The Ministry of Labour and Employment (the "MoLE") has introduced 4 labour codes in a bid to revamp labour laws related legislations in India. In this regard, the MoLE has consolidated 29 central laws into 4 labour codes (the "Labour Codes"). All the Labour Codes have been passed by both houses of the Parliament and received the assent from the President of India1 . However, a notification(s) bringing them into effect is yet to be issued. Secretary of the MoLE, Mr. Apurva Chandra, has stated that the Government intends to implement the Labour Codes from April 1, 20212 .
These Labour Codes are divided into 4 categories:
- Industrial Relations,
- Social Security, and
- Occupational Safety, Health and Working Conditions.
The Central Government is now in the process of drafting and finalising the subordinate rules under the Labour Codes3 . As of now, draft rules under the Labour Codes on Wages, Industrial Relations, Social Security as well as Occupational Safety, Health & Working Conditions have been published by the Government.
The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (the "EPF Act") and the Employees' State Insurance Act, 1948 (the "ESI Act") are two of the most important social security legislations under the existing labour laws in India. Several establishments have been subjected to enquiry under different aspects of the EPF Act, the most relevant of these being the determination of contribution not being as per the Act. Similarly, under the ESI Act, several establishments have been subjected to enquiry for incorrect or nonpayment of appropriate contribution. In this article, we examine the possible impact of the Code on Social Security, 2020 (the "SS Code") and the draft Code on Social Security (Central) Rules, 2020 (the "Draft SS Rules") on some of the pending inquiries, involving private establishments, relating to social security contributions under the new regime4 .
2. IMPACT ON PENDING INQUIRIES – AFTER IMPLEMENTATION OF THE SS CODE
A) POSITION UNDER THE EXISTING LAWS GOVERNING SOCIAL SECURITY
The EPF Act provides for the institution of a contributory provident fund, pension fund and deposit-linked insurance scheme for employees, funded by contributions made from the employer and the employee at the rate of 12% of basic wages (except for certain specific industries to which a rate of 10% is applicable). On the other hand, the ESI Act provides for benefits to an employee in case of sickness, maternity, temporary or permanent physical disablement and employment injury, and guarantees medical care to workers and their immediate dependants.
The existing mechanisms and limitation periods in respect of inquiry and the right to appeal under the existing EPF Act or the ESI Act are as follows:
- i) Existing mechanism under the EPF Act
- Inquiry under the EPF Act
Section 7-A5 of the EPF Act lays down the mechanism for passing an order or conducting an inquiry, in case of a dispute regarding the applicability of the EPF Act to an establishment or for determining the amount due from any employer under the EPF Act. For this purpose, the relevant Provident Fund ("PF") Commissioners are vested with the powers of a civil court and can initiate such inquiry or pass an order, as prescribed under the EPF Act.
1 The Code on Wages, 2019 was passed by the Lok Sabha on July 30, 2019 and thereafter the Rajya Sabha on August 2, 2019. It then received Presidential assent on August 8, 2019. Whereas, the remaining 3 labour codes, namely, the Code on Social Security, 2020, the Industrial Relations Code, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 have been passed by the Lok Sabha on September 22, 2020 and thereafter the Rajya Sabha on September 23, 2020. The 3 Codes received Presidential assent on September 28, 2020.
3 The draft Code on Wages (Central) Rules, 2020 were published for comments from stakeholders with the last date for comments being August 24, 2020. On October 29, 2020, the draft Industrial Relations (Central) Rules, 2020 were published for comments from stakeholders with the last date for comments being November 28, 2020. On November 13, 2020, the draft Code on Social Security (Central) Rules, 2020 were published for comments from stakeholders with the last date for comments being December 27, 2020. On November 19, 2020, the draft Occupational Safety, Health and Working Conditions (Central) Rules, 2020 were published for comments from stakeholders with the last date for comments being January 3, 2021.
4 It is possible that due to nature of certain inquiries and/or status thereof and/or other issues covered, etc., the discussion herein may not be relevant in those cases.
5 Section 7-A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 - Determination of moneys due from employers (1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner or any Assistant Provident Fund Commissioner may, by order:
(a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and
(b) determine the amount due from any employer under any provision of this Act, the Scheme or the Pension Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary.
(2) The officer conducting the inquiry under sub-section 1 shall, for the purposes of such inquiry have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), for trying a suit in respect of the following matters, namely:
(a) enforcing the attendance of any person or examining him on oath:
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavit;
(d) issuing commissions for the examination of witnesses, and any such inquiry shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code (45 of 1960).
(3) No order shall be made under sub-section (1), unless the employer concerned is given a reasonable opportunity of representing his case.
(3A) Where the employer, employee or any other person required to attend the inquiry under sub-section 1 fails to attend such inquiry without assigning any valid reason or fails to produce any document or to file any report or return when called upon to do so, the officer conducting the inquiry may decide the applicability of the Act or determine the amount due from any employer, as the case may be, on the basis of the evidence adduced during such inquiry and other documents available on record.
(4) Where an order under sub-section (1) is passed against an employer ex-parte, he may, within three months from the date of communication of such order, apply to the officer for setting aside such order and if he satisfies the officer that the show cause notice was not duly served or that he was prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry. Provided that no such order shall be set aside merely on the ground that there has been an irregularity in the service of the show cause notice if the officer is satisfied that the employer had notice of the date of hearing and had sufficient time to appear before the officer. Explanation.- Where an appeal has been preferred under this Act against an order passed ex-parte and such appeal has been disposed of otherwise than on the ground that the appellant has withdrawn the appeal, no application shall lie under this sub-section for setting aside the ex-parte order.
(5) No order passed under this section shall be set aside on any application under sub-section (4) unless notice thereof has been served on the opposite party.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.