Legal Compliances Required For The Staffing Industry

Sub:CLRA Mutual rights and Duties

Dear All

In fact many of the Clients of the Staffing Industry insist Compliance of 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 of 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 licence 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 expiry of the period fixed in this behalf, if the registering officer is satified 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 to be revoked, 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.

Application has to be made in Form I and 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 licence issued in that behalf by the licensing officer.

(2) Subject to the provisions of this Act, a licence under sub- section (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 sum, if any, as security for the due performance of the conditions as may be prescribed.

13. Grant of licences.-

(1) Every application for the grant of a licence under sub- section (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 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 investigation in respect of the application received under sub- section (1) and in making any such investigation the licensing officer shall follow such procedure as may be prescribed.

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

14. Revocation, suspension and amendment of licences.-

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

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

(b) the holder of a licence has, without reasonable cause, failed to comply with the conditions subject to which the licence 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 licence may be liable under this Act, the licensing officer may, after giving

the holder of the licence an opportunity of showing cause, revoke or suspend the licence or forfeit the sum, if any, or any portion thereof deposited as security for the due performance of the conditions subject to which the licence has been granted.

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

Application is to be made under Form IV and the Licence will be issued under Form VI .

Next time when you undertake Compliance of CLRA the Industry needs to tell the Client of mutual duties and responsibilities.

With Regards

Advocates & Notaries -Legal Consultants-HR

E-mail : rajanassociates@eth,net,

Mobile : 9025792684.

Subject - Insubordination in Temping Industry

Dear All

Insubordination which is a major issue to be tackled in HR in the Temping and Staffing Industry.

Clients come up with reports of Insubordination by the Temps .

On such a report coming from the Client the Temping Company has to see that such Insubordination needs to be proved and it should be wilful.

In service matters it would include an act of revolt against superior; a challenge to the authority of superior, an agitation against the superior, any act which humiliates, insults or degrades the dignity and decorum of superior's authority, words which deliberately cast a slur or stigma on the superior, language employed to denigrate the superior, condemnation which demoralizes and shatters the public confidence, an act or use of expression which pollutes and militates against loyalty, an unbecoming gesture without words and like matters; what constitutes insubordination depends on facts and circumstances of each case. The offender may not realize the consequences, therefore examination from his angle would be irrelevant. How it is received by the other side, what is the reflection on the administration and discipline of the office would be very relevant. Ref B.M. Baliga vs Vijaya Bank decided on 11 July, 1990 by Karnataka High Court ILR 1991 KAR 4361, 1991 (4) KarLJ 721-

On a report of Insubordination coming the follow up action can be by issuing a warning letter recording the Insubordination. But its language should be so structured that the factum of Direct supervision by the Client should be stated in a couched language.This would be a part of the large process that the Temping Company needs to follow.

With Regards

Advocates & Notaries -Legal Consultants-HR

E-mail : rajanassociates@eth,net,

Mobile : 9025792684

Sub: Whether Staffing Industry is Industry ?
A confusion may come into the mind of the HR practitioners in the Staffing & Flexi Staffing Industry whether it will come within the definition of Industry .
For this Sec 2 (j) of the Industrial Disputes Act has to be read which defines "industry" means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not, - (i) any capital has been invested for the purpose of carrying on such activity; or
(ii) such activity is carried on with a motive to make any gain or profit, and includes - (a) any activity of the Dock Labour Board established under section 5A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1949);
(b) any activity relating to the promotion of sales or business or both carried on by an establishment, but does not include - (1) any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one.
Explanation : For the purposes of this sub-clause, "agricultural operation" does not include any activity carried on in a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951 (69 of 1951); or
(2) hospitals or dispensaries; or
(3) educational, scientific, research or training institutions; or
(4) institutions owned or managed by organizations wholly or substantially engaged in any charitable, social or philanthropic service; or
(5) khadi or village industries; or
(6) any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space; or
(7) any domestic service; or
( any activity, being a profession practised by an individual or body of individuals, if the number of persons employed by the individuals or body of individuals in relation to such profession is less than ten; or
(9) any activity, being an activity carried on by a co-operative society or a club or any other like body of individuals, if the number of persons employed by the co-operative society, club or other like body of individuals in relation to such activity is less than ten;
The portion {"industry" means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes ]}will clarify this as it will come within the supply of Services through a Contractor.
Consequently the relevant provisions of the ID Act will become applicable.
With Regards
Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry
E-mail : rajanassociates@eth,net,
-9025792684-9025792634

Sub: 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 and 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 by including this clause is will result in protective step being initiated in accordance with this clause when there is default without incurring heavy costs of Court Fee by invoking the Arbitration Courts 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 timely collection of dues.

With Regards

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail : rajanassociates@eth,net,

-9025792684-9025792634

Dear All

Sub: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 the 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 modification 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 Recruiting & Staffing Industry

E-mail : rajanassociates@eth,net,

-9025792684-9025792634

Dear All
Tim Roth ,Chief Legal officer of Manpower Inc at Milwaukee a Fortune 500 Company in his Blog has reported 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 equally applies to the Indian Staffing and Recruiting Industry and thanks to Tim for waking us.
For more see : <link no longer exists - removed>
With Regards
Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry
E-mail : rajanassociates@eth,net,
-9025792684-9025792634

Sub: Misconduct Termination-

Dear All


Many a 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 notice period due to misbehavior or if he is found drunk during working ours do we still have to pay the notice period?

Section 13 of the Delhi Shops Act lists the Acts and omission constituting misconduct

for the purpose of Section 30,misconduct shall include the following acts and omission on the part of an employee:
(a) willful insubordination or disobedience, whether or no not in combination with another, of any lawful and reasonable order of superior;
(b) going on an illegal strike or inciting, abetting or instigation or acting in furtherance thereof;
(c) willful slowing down in 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 behaviour on the premises of establishment, such as. drunkenness, riotous, disorderly or indecent behaviour, gambling or holding meeting without 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 if the establishment;
(i) disclosing to any unauthorised person any information in regard to the processes of the establishment which may come into the possession of the employee in the course if his work.

Therefore drunkenness will come within (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 months' 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 Show cause Notice and conduct an Enquiry by appointing an Enquiry Officers report and act based on the Enquiry officers report.This is a safe and secure process .But 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 our long standing experience of 30 years in the direct Litigation Support and acting for PSU‘s and Corporate and present counseling in Staffing Business for important Staffing Industry players 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 the 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 Companies legal Team have always made an effort and during the course of the case and certainly at the end to talk about lessons learned. While they are numerous, and each perspective could be the subject of a book on the topic, the following are a few amongst the many key questions of which this is the first part:

1. Many a times the Contract signed with the employee is styled as Fixed Term Contract with a stipulation for termination, why is that there is 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 exclusion provided under Sec 2 (oo) of the Industrial Disputes Act. Therefore application of the exclusion by the Employer is subject to the Redressal Mechanism provided in the Act and there being different layers of redressal the damages that it could cause to the Staffing Company on an order of re-instatement could be onerous.Clients may insist 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

Dear All

Sub: ID Card for Temporary workers .

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 name and designation is 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

E-mail : 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 cheque to be submitted to the Authority Concerned.

The Profession Tax ACT Monthly Returns along with 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 the 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 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

E-mail : rajanassociates@eth,net,

Mobile : 9025792684.