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Making any change in the Employment Service Condition? What is the mandatory requirement for an Employer, to conform?

Posted by: The ADP Team on 5 September 2019 in Compliance

(Coffee Break Compliance Guide – Volume 54 by Subramaniam Anandan)

Before going further to the details on the captioned, let us understand which employment legislation protects the employees (workmen) from unlawful effect of change in service condition and more specifically what service condition is?

Under Section 9-A of the Industrial Disputes Act, 1947, no employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change,

  • without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or
  • within twenty- one days of giving such notice

(Forty-two days in the State of Andhra Pradesh, Telangana and West Bengal as per the State amendment)

Besides, the State of Maharashtra has also inserted the following provisions in addition to the above

(i) such change shall not effect the total wages of the workmen and their hours of work; and

(ii) the employer provides all the legitimate and required facilities such as trainings, etc., to the workmen to acquire the skill of new job.”

Schedule Four sets out the conditions of service for change of which notice is required to be given under Section 9-A. The conditions of service prescribed in the Fourth Schedule include,

  1. Wages, including the period and mode of payment;
    • Period – Daily, Weekly, Fortnightly or Monthly
    • Mode of payment – In current coins through Cheque, Credit into bank or Electronic mode
  2. Contribution paid, or payable, by the employer to any provident fund or pension fund or for the benefit of the workmen under any law for the time being in force;
    • Percentage of contribution towards Provident Fund or Pension Fund
  3. Compensatory and other allowances;
    • Change in compensation structure
    • In view of change in proposition, any social security benefit is impacted
    • Withdrawal of any variables, perks etc.
  4. Hours of work and rest intervals;
    • Change in
      • Working Hours (eg. 8 hours or 8 ½ hours or 9 hours)
      • Relays (Shifts) (cancellation or introduction of new shifts)
      • Shift timings (commencement/end of shift timings)
    • Change in rest intervals (30 minutes or 45 minutes or 1 hour etc). Besides including such rest intervals within the working hours or rest intervals are in addition to the working hours.
  1. Leave with wages and holidays;
    • Change in number of types of leave
    • Change in process of applying/availing leave
    • Change in weekly-off (for all or for specific group of persons or for persons from specific shifts)
  2. Starting, alternating or discontinuance of shift working otherwise than in accordance with standing orders;
    • Any change in Shift or timings which is new or not mentioned in the Certified Standing Order
  3. Classification by grades;
    • Clubbing or de-merging or introduction of new – grades / levels
  4. Withdrawal of any customary concession or privilege or change in usage;
    • Amenities, Facilities, welfares
    • Food, Change in charges on Food
  5. Introduction of new rules of discipline, or alteration of existing rules except insofar as they are provided in standing orders
  6. Rationalization, standardization or improvement of plant or technique which is likely to lead to retrenchment of workmen;
  7. Any increases or reduction (other than casual) in the number of persons employed or to be employed in any occupation or process or department or shift not occasioned by circumstances over which the employer has no control.

Where any change is being proposed for a workman or group of workmen, who shall be impacted upon such change, then the employer needs to give a written notice and wait for 21 days and then act upon such changes.

Usually, any alteration in conditions of service which has adverse effect on the workman or group of workman will be raised in the appropriate forum, if it is not informed in writing.

Besides, if such alteration is not favoring the workman or group of workmen in accordance with the terms of contract of the appointment order of the workman concerned as well as of the provisions of the standing orders of the company in case of change for the entire group of workmen, then it may fail before the appropriate forum.

There are instances where few affected parties have gone to the highest court in challenging the change/ alteration in service condition even after it is duly followed with the process of provisions under the Industrial Disputes Act.

In the above situation, it is always suggested that an Employer should be thoughtful in changing any of the current service condition of every employee.  With changing industry environment, any new change or alteration in existing service condition on the following are to be taken care

  • Transfer to other department / project / section
  • flexible working hours,
  • working from home option,
  • usage of company infrastructure,
  • provision of amenities to section of persons engaged,
  • extension of working hours,
  • change in weekly-off, in line with amendment in employment legislation
  • change in working time aligning with the project undertaken,
  • computation of social security benefits in line with amendments in the legislations or Judicial interpretation which causes change in the wage structure of workmen
  • Downsizing or right-sizing
  • During Merger and acquisition, the respective employers

Where the employer will not be liable to give you any compensation or notice during Merger or Acquisition,

  • There is no interruption in workmen service has occurred due to any such transfer;
  • Equally or more favourable terms and conditions of the employment are applicable to transferred employees, in comparison to the ones that were applicable to you before the transfer of undertaking.
  • New employer has become legally liable to pay the transferred workers, compensation in the event of retrenchment, in a manner similar to the one in which the old employer was liable. Also, such period of transfer will be counted in the period of continuous service

Notwithstanding, all such above provisions are applicable only for Workmen and not Managerial or persons of Administrative capacity.

Only reprive for employers is Section 9B under the Industrial Disputes Act, which gives power to government to exempt from the provisions of Section 9A in exceptional circumstances where the application of 9A may cause serious repercussions on the industry concerned and if the public interest so requires.

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TAGS: compliance Employment service condition

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