Backgrounder November 2016
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Challenging Opportunities for Practising Company Secretaries in Labour Laws BACKGROUNDER NOVEMBER 2016 PRICE : Rs. 400/- (Excluding Postage) © THE INSTITUTE OF COMPANY SECRETARIES OF INDIA All rights reserved. No part of this publication may be translated or copied in any form or by any means without the prior written permission of The Institute of Company Secretaries of India. Although due care and diligence have been taken in the publication of this book, the Institute shall not be responsible for any loss or damage, resulting from any action taken on the basis of the contents of this book. Any one wishing to act on the basis of the material contained herein should do so after cross checking with the original source. Published by : THE INSTITUTE OF COMPANY SECRETARIES OF INDIA ICSI House, 22, Institutional Area, Lodi Road, New Delhi - 110 003 Phones : 4534 1005; Fax : 24626727 Website : www.icsi.edu; E-mail : [email protected] ISBN : 978-93-82207863 Printed at Samrat Offset Works/500/November 2016 (ii) PREFACE Industrialization is considered to be one of the key engines to support the economic growth of any country. The commence of industry and its growth is not a venture of the employer alone; yet it involves the hard work and tough grind of each and every stakeholder of the industry including the labourers, supervisors, managers and entrepreneurs. With the initiation of the concept of welfare state in the early realm of independence of our country, various legislative efforts have made their first move in the direction of welfare, equitable rights, social justice, social equity and equitable participation of the labour as a stakeholder at parity. A plethora of labour laws have been established to ensure elevated health, safety, and welfare of workers; to protect workers against oppressive terms as individual worker is economically weak and has little bargaining power; to encourage and facilitate the workers in the organization; to deal with industrial disputes; to enforce social insurance and labour welfare schemes and alike. Company Secretaries as the expert professionals in the vicinity of compliance and governance play crucial role in directing the desired implementation and deployment of these labour law towards the labour rights and welfare. Hence, the cavernous indulgence of the professionals in the facts and facets of entire range of labour laws is necessitated at par. Recently, the Labour Department, Government of Haryana vide its Notification No.11/38/2016-4Lab dated 10th August, 2016 formulated Third Party Certification/Audit Scheme for the factories, shops and commercial establishments in the State to liberalise the enforcement of labour laws in pursuance of implementation of the “Business Reform Action Plan 2016- Ease of Doing Business” as formulated by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industries, Government of India . The Third Party Certification/Audit Scheme authorizes Practising Company Secretaries to conduct audits of compliance of various labour laws. With a view to advance the understanding and support critical analysis (iii) of labour laws under the recurrent position, this book as a consolidated guide on the entire array of labour laws will assist the Company Secretaries to augment their perspective of professional services under labour laws. I commend the sincere efforts of Dr. Rajesh Agarwal, Director, ICSI-CCGRT and his team in preparing the manuscript. I also take this opportunity to convey my heartfelt gratitude to CS Ashish Doshi, Council Member & Chairman, ICSI-CCGRT Management Committee under whose leadership this book been accomplished. I sincerely believe that this book will be of paramount academic importance even for other professionals, such as Chartered Accountants, Cost Accountants, Industry executives and students pursuing Company Secretaryship and other professional courses. New Delhi CS Mamta Binani November 07, 2016 President, ICSI (iv) INDEX Chapter Content Page No. 1. Introduction to Labour Law framework 1 1.1 Brief introduction 1 1.2 Coverage of labour laws 1 1.3 Categories of labour laws 1 1.4 Enacted by central government and sole responsibility of enforcement by central 2 government 1.5 Enacted by central government and enforced by both central and state government 3 1.6 Enacted by central government and enforced by state government 4 1.7 Enacted by state government and enforced by state government 5 1.8 Purpose and objectives of labour laws 6 2. Opportunity for Practice 7 2.1 Functions of Company Secretary under Companies Act, 2013 7 2.2 Available opportunities and Scope 7 2.3 Excelling in labour laws 7 2.4 The landmark judgment on Factories Act by Supreme Court 8 2.5 Occupier of factory to be only directors 9 2.6 Bhopal Gas Tragedy case 10 (v) Chapter Content Page No. 