your employer makes, out of that 8.33% actually goes in EPS (subject to maximum of Rs 1250) and the rest goes into EPF. So understand it this way, a part of your  employer contribution actually makes up your pension corpus. But there are some caveats to this. One is liable for pension only if one has completed the age of 58. If you are not in service then you can get pension before 58 years. But your age should be more than 50 years. One is liable for pension only if he has completed 9.5 yrs. of service (in case of more than one companies, the EPF should have been transferred, not withdrawn). Family of the deceased employee can get pension prematurely. In this case minimum requirement of service is only 1 month. A permanently disabled worker can also get pension bore the time limit.  The minimum Pension per month is Rs 1,000 per month. Lifelong pension is available to the member and upon his death members of the family are entitled for the pension.

 3: No interest is given on EPS (pension part) you must be thinking that you regularly get compound interest each year on your contribution + employer contribution. But it does not work like that. The compound interest is provided only on EPF part. The EPS part (8.33% out of 12% contribution from your employer or Rs 541 whatever is minimum) does not get any interest. At the time of PF withdrawal;, you get both EPF and EPS. 

4: You might not get 100% of your Provident Fund money Imagine your contribution + employer contribution has been total Rs 3, 50,000 till date. Out of this 3,50,000 , suppose 2,50,000 has gone in EPF , and rest 1,00,000 has gone in EPS (for pension) . Now if you quit your job in 6th year of employment and opt for withdrawal of your Provided Fund money (EPF + EPS actually), then do you think you will get total 3, 50,000. NO! That's because you always get 100% of your EPF part, but for EPS there is separate rule. There is something called Table 'D' , under which its mentioned how much you get at the time of exit from your job, there is a slab for each completed year and you get n times of your last drawn salary (depending on the completed year of service) subject to maximum to Rs 6,500 per month. So if your salary in this case was Rs 30,000 per month, still you will be given only 6,500 * 6.40 = Rs 41,600. Note that the table D is up to 9 yrs. only, because if 10 yrs. are crossed, then you are liable for pension.

 5: You can invest more in Provident Fund it's called VPF You can always invest more than 12% of your basic salary in Employee Provident Fund which is called VPF (Voluntary Provident Fund). In this case the excess amount will be invested in PF and you will keep on getting the interest, but the employer is not supposed to match your contribution. He will just invest up to maximum of 12% of your basic, not more than that. 

6: Withdrawing of EPF amount at job change is illegal Almost everyone thinks that withdrawing of your Employee Provident Fund amount after a job switch is totally fine and allowed, however as per the EPF Rules, it's illegal. You can only withdraw your Employee provident fund money, only if you have no job at the time of withdrawing your money and if 2 months have passed. Only transfer is allowed in case you get a new job and you switch to it. While there are no cases where EPF office tracks these things and takes up this matter, still just for your information you should know that if you got a new job and took it and then you are applying for withdrawal, its illegal as per law. However in case of EPS, if the service period is less than 10 years, you've option to either withdraw your corpus or get it transferred by obtaining a 'Scheme Certificate'. Once, the service period crosses 10 years, the withdrawal option ceases. Just for your information, you can withdraw your EPF money without the help of past employer signature by attesting your withdrawal form by a bank manager or some gazzeted officer. I hope you are clear about EPF withdrawal rules. 

7: One can opt out of EPF if he wants Yes! I know this might be a surprising fact for many, but if one's basic salary per month is more than Rs 15,000, he has an option to opt out of PF and not be part of it. In which case he will get all his salary in hand (without anything deducted every month). But the sad part is that one has to opt out of Provident Fund in the start of his job. If a person has been part of EPF even once in his life, then he cant opt out of it. So if you have already had EPF in your life. This option is not for you, but if you are new to job and your PF account number still does not exist, you can tell your employer that you don't want to be part of Employee provident fund . You will have to fill up form 11 for this. 

8: Your EPF gives you some life insurance too A lot of people might not know that in case a company is not providing group life insurance cover to its employees, in that case the employee is given a small life cover through EPF. This is because there is something called Employees' Deposit Linked Insurance (EDLI) scheme and your organization has to contribute 0.5% of your monthly basic pay, capped at Rs 6,500, as premium for your life cover. However companies which already have life insurance benefits to employees as part of the company, are exempted from this EDLI scheme. The bad part of this EDLI scheme is that the life cover under this option is very low and that's maximum amount of Rs. 60,000. While this is peanuts for most of the people in big cities. For employees in small scale industries and small cities, this amount of Rs 60,000 will still count something.

