Legal Compliances Required For The Staffing Industry

Subject: CLRA Mutual Rights and Duties

Dear All,

In fact, many of the clients of the Staffing Industry insist on compliance with the Contract Labour (Abolition & Regulation) Act 1970 [CLRA]. The clients, without understanding the implications of CLRA and the industry reciprocating it just for the sake of getting the business, undertake its compliance without understanding that compliance with CLRA is not a one-way route. It involves mutual duties and responsibilities.

It is the basic rule of CLRA compliance that the contractor cannot get a license without registration by the principal employer. Therefore, one needs two hands to clap.

The relevant provisions for beginning the compliance under CLRA are:

The principal employer needs to do the following:

7. Registration of certain establishments.-

(1) Every principal employer of an establishment to which this Act applies shall, within such period as the appropriate Government may, by notification in the Official Gazette, fix in this behalf with respect to establishments generally or with respect to any class of them, make an application to the registering officer in the prescribed manner for registration of the establishment: Provided that the registering officer may entertain any such application for registration after the expiry of the period fixed in this behalf if the registering officer is satisfied that the applicant was prevented by sufficient cause from making the application in time.

(2) If the application for registration is complete in all respects, the registering officer shall register the establishment and issue to the principal employer of the establishment a certificate of registration containing such particulars as may be prescribed.

8. Revocation of registration in certain cases.- If the registering officer is satisfied, either on a reference made to him in this behalf or otherwise, that the registration of any establishment has been obtained by misrepresentation or suppression of any material fact, or that for any other reason the registration has become useless or ineffective and, therefore, requires revocation, the registering officer may, after giving an opportunity to the principal employer of the establishment to be heard and with the previous approval of the appropriate Government, revoke the registration.

9. Effect of non-registration.- No principal employer of an establishment, to which this Act applies, shall--

(a) in the case of an establishment required to be registered under section 7, but which has not been registered within the time fixed for the purpose under that section,

(b) in the case of an establishment the registration in respect of which has been revoked under section 8, employ contract labour in the establishment after the expiry of the period referred to in clause (a) or after the revocation of registration referred to in clause (b), as the case may be.

An application has to be made in Form I, and a certificate will be issued in Form II.

The contractor is required to do the following:

12. Licensing of contractors.-

(1) With effect from such date as the appropriate Government may, by notification in the Official Gazette, appoint, no contractor to whom this Act applies shall undertake or execute any work through contract labour except under and in accordance with a license issued in that behalf by the licensing officer.

(2) Subject to the provisions of this Act, a license under subsection (1) may contain such conditions including, in particular, conditions as to hours of work, fixation of wages, and other essential amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance with the rules, if any, made under section 35 and shall be issued on payment of such fees and on the deposit of such a sum, if any, as security for the due performance of the conditions as may be prescribed.

13. Grant of licenses.-

(1) Every application for the grant of a license under subsection (1) of section 12 shall be made in the prescribed form and shall contain the particulars regarding the location of the establishment, the nature of the process, operation, or work for which contract labour is to be employed and such other particulars as may be prescribed.

(2) The licensing officer may make such an investigation in respect of the application received under subsection (1), and in making any such investigation, the licensing officer shall follow such a procedure as may be prescribed.

(3) A license granted under this chapter shall be valid for the period specified therein and may be renewed from time to time for such a period and on payment of such fees and on such conditions as may be prescribed.

14. Revocation, suspension, and amendment of licenses.-

(1) If the licensing officer is satisfied, either on a reference made to him in this behalf or otherwise, that--

(a) a license granted under section 12 has been obtained by misrepresentation or suppression of any material fact, or

(b) the holder of a license has, without reasonable cause, failed to comply with the conditions subject to which the license has been granted or has contravened any of the provisions of this Act or the rules made thereunder, then, without prejudice to any other penalty to which the holder of the license may be liable under this Act, the licensing officer may, after giving the holder of the license an opportunity to show cause, revoke or suspend the license or forfeit the sum, if any, or any portion thereof deposited as security for the due performance of the conditions subject to which the license has been granted.

