Gratuity Act

Dear Readers,

Wish You a Happy May Day-2024

Gratuity is one of the many retirement benefits offered by a company to an employee. It is a lump sum amount that employers pay their employees as a sign of gratitude for the services provided. However, only those employees who have been employed by the company for five years or more are given the gratuity amount. It is governed by the Payment of Gratuity Act, 1972.

All central and state government departments, defense, and local governing bodies are covered under this act. Private organizations can come under its purview subject to fulfilment of certain conditions.

Gratuity Act shall be applicable to

(a)    Every factory, mine, oilfield, plantation, port and railway company.

(b)    Every shop or establishment to which Shops & Establishment Act of a State applies in which 10 or more persons are employed at any time during the year end.

(c)     Any establishment employing 10 or more persons as may be notified by the Central Government.

(d)    Once Act applies, it continues to apply even if employment strength falls below 10.

To receive the gratuity, you must meet the following eligibility criteria:

You should be eligible for superannuation.

You should have retired from service.

You should have resigned after continuous employment of five years with the company.

You on disablement on account of a sickness or an accident.

In case of your death the gratuity is paid to the nominee.

However, the condition of completion of continuous service of five years shall not be necessary in case the termination of the employment of any employee is related to their death or disablement. In this case, ‘completed year of service’ would refer to as continuous service for one year and an employee shall be said to be in continuous service for a period if he/she has been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave, lay off, strike or a lock-out or cessation of work not due to any fault of the employee.  There is a judgment by the Madras High Court, which states that an employee would be eligible for gratuity even in case he/she has completed 4 years 240 days.

In addition to above, in the case of death or incapacitated, the employer is mandated by law to pay gratuity to the now ex-employer or his nominee/legal heir, as the case may be, irrespective of the number of years of continuous service.

The law further states that in case the nominee of the employee is a minor, then the assistant labour commissioner shall invest the money in nominee’s name in a term deposit with the State Bank of India or a nationalized bank for the minor’s benefit until he/she becomes a major.

Formula for gratuity calculation is G=S*N*15/26

  Gratuity (G)= Last Drawn Salary(S) × No. of Years of Service(N)× 15/26

  The ratio 15/26 represents 15 days out of 26 working days in a month.

  S = Last drawn salary = (Basic Salary + Dearness Allowance).

  N = Years of Service are rounded down to the nearest full year. 

If the number of years you have worked in the last year of employment is more than six months, then it will be rounded to the nearest figure. Suppose your tenure of service is 16 years 7 months, then you receive the gratuity for 17 years. Otherwise, it’s for 16 years if it happens to be 16 years 4 months.

The tax treatment of the gratuity amount depends on the type of employee who has to receive the gratuity.

The amount of gratuity received by any government employee (whether central/state/local authority) is exempt from the income tax.

Any other eligible private employee whose employer is covered under the Payment of Gratuity Act. The maximum amount of gratuity specified is Rs 20 lakh, irrespective of the number of years of service. Please note that in your entire working life, the maximum tax-exempt gratuity amount you may claim, cannot go beyond Rs 20 lakh. Any excesses would be treated as ex-gratia and liable for tax as per the tax bracket.

Gratuity paid to the widow or legal heir of an employee will be exempt of tax – Upon an employee’s demise, the gratuity that is paid to his widow or legal heir will be exempt from tax. Any ex-gratia payment made to an employee or his legal heir on account of an injury caused will also be tax-free.

Forfeiture of gratuity- According to the Payment of Gratuity Act of 1972, when the employee has been terminated due to disorderly conduct wherein, he/she tries to physically harm individuals during his/her employment, an employer holds the right to forfeit their gratuity payment, either wholly or partially despite the employee having completed 5 and more years of service in a company.

BOCW Cess

Dear Readers,
 
Wish You a Happy May Day-2017

Following three industries where normally unskilled manpower are being deployed

·         Construction Industries –Applicable act is BOCW Act, 1996

·         Manufacturing Industries – Applicable act is Factories Act

·         Mining Industries – Applicable act is Mines Act

Now, let us discuss about BOCW act. It is short form of Building and Other Construction Workers' Welfare Cess Act, 1996

Normally in construction Industries, we used to follow the Contract Labour Act, 1971, and we take Labour License before commencement of Construction Job. In that Act, normally the details are given about the Contract Workforce, Obtaining Labour License Procedure, Welfare Measures, and all about the contract Workmen. The Government felt that the act is not having the uniqueness.

