Labor Codes for NGOs & How to be Ready - Part 2

Code on SS (continued)

OSHWC Code

Other standalone laws that coexist

The Employee's Compensation Act, 1923

The Employees' State Insurance Act, 1948

The Employees' Provident Funds and Miscellaneous Provisions Act, 1952

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959

The Maternity Benefit Act, 1961

The Payment of Gratuity Act, 1972

The Cine-Workers Welfare Fund Act, 1981

The Building and Other Construction Workers' Welfare Cess Act, 1996

The Unorganised Workers' Social Security Act, 2008

Chapter 1: Preliminary

Chapter 2: Social Security Organization

Chapter 3: EPF

Chapter 4: ESIC

Chapter 5: Gratuity

Chapter 6: Maternity Benefit

Chapter 7: Employee Compensation

Chapter 8: SS for construction workers

Chapter 9: SS for unorganized, gig and platform workers

Chapter 10: Finance & Accounts

Chapter 11: Authorities, Compliance, Recovery

Chapter 12: Offences and Penalties

Chapter 13: Employment information and Monitoring

Chapter 14: Misc

Employees' Provident Fund (EPF): Every establishment in which 20 or more employees are employed.

Employees' State Insurance Corporation (ESIC): Every establishment in which 10 or more persons are employed (other than a seasonal factory).

Gratuity: Every shop/establishment in which 10 or more employees are employed (or were employed on any day of the preceding 12 months).

Maternity Benefit: Every shop/establishment in which 10 or more employees are employed (or were employed on any day of the preceding 12 months).

Employees Compensation: Applies to employers and employees to whom Chapter 4 (ESI) does not apply and are mentioned in the Second Schedule.

Calculation of Dues: Calculation of EPF, ESI, and Gratuity is now as per the new definition of "Wages". This is the biggest change.

Universal EPF: EPF coverage is universal and not restricted to Schedule 1 establishments.

Wage Ceilings: EPF and ESI thresholds for coverage and wage ceilings remain unchanged for now, but be on the lookout for revisions.

Hazardous Occupation (ESI): In ESI, even one employee in a hazardous/life-threatening occupation entails ESI registration.

Contributions: EPF Contribution is 10% for employer and higher than 10% for employee. EDLI contribution up to 1% of wages plus 0.25% as admin charge.

ESIC Scope: Covers every establishment (not restricted to factories/shops) and extends to all districts in the country. In-laws and dependent siblings added as beneficiaries.

Employment Injury: Commute-related accidents are considered employment-related.

Opt-in/Opt-out: Possible for EPF/ESI with conditions: 5-year lock-in, majority of employees agree, all filings/dues paid, and approval by CPFC/ESIC DG (60-day decision window).

UAN: Govt working on one UAN and common ECR for EPF and ESIC since the Wage definition is uniform now.

FTE Definition: Engagement with a written contract for a fixed period. Hours, wages, allowances, and benefits shall not be less than that of a permanent employee doing similar work. They are eligible for all statutory benefits available to permanent employees.

Gratuity for FTE: Eligibility upon 1 year of service.

Continuous Service: 240 days (6-day week) or 190 days (5-day week). Service beyond 6 months will be considered as 1 year.

Retrospective Applicability: Gratuity prior to 21.11.2025 may be based on the new definition of Wages, casting additional liability.

Accounting: ICAI guidance is to recognize increased liability immediately as vested past service costs or amortized over the remaining vested period (AS-15).

New Beneficiaries: Platform workers, gig workers, and unorganized workers are covered.

Registration: Age 16-60 years, with 90 days engagement in 12 months. Aadhaar is the only proof required.

Social Security Fund: Funded by 1-2% of turnover (capped at 5%) from employers/aggregators. Schemes will cover life, disability, health, maternity, and pension.

Revisit HR classification (regular, FTE, contract, consultant).

Understand the impact on EPF, ESI, Gratuity, and Earned Leave (EL) based on the new definition of Wages.

Check applicability of ESI to NGOs.

Consider keeping PF ceiling wages at Rs. 15k for EPF.

Consider funding incremental gratuity and EL under current insurance policy once retrospective applicability clarity emerges.

Examine both SS code and Code on Wages (CoW) while tweaking comp structure.

Balance employee taxation (TDS) and take-home pay due to possibly higher SS benefits.

EPF and ESI thresholds may get revised (fixed >8-10 years ago).

Mandatory funding of gratuity if currently only a provision is being made.

Ensure same employment terms for FTE plus Gratuity as for regular employees.

The Factories Act, 1948

The Plantations Labour Act, 1951

The Mines Act, 1952

The Working Journalists and other Newspaper Employees Act, 1955

The Contract Labour (R&A) Act, 1970

The Motor Transport Workers Act, 1961

The Inter-State Migrant Workmen Act, 1979

The Working Journalist Act, 1958

The Beedi and Cigar Workers Act, 1966

The Sales Promotion Employees Act, 1976

The Cine Workers and Cinema Theatre Workers Act, 1981

The Dock Workers Act, 1986

The BOCW Act, 1996

Employer Duties: Ensure no hazards causing injury/occupational disease, comply with OSH standards, annual health examination, safe working environment, disposal of hazardous waste, issue appointment letters. No charges to employees for safety/health.