(2) Subject to any rules that may be made in this behalf, the licensing officer may vary or amend a license granted under section 12.

An application is to be made under Form IV, and the license will be issued under Form VI.

Next time when you undertake compliance with CLRA, the industry needs to inform the client of mutual duties and responsibilities.

With Regards,

Advocates & Notaries - Legal Consultants - HR

E-mail: rajanassociates@eth.net

Mobile: 9025792684.

Subject: Insubordination in the Temping Industry

Dear All,

Insubordination is a major issue that needs to be addressed in HR within the Temping and Staffing Industry. Clients often report instances of insubordination by the temporary employees.

Upon receiving such reports from the client, the Temping Company must ensure that the alleged insubordination is proven and intentional. In the context of employment matters, insubordination may manifest as acts such as challenging the authority of a superior, engaging in behaviors that undermine or humiliate a superior, using disrespectful language towards a superior, or engaging in actions that compromise loyalty. The determination of insubordination depends on the specific circumstances of each case. The impact on office administration and discipline is also a crucial consideration.

In cases of reported insubordination, the appropriate follow-up action may involve issuing a warning letter documenting the insubordinate behavior. It is essential to phrase the warning letter in a manner that acknowledges the direct supervision by the client, while also being tactful.

This process is an integral part of the protocol that the Temping Company must adhere to in managing instances of insubordination.

With Regards,

Advocates & Notaries - Legal Consultants - HR

Email: rajanassociates@eth.net

Mobile: 9025792684

Subject: Whether Staffing Industry is Considered an Industry?

A confusion may arise in the minds of HR practitioners in the Staffing & Flexi Staffing Industry regarding whether it falls within the definition of an industry. Section 2(j) of the Industrial Disputes Act needs to be referred to, which defines "industry" as any systematic activity carried out through cooperation between an employer and their workers (whether directly employed or through an agency, including a contractor) for the production, supply, or distribution of goods or services aimed at satisfying human wants or wishes (excluding spiritual or religious desires). This definition includes activities such as those of the Dock Labour Board under the Dock Workers (Regulation of Employment) Act, 1948, and sales or business promotion activities by an establishment. However, it excludes certain operations like agricultural activities that are not integrated with other activities, hospitals, educational institutions, charitable organizations, among others.

The definition provided above clarifies that the Staffing & Flexi Staffing Industry falls within the realm of providing services through a contractor, thereby making the relevant provisions of the Industrial Disputes Act applicable.

With Regards,

Advocates, Notaries, and Legal Consultants for the Staffing and Recruiting Industry

E-mail: rajanassociates@eth.net

Phone: 9025792684, 9025792634

Subject: Inclusion of Arbitration Clause in Flexi Staffing Agreements

Dear All,

The Flexi Staffing Industry is burdened with the problem of chasing payments from the Clients, which has become a perennial issue. The reward for the effort, which is the essence of the Staffing Industry, is taken away, and these unpaid invoices become bad debts.

This is on account of the absence of protective clauses in the Staffing Agreement.

The solution for this is to include an Arbitration clause. This will help the Industry to have some hold on the Client in recovering the dues.

The advantage of including this clause will result in a protective step being initiated in accordance with this clause when there is a default without incurring heavy costs of Court Fees by invoking the Arbitration Court's help by requesting the Court to issue a direction to the Client pending the Arbitration proceedings. This will ultimately protect the recovery process of outstanding invoices.

The Industry should make a beginning if the clause is already not there in their Template. This is critical for Business and reduces the risk and will aid in the timely collection of dues.

With Regards,

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

Subject: Typical Arbitration Clause

Following the earlier post, arbitration by itself means referring the dispute between the client and the agency to an arbitral panel instead of rushing to court. This saves time and money. The typical clause can be like this:

"In the event of any dispute, difference, or question arising out of or in respect of this agreement or the commission of any breach of any terms thereof or of compensation payable thereof or claim made by either of the parties against the other in any manner whatsoever in connection with it, the same shall be referred to a Sole Arbitrator to be selected and appointed by mutual agreement for arbitration as provided in the Arbitration and Conciliation Act 1996 and Rules framed therein. The decision or award so given by the Single Arbitrator shall be final and binding on the parties hereto. Initially, the costs of the arbitration shall be borne equally by both parties, and the award shall tax the costs of the arbitration the party against whom the award is passed."