 9: You can use EPF money can be withdrawn at special occasions so now you know that EPF withdrawal is not permitted if you are still working. But there are occasions when Employee provident fund withdrawal is allowed. While you cannot withdraw it fully, you can withdraw a partial amount. Following is a list of events when you can withdraw the Provident Fund amount and the conditions you need to fulfill 1. Marriage or education of self, children or siblings: - You should have completed a minimum of seven years of service. – The maximum amount you can draw is 50% of your contribution – You can avail of it three times in your working life. – You will have to submit the wedding invite or a certified copy of the fee payable. 2. Medical treatment for Self or family (spouse, children, dependent parents)- For major surgical operations or for TB, leprosy, paralysis, cancer,  mental or heart ailments: – The maximum amount you can draw is 6 times your salary – You must show proof of hospitalization for one month or more with leave certificate for that period from your employer. 3. Repay a housing loan for a house in the name of self, spouse or owned jointly:  - You should have completed at least 10 years of service. – You are eligible to withdraw an amount that is up to 36 times your wages. 4. Alterations/repairs to an existing home for house in the name of self, spouse or jointly: - You need a minimum service of five years (10 years for repairs) after the house was built/bought. – You can draw up to 12 times the wages, only once. 5. Construction or purchase of house or flat/site or plot for self or spouse or joint ownership:  - You should have completed at least five years of service. – The maximum amount you can avail of is 36 times your wages. To buy a site or plot, the amount is 24 times your salary. – Can be avail of it just once during the entire service. 

  10: You can file an RTI application for EPF issues did you know that you can file an RTI applicable to get any kind of information regarding your EPF. You can file it if you are facing issues like no clarity about EPF balance, no action taken for your EPF withdrawal or transfer. 


Rules for hiring contract workers may be eased

The  government at the Centre has proposed to give industries some flexibility in hiring contract workers for project-based jobs or short-term assignments, a move cheered by industry but slammed by trade unions as an entry of 'hire and fire' through the back door.

The Union government has issued draft rules for inviting public comments on amending the Industrial Employment (Standing Orders) Act. Even as five days are left for receiving public feedback (proposals were mooted on April 29 for inviting comments within 45 days), central trade unions seem to lack clarity on the proposals.

According to the draft rules, factories can hire 'fixed-term' workers for a specific time. The benefits they will get and their terms - working hours, wages, allowances, etc - will be the same as those provided to permanent employees. The employer will not have to give the worker any notice period at the end of his job tenure, or when the project is completed.

The move will allow companies to hire workers for short assignments and terminate their services once the project is completed. "Fixed-term employment is needed to execute time-bound projects and short-term contracts where manpower employed could be dispensed with on completion of the project… The category of 'fixed-term employment' may be reintroduced," industry body Ficci had said in its proposal, soon after the NDA government took office in May last year.

While industry is cheering the proposal, the central trade unions are slamming the government for keeping them in the dark.

"One of the biggest challenges before companies today is hiring contract workers. The fear of having to match contract workers' expectations for employing them on a permanent basis deters industry from hiring casual workers which leads to non-creation of employment. The government move in this regard is commendable," says Rituparna Chokrabatory, co-founder & senior vice-president of TeamLease, a staffing firm. She says the new rule will bring clarity on a worker's job duration in his or her appointment letter itself.

Companies, particularly those in construction and mining activities, usually refrain from hiring permanent workers for project-based requirements, as termination requires process of retrenchment under the provisions of the Industrial Disputes Act. This includes giving a notice, payment of compensation, intimation to the government, etc.

The employers will not be mandated to give a notice to a fixed-term worker on non-renewal or expiry of his or her contract. At present, there is no clarity in the Industrial Employment Act on whether there is a need to give a notice when the contract of a temporary worker expires or the employer chooses not to renew the contract.

According to the proposal, in coal mines, workers hired as badli (temporary replacement for permanent workers) or on a temporary basis, will not be given notice on termination of employment. At present, employers need to give a two-week notice for terminating the services of the temporary workers who have completed three months in office. These workers could be fired without written explanations required under the present provisions.

