isf issue paper dec 11

7/28/2019 ISF Issue Paper Dec 11

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Temporary Staffing In India:Issues and Prospects

ISF Discussion Paper

December 2011


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ContentsWhat is a Staffing Company? 1

Mandatory Features and Practices of Staffing Companies 2

Best Practices of Staffing Companies 3

Staffing Companies: The Global Experience 4

Staffing Companies: The Indian Experience 6

Temp Staffing in India: The Pending Reforms Agenda 7

Short Term Issues

A. Overall Issues 8B. Provident Fund 9C. Employees State Insurance 14D. Contract Labour 18Long Term Issues

A. Industrial Disputes Act, 1947 22B. Employees Compensation Act, 1923 25C. Payment of Gratuity Act, 1972 26D. Factories Act, 1948 27E. Shops and Establishment Act 29F. The Employees State Insurance Act, 1948 30G. The Employment Exchanges (Compulsory Notification of Vacancies) Act,

1959 31

H. Contract Labour Act 31I. Service Tax 32


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Temporary Staffing In India: Issues and Prospects, ISF Discussion Paper, December 2011 1

What is a Staffing CompanyA Staffing Company is any enterprise or person, independent of the public authorities,

which provides one or more of the following labour market functions:

a. services for matching offers of and applications for employment

b. services for employing people with a view to making them available to a third party

(user enterprise); and/or

c. other services relating to jobseeking, such as the provision of information, that do not

aim to match specific employment offers and applications.

Staffing company employment refers to employment where people are employed by a

staffing agency, and then hired out to perform his/her work at (and under the supervision

of) the user company. There is no employment relationship between the staffing agency

employee and the user company, although there could be legal obligations of the usercompany towards the staffing agency worker. The staffing agency offers employees a fixed

duration employment contract. The employment is often called temporary work,

temping or temporary staffing. The hiring firm pays fees to the staffing company, and

the staffing company pays the wages. Flexibility for both employee and employer is a key

feature of agency work.

The profile of contract staff in India is diversified. Frontline staff - customer services, sales

and customer prospecting, and telemarketing - account for nearly 80% of deployment.

Technical functions such as installation and commissioning, and repairs and maintenance

make up 15% of deployment, while 3-4% of contract staff are deployed in senior

management positions, including technical specialists and management experts.


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Mandatory Features and

Practices of Staffing

Companies1. Staffing Companies cannot charge employees for finding work

2. Staffing companies must adhere to all labour laws of the land e.g.:

Industrial Dispute Act

Minimum Wages Act

ESIC Act

CLR Act Provident Fund Act

Gratuity Act

Payment of Bonus Act etc.

3. Staffing Companies mandatorily covers each employee with all statutory Employee

benefits as is due to them and as per the statutes laid down in India. For eg. each

employee is covered under Minimum Wages and in most cases are paid wages at par

with the prevalent market range for the specific job. Each employee is paid PF and has

ESIC coverage as laid down in the statutes.

4. As a mandatory practice each staffing company generates and distribute payslips for

each and every temp employee.

5. As a mandatory practice each staffing company needs to run accurate payroll system


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Best Practices of Staffing

CompaniesAs a best practice, staffing companies:

1. Cover the temp workers under additional Group Mediclaim and personal accident

insurance coverage. This is over and above their coverage under ESIC

2. Facilitates opening of Bank Accounts/Payroll Cards for the Temp Workers and each

Temp Worker is either paid salary through an account payee cheque or through direct

bank transfer into their accounts.

3. Organize rewards and recognition programmes for their high performing temp workers

in consultation with the User Companies

4. Provides temp workers with ongoing support to address their issues or concerns around

their employment

5. Provide skill development opportunities to the temp workers in consultation with the

user companies


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Staffing Companies: The

Global ExperienceAccording to a CIETT / BCG report titled Adapting to Change: How private employment

services facilitate adaptation to change, better labour markets and decent work, staffing

companies globally support companies and workers in adapting to seasonal and cyclical

changes in the economy. It notes that the increased incidence of structural changes in

recent years has brought a new set of challenges to economies and labour markets.