Suitable modifications can be made depending upon the need. The advantage of having a sole arbitrator is to reduce costs. Please see the Arbitration and Conciliation Act 1996 for more details on the process.

With Regards,

Advocates & Notaries & Legal Consultants for the Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

Tim Roth, Chief Legal Officer of Manpower Inc. in Milwaukee, a Fortune 500 Company, reported in his blog that he conducted a survey of the finest Employment Lawyers in the USA to get their answers to the following question: What are the top ten employment law issues most likely to wake you up screaming in the middle of the night? Here are the answers:

1. Inadequate knowledge of employment law basics
2. Executive misconduct
3. Any form of discrimination
4. Wage and hour violations
5. Retaliation
6. Inadequate investigation
7. Failure to follow policies
8. Bad documentation/communication
9. Emotional rather than fact-based decisions
10. Inconsistency

This information equally applies to the Indian Staffing and Recruiting Industry. Thanks to Tim for bringing this to our attention.

For more information, please visit the link [link no longer exists - removed].

With Regards,
Advocates & Notaries & Legal Consultants for the Recruiting & Staffing Industry
E-mail: rajanassociates@eth.net
-9025792684-9025792634

Subject: Misconduct Termination

Dear All,

Many times Staffing Industry Consultants and HR Managers are confronted with the following question:

Can we fire a Temporary Employee sent to the Client for working without giving a notice period due to misbehavior, or if he is found drunk during working hours, do we still have to pay the notice period?

Section 13 of the Delhi Shops Act lists the Acts and omissions constituting misconduct. For the purpose of Section 30, misconduct shall include the following acts and omissions on the part of an employee:
(a) willful insubordination or disobedience, whether or not in combination with another, of any lawful and reasonable order of a superior;
(b) going on an illegal strike or inciting, abetting, or instigating or acting in furtherance thereof;
(c) willful slowing down in the performance of work, or abetment, or instigation thereof;
(d) theft, fraud, misappropriation, or dishonesty in connection with the employer's business or property;
(e) habitual absence without leave, overstaying the sanctioned leave without sufficient grounds, or proper and satisfactory explanation, or habitual late attendance;
(f) commission of any act subversive of discipline or good behavior on the premises of the establishment, such as drunkenness, riotous, disorderly, or indecent behavior, gambling, or holding meetings without the previous permission of the employer or taking or giving bribes or any illegal gratification whatsoever;
(g) habitual neglect of work or gross or habitual negligence;
(h) willful damage to work in process or to any property of the establishment;
(i) disclosing to any unauthorized person any information regarding the processes of the establishment which may come into the possession of the employee in the course of his work.

Therefore, drunkenness will come under (f) above.

Section 30: Notice of dismissal

(1) No employer shall dispense with the services of an employee who has been in his continuous employment for not less than three months without giving such person at least one month's notice in writing or wages in lieu of such notice:

Provided that such notice shall not be necessary where services of such employee are dispensed with for misconduct, after giving him an opportunity to explain the charge or charges against him in writing.

Therefore, you will have to follow the procedure of first getting a report from the Client on the misconduct and then issue a Show cause Notice and conduct an Enquiry by appointing an Enquiry Officer's report and act based on the Enquiry officer's report. This is a safe and secure process. However, many of the Temporary Employees, considering their future, will opt to resign, facilitating the exit process.

The reference to the Delhi Act is for illustration, and each report of "Misconduct" has to be tackled in accordance with the Shops and Establishments Act applicable to that State where the Temporary Employee is working.

With Regards,

Advocates & Notaries - Legal Consultants - HR

E-mail: rajanassociates@eth.net

Mobile: 9025792684

IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES

Having been focused on the Staffing Industry in India, which is at its crucial stage, and with our long-standing experience of 30 years in direct Litigation Support and acting for PSUs and Corporates, along with present counseling in the Staffing Business for important players in the Staffing Industry, we have always been focused on the analysis of proactive and preventive steps Staffing Companies can and should take to avoid claims and liability.

