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Occupational Safety, Health And Working Conditions Code, 2020

The Occupational Safety, Health and Working Conditions Code, 2020 (“OSHWC Code”) which consolidates the various legislations pertaining to working conditions of various types of industries was passed by the Lok Sabha on 22nd September 2020, the Rajya Sabha on 23rd September 2020 and received Presidential Assent on 28th September 2020

The amalgamated and consolidated legislations are:

 

  1. The Factories Act, 1948
  2. The Contract Labour (Regulation and Abolition) Act, 1970
  3. The Mines Act, 1952
  4. The Dock Workers (Safety, Health and Welfare) Act, 1986
  5. The Building & Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1979
  6. The Plantations Labour Act, 1951
  7. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
  8. The Working Journalist and other Newspaper Employees (Conditions of Service and Miscellaneous Provisions) Act, 1955
  9. The Working Journalist (Fixation of rates of wages) Act, 1961
  10. The Cine Workers and Cinema Theatre Workers Act, 1961
  11. The Motor Transport Workers Act, 1961
  12. The Sales Promotion Employees (Conditions of Service) Act, 1976
  13. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966

 

Salient Features of the OSHWC Code

 

This section points out some of the key provisions in the OSHWC Code with a focus on the aspects which are different from applicable law.

 

  1. OSHWC Code has introduced a single registration for all establishments with 10 or more workers. Given that the OSHWC Code applies to a variety of different industries and types of establishments, the applicability for various sections varies accordingly as enumerated in the next point.

 

  1. The following are the amendments to thresholds which determine the applicability of relevant provisions of the OSHWC Code:
  • Factories with power – 10 to 20 workers
  • Factories without power – 20 to 40 workers
  • Contract Labour Section – 20 to 50 workers
  • Creche facility – 30 to 50 workers
  • Welfare Officer – 500 to 250 workers
  • Canteen – 250 to 100 workers

 

  1. Women can now work between 7 pm and 6 am in various establishments provided consent is obtained and safety measures are in place. Further, where previously prohibited, women are now allowed to work in all establishments including ones which are involved in hazardous activities.

 

  1. It has been made mandatory for all workers to have written terms of employment issued in an Appointment Letter.

 

  1. Free health needs to be provided by the employer annually for all workers over an age specified.

 

  1. Inter-state migrant workers to be provided for by employer/contractor, including statutory benefits. Further employers also have to cover travel fares for such workers as an allowance annually.

 

  1. Constitution of National Occupational Safety and Health Advisory Board to oversee and regulate safety norms, including requiring participatory/representative committees to be created to evaluate safety norms.

 

  1. Working hours, leave, overtime, welfare provisions have been made largely uniform across most Codes which makes the provisions uniform across most establishments.

 

  1. An employer is required to maintain a register which includes most of the following information: work performed by the employees, number of hours of work that constitute normal working hours in a day, weekly scheduled rest day, wages paid and receipts provided thereof, leave, leave with wages, overtime work, attendance, and dangerous occurrences and employment of adolescents.

 

  1. Government to formulate schemes for third party audit by professional experts.

 

OSHWC Code Implications

 

The OSHWC Code has certainly simplified the regulatory process. However, most of the aspects specifically needing regulations have been delegated to the State Government or the Board, so it needs to be seen what further legal provisions will likely be introduced in the rules.

Image Credits: Photo by Christopher Burns on Unsplash

The OSHWC Code has certainly simplified the regulatory process. However, most of the aspects specifically needing regulations have been delegated to the State Government or the Board, so it needs to be seen what further legal provisions will likely be introduced in the rules.

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Appointment of Sole Arbitrator: Two Sides of the Same Coin

Almost every commercial contract contains an arbitration clause in order to circumvent the traditional trajectory of dispute resolution through litigation. It is common to encounter myriad project financing documents between a lender and a borrower bearing arbitration as a means of settling any dispute or difference. The concerning question raised in such a scenario is whether the lender of facilities exercises an upper hand in designating an arbitrator devoid of any recourse to the borrower; thereby bringing us to the crucial question: Have the clauses similar to All disputes and differences of whatsoever nature arising out of this agreement, whether during its term or after expiry thereof or prior termination shall be referred to arbitration in terms of the Arbitration and Conciliation Act, 1996. The arbitration shall take place before a sole arbitrator, to be appointed by the Lender.been obliterated?