2.7 Concern of regulators on compliance 10 2.8 Company secretary professionals are expert as per Companies Act, 2013 10 3. Areas of Practice in labour laws 11 3.1 Brief on areas of practice in labour laws 11 3.2 Documentation relating to employment 11 3.3 Company Policy and Employee Handbook 12 3.4 Advisory Services 12 3.5 Employee’s compensation structuring and allied services 14 3.6 Employee Stock Options & Share Plans 15 3.7 Employment Termination/ Downsizing 16 3.8 Transfer of Employment 16 3.9 Labour and Compliance Audits / HR audit – legal 17 3.10 Employment Litigation 17 3.11 Expatriate Taxation, Social Security & 18 Immigration Issues 3.12 The gist of practice 18 4. Understanding the applicable laws in an organization 20 4.1 Applicable laws and their compliance 20 4.2 Starting point – identifying all applicable labour laws 20 (vi) Chapter Content Page No. 4.3 Next step – preparation of check lists 21 4.4 Technology could help 21 4.5 Responsibility of Compliance 22 4.6 Greater Role for practicing Company Secretaries in ensuring Compliance 22 4.7 Non compliance 23 4.8 Conclusion 23 5. Overview of few (select) labour laws 25 5.1 Classification of labour laws 25 5.2 Labour laws relating to wages of workmen 25 5.3 Labour laws relating to Working Hours, Conditions of Service and Employment 25 5.4 Labour laws relating to Equality and Empowerment of Women 27 5.5 Labour laws relating to deprived and disadvantaged sections of the society 27 5.6 Labour laws relating to industrial relations 27 5.7 Labour laws relating to social security 27 5.7.1 Health related 27 5.7.2 Compensation related 27 5.7.3 Welfare related 28 5.7.4 Unorganized sector related 28 5.7.5 Employers’ liability related 28 (vii) Chapter Content Page No. 5.7.6 Retirement benefit related 28 5.8 Few forms under labour laws (illustration) to understand magnitude of compliance 28 5.9. Scope of practice is enormous & challenging as well as rewarding 31 6. Factories Act, 1948 Compliance 32 6.1 Importance of Factories Act 32 6.2 Various compliance requirements 32 6.3 Labour Laws Provision v. Board of Directors Responsibility 32 6.4 Appointment of occupier (director) who would have the ultimate control over the factory 33 6.5 Draft Resolution for Appointment of……… (Director's Name) as Occupier under the 33 Factories Act, 1948 6.6 Appointment of the manager who would be responsible for day-to-day affairs of the factory 35 (with draft resolution) 6.7 Answerability for offences (with draft resolution) 36 6.8 Information to inspector of factories 37 6.9 Resolution authorizing the secretary or other authorized person to advise the inspector of 37 factories about the appointment 6.10 The compliance issues 37 6.11 Display on the notice board 38 6.12 Provisions relating to various health and welfare measure 38 (viii) Chapter Content Page No. 6.13 Floor space / rest room requirements 39 6.14 Nomination form 39 6.15 Mode of form of intimation before occupying or use of the premises 40 6.16 Ensuring Compliance - system to be in place 41 6.17 Declaration from the Manager 41 6.18 Suggested draft declaration from the Manager 41 6.19 Monthly Compliance Certificate from the Manager to the Occupier 43 6.20 Suggested draft monthly compliance certificate (draft certificate in ideal circumstances) 43 6.21 Intimation regarding proposed action on the compliance 44 6.22 Review of the compliance report and initiating required action on the compliance 45 6.23 Compliance Report to the Board 45 6.24 Certificate of compliance 46 6.25 Action points arising on the compliance certificate 47 6.26 Compliance certificate taken on record by the Board 48 6.27 Compliance other than the Factories Act, 1948 18 6.28 Role of practicing company secretary (especially in SME sector) 49 6.29 The actual work /job involved for the practicing company secretary professional 50 in relation to Factories Act (ix) Chapter Content Page No. 6.30 Prescribed returns and registers under Factories Act, 1948 Compliance checklist 51 7. The Industrial Disputes Act, 1947 100 7.1 Brief on Industrial Disputes Act, 1947 100 7.2 Obligations of Employers 100 7.3 Rights of Employers 101 7.4 Conditions of service etc., to remain unchanged under certain circumstances during pendency 101 or proceedings 7.5 Offences and Penalties 103 The Industrial Disputes Act, 1947 Compliance 104 checklist 8. The Registration of Foreigners Act, 1939 read with the Registration of Foreigners 116 Rules, 1992 as Amended in 1999 8.1 Brief on expatriate appointment in India 116 8.2 Opportunity for PCS in case of expatriate appointment 117 8.3 Registration procedure 117 8.4 Time Limit within which Registration Report required to be Presented 118 8.5 Mode of presenting registration report 118 8.6 Foreigner’s address in India 118 8.7 Issue of residential permit 119 8.8 Conditions to be Fulfilled upon Issue of Resident Permit 120 (x) Chapter Content Page No.