Working Hours: Max 8 hours per day, but spread over permitted up to 12 hours (with rest interval). Max 6 days per week.

Overtime (OT): OT for work beyond 8 hours at 2X the wage rate. Max 125 hours in a quarter (Delhi proposed 144 hours).

Rest Interval: 30 minutes after every 5 hours.

Weekly Holiday: One paid holiday. Comp off for work on weekly holiday must be availed within 2 months.

Welfare: Cleanliness, hygiene, ventilation, drinking water, lighting, toilets. Canteen (100+ employees) and Crèche (50+ employees) mandatory.

Appointment Letter: Mandatory with specified terms (wages, deductions, OT).

Women Employment:

• Night Shift: Consent required for working between 7 PM and 6 AM with safety measures.

• Hazardous Jobs: Permitted with consent and safety measures (except pregnant women).

Applicability: Every establishment employing 50 or more contract labor (previously 20).

Core Activity Prohibition: Employment of contract labor in "core activity" is prohibited.

Core Activity Definition: Any activity for which the establishment is set up and includes any activity essential to such activity.

Non-Core Activity: Sanitation, security, canteen, loading/unloading, courier, gardening, housekeeping, laundry, transport, and intermittent activity.

Test for Core Activity:

1. Is it incidental/necessary for the industry?

2. Is it of perennial nature (sufficient duration)?

3. Is it ordinarily done through regular workers?

4. Is it sufficient to employ a considerable number of whole-time workers?

Exceptions: Contract labor permitted in core activity if:

• Normal functioning ordinarily requires a contractor.

• Activities do not require full-time workers for the major portion of the day.

• Sudden increase in volume of work needs to be accomplished in specified time.

Earned Leave (EL): 1 day for every 20 days worked (eligible if worked 180 days in calendar year).

Leave Encashment: Carry forward up to 30 days; excess can be encashed. Even the 30 days CF is eligible for encashment if desired by the worker.

Inter-State Migrant Workers (ISMW): Earnings up to Rs. 18k/month. Entitled to journey allowance (to and fro fare) once a year and portability of benefits (PDS).

Prohibition of contract labor in core activity.

Implement health, safety, and welfare provisions as per OSH standards.

Issue mandatory appointment letters.

Annual Health checkup (refer to state rules).

Review EL provisions for compliance with both OSH Code and State Shops & Establishments Act.

Leave calendar should be the calendar year, not financial year.

The Trade Unions Act, 1926

The Industrial Disputes Act, 1947

The Industrial Employment (Standing Orders) Act, 1946

Fixed-Term Employment: Introduced with benefits equal to permanent workers.

Strikes and Lockouts: Conditions prescribed; notice required.

Standing Orders: Required in establishments where 300 or more workers are employed.

Retrenchment/Lay-off: Provisions not applicable if workers <300. Lay-off provisions not applicable if workers <50.

Grievance Redressal Committee: Mandatory where 20 or more workers are employed.

Reskilling Fund: Employer to deposit 15 days wages for retrenched employees.

NGOs cannot be in denial regarding the applicability of SS laws. Expanded coverage (minimum wages, ESI) affects them.

If not specifically exempted (like IR Code for charitable orgs), all acts are applicable.

Labor is a concurrent subject; State rules cannot supersede Codes.

Transition period: Existing rules apply until new rules are fully implemented (likely by April 2026).

HR and Finance process reengineering will be required.

Compliance framework includes stiff penalties and web-based integration.

Engage teams on orientation and comp restructuring.

Applicability: Based on coverage of charitable institutions within the definition of 'Establishment' in the respective State Act.

Regulates: Working hours, holidays, leaves (EL, CL, SL), OT, etc.

Earned Leave: Varies by state. Generally min 240 days for eligibility, 1 EL for 20 days worked, accumulation/carry forward rules apply.

Levied by: State/UT on persons earning income.

Exempt States: Delhi, UP, Rajasthan, HP, Uttaranchal, Arunachal Pradesh, Haryana.

Compliance: Registration required in each state for multi-state operations. Deduction/deposit based on income slabs.

Mandate: Safe environment policy, Internal Complaints Committee (ICC) if employees >10.

Inquiry: To be completed in 90 days.

Reporting: Annual report to district authority (if >10 employees) and in Directors Report (for companies).

Mandatory: Establishments with 30 or more employees must engage apprentices (2.5% - 15% of workforce).

Voluntary: If strength is 4-29.

Training: 6 months to 4 years.

Stipend: Provided during training. Reimbursement available under NAPS-2 (25% of stipend capped at Rs. 1500/month).

Status: Apprentice is not a worker; labor laws are not applicable.