The law in case of appointment of the sole arbitrator by a party has been settled by the Hon’ble Supreme Court in the case of Perkins Eastman Architects DPC and Ors. v. HSCC (India) Ltd.[1] (Perkins case). HSCC (India) Ltd. (Respondent), the executing agency of the Ministry of Health and Family Welfare, issued a Letter of Award (LOA) to the consortium of Applicants for the appointment of Design Consultant for All India Institute of Medical Sciences (AIIMS) proposed at Guntur in Andhra Pradesh. The dispute resolution clause in the contract between the parties provided that if Applicants were dissatisfied with the decision of Director (Engg.), HSCC (India) Ltd. (HSCC) they were at the liberty to issue a notice to the Chief Managing Director (CMD), HSCC for the appointment of an arbitrator within 30 (thirty) days of receipt of the decision.

Furthermore, the contract also prohibited any other person except appointed by CMD, HSCC to act as a sole arbitrator thereby entirely vesting the power of appointment of an arbitrator on the Respondent. When disputes arose, the Applicants invoked the dispute resolution clause in the contract and the Chief General Manager, HSCC appointed the sole arbitrator. Thereafter, an application was filed by the Applicants under Section 11(6) read along with Section 11(12)(a) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Act”) which envisages appointment of an arbitrator by the court. The Hon’ble Supreme Court examined if it could exercise the power of appointment of an arbitrator in this case dehors the procedure set out in the arbitration agreement.

The Hon’ble Supreme Court referred to the judgement of TRF Limited v. Energo Engineering Projects Limited[2] (TRF case) in which the Apex Court examined the issue wherein the Managing Director of the Respondent was titled as the sole arbitrator and was also vested with the authority to nominate a replacement. The Apex Court by virtue of Section 12(5) of the Act that deals with the arbitrator’s relationship with the parties or counsel or subject matter of dispute, affirmed the ineligibility of a person falling under the purview of Seventh Schedule of the Act to perform the role of an arbitrator. Therefore, the Managing Director was ineligible to act as an arbitrator due to which his ability to nominate another person as an arbitrator was annihilated. The Apex Court in this case differentiated the dual power of the Managing Director, one to adjudicate as an arbitrator and second, the capacity of the Managing Director to appoint a nominee in his place.  

The principles emanating from the TRF case were reflected in the present case wherein the capacity of CMD, HSCC to appoint an arbitrator was analyzed. The Hon’ble Supreme Court held that in the TRF case the ineligibility of the Managing Director arose due to his interest in the outcome of the dispute. The same ground would be applicable in the scenario irrespective of the binary power of the arbitrator. In other words, if the appointed arbitrator has an interest in the dispute or in the outcome or decision thereof, he shall be incompetent to adjudicate the dispute as an arbitrator and/or disentitled to appoint any other person as an arbitrator.

The Hon’ble Court stated that the facet of exclusivity shall encompass the party that unilaterally appoints the sole arbitrator of its choice and discretion in spelling the course of the proceedings. Thus, the essence of the Act along with the TRF case was retained by upholding that it would be incongruous to confer the power of appointing an arbitrator in the hands of a person who has an interest in the outcome or decision of the dispute. The appointment made by the Respondent who was empowered in accordance to the dispute resolution clause was annulled and the Hon’ble Court exercised its power under Section 11(6) resulting in the appointment of a sole arbitrator to preside over the disputes between the parties.