 

Hence in 1996, Indian government introduced the Building & Other Construction Workers Act, (in Short, BOCW Act), BOCW Rules and BOCW Welfare Cess Act, In BOCW Act & Rules it has given the direction about the Welfare measures to Workmen, Safety Precautions and many Technical Aspects about the Tools, Tackles, Instruments, Machineries, Lifting Appliances, its maintenance, inspection, etc. Medical Facilities required to be given to the injured workmen, Periodical Medical Checkup for drivers, operators, food handlers, etc., Pre-employment Medical Checkup for every workmen.

In this Act, for implementation purpose the Government needs fund. So they implemented the BOCW Welfare Act, which made the provision to collect 1% minimum and Maximum of 2% of the Cost of Construction / Works carried out during the Financial Year to be paid as BOCWW Cess to the BOCWW Cess Board.

Some of the Key Points are below.

·         Cess came into force on 26th March, 1998

·         This act is applicable immediately on commencement of Job

·         The Principal Employer and the contractors, both are liable for this Cess

·         The responsibility of Principal Employer to make the payment of Cess.

·         The BOCW Cess is payable to the Government (BOCW Welfare Commissioner of State)

·         Cess rate not exceeding two percentage, but not less than one percentage of the cost of construction incurred by an employer.

·         Cess shall not include the Cost of land and any compensation paid or payable to a worker or his kin under the Workmen's Compensation Act. 1923.

·         BOCW act does not include any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), apply.

·         Cess is not refundable in any case. However, the amount of compensation paid to the workers during that year, can be deducted from the Cess payable.

·         Cess shall be paid by an employer,

o   If the project duration is less than a year, within thirty days of completion of the construction project or within thirty days of the date on which assessment of Cess payable is finalised, whichever is earlier, to the Cess collector.

o   If the duration of the project or construction work exceeds one year, Cess shall be paid within thirty days of completion of one year from the date of commencement of work and every year thereafter at the notified rates on the cost of construction incurred during the relevant period.

·         Once Factories Act is implemented there the BOCW act will get ceased.

·         Once the Factory fencing is made excluding the expansion project then Factories Act is not applicable and only BOCW will be applicable to that expansion project.

·         If Construction area falls within the factory premises then BOCW Act cannot be applicable and only Factories Act will be applicable.

·         For Registration under BOCW Act is exempted for those who got covered by Factories Act and Mines Act and the construction work carried out for self and the cost is within 10 Lakhs.

·         Generally ESI Coverage is not applicable for Construction Industries and not for BOCW Act. But if your construction Activities are being done in the premises of Factories or your principal employer is covered under ESI, then obviously you also required to make payment of ESI as 1.75% Employee Share and 4.75% Employer Share.

The above views are my personal views from the study which I have made on this subject. There is a need to take up the ambiguities in this entire enactment

Labour Law's of Construction Industry

Dear Readers,

Wish you a Happy May Day-2015

Without labour nothing is possible in construction industry. Engineer Diary is proud to discuss about the labour law of construction industry in India 

In construction industry, normally the works are executed by labors engaged by contractor(s) / Sub-Contractor(s). The principal employer, contractor(s) as well as the Sub Contractor(s)  , they  are having certain duties and responsibilities under the applicable labor laws to them and liable jointly . Following list of minimum required compliances to be made by principal employer as well as contractor(s) are followed by list of act .

Below a list of some Act applicable to Construction Industry:

1. Workmen’s Compensation Act,1923 (now it is Employee Compensation Act)
2. Payment of Wages Act, 1936
3. Industrial Dispute Act, 1947.
4. Minimum Wages Act, 1948
5. Employees’ State Insurance Act, 1948 ( in certain conditions)
6. Employees’ Provident Fund Act, 1952
7. Maternity Benefit Act, 1961
8. Payment of Bonus Act, 1965
9. Contract Labour (Regulation & Abolition) Act, 1970
10. The Contract Labour (Regulation & Abolition) Act, 1970
11. Equal Remuneration Act. 1976.
12. Inter-state Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
13. Inter-State Migrant Workers Act, 1979
14. Building and Other Construction Workers Act, 1996
15. Building and Other Construction Workers’ Welfare Cess Act, 1996
16. Child Labour Act, 1996.

