Payment of Dues ,Claims & Audit
Section 42. Central Advisory Board and State Advisory Boards.
42(1)
The Central Government shall constitute a Central Advisory Board.
This Board shall consist of members nominated by the Central Government, representing:
(a) Employers.
(b) Employees — and the number of employee representatives shall be equal to employer representatives.
(c) Independent persons — not more than one-third of the total Board members.
(d) Five representatives of such State Governments as the Central Government may nominate.
42(2)
One-third of all members of the Board shall be women.
One of the independent persons referred to in clause (c) shall be appointed as the Chairperson of the Board by the Central Government.
42(3)
The Central Advisory Board shall, from time to time, advise the Central Government on issues relating to:
(a) Fixation or revision of minimum wages and related matters.
(b) Increasing employment opportunities for women.
(c) The extent to which women may be employed in those establishments or employments that the Central Government may notify.
(d) Any other matter connected with this Code.
Based on such advice, the Central Government may issue appropriate directions to State Governments
42(4)
Every State Government shall constitute a State Advisory Board to advise the State Government on the following matters:
(a) Fixing or revising minimum wages and all matters connected to such fixation or revision.
(b) Measures for increasing employment opportunities for women.
(c) Determining the extent to which women may be employed in establishments or employments that the State Government may specify by notification.
(d) Any other matter related to this Code that the State Government may refer to the Board from time to time.
42(5)
The State Advisory Board may set up one or more committees or sub-committees to examine issues related to the matters listed in clauses (a) to (d) of sub-section (4).
42(6)
The State Advisory Board, as well as every committee or sub-committee it forms, shall consist of:
(a) Members representing employers;
(b) Members representing employees, equal in number to the employer representatives;
(c) Independent persons, not exceeding one-third of the total membership of the Board, committee or sub-committee, as applicable.
42(7)
One-third of the members referred to in sub-section (6) shall be women. Among the independent members under clause (c):
(a) One shall be appointed by the State Government as Chairperson of the State Advisory Board;
(b) One shall be appointed by the State Advisory Board as Chairperson of the committee or sub-committee, as the case may be.
42(8)
When giving advice on matters under clauses (b) or (c) of sub-section (4), the State Advisory Board shall consider:
– the number of women employed in the relevant establishment or employment,
– the nature and hours of work,
– the suitability of women for such employment,
– the need to create more employment opportunities for women, including part-time work, and
– any other factors the Board considers relevant.
42(9)
After considering the advice of the State Advisory Board, and after inviting and examining representations from establishments, employees, or any other concerned persons, the State Government may issue such directions as it deems appropriate.
42(10)
The Central Advisory Board under sub-section (1) and the State Advisory Board under sub-section (4) shall regulate their own procedure, including the procedure of the committees and sub-committees constituted by the State Advisory Board, in the manner prescribed.
42(11)
The term of office of the Central Advisory Board, the State Advisory Board, and of the committees and sub-committees constituted by the State Advisory Board, shall be as prescribed.
Section 43. Responsibility for payment of various dues.
43.
Every employer must pay all amounts that are required to be paid under this Code to every employee employed by him.
Proviso:
If the employer fails to make such payment in accordance with the Code, then the company, firm, association, or any other person who is the proprietor of the establishment in which the employee works shall be responsible for making the payment.
Explanation:
For this section, the term “firm” shall have the meaning assigned to it under the Indian Partnership Act, 1932.
Section 44. Payment of various undisbursed dues in case of death of employee.
44(1).
Subject to the other provisions of this Code, if an amount payable to an employee cannot be paid because the employee has died before receiving it or because his whereabouts are not known, then:
(a) The amount shall be paid to the person nominated by the employee in accordance with the rules under this Code; or
(b) If no nomination exists, or if for any reason the amount cannot be paid to the nominee, the amount must be deposited with the prescribed authority, which will deal with it in the manner laid down in the rules.
44(2).
When the employer—
(a) pays the amount to the nominee, or
(b) deposits the amount with the prescribed authority,
the employer’s liability to pay that amount stands fully discharged.
Section 45. Claims under Code and procedure thereof.
45(1).
The appropriate Government may, by notification, appoint one or more authorities (each at least of Gazetted Officer rank) to hear and decide claims arising under this Code.
45(2).