Globalisation, demographic evolution, sectoral and IT shifts, unpredictability and complexity

combined with new attitudes to work have resulted in economies across the world

experiencing deep structural shifts. For labour markets, the consequences are severe:

persistent high level of unemployment (which hits young people disproportionately hard),

the need for new skills for new jobs, low occupational and geographic work mobility, a riskof segmentation of labour markets, low labour market participation rates (especially for

women and older workers) and the need to reconcile diverse forms of labour relations with

decent working conditions. According to the report staffing companies are well placed to

enable adaptation to these structural changes. With its international reach and specialised

market knowledge, the sector facilitates adaptation to change in labour markets that are

becoming increasingly complex, volatile and unpredictable.

Some of the key observations made in the study are:

Unemployment and staffing agency work rates follow inverse patterns: The higher the

agency work penetration rate, the lower the unemployment rate.

Staffing services create jobs: In the USA, staffing agency services provided 401,000 new

jobs in 2010, the largest annual growth posted since 1994. In Europe, since the low

point of the economic crisis in 2009, the sector has provided up to mid 2011 at least

900,000 new jobs on top of the 3 million agency workers that have remained employed

throughout the downturn. This builds on the performance during the period from 2002

to 2007 when there were 1.3 million new jobs in the industry.

Staffing agency work does not substitute permanent contracts: 74% of user

organisations would not consider hiring permanent workers as an alternative to taking

on agency workers and 62% of them would not have created jobs if they had no access

to private employment services.

Staffing services contribute to reducing undeclared work (unorganised sector): There is

an inverse correlation between the level of illegal economic activity and the level of

agency work penetration. In Italy, agency work was introduced legally by the

government in 1998 as a means to fight undeclared work. In Belgium, private

employment services play a key role in distributing services cheques turning

undeclared domestic cleaning staff into formal workers.


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Staffing agencies provide a stepping stone: In South Africa, just 15% of workers were in

jobs before accessing agency work; the figure rises to 61% afterwards. In France, just

11% of workers had jobs before they took up agency work, and this figure jumps to 66%

working due to agency work. In Norway, the percentage of people employed jumped

from 16% to 65% due to agency work. In Sweden, labour market participation of agency

workers rose from 34% to 85%.

Staffing agencies help young people to enter and stay in labour markets: 35% ofstaffing agency workers in Europe are under 25 years of age. Agency work is often their

first opportunity to gain work experience.

Target groups benefit from staffing agency services: 66% of staffing agency workers

were unemployed before seeking help from private employment agencies. In addition,

older workers (over 50 years) represent an increasing share of agency workers: in France

and Belgium, the share of older workers as a percentage of agency workers is increasing

at twice the rate of older workers in the wider labour market.

Staffing companies adapt skills to sectoral shifts: In the USA, the professional sector

(i.e. higher skilled agency workers) today accounts for 55% of the staffing market

compared with just 36% back in 1995, reflecting the overall demand for a higher skilledworkforce. In France, the percentage of agency workers placed in service industries has

risen some 10% in the past ten years, reflecting and accompanying the shift to a more

services-oriented economy.

Staffing companies create skills: In 7 European countries (Belgium, France, Luxembourg,

Netherlands, Italy, Spain and Austria), sectoral training funds managed by social partners

have been established to facilitate access to vocational training for agency workers.

More than 500 million are invested every year by these training funds in schemes

specifically designed for agency workers.


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Staffing Companies: The

Indian ExperienceAccording to the CIETT / BCG report, in India, where the labour market is highly fragmented,

organised employment (based on formal, written employment contracts) has been stagnant

for many years leaving unorganised employment (without written employment contracts or

undeclared) that is responsible for some 80% of the workforce. By creating new, formal job

opportunities each year, the temporary staffing industry plays a key role at institutional

level in reducing both unemployment and undeclared work. For the workers, the industry

provides decent work, safe working conditions and a reassurance that they will be paid.