By Principal Employer:

1. Obtain Registration Certificate under Contract Labour Act and amend it time to time whenever there is a change; 
2. Obtain Registration Certificate under BOCW Act for its own employees and renew/ amend it from time to time. Also Register Beneficiaries under BOCW Act; 
3. Obtain Registration under Inter-state Migrant Labour Act, if applicable; 
4. Maintain register of contractors;
5. Maintain all the registers and records in respect of own employees (as listed above in list of registers and records to be maintained by Contractors);
6. Maintain minimum rates of wages to own employees;
7. Maintain minimum HRA at 5 % of Basic + DA;
8. Make compliance of EPF, PT, MLW etc. in respect of own employees;
9. Cover own employees sufficiently under Employees Compensation;
10. Ensure that the contractors pay as per minimum rates of wages;
11. Ensure that the contractors make proper compliance of EPF, PT, MLW etc.;
12. Ensure that the contractors have Cover the employees sufficiently under Employees Compensation;
13. Submit annual return under Contract Labour Act and also under BOCW Act;
14. Maintain Health register and certificate of Medical Examinations etc.;
15. Maintain Testing Certificates of lifting appliances and machines etc.;
16. Ensure formation of Safety Committee and its functioning, appointment of Safety officer, Safety and Health written policy- its approval, Safety & Health audit etc.;
17. Ensure that the employees at work wear safety shoes, helmets, safety belts etc. 

By contractor(s) / Sub Contractor (s):

1. Obtain License under Contract Labour Act if employees are above 20 on any day and renew/ amend it from time to time;
2. Obtain Registration Certificate under BOCW Act if employees are above 10 on any day and renew/ amend it from time to time. Also Register Beneficiaries under BOCW Act;
3. Obtain license under Inter-state Migrant Workmen Act, if applicable
4. Maintain the minimum rates of wages as applicable;
5. Maintain min. HRA at 5 % of Basic + DA;
6. Make the compliance of EPF&MP Act;
7. Make the compliance of Profession Tax;
8. Make the compliance of MLW Fund;
9. Cover the employees sufficiently under Employees Compensation.
10. Maintain muster roll, wage register, other registers, records, notices, forms etc. as required under various applicable Acts, abstracts of various applicable Acts.

Identification of Plastics By Numbers

Dear Readers,

 

During our daily life Plastics are everywhere. Some are Eco-friendly. At the bottom of most plastic containers you can find a small number inside the three arrow triangle recycling symbol and indicates the type of resin used to produce the plastic. The little number inside the triangle tells the real story and gives the information about the recycling which ranges from one to seven Sometimes below the numbers you also find the abbreviations for the plastic type (PETE, HDPE, etc.). The most widely accepted plastics for recycling are number is 1 and 2.

 

 

Code#1-PET (Polyethylene Terephthalate) PET is one of the most commonly used plastics in consumer products, and is found in most water and pop bottles, and some packaging. Products made of #1 (PET) plastic should be recycled but not reused.

Code#2-HDPE (High-Density Polyethylene) HDPE plastic is the stiff plastic used to make milk jugs, detergent and oil bottles, toys, and some plastic bags. Products made of #2 HDPE are reusable and recyclable.

Code#3 - PVC (Polyvinyl Chloride) PVC is a soft, flexible plastic, It is commonly used to make window frames, garden hoses, arbores, raised beds and to make plastic pipes and parts for plumbing. Products made using PVC plastic are not recyclable.

Code#4 - LDPE (Low-Density Polyethylene) The plastic grocery bags used in most stores today are made using LDPE plastic. Products made using LDPE plastic are reusable, but not always recyclable.

Code#5 - PP (Polypropylene) Polypropylene plastic is tough and lightweight, and has excellent heat-resistance qualities. PP is considered safe for reuse.

Code#6 - PS (Polystyrene) Polystyrene is  lightweight and easily-formed plastic with a wide variety of uses. It is most often used to make disposable Styrofoam drinking cups, Recycling is not widely available for polystyrene products.

Code#7 - Other (BPA, Polycarbonate and LEXAN) The #7 category was designed as a catch-all for polycarbonate (PC) and “other” plastics, so reuse and recycling protocols are not standardized within this category.

 

Best Quote. Never leave that till tomorrow which you can do today. Have a Nice Day.

Bearing Designations

Dear Readers,

As you well aware that bearing is a device that supports, guides, and reduces the friction of motion between fixed and moving machine parts. All standard bearings have a characteristic basic designation it consist of basic numbers and supplementary symbols (Prefix and Suffix). If you know the observation of bearing number you may proceed further without any delay of your activity / job. You know prefix and suffix details then it is an excellent.  

The first digit (or letter) designates the bearing type, the second and third digits indicate the dimension series to which the bearing belongs. The second digit represents the width (or height) series and the third digit the diameter series. The three first digits together designate the bearing series.

The two last digits indicate the bore diameter. For bearing with bore diameter between 20 and 490 mm is obtained by multiplying the two last digits by five. For bearing with bore diameter greater than 490mm the bore diameter is directly indicated after an oblique (Ex.511 / 500). Special coding applies for bearings with bore diameter less than 20mm.

 

Types of bearing, prefix and suffix details will follow my next post

 

For More information about bearings click Here

 

Best Quote: "Remember that happiness is a way of travel, not a destination.” Have a Nice Day