While deciding a claim, the appointed authority may—considering the circumstances—order compensation in addition to the claim amount.
This compensation may extend up to ten times the amount of the claim.
The authority should make an effort to decide the claim within three months.
45(3).
If the employer does not pay the determined claim and the compensation ordered, the authority shall issue a certificate of recovery to the Collector or District Magistrate of the district where the establishment is located.
The Collector/District Magistrate will recover the amount as arrears of land revenue and remit it back to the authority, which will then pay the employee.
45(4).
A claim under sub-section (1) may be filed by:
(a) the concerned employee;
(b) a registered Trade Union of which the employee is a member; or
(c) the Inspector-cum-Facilitator.
45(5) – Joint Applications
A single application may be filed for any number of employees from the same establishment, subject to the rules framed under the Code.
This allows group claims instead of requiring each employee to file separately.
45(6) – Limitation Period for Claims
An application under section 45(4) must be filed within three years from the date the claim arises.
However, the authority may accept an application after three years if the applicant shows sufficient cause for the delay.
This gives the authority discretion to condone delays in genuine cases.
45(7) – Powers of the Authority and Appellate Authority
Both:
the authority appointed under section 45(1), and
the appellate authority appointed under section 49(1)
have the same powers as a civil court under the Code of Civil Procedure, 1908, including:
taking evidence,
enforcing attendance of witnesses,
compelling production of documents.
They are also deemed to be civil courts for the purposes of:
section 195 of CrPC (prosecution for offences affecting administration of justice), and
Chapter XXVI of CrPC (provisions relating to offences affecting justice).
This gives the authorities legal strength and procedural powers similar to courts.
Section 46. Reference of disputes under this Code.
Despite anything stated elsewhere in this Code, any dispute between an employer and employees relating to the following:
46(a)
A dispute about fixation of bonus or eligibility for bonus under this Code.
46(b)
A dispute about the application of bonus provisions to a public sector establishment.
Such disputes will be treated as industrial disputes under the Industrial Disputes Act, 1947.
Effect of Section 46
These disputes must be handled under the mechanisms of the Industrial Disputes Act (conciliation, adjudication, labour courts/tribunals).
Employees cannot pursue these disputes through ordinary civil processes; they must use ID Act procedures.
It ensures uniform handling of bonus-related disputes as labour disputes.
Section 47. Presumption about accuracy of balance sheet and profit and loss account of corporations and companies.
47. (1) Explanation
When certain legal proceedings are going on—such as cases related to bonus disputes or appeals—specific authorities look at the employer’s financial statements to decide the matter. This subsection explains how those financial statements are treated.
(a) the authority under section 45; or
(b) the appellate authority under section 49; or
(c) a Tribunal; or
(d) an arbitrator referred to in clause (aa) of section 2 of the Industrial Disputes Act, 1947,
If any of the above authorities are dealing with a dispute under sections 45, 46, or an appeal under section 49, and the employer is a corporation or company (not a bank), then the following rule applies:
When the employer submits its balance sheet and profit & loss account
And these financial statements are duly audited either by
the Comptroller and Auditor General of India, or
auditors qualified under section 141 of the Companies Act, 2013
Then the authority can assume that the figures and statements in those documents are accurate.
In other words:
The company does not have to separately prove that the statements are correct.
It does not have to file an affidavit or use any other method to show the accuracy.
The authority may presume the audited financials to be correct unless there is evidence to the contrary.
Provided that
If the authority, appellate authority, Tribunal, or arbitrator (mentioned in sub-section (1)) feels that the statements or figures in the company’s balance sheet or profit & loss account are not accurate, then:
It can take any steps it considers necessary
To verify and find out the correct accuracy of those statements.
In simple terms:
Even though audited financials are normally presumed correct, if the authority doubts their accuracy, it can investigate further.
(2) Explanation
When any of the following apply:
A Trade Union involved in the dispute or appeal makes an application; or
If there is no Trade Union, the employees who are party to the dispute or appeal make an application,
And they request a clarification about any particular item in the company’s balance sheet or profit & loss account,
Then the authority, appellate authority, Tribunal, or arbitrator may:
First check whether the clarification is genuinely necessary;
If yes, it may order the company or corporation to give that clarification to the Trade Union or the employees;
And it must specify a time limit for providing that clarification;
The company is then legally required to provide that clarification within the given time.
