liabilities of director
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This article is written by Nirmalya Bhattacharya, pursuing a Certificate Course in Labour, Employment and Industrial Laws for HR Managers from LawSikho.com. Here he discusses “civil and criminal liabilities of directors, managers and officers of the company for violation of labour legislations”. 

Directors, Managers or Officers mostly constitute the definition of employer for any labour legislation in India. Being a part of the employer category, they individually, or as an organization is responsible for basic functions like payment of the employees in proper right time and legally justified amount, maintaining health, safety and welfare measures in the workplace, providing them with the mutually agreed benefits including leave & holidays and treating employees fairly. Employers are the custodians of most of the statutory provisions and hence they need to abide by the laws with diligence. Any negligence on their behalf, i.e., any violation of the legal provisions can result in civil as well as criminal offences.

For the purpose of this article, I am taking into consideration the following acts and shall bring out in detail about the civil and criminal responsibilities of the Directors and/ or Managers and/ or Officers of a company.

  1. Minimum Wages Act 1948
  2. Payment of Wages Act 1936
  3. The Contract Labour (Regulation and Abolition) Act 1970
  4. The Factories Act 1948
  5. The Industrial Disputes Act 1947

Statute 1: Minimum Wages Act 1948

Type of Violation

Applicable Section

Concerned Responsibility lies upon

Nature and Consequence of Violation

Failure to Maintain Registers

22A

In case of Factory, Factory Manager

CEO or HR Manager or any other officer can also be accountable if they are responsible for the supervision and control of the employees or for payment of wages

Criminal 

Fine up to Rs.500/-

Failure to pay minimum wage as per employee’s class of work 

22

In case of Factory, Factory Manager

CEO or HR Manager or any other officer can also be accountable if they are responsible for the supervision and control of the employees or for payment of wages

Criminal.

Up to 6 months’ imprisonment or Rs.500/- as fine or both.

Failure of working hour fixation/ day of rest/ payment of wage for working in the day of rest (As per Section 13)

22

In case of Factory, Factory Manager

CEO or HR Manager or any other officer can also be accountable if they are responsible for the supervision and control of the employees or for payment of wages

Criminal 

Up to 6 months’ imprisonment or Rs.500/- as fine or both.

For any claim as per Section 20

20(3)

In case of Factory, Factory Manager

CEO or HR Manager or any other officer can also be accountable if they are responsible for the supervision and control of the employees or for payment of wages

Civil – In cases where the paid wage is less than the minimum wage, the difference is to be paid by the employer along with the compensation as it will be decided by the authority. This compensation will not exceed ten times the difference between the paid wage and the minimum wage, where the minimum wage is higher.

In any other case, e.g., for the payment of remuneration for the days of rest, fixation of working hour or overtime, a summation of the due amount and the compensation not above ten rupees.

As per Section 20 sub-section 3

 

Moreover, as per section 22C(2) of the act, when any offence in contravention to the provisions of the MW Act, has been committed by a company and either any Director or Manager or Secretary or any other officer had shown proven evidence of consent or encouragement or negligence for violation, he will be also treated as guilty and shall be liable to be judged and punished accordingly. In such cases, the offence will be treated as a criminal offence and shall be proceeded against and punitive action shall be taken accordingly.

Statute 2: Payment of Wages Act 1936

Type of Violation

Applicable Section

Concerned Responsibility lies upon

Nature and Consequence of Violation

Untimely payment of wages to existing or terminated employee/ Unlawful deduction from the wages by the employer/ Unlawful fine imposition on an employed person by the employer/ wrong deductions for absence from duty or for damage or loss made or for services rendered or for recovering given advances and loans or for payment to cooperative or insurance schemes

20(1)

For factories, the responsible person will be the Factory Manager as per Factories Act 1948.

In case of industrial and other establishments or in other cases, it can be any person who is responsible for the supervision and control of such purpose, which means that it can be the CEO, Manager or any other officer.

Criminal – Fine of not less than Rs.1500/- and maximum up to Rs.7500/-

Wrong wage period fixation/ improper day for payment/ Wrong mode of payment, i.e., not using proper currency standard/ improper maintenance of registers for fines and all realizations and simultaneously not using the realized money for beneficial purpose of the persons employed/ not maintaining register for deduction of damage and loss/ not displaying act abstract as notice

20(2)

For factories, the responsible person will be the Factory Manager as per Factories Act 1948.