Rights such as social security which temporary staffing industry offer their agency workers

are rare in India where some 350 million workers are not organised formally and so receive

no such entitlements.

According to the TeamLease Temp Salary Primer 2011, India has an estimated 90 million

temp workforce, currently, of which about 500,000 are engaged by the organized sector

(about 0.55%). The contract duration of a typical temp job in India varies between 2 months

to 18 months this is very close to the global mean duration of 3 months to 24 months. The

Indian temp staffing industry has added close to 75,000 temp jobs in 2010-11.

The CIETT / BCG report notes that in emerging markets such as India, where employability is

a significant problem, Temporary Staffing firms are serving a crucial role. They deliver the

specialist knowledge needed to navigate the complex regulatory framework for organised

labour with different labour compliance requirements across the countrys 28 States and 7

territories, and no less than 22 recognised languages. As existing experiences show, one

change in an organisations social security scheme may require 26 different approvals and

many multi-national companies find they dont have the knowledge or the connections to

manage these complexities.


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Temp Staffing In India: The

Pending Reforms AgendaIndia has more than 100 labour laws, more than most other countries of the world.

Moreover, there is considerable over-lapping of several statutory provisions. For example,

there is requirement of a canteen, rest rooms and first aid facilities not only in the Factories

Act, 1948 but also in the Contract Labour (Regulation & Abolition) Act, 1970 and the Inter-

State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979. Lack

of uniformity in coverage both to establishments and employed persons causes a lot of

confusion. Variations in definition of words & expressions used in various labour laws adds

to this. In fact, basic terms such as employed persons and wages have been defined

differently in the various labour laws. A person covered under the labour laws has been

referred to either as an employee (e.g. E.S.I Act, 1948; M.W. Act, 1948; EPF & M.P Act,1952; P.B. Act, 1965; P.G. Act, 1972) or as a workman (e.g. W.C Act, 1923, I EL (S.O) Act,

1946, ID Act, 1947) or as a worker (e.g. Apprentices Act, 1961, Factories Act, 1948) or

simply as an employed person as in the Payment of Wages Act, 1936.

Even in the social security laws of ESI Act, 1948 and the EPF & MP Act, 1952, which define

the term employee in almost identical words, there is a marked difference in scope of the

term wages in these two acts. Under the EPF & M.P. Act, 1952, PF contributions are

payable only on basic wages, dearness allowance, retaining allowance. But under the ESI

Act, 1948, the term wages is very wide and all-embracing.

There is need to move from complexity to simplicity and from multiple labour laws to single

labour code. It may be argued that there are certain practical difficulties to formulate a

single common labour code having uniform definitions all through & applicable to all

categories of employees and establishments. However, a beginning can surely be made in

integrating those enactments, which cover subjects having common objectives. For instance

the T.U Act, 1926, I.E (S.O) Act, 1946 and ID Act, 1947 can be combined into a single law

entitled Industrial Relations Act Similarly, these can be a single Act on wages, covering P.W.

Act, 1936, M.W Act, 1948, P.B. Act, 1965 and E.R. Act, 1976. Like-wise these can be a single

law on social security measures amalgamating W.C act, 1923, E.S.I Act, 1948, E.P.F & M.P

Act, 1952 and M.B. Act, 1961 and P.G Act, 1972. A comprehensive social security cover

could make a single contribution and a single return possible instead of separate

contributions and returns under the E.S.I. Act, 1948 and E.P.F. & M.P. Act, 1952. The

judiciary also faces a difficulty while defining the term or components of Basic Wages.

Different courts have different rulings on PF and ESIC applicability. This has resulted in filing

of various writ petitions across the country by the aggrieved and leads to a tremendous

amount of confusion.

The following are issues that the Indian Staffing Federation would like to submit for

consideration.


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Short Term Issues

A.Overall Issues

1. Rationalization of Inspections:

Each establishment is liable for inspection by several Inspectors with little co-ordination.

There are half a dozen or so Inspectors appointed under various labour laws who drop in

quite often, one after the other, prima facie to look after the compliance of statutory

provisions.