Trade unions have termed the proposal a "backdoor entry" of "hire & fire policies" of the government. "Since the government realised its proposed Industrial Relations Bill, which seeks to ease retrenchment process for employers, will take time to be implemented, it moved to amend the law this way. All future hiring will be on a 'fixed term'. It is strange the proposal has not reached trade unions. We will strongly protest this proposal," said A K Padmanabhan, president of Centre of Indian Trade Unions (Citu).

The government has drafted an industrial relations code to combine three existing laws, with changes to the Industrial Disputes Act, Trade Unions Act and Industrial Employment (Standing Orders) Act. According to a proposal, units with up to 300 workers will be allowed to lay off workers without official sanction. At present, only those factories that have up to 100 workers are allowed to do so.
  • Govt has proposed to allow companies to hire contract workers for short assignments, or on a project basis
  • This proposal was mooted by the previous NDA govt in 2003 and scrapped by the UPA govt in 2007
  • The move will allow companies, especially those in construction or mining, to hire 'fixed-term' workers for a particular time, instead of permanent ones
  • Fixed-term workers will not be given notices at the time of termination of their service or at the end of tenure
  • The fear of having to regularise contract workers deters companies from hiring for the short term
  • The move will remove ambiguities as the duration of work and project will be clearly said in contract workers' appointment letters

CLRA : Contract Labour Registration

Model Shops and Establishment Act -Flexibility for shops, cinemas to open 24/7 :

Welcoming the flexibility for the retail sector to open round the clock with the passage of a model bill by the Union Cabinet here on Wednesday, the industry said it will add thousands of additional jobs in the sector.
The Model Shops and Establishment (Regulation of Employment and Condition of Services) Bill 2016 to give flexibility to shops, restaurants, cinemas, etc, to operate round the clock was approved by the Union Cabinet.
“We welcome the Model Shop and Establishment Act by the Union Cabinet. This is a progressive decision that will benefit the service providers as well as the users, and has the potential to generate additional employment opportunities in the country,” Ajay Kaul, CEO of Jubilant FoodWorks, said.
“For us, the new Act opens up greater avenues for reinventing our service offering for customers and catalyse growth,” Kaul said.
“Model Shop and Establishment Act by the central government is a welcome step and we hope all the states will adopt it. With flexibility available to retailers to open their establishment 24/7, not only thousands of additional skill jobs will be added, but it will also make the retail markets vibrant giving customers flexibility and convenience to shop anytime,” Krish Iyer, President and CEO of Walmart India, said.
“24/7 policy for retail stores in other developed economies has given significant boost to their growth in the past. A vibrant retail environment is critical to the economic growth and it also contributes towards important initiatives such asMake in India because it boosts domestic consumption,” Iyer said.
“The passing of the Models Shops and Establishment Bill will have a positive effect on the market, as it will lead to increase in employment opportunities. This will also enable level playing for brands across online as well as offline retail platforms,” Abhishek Bansal, Executive Director, Pacific India, said.
“At Pacific Mall currently shops that close by 9 p.m. can now remain open till about 11 p.m. which will be good for customers who only get a chance to shop after they return home from work or people working late shifts,” Bansal said.
“Being a premium high-end shopping and leisure destination we have invested in state of the art security management service and surveillance systems and we will have to look into hiring and training more people according to their job profiles post this change,” Bansal added.
“This is extremely wonderful news and a victory for the NRAI ((National Restaurant Association of India). We have been lobbying hard for the past many years for the freedom of operational timings in restaurants. We are delighted as this will go a long way in boosting the economy and employment in India. We are hopeful that the state and local authorities would cooperate and adopt this model” Riyaaz Amlani, President, NRAI, said.
Hiring is one of the major activities of HR. In hiring negotiations and offer letter rollout the important compensation words that we come across are -CTC, Gross, Net Take Home.

Human Resource model evolution -Employee Vs Freelancer / Contractor

Employee Vs Freelancer / Contractor - legal and tax considerations

Advantages to recruiters:

 Contractors are not eligible for any welfare benefits such as medical or other insurance, paid time off work, and so forth. Also, contractors are responsible for taking care of their own taxes, with no amounts being deducted or paid by the business entity for social security, unemployment, etc. And, of course, when contractors are let go, they are not eligible for unemployment benefits.