In case of industrial and other establishments or in other cases, it can be any person who is responsible for the supervision and control of such purpose, which means that it can be the CEO, Manager or any other officer.

Criminal – Fine up to Rs.3750/-`

Not designating the nominated person as per Section 3 

9(c) of the POW(Amendment) Act 2005; Section 20(2A)

Employer, i.e., who is responsible for such designation or nomination.

Criminal – Fine up to Rs.3000/-

Not maintaining registers and records/ intentional refusal to present information and return/ intentional presentation of false information/ giving wrong answers to questions which are  important to obtain information

20(3)

Any person designated by the employer for performing such responsibilities

Criminal – Fine ≥Rs.1500/- and ≤Rs.7500/-`

Obstructing the inspector in performing his duties/ not producing registers or records on demand by the inspector/ preventing any other person for necessary examination by the inspection in line with the act

20(4)

Any person responsible for such duties. Can be anybody in an establishment

Criminal – Fine ≥Rs.1500/- and ≤Rs.7500/-`

Repetition of guilt for same offence under the act. 

20 (5)

Any person responsible for such duties. Can be anybody in an establishment

Criminal – imprisonment of minimum 1 month up to 6 months or fine ≥Rs.3750/- and ≤Rs.22500/- or both

Failure or willful negligence to pay wage to any employed person within the stipulated date

20(6)

Any person responsible for such duties. Can be anybody in an establishment as will be delegated by the employer

Criminal – Fine up to Rs.750/- for each day of failure or willful negligence

For unlawful deduction from wages/ delay to pay wages

15(3)

Employer or any other person responsible as per the act, i.e., to whom delegation has been made by the employer as per provision of the act

Civil – Ten times of the wrong deduction or compensation of ≥Rs.1500/- and ≤Rs.3000/- for delay in payment of wages. 

Even if the deduction or delay of wages is paid before the disposal of application, the compensation may be directed not more than Rs.2000/-

Statute 3: Contract Labour (Regulation & Abolition) Act 1970

Type of Violation

Applicable Section

Concerned Responsibility lies upon

Nature and Consequence of Violation

Obstructing the Inspector to discharge his duties or intentional negligence to provide and facility for the purpose of inspection, inquiry, examination or investigation

22(1)

Principal Employer – Can be Occupier/ factory Manager for a factory. For other establishments the person who is responsible for the overall business of the said establishment.

In case of Contractor, the contractor as per the act

Criminal –  Imprisonment up to 3 months or fine up to Rs.500/- or both

Willful disobedience to furnish any register/ record/ document upon demand by the inspector

22(2)

Principal Employer – Can be Occupier/ factory Manager for a factory. For other establishments the person who is responsible for the overall business of the said establishment.

In case of Contractor, the contractor as per the act

Criminal – Imprisonment up to 3 months or fine up to Rs.500/- or both

Violation of any provision of the act or any relevant rules for a pattern of  deployment of contract labour or violates any clause of the granted licence

23

Principal Employer – Can be Occupier/ factory Manager for a factory. For other establishments the person who is responsible for the overall business of the said establishment.

In case of Contractor, the contractor as per the act

Criminal – Imprisonment up to 3 months or fine up to Rs.1000/- or both.

In case of continuation of the violation, Rs.100/- for each day of the violation after the first conviction.

For any other violation for which no other penalties are mentioned anywhere

24

Principal Employer – Can be Occupier/ factory Manager for a factory. For other establishment the person who is responsible for the overall business of the said establishment.

In case of Contractor, the contractor as per the act

Criminal – Imprisonment up to 3 months or fine up to Rs.1000/- or both.

 

However, this is to be mentioned as per section 25(2) of the Act, when an offence in contravention to any provision of the act has been done by a company, and it is proved that it has been done via any consent or negligence on the part of any of the Directors, Manager, Managing agent or any other officer of the Company, he will be considered guilty and shall be proceeded against or punished as it will deem fit.

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Statute 4: The Factories Act 1948

Type of Violation

Applicable Section

Concerned Responsibility lies upon

Nature and Consequence of Violation

General penalty – in case of any factory violating any provision of the act or of any rules under the act

92

The Occupier and the Manager each.