Not only cumbersome provisions of law and procedures which virtually gag the industry are

needed to be done away with but the harassment caused by frequent inspections also have

to be eliminated.

Recommendation

Labour inspections should be regulated in such a manner that it serves the purpose of

guidance in compliance with the statutory provisions, instead of causing harassment. There

should be only one routine annual inspection by all the Inspectors (namely Labour Inspector,

Factory Inspection, ESI Inspector, Provident Fund Inspector, Welfare Inspector, Statistical

Inspector etc), which should be coordinated and organized jointly by different agencies and

that too after reasonable prior notice so that the clerk/officer concerned is there to make

available the requisite records.

Also, as the Inspections happen without any intimation, the person attending the Inspection

may not be aware of the availability of certain documents in their premises. Hence there is a

need for prior intimation.

2. Computerization of Records

Almost every Act requires the employer to maintain a set of registers and submit periodic

returns. The load of paper work involved is enormous. Moreover, the effort spent to

complete these formalities is not commensurate with the utility of such registers, returns

and notices. Besides, there is a lot of duplication and overlapping.

Most companies today have adopted the use of IT to maintain all their records. However,

the Inspecting Officers insist on maintenance of manual registers, which involves enormous

time and paper work.


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Recommendation

It is suggested that Inspecting Officers be directed to accept computerized printouts and not

insist on the maintenance of manual records.

Also as per provisions of the Information Technology Act, 2000, records maintained in

electronic form are admissible as evidence in any court of law. Therefore, all records

maintained in electronic form or in digital form should be admissible and acceptable by one

and all authorities set up under various labour laws.

In addition, the filing of returns other than those that are annual in nature should be

allowed online or in soft copies as duly authorised by the relevant signatory. Gradually all

the returns should be allowed to file online and/or in soft copies.

3. Minimum Wages

Definition

Suggestion

It is suggested that a clear notification is issued as to what is to be considered as Minimum

Wage i.e. Basic + DA or Gross (sum of all Allowances).

Harmonisation of minimum wages

Some industries fall under Central Government jurisdiction and yet others in state

government jurisdiction. The minimum wage rates in both cases differ. For example,

Coimbatore falls under Zone B as per Central Minimum Wage Act. Minimum Wage as per

Central Zone B for Skilled is Rs.7,098/- while as per Tamil Nadu State rules it is Rs.3,654/-.

Suggestion

There is a need to harmonise the minimum rate and remove anomalies such as the one

cited above.

B.Provident Fund

1. Code Number AllotmentThe process to obtain registration for an employer is very tedious. The application requires

details and documents that may not be relevant from the Provident Fund perspective. The

process takes a minimum of a month to complete.

As a result, contributions are remitted without the code number. There is a delay in filing of

initial returns detailing the employees as well as in filing the regular monthly returns.


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Recommendations

There is a need to simplify the application form with the following details:

Certificate of incorporation, PAN/TAN allotment letter issued by Income Tax Authorities,

to substantiate ownership.

Of Responsible Person(s) for the relationship with EPFO with the details such as his/her

address, phone number, email id etc Number of employees for whom coverage is sought.

2. Remittances

Remittances of contribution and charges are done through the branches of State Bank of

India (SBI) by way of challans and cheques. It has been noticed that SBI branches return the

challans with acknowledgement only after realization of cheques. SBI branches also go by

jurisdiction and refuse to accept challans of other jurisdictions.

There is a delay in reporting the remittance to EPFO. The process is very tedious as each

company need to make several visits to the SBI Branch.

Recommendation

There is a need to switch to electronic transfers enabling remittance of Contribution directly

to the EPFO account.

3. Returns

Companies are required to submit multiple returns to the EPFO. These include:

Monthly Returns detailing the contributions and charges paid and the others detailingthe new additions and deletions for the earlier month

Yearly returns detailing individual employee wise contributions as well as the

consolidated detail for each employer.

While the EPFO accepts soft copies, the same is only accepted when it submitted along with

the hard copies. This also leads to clutter at the EPFO offices and is causing huge storage

and record maintenance issues.