Advantages to professional / service person:

Some people like contracting because they receive more money directly (due to no tax deductions being made to their pay); but many do not for the reasons stated above and because they can owe a sizable amount for income taxes at year’s end if they were not paying estimated taxes quarterly throughout the year.

There are quite strict laws regarding the definition of a contractor versus an employee because companies like to skirt paying payroll taxes when they can. Hence laws don’t allow too much flexibility in this planning to avoid illegitimate arrangements of avoiding social security contributions.

Hence if the relations have the characteristics of employee-employee relation like as given below, then legal authorities may held that the true nature of engagement is employment irrespective of the nomenclature used.

·         long term duration,

·         working under guidance and supervision of employer

·         The service person works exclusively for one employer

Social Security Agreement :

 To facilitate the international mobility of employees : India-Australia SSA comes into force from 01 Jan 2016

SSAs are bilateral agreements between India and other countries designed to protect the interests of cross border workers. They provide for avoidance of 'no coverage' or 'double coverage' and equality of treatment of the workers of both countries.

 India has entered into SSAs with 11 countries and is currently negotiating SSAs with a number of other countries, including Sweden, the USA, Canada, Australia, and Japan. 

A SSA generally provides for the following:

(a)  Detachment:
Applies to employees posted to the other country provided they comply with the social security requirements of their home country.

(b) Exportability of pension:
Provision for payment of pension benefits directly without any reduction to the beneficiary choosing to reside in his/ her home country or any other country.

(c)  Totalisation of  benefits:
The period of service rendered in a foreign country is counted when determining eligibility for benefits. Benefits are linked to the length of service, on a pro rata basis.

Certificates of coverage (Detachment)

A certificate of coverage (COC), otherwise known as a 'detachment certificate' must be obtained by an international worker to avoid double coverage. A COC will be issued by the worker's home country's social security authority in accordance with the provisions of the relevant SSA. The COC serves as a proof of detachment on the basis of which exemption from social security contributions or social security taxes in the host country are available for the period of detachment. For example, a German national can apply for a COC from the German social security authorities before being deputed to India to work with an establishment to which the Indian social security regulations apply. This will exempt him/her from contributing to Indian social security for the period stated in the COC.

Period covered by COC

The period covered by the COC depends on the period of the international worker's assignment to the other country. The maximum duration for which the COC can be issued depends on the terms provided in the SSA with the international worker's home country. For instance, in the case of the India Germany SSA, the maximum duration for which the COC can be issued is 48 months.

 India - Australia Social Security Agreement comes into force from 01 Jan 2016 

The Social Security Agreement (the "Agreement") between India and Australia was signed on 18 November 2014. The Agreement has now come into force with effect from 1 January 2016. However, there is no official circular from the Indian Social Security Authorities yet.

The Agreement will have the following benefits:

1. For Australian employees working in India:
  • Exemption from social security contributions in India
  • Early withdrawal of contributions from the Provident Fund Scheme on completion of Indian assignment (if contributions made in India)
  • Eligible for benefit from the Pension Scheme (if contributions made in India)
  • Eligibility to receive refund from the Provident Fund Scheme directly in the foreign bank accounts (under export of benefits clause)

  2. For Australian employees working in Australia:
  •  Exemption from social security contributions in Australia
  • Continue to be considered as "local employees" in India – As per India's social security scheme, Indian employees who are not eligible for any host country social security benefits are not classified as "International Workers"

Shadow Payroll

 Shadow payroll is a mechanism established to assist with an expat employee’s host-country reporting and tax withholding obligations while the employee is on assignment in the host country. During this time the employee remains on a home-country payroll. The payroll in the host country will “shadow” what is being reported in the home country, but the employee will not receive any compensation from the host country. A shadow payroll can also be established in the home country where an employee is paid through a host-country payroll. 

HR Health check audit

A HR “Health Check” Audit demonstrates the compliance of your current HR policies, procedures, documentation, and systems throughout the whole of the employer/employee life cycle. 

The HR Health Check Audit means we can diagnose issues before they become real problems and help you find the right solutions. This thorough review helps identify needs for improvement and enhancement of positive people management and company culture. 

An HR audit can provide a baseline to prioritize an organization’s human resource needs and objectives moving forward.