The Hon’ble High Court of Delhi echoed this principle in the case of Bilva Knowledge Foundation and Ors. v. CL Educate Limited[3] where the court conceded with the view, followed by the case of Proddatur Cable TV DIGI Services v. SITI Cable Network Limited[4] wherein the distribution agreement vested a unilateral right to appoint the sole arbitrator on the Respondent Company which disagreed with the nomination of arbitrator proposed by the Petitioner. The High Court held that test of having an interest in the outcome of the dispute will be exhibited by the Respondent Company acting through its Board of Directors thereby vitiating the unilateral appointment. The High Court clarified that though party autonomy is a touchstone in arbitration, one cannot overlook the underlying principles of fairness, transparency and impartiality that are also fundamental in an arbitration. While the parties may agree to the procedure mentioned in the dispute resolution clause by free will, this agreement should not eclipse the facet of fairness and impartiality in an arbitration proceeding.

Concluding remarks

In cases where both parties can nominate their respective choice of arbitrators the power derived by one party is counter balanced by an equal power with the other party as seen in the Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV)[5].  Though it may seem that the law governing the right of the lender to appoint the sole arbitrator as upheld in the case of D.K. Gupta and Ors. v. Renu Munjal[6] is now settled through the Perkins case, one has to be prudent in drafting and interpreting the clauses for the appointment of sole arbitrator that may be reached by mutual consent or by court appointment or any other alternative thereby balancing party autonomy and the tenets of fairness, transparency and impartiality.

 

References:

[1] AIR2020SC59

[2] (2017)8SCC377

[3] Arb. P. 816/2019

[4] 267(2020)DLT51

[5] 2020(1)ALT70

[6] O.M.P. (T) (COMM.) 106/2017 & IA No. 14824/2017

 

 

Image Credits: Photo by Sora Shimazaki from Pexels

In cases where both parties can nominate their respective choice of arbitrators the power derived by one party is counter balanced by an equal power with the other party as seen in the Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV).

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Junk food ban- Legal responsibilities of School Authorities

According to the World Health Organization (WHO), 38 million children under the age of 5 were overweight or obese in 2019 and over 340 million children and adolescents aged 5-19 were overweight or obese in 2016. The statistics are alarming because obesity is just one of the myriads of health problems that result from continuous consumption of a poor-quality diet high in junk food. Plus, obesity is an external manifestation of the problem, but the harmful effects of these zero-nutrition foods fester within the body and cause permanent damage. The repercussions are far worse when the habit is inculcated at a tender age. Junk food can cause memory and learning problems as well as fatigue and weakness among children. Further, advertisement specifically designed to influence young minds into making unhealthy choices is another grave cause of concern.

Since schools are the temples of learning and the place where children spend most of their waking hours, initiating a healthy eating environment in and around the school premises was crucial. Towards this end, regulations have been passed by the Government to ensure that children are exposed to wholesome meals and proper guidance that instill good eating habits.

Background

A Public Interest Litigation (PIL) was filed by an NGO in 2010 seeking a direction banning the sale of junk food and aerated drinks in and around schools (Uday Foundation for congenital defects and rare blood groups Vs. Union of India & Ors.). Pursuant to the PIL, the Hon’ble High Court of Delhi issued a direction to the Central Government to draft detailed guidelines to regulate the sale of junk food and aerated drinks in and around school premises in the country.  

In light of the directions, the Food Safety and Standards Authority of India (FSSAI) has notified the Food Safety and Standards (Safe food and balanced diets for children in school) Regulations, 2020 (“the Regulations”) that prohibits the sale, marketing and promotion of junk food within the school premises and the surrounding vicinity. The said Regulations apply to –

  1. Schools (pre-primary, primary, elementary, secondary, day-care) that provide food within the campus.
  2. Shops/stalls or food outlets which sell food products within fifty meters of the school gate in any direction.
  3. Food Business Operator (FBO)* /Food caterers who supply mid-day meals.

This Regulations inter-alia outlines the roles and responsibilities of the School Authority to ensure safe food and balanced diets on school premises.   

Licensing requirements

  • The School Authority shall get registered as an FBO to sell/provide catering of school meals by itself on the school campus.
  • The School Authority shall mandatorily enter into a contract or transaction with the registered or licensed FBOs under the provisions of the Food Safety and Standards Act, 2006 (“The Act”).
  • The Central or State Department of School Education shall ensure that FBOs contracted by it for the operation of the mid-day meal scheme are registered or licensed under the provisions of the Act.
  • The provisions of Regulations shall be duly complied by FBOs with effect from 01st July 2021.