Occupier means any of the Directors who is being appointed as Occupier of the Factory.

Criminal – Imprisonment up to 2 years or fine up to Rs.100000/- or both.

If the violation continues after awarding the penalty, further fine up to Rs.1000/- for each day of the violation.

In case of death or serious bodily injury due to dangerous operations, the fine will not be less than Rs.25000/- or Rs.5000/- respectively.

Repetitive violation of the provision punishable under section 92.

94

The Occupier and the Manager each

Criminal – Imprisonment up to 3 years or fine ≥Rs.10000/- and ≤Rs.200000/- or both. In case of death or serious bodily injury due to dangerous operations, the fine will not be less than Rs.35000/- or Rs.10000/- respectively.

Obstructing Inspector or failure to produce registers/ records

95

Applicable to all, not only to the occupier or the Manager

Imprisonment up to 6 months or fine up to Rs.10000/- or both

Disclosure of result of analysis of the sample collected by the inspector

96

Applicable to all

Imprisonment up to 6 months or fine up to Rs.10000/- or both

Violation of laws related to disclosure of hazardous process as per section 41B, 41C and 41H of the act and the rules

96A(1)

Whoever fails to comply with the provisions, especially the Occupier and the Manager

Imprisonment up to 7 years or fine up to Rs.200000/- or both. In case of continuation fine up to Rs.5000/- for each day after the first violation. 

If the violation continues beyond 1 year after the date of conviction, imprisonment up to 10 years may be awarded to the offender.

For using false certificate of fitness awarded to an adolescent 

98

User of the false certificate, i.e., the worker as applicable

Or who allowed such usage knowingly, i.e., can be Manager of the factory or any other officer responsible for the deployment of the workers

Criminal – Imprisonment up to 2 months or fine up to Rs.1000/- or both.

 

Statute 5: Industrial Disputes Act, 1947

Type of Violation

Applicable Section

Concerned Responsibility lies upon

Nature and Consequence of Violation

Lay-off or retrenchment without permission from the appropriate government

25Q

CEO or Managing Director.

No provision for delegation to other officers or Managers

Criminal – imprisonment up to 1 month or fine up to Rs.1000/- or both.

Violation of provision for application of consent of closure as per section 25O (1)

25R(1)

CEO or Managing Director.

No provision for delegation

Criminal – imprisonment up to 6 months or fine up to Rs.5000/- or both.

Ignoring and acting against the refusal to grant permission for closure as per section 25O(2) 

or

refusal to restart an undertaking as per section 25P

25R(2)

CEO or Managing Director.

No provision for delegation

Criminal – imprisonment up to 1 year or fine up to Rs.5000/- or both.

In case of continuation of the violation further fine of Rs.2000/- per day.

Committing unfair labour practice

25U

CEO or Managing Director.

Or any workman or any trade union, whether registered or not

Criminal – imprisonment up to 6 months or fine up to Rs.1000/- or both.

Illegal lock-out as per the act

26(2)

CEO or Managing Director.

Criminal – Imprisonment up to 1 month or fine up to Rs.1000/- or both

Section 26(2)

Encouraging illegal lock-out or Strike

27

Any person. Can  be Manager or Officers as well

Criminal – imprisonment up to 6 months or fine up to Rs.1000/- or both.

Willful monetary support to illegal strike or lock-out 

28

Any person. Can  be Manager or Officers as well

Criminal – imprisonment up to 6 months or fine up to Rs.1000/- or both.

Violation of Settlement or award

29

As applicable either to the employer or the workman

Criminal – imprisonment up to 6 months or fine or both.

In case of continuation of such offence fine up to Rs.200/- per day till the offence continues in addition to the aforesaid penalty

Disclosure of confidential information

30

Any person responsible for such act whether employer or workman

Criminal – imprisonment up to 6 months or fine up to Rs.1000/- or both.

For not providing notice and compensation to workman, working for at least one year prior to the closure

30A

Employer as per the act

Criminal – imprisonment up to 6 months or fine up to Rs.5000/- or both.

Changing conditions of service at the time of proceedings

31(1)

Employer, i.e., CEO or MD

Criminal – imprisonment up to 6 months or fine up to Rs.1000/- or both.

Any other offence for which no penalty is mentioned anywhere in the act

31(2)

Any employer or workman

Fine up to Rs.100/-

 


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