Unit 6:

6.1 Employees’ state Insurance Act 1948 (with latest Amendments) (Object, purpose, scope and silent features, definitions, benefits under this act)
6.2 The Employees Provident Funds and miscellaneous provisions Act 1952(with latest Amendments) (Object, purpose, scope and silent features)
6.3 The Payment of Bonus Act 1955 (with latest Amendments) (Purpose, scope and silent features)
6.4 The Payment of Gratuity Act 1972 (with latest Amendments) (Object, purpose, scope and silent features) 

6.5 The Payment of Wages Act 1936 (with latest Amendments ) (Object, purpose, scope and silent features)

 

6.1 Employees’ State Insurance (ESI) Act, 1948

Introduction & Object

The ESI Act is a self-financing social security scheme. It provides medical care and cash benefits to employees in case of sickness, maternity, disablement, and death due to employment injury.

Statutory Provisions & Benefits

• Scope: Applies to non-seasonal factories employing 10 or more persons. The current wage ceiling for coverage is ₹21,000 per month.
• Administration: Managed by the ESI Corporation (ESIC).
• Benefits (Section 46):
  1. Medical Benefit: Full medical care for the insured person and family.
  2. Sickness Benefit: Cash compensation during certified sickness (approx. 70% of wages).
  3. Maternity Benefit: Paid leave for 26 weeks.
  4. Disablement Benefit: For temporary or permanent disability.
  5. Dependents’ Benefit: Monthly pension to dependents in case of death due to employment injury.
  6. Funeral Expenses: Payment of ₹15,000 to the eldest surviving member.

6.2 Employees’ Provident Funds (EPF) Act, 1952

Introduction & Object

The EPF Act is a compulsory contributory fund intended to provide for the future of the worker after retirement or for their dependents after death.

Silent Features & Schemes

• Scope: Applies to establishments employing 20 or more persons.
• The Three Schemes:
  1. EPF Scheme (1952): Retirement savings.
  2. Pension Scheme (1995): Monthly pension after age 58.
  3. Insurance Scheme (EDLI, 1976): Life insurance cover for the employee.
• Contributions: Generally, 12% of basic pay + DA is contributed by the employee, and an equal 12% by the employer.

6.3 The Payment of Bonus Act, 1965

Introduction & Object

The Act aims to allow employees to share in the prosperity (profits) of the establishment and to bridge the gap between the actual wage and the living wage.

Statutory Provisions

• Eligibility: Any employee earning up to ₹21,000 per month who has worked for at least 30 working days in a year.
• Quantum of Bonus (Section 10 & 11):
  • Minimum Bonus: 8.33% of the salary/wage (even if the company makes a loss).
  • Maximum Bonus: 20% of the salary/wage.
• Disqualification: An employee is disqualified if dismissed for fraud, riotous/violent behavior, or theft.

6.4 The Payment of Gratuity Act, 1972

Introduction & Object

Gratuity is a “gift” or “reward” given by the employer to the employee in recognition of long and meritorious service.

Statutory Provisions

• Applicability: Every factory, mine, oilfield, plantation, port, railway, and shop/establishment with 10 or more employees.
• Eligibility: Continuous service of not less than 5 years.
  • Exception: The 5-year rule does not apply in case of death or disablement.
• Calculation (Section 4):
  $$\text{Gratuity} = \frac{\text{Last Drawn Salary} \times 15 \times \text{Years of Service}}{26}$$
• Ceiling: The maximum tax-free gratuity amount is currently ₹20 Lakhs.

6.5 The Payment of Wages Act, 1936

Introduction & Object

The objective is to ensure that wages are paid on time and without unauthorized deductions. It protects the worker’s right to receive their full earned remuneration.

Silent Features

• Wage Period: Fixed by the employer, but must not exceed one month.
• Time of Payment:
  • < 1000 workers: Paid by the 7th of the following month.
  • > 1000 workers: Paid by the 10th of the following month.
• Deductions (Section 7): Only authorized deductions are allowed (e.g., Fines, Absence, Income Tax, PF, Loans). Fines cannot exceed 3% of the wage.

Comparison Table: Social Security Benefits

Act	Nature of Benefit	Eligibility Condition
ESI	Health/Medical	Working in covered factory (< ₹21k wage).
EPF	Retirement/Savings	20+ employees in establishment.
Bonus	Profit Sharing	30 days of work in a year.
Gratuity	Loyalty Reward	5 years of continuous service.

Exam-Style Conclusion

Unit 6 represents the “Economic Justice” pillar of Labour Law. While ESI and EPF focus on social security during and after service, Bonus and Gratuity ensure the worker shares in the capital they help create. In your exam, remember that the Payment of Wages Act serves as the procedural foundation that ensures all these payments reach the worker’s pocket.