By registering under the Act, the School Authority shall be liable for the compliance of provisions of the Act and the Rules and Regulations made thereunder. Any violations or non-compliance by the school authority under the Act shall attract penal provisions and penalties including imprisonment.

Prohibition of Junk Food 

  • The School Authority shall ensure that no person shall sell or offer for sale including free sale, or permit sale, of food products high in saturated fat or trans-fat or added sugar or sodium [High in Fat, Salt and Sugar (HFSS) ** or Junk food] in school premises or campus.
  • The School Authority shall ensure that there shall not be any advertisement, banner or wallpaper or direct/indirect promotion of Junk food in school premises or campus.
  • The School Authority has to display a board containing the warning “Do not sell, including free sale or market, or advertise Junk food within school premises or campus” at the entrance gate or gates of the school.
  • No person shall directly or indirectly advertise or market or sell or offer for sale including free sale, or permit sale, of Junk food products in the school campus or to school children in an area within fifty meters from the school gate in any direction.

The School Authorities are made responsible to ensure the sale, advertisement, and promotion of Junk food do not take place even by a third party.  Shops/stalls and food outlets which are running within school premises or within fifty meters of the school gate in any direction shall stop selling all kinds of Junk food products. The Regulations with respect to prohibiting and promoting of junk foods in and around school premises shall come into force only from such date as the Food Authority may, by notification in the Official Gazette, appoint.

Sanitary and hygienic practices

  • The School Authorities shall encourage to adopt a comprehensive program for promoting safe food and balanced diets amongst school children and meet specified benchmarks to convert school campus into ‘Eat Right Campus’ and also follow guidance from “Dietary guidelines for Indians – A Manual” issued by the National Institute of Nutrition and other expert institutions or authorities.
  • The School Authority shall ensure that the FBOs supplying prepared school meals in the school premises are identified and selected food that can be served or sold on the basis of the broad guidelines given in the Schedule to Regulations and as per the directions, issued by the Food Authority or the Commissioner of Food Safety of the State. The School Authority may appoint a Health and Wellness Ambassador or Health and Wellness team, who shall act as the nodal persons to monitor the availability of safe, balanced, and hygienic food.
  • The School Authority may engage with nutritionists, dietitians, nutrition associations or seek parental support to assist in the drafting of the menu for the children, periodically.
  • The crèches or day-cares for infants or children up to the age of twenty-four months old are also expected to serve safe and balanced diets to them. 

Implementation, Monitoring, and surveillance

  • The School Authority/ State Food Authority/ Any public authority like Municipal Corporation or any other local body or Panchayat in an area shall have a system of regular or periodic inspection of school premises to ensure that safe, balanced and hygienic food is served to children.
  • The State Level Advisory Committee (SLAC) constituted under the Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011 shall create a subcommittee consisting of representatives from the Department of School Education, and public health professionals in the field of food and nutrition to monitor the implementation of these regulations and to ensure availability of safe and wholesome food to school children.
  • Implementation of these Regulations is achieved by action or complaint of the School Authorities to concerned Food Safety Authorities.  

PROS:

CONS:

Undoubtedly, Junk food is addictive by nature and spoils children’s physical and mental health at an early age. Objectives of the prohibition of unhealthy Junk food and also monitoring hygienic/nutritious food for children are well appreciated. The Regulations also encourage schools to implement and monitor a balanced food menu for children. Junk food manufactures may change/restrict ingredient limits/compositions of saturated fat or trans-fat or added sugar or sodium in their products to escape from the labeling of their products as Junk food. The Regulations will address all serious problems arising from undernutrition and malnutrition in children who are living in rural areas.

Implementation and enforcement of the Regulations is not easy unless School Authorities create awareness among children about the side effects of eating Junk food and the necessity of nutritious food. It is not easy to label food as Junk food and it requires a regular monitoring system. Some parents will provide Junk food in lunch boxes and the same will defeat the purpose of the Regulations. Majority of shops and outlets near schools sell Junk food to attract children. Small vendors and shopkeepers who keep and sell Junk products would be badly affected by the regulations. Small businesses/manufacturers of food products such as fried chips, bakery items, chocolate bars, candies, chocolates, peppermints, sweet gums, wrapped sweets that cannot be sold near the school would face losses and may also result in closure.  