Section 48. Audit of accounts of employers, not being corporations or companies.
(1)
This clause deals with employers who are not corporations or companies (for example: sole proprietors, partnerships, individuals).
If a dispute between such an employer and employees is pending before:
an authority under section 47, or
an appellate authority, or
a Tribunal, or
an arbitrator,
and the employer produces audited accounts, where the audit has been done by an auditor who is qualified under section 141 of the Companies Act, 2013, then:
The rules given in section 47 (about presuming audited accounts to be accurate, allowing clarification, etc.)
Will also apply to this employer's audited accounts as far as possible.
In simple terms:
Even for non-company employers, properly audited accounts get the same legal treatment as audited accounts of companies.
(2)
If the authority, appellate authority, Tribunal, or arbitrator finds that:
The employer’s accounts have not been audited by a qualified auditor,
And believes that an audit is necessary to decide the dispute,
then it may:
Pass an order directing the employer to get the accounts audited,
Within a specified time (or extra time if allowed),
By an auditor or auditors chosen as the authority thinks appropriate.
Once this order is given:
The employer must get the accounts audited and comply with the direction.
(3)
If the employer does not get his accounts audited even after being directed to do so under sub-section (2), then the authority, appellate authority, Tribunal, or arbitrator may:
Get the accounts audited on its own,
By appointing any auditor(s) it considers appropriate,
And this is in addition to any penalty or action possible under section 54.
In simple terms:
If the employer refuses or fails to get the audit done, the authority will get it done directly.
(4)
When the accounts are audited either:
because the employer was ordered to get them audited (under sub-section (2)), or
because the authority itself arranged the audit (under sub-section (3)),
then:
The rules of section 47 (presumption of correctness, right to seek clarification, etc.)
Will apply to these audited accounts as far as appropriate.
(5)
All costs of the audit done under sub-section (3)—including:
the auditor’s fees, and
all other expenses connected to the audit,
will be:
fixed/decided by the authority, appellate authority, Tribunal, or arbitrator,
and must be paid by the employer.
If the employer does not pay:
The amount will be recovered from him by the authority under section 45(3),
Using the same method of recovery provided in that sub-section.
Section 49. Appeal.
(1)
If any person is unhappy or dissatisfied with an order passed by the authority under section 45(2), that person may file an appeal to the appellate authority appointed by the appropriate Government.
The appeal must be filed within 90 days from the date of the order.
It must be filed in the form and manner prescribed.
Proviso:
If the appeal is filed after 90 days, the appellate authority may still accept it if there was a valid and sufficient reason for the delay.
(2)
The appellate authority must be an officer of the appropriate Government who holds a rank at least one level higher than the authority who passed the original order under section 45(1).
In short:
The appeal is heard by a superior officer.
(3)
The appellate authority must:
Hear both parties involved in the appeal, and
Make an effort to decide the appeal within 3 months.
This creates a timeline for quick disposal of appeals.
(4)
If the appellate authority orders payment of dues, those outstanding dues shall be recovered by the authority under section 45.
The recovery will be done by issuing a certificate of recovery,
Using the same method provided in section 45(3).
Section 50. Records, returns and notices.
(1)
Every employer covered by this Code must maintain a register.
This register must record:
details of all persons employed,
the muster roll (attendance),
wages paid, and
any other details prescribed by rules.
In short: proper employment and wage records must be kept.
(2)
Every employer must put up a notice on the notice board in a visible and prominent place in the establishment.
This notice must contain:
a summary (abstract) of this Code,
wage rates for each category of employees,
the wage period,
the day/date and time when wages will be paid,
the name and address of the Inspector-cum-Facilitator for that area.
(3)
Every employer must issue wage slips to employees, in the form and manner prescribed by the rules.
In short: employees must receive official proof of their wage payment.
(4)
The duties mentioned in sub-sections (1), (2), and (3) do not apply to an employer who employs not more than five persons for:
agricultural work, or
domestic purposes.
However, even such employers must:
provide reasonable proof of wage payment to the Inspector-cum-Facilitator when asked.
Explanation:
“Domestic purpose” means activities related only to the home or family affairs of the employer.
It does not include any work related to an establishment, industry, trade, business, manufacturing, or occupation.