Despite these efforts, it seems that Lawyers and Consultants end up doing more damage control in Courts and Tribunals. Through this damage control, many lessons are learned. This is a continuing effort and cannot be viewed on a short-term basis.

With each matter, the Staffing Company's legal team has always made an effort, and during the course of the case and certainly at the end, to talk about lessons learned. While there are numerous lessons, and each perspective could be the subject of a book on the topic, the following are a few among the many key questions, of which this is the first part:

1. Many times the contract signed with the employee is styled as a Fixed-Term Contract with a stipulation for termination. Why is there litigation on termination?

The law is not clear since there is no positive provision in the Industrial Disputes Act as the action for termination in a Fixed-Term Contract hinges on the exclusion provided under Sec 2(oo) of the Industrial Disputes Act. Therefore, the application of the exclusion by the Employer is subject to the Redressal Mechanism provided in the Act, and with different layers of redressal, the damages that it could cause to the Staffing Company on an order of reinstatement could be onerous. Clients may insist on termination without Notice pay, but the best bet is to have a secure termination process based on sound legal advice.

With Regards,

Advocates & Notaries - Legal Consultants-HR

E-mail: rajanassociates@eth.net

Mobile: 9025792684 - 9025792634

Subject: ID Card for Temporary Workers

Dear All,

In continuation of our earlier post on the subject of IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES:

In the Temping Industry, a common question like this keeps cropping up:

I am designing ID cards for temporary employees. Is it important to mention the employee status as "temporary employee" or is the name and designation enough?

Answer: There need not be any doubt, the form is mandated in the CLRA Rules.

76. Employment card.-
(I) Every contractor shall issue an employment card in Form XIV to each worker within three days of the employment of the worker.
(II) The card shall be maintained up to date, and any change in the particulars shall be entered therein.

Therefore, if you just say Form XIV of the CLRA Rules 1971, it is sufficient. You can refer to the form in the rules and go by it.

With Regards,

Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry

Email: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

In the Staffing or Temping Industry, the following can be considered as pillars of Legal Compliance:

1. Compliance-Statutory - Liaison with Departments on the following:

- Labour Welfare Fund Act Statement of Contribution along with a cheque to be submitted to the Authority Concerned.
- The Profession Tax Act Monthly Returns along with a cheque.
- The Contract Labour (R&A) Act, 1970 Half-Yearly Return - by Contractor to be submitted to Asst. Labour Commissioner.
- The Maternity Benefit Act, 1961 Annual Return.
- The (National & Festival Holidays) Act, 1963 Annual Return.
- The Minimum Wages Act, 1948 Annual Return.
- The Contract Labour (R&A) Act, 1970 Annual Return by Principal Employer.
- The Payment of Wages Act, 1936 Annual Return.
- The Employees Provident Fund Act, 1952 3A & 6A Annual Individual Returns & Returns of Contributions to the Regional Provident Fund Commissioner.
- The Employees State Insurance Act, 1948 Summary of Contribution.
- The Contract Labour (R&A) Act, 1970 Renewal of Licence.
- The Payment of Bonus Act, 1965 Annual Return.
- Shops & Establishment Act Renewal & Registration Certificate.

Temporary Employees

Joining Compliance

Monthly Compliance of Statutes in respect of the Temps.

Exit/Resignation/Severance/Termination Compliance.

2. Compliance-Audit - Conduct Audit, i.e., verification of the Compliance done under (1) either monthly/quarterly, Half-yearly, and improve/enforce compliance. An audit report should follow the Audit.

3. Legal Consultation & Litigation Support - Provide Legal Support and advisory services for (1) & (2).

The above can be done Branch-wise. If all three are independent and existing and report their activities by way of MIS, any Staffing or Temping organization can have trouble-free functioning. These can exist within the very organization itself or "out-sourced." Of course, the cost is involved, but the cost will be nothing when compared to encountering and settling claims out of violations.

With Regards,

Advocates & Notaries - Legal Consultants-HR

Email: rajanassociates@eth.net

Mobile: 9025792684.