 Conclusion

The FSSAI has notified and implemented the Regulations after conducting various surveys, research, and consultation with the public, nutritionists, various organizations, and medical experts. Now, the Regulations must be implemented and followed by the School Authorities in letter and spirit without any further delay. 

Manufacturing and Best Before dates to be mandatorily displayed on sweet packages

The FSSAI has also issued Orders on 25th & 30th September 2020 for mandating the compulsory display of Manufacturing date and Best Before date on non-packaged and loose sweets containers/packages/tray holding sweets at the outlet sale.

Image Credits:  Photo by Fábio Alves on Unsplash

The FSSAI has notified and implemented the Regulations after conducting various surveys, research and consultation with the public, nutritionists, various organisations and medical experts. Now, the Regulations must be implemented and followed by the School Authorities in letter and spirit without any further delay.

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Impact of Supreme Court ruling pertaining to calculation of Provident Fund contribution on Allowances

The Hon’ble Supreme Court, in a recent judgement, answered the question of whether “special allowances” would fall within the expression “basic wages” for Provident Fund (PF) contribution in the affirmative. Interpreting the provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952 (“PF Act”) as a beneficial social welfare legislation, the Court affirmed the PF authorities’ factual conclusion that the allowances in question were essentially a part of the basic wage camouflaged as part of an allowance so as to avoid deduction and contribution to the provident fund account of the employees.

In essence, the Court reiterated the principle laid down in prior rulings that where the wage is universally, necessarily and ordinarily paid to all across the board, such emoluments are basic wages and employers had to expressly prove the special treatment in the special allowance for it to be kept out of the purview of calculations for PF purposes.

 

Background

The PF Act is a social security legislation enacted to help ensure that both employees and employers contributed towards a superannuation fund for the purpose of retirement benefits. Per the PF Act, all employees are required to contribute 12% of their basic wages, dearness allowance, cash value of any food concession and retaining allowance, if any with the employer contributing a matching 12%.

 

Basic Wages under Section 2(b)(ii) read with Section 6 of the PF Act is defined as “all emoluments which are earned by an employee while on duty or [on leave or on holidays with wages in either case] in accordance with the terms of employment and which are paid or payable in cash to him, but does not include:

  • the cash value of any food concession;
  • any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or any other similar allowances payable to the employee in respect of his employment or of work done in such employment;
  • any presents made by the employer.

The phrase “or any other similar allowance” has not specifically been defined in the PF Act or related schemes and has thus been a subject of litigation for several decades. Over the year, companies have been structuring the salary paid to employees to include various allowances, including special allowance. However, in all instances per the understanding of the PF Act, employers have only been paying contribution on Basic Salary, Dearness Allowance and Retaining Allowance or such equivalent components. The PF authorities have usually contended that ‘special allowances’ should be included for the purpose of calculation of contribution. The Hight Courts in India have taken varying views on the subject matter pertaining to contribution on allowances which had resulted in various appeals pending before the Supreme Court of India.

 

Supreme Court Decision on 28th February, 2019[1]

Various appeals[2] were preferred before the Supreme Court questioning whether various types of allowances such as special allowance, travel allowance, HRA, food allowance, etc. were to be construed as ‘basic wages’ for the purpose of calculation of contribution. The petitioners/employers had used the argument that the term ‘basic wages’ had certain specific exceptions and only such payment that had been earned by the employee in accordance with the terms of the employment was to be included for calculation of provident fund. The PF authorities, on the other hand used the principle of ‘universality’, stating that only incentive payments linked to output could be excluded from the calculation of provident fund.

