Five laws that every salaried employee should be aware of

Moneycontrol interacted with law experts to declutter key laws that every employee should be aware of.

Layoff process

Indian labour laws do not explicitly define salaried employees. However, the Industrial Disputes Act of 1947 mentions “workman,” any person including an apprentice employed in an industry to do “manual, unskilled, skilled, technical, operational, clerical or supervisory work.”

It's important to note that the law excludes those in managerial or administrative capacity. For people in the ‘workman” category, Section 25 is crucial because it protects employees from layoffs under certain conditions.

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If an establishment has employed 100 or more workers on average per working day over the previous 12 months, the employer must first acquire approval from a government authority before laying off any employees, Kunal Sharma, a partner at Singhania & Co., told Moneycontrol.

Additionally, the company must give retrenched employees notice and compensation.

There is a stipulated process to follow for layoffs.

“The employee must receive either advance notification or payment instead of notice from the employer, whichever is later,” Sharma said, adding that the employer is required to compensate the employee at the rate of 15 days' average pay for each year of service that has been finished, or any portion thereof that is longer than six months.

Besides, retrenched employees must be given priority for reemployment over new hires who lack the same qualifications and experience.
For those outside the ‘workman’ category, there is no specific law to protect their jobs. However, Sharma suggested they negotiate their employment contracts with due diligence.

“In the document, employers can mention terms related to pay-out benefits, notice periods, and insurance, so employees need to be careful while signing this document and should keep in mind as it is not just the salary which is to be negotiated but also the terms of entitlements if the employee is laid off,” he said.

In case of a breach of any clause, an employee can move court for nonfulfillment of the terms and conditions mentioned.

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Sexual harassment

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act protects against sexual harassment of women at the workplace and provides for redressal of complaints of sexual harassment.

Apart from making physical contact and advances and demands for sexual favours, the law says that sexual harassment includes making sexually coloured remarks, showing pornography, and any other unwelcome physical, verbal or non-verbal conduct of sexual nature.

“Under this law, the employer is mandated to form an internal committee where any woman who feels sexually harassed by any person at the workplace can complain against such person,” said Shashank Agarwal, an advocate at the Delhi High Court.

While female employees ought to know their rights, he said males must be made aware of their duty to not make their female colleagues uncomfortable at the workplace by making sexually coloured remarks or sexual advances.

Phaneesh Murthy was sacked by IT company iGate in 2013 for violating company policy by failing to report a relationship with a fellow employee who claimed sexual harassment.

Payment of gratuity

The Payment of Gratuity Act, 1972, provides for payment of a stipulated amount to an employee on the termination of employment after rendering continuous service for not less than five years, on superannuation, retirement, resignation, or on death or disablement due to accident or disease.

In case of death, gratuity should be provided to the nominee/heir of the deceased employee. The act also contains penal provisions, which every employee must be aware of.

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There is a provision of imprisonment and fine in case employers make any false statement or representation to avoid payment under the act, or even simple non-payment of gratuity, said Shivani Bhushan, a senior associate at TAS Law.

However, employees should remember that gratuity can be forfeited partially or fully if their service has been terminated for any act, wilful omission or negligence causing damage to the employer’s property.

“Gratuity Act is a social security legislation or can also be termed as welfare law intended for workers who provide long-term continuous and meritorious services,” Bhushan added.

Maternity benefits

Under the Maternity Benefit Act of 1961, employers cannot employ women in any capacity for six weeks immediately following delivery or miscarriage.
Most importantly, employers are liable to pay maternity benefits at the rate of the average daily wage for the period of absence immediately preceding and including the day of delivery and for the six weeks following.

“An employee can neither be discharged or dismissed while being on maternity leave nor can any notice of discharge or dismissal be given on such a day that the notice will expire during the maternity leave,” said Suyash Srivastava, a partner at DSK Legal.

However, to claim the benefits, the employee should have worked for not less than 160 days in the 12 months immediately preceding the expected delivery.

Srivastava said the act enables an employee to overcome the state of motherhood honourably, peacefully and undeterred by the fear of being victimised for absence during the maternity period.

“Non-compliance has serious consequences wherein employees may file a criminal complaint before the jurisdictional criminal court seeking prosecution of the company as well as all persons who have the ultimate control over its affairs including its directors and other key employees,” he added.

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Srivastava said employees can file a claim to set aside the termination order and seek reinstatement. Non-compliance with the Maternity Benefit Act may also lead to loss of reputation for the company.

Insurance and financial aid

The Employees’ State Insurance Act of 1948 insures employees and grants financial aid in case of injury. The Employees’ State Insurance Corporation, a government organisation, manages the Employees’ State Insurance scheme, which provides basic medical and financial assistance to employees and their families and covers sickness, employment injury or maternity benefits.

Anushkaa Arora, founder of ABA Law Office, said employers and employees have to contribute to the fund to ensure protection.

“The medical benefits cover the payment of all treatment expenses… The sickness benefits are provided if the medical condition is verified by the appointed medical practitioner. An insured woman can claim periodical payments during confinement, miscarriage, a sickness arising out of pregnancy and premature birth of a child,” she said.

Besides, the benefits are provided to family members of employees who die during service. Arora said if an employee dies while travelling from home to the workplace, then family members including the spouse, children and parents will be compensated and insured.