 

The Hon’ble Supreme Court dismissed the appeals by the employers (except the appeal by the RPFC in the Vivekananda Vidyamandir case) and concluded, relying on the principle of universality, that all payments which were made to all employees or categories/classes of employees without discrimination and which are not specifically ‘variable’ in nature and fact or linked to certain incentive for greater output, would be construed as ‘basic wages’ and thus provident fund contribution was to be made on them. For an amount to be construed as variable in nature it would need to be demonstrated that the said amounts were payable on account of employees contributing beyond any normal work that would usually be expected of them; or that it would be payable to employees only if they availed certain opportunities.

 

The Supreme Court relied on some of its previous decisions for its conclusions, namely:

  • Whatever is payable by all concerns or earned by all permanent employees had to be included in basic wage for the purpose of deduction under Section 6 of the Act. It is only such allowances not payable by all concerns or may not be earned by all employees of the concern, that would stand excluded from deduction.[3]
  • Any variable earning which may vary from individual to individual according to their efficiency and diligence will stand excluded from the term ‘basic wages’.[4]
  • Where the wage is universally, necessarily and ordinarily paid to all across the board such emoluments are basic wages. Where the payment is available to be specially paid to those who avail of the opportunity is not basic wages. Conversely, any payment by way of a special incentive or work is not basic wages.[5]
  • That the Act was a piece of beneficial social welfare legislation and must be interpreted as such.”[6]

Impact of Supreme Court Decision

The principles laid out by the Supreme Court, although not new, are a welcome clarification on the position of allowances with respect to the calculation of provident fund contribution. From an employee perspective, employees’ net take home salary is also likely to be impacted by the decision.

 

However, the possibility of the decision having a retrospective effect might exasperate employers. This is on account of the fact that the judgement interprets an existing provision in the law and does not create any new provisions. The retrospective effect may require employer to cover the shortfall in contribution for the past year but additionally pay interest and damages as well.

 

It may also be noted that the Supreme Court decision to include allowances as part of basic wages has primary financial implications in connection to those domestic employees whose salary (on which PF contributions were being paid i.e. basic salary and dearness allowance) is less than INR 15,000 per month, as well as all international workers.

 

Employers are advised to revisit their policies and salary structures and start ensuring that all components of salary which are not discretionary or variable in nature are included for the purpose of PF contributions. Employers are also recommended to conduct audits to ascertain potential past non-compliances / shortfalls in contributions.

 

The matter is also currently sub judice with the management of Surya Roshni Ltd. having filed a review petition before the Supreme Court. It also remains to be seen if the EPFO would take a more lenient stance and allow employers to rectify past non-compliances without incurring the additional cost of interest and damages.

 

References:

[1] In connection with Civil Appeal no. 6221/2011, 3965-66/2013, 3969-70/2013, 3967-68/2013 and Transfer Case no. 19/2019 (arising out of TP(C) no. 1273/2013)

[2] Appeals considered jointly: (i) The Regional Provident Fund Commissioner (“RPFC”), West Bengal v/s Vivekananda Vidyamandir and Others (Kolkata High Court); (ii) Surya Roshni Ltd. vs. Employees Provident Fund and others (Madhya Pradesh High Court); (iii) U-Flex Ltd v/s EPF and another; (iv) Montage Enterprises Pvt. Ltd. v/s EPF and another (Madhya Pradesh High Court); (v) The Management of Saint-Gobain Glass India Limited v/s The RPFC, EPFO (Madras High Court).

[3] (i) Bridge and Roof Co. (India) Ltd. vs. Union of India, (1963) 3 SCR 978

[4] Muir Mills Co. Ltd., Kanpur Vs. Its Workmen, AIR 1960 SC 985

[5] Manipal Academy of Higher Education vs. Provident Fund Commissioner, (2008) 5 SCC 428

[6] The Daily Partap vs. The Regional Provident Fund Commissioner, Punjab, Haryana, Himachal Pradesh and Union Territory, Chandigarh, (1998) 8 SCC 90

Image Credits: Image by Shutterbug75 from Pixabay 

Employers are advised to revisit their policies and salary structures and start ensuring that all components of salary which are not discretionary or variable in nature are included for the purpose of PF contributions. Employers are also recommended to conduct audits to ascertain potential past non-compliances / shortfalls in contributions.

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