Recommendation

It is suggested that EPFO design a single monthly return which can be submitted as a soft

copy and can be uploadable directly into the EPFO data base.

The EPFO could create an Electronic Data Interface, to enable submission of return online

through internet or file transfer through internet. Once that is done the facility could be

linked to e-payment of contributions and charges.


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4. Procedure for Transaction Processing

The EPFO requires companies to fill out multiple forms for various transactions, such as

Transfer-ins & Transfer-outs due to job changes, Settlements due to termination of job &

Withdrawal for housing etc. There are different processes for each type of transaction.

There are also differences in processes between EPFO offices. It has been found that for

want of proper records, EPFO relies on Employers for processing transactions of theemployee members.

This has led to employers and employee members not being clear about the processes and

requirements. The lack of clarity often leads to incomplete applications being files which

leads to delays in processing and multiple visits to the EPFO.

Suggestion

There is a need to simplify the forms and devise one common form for all transactions.

In the long-term, there is a need to:

Create an integrated national database of all the PF members and Employers.

Provide an employee wise identification number which can be carried across

employments and Locations.

Standardize application formats and web enable entire transaction processing

5. Turnaround Time for Transaction Processing

Currently, there is no fixed timeline for completion of any transaction. Internally, EPFO

offices insist on a 30 day timeline for settlements. It has also been noticed that to meet

internal deadlines, EPFO staff refuse to accept application forms beyond a certain number.

This sometimes leads to rejections on frivolous grounds.

Suggestion

There is a need to adopt stringent Service Level Agreements (SLAs) for every transaction.

Interest should be payable to the employee member if the EPFO delays payments beyond

SLAs.

6. Individual Account Information

The PF Scheme provides that the Members to be updated every year about their balance.

However, there is no time limit for the same and members are not informed of the status of

their application on transfer in/outs

This leads to the Employee / member being in the dark about the quantum of corpus in his

name at any time.


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Suggestion

There is a need to:

Create an integrated national database of all the PF members and Employers. Provide an

employee wise identification number which can be carried across employments and

locations.

Standardize application formats and web enable entire transaction processing

7. Inspections, Hearings and Proceedings

Show Cause Notices and Inspections have generally been perceived as instruments for

harassment. It has been found that companies need to make frequent visits to EPFO offices

to settle issues that need not have arisen.

Suggestion

It is suggested that as a one-time effort, all the offices of the EPFO need to update their

database based on the latest returns and challans and if there are gaps take the help of the

employers to fill the same. This would ensure EPFO has the correct info on compliance

status and the Regulatory wing of EPFO could concentrate on the enforcement of the PF Act

and its schemes on the errant employers, while the compliant ones are served adequately.

8. High Administration Charges

The EPFO Charges Employer 1.11% of the Basic Pay of all employees for providing the PF

Services. With the process of exemption (process allowing the employer to run the PF

scheme internally with no intervention from EPFO) being completely stopped; employers

are forced to pay these high fees.

As a result of this, there is resistance from employees to participate in the PF scheme

Suggestion

It is suggested that the process of granting exemption, which is a right of an employer under

the PF Act and Scheme, should be immediately reinitiated.

9. Third Party Outsourcing

Many employers have outsourced the activity pertaining to PF to third parties/consultants.

The consultants are unorganized and thrive on their rapport with the EPFO staff. There are

professionally organized corporates providing service relying on process capabilities and

knowledge base who are not recognized by EPFO.

In spite of being professionals with adequate knowledge base and understanding of EPFO

workings, such outsourcers are not in a position to play the role of bridge between EPFO

and employers.


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Suggestion

It is suggested that outsourcing service providers in the area of PF administration based on

certain minimum criteria such as infrastructure, professional capability etc. be recognised.

These Recognized Outsourcers should be made responsible for the compliance of their

clients and allow them to play the role of facilitators between EPFO and Employers.

10. Exemption Process for New Companies

New companies that cross the threshold of 20 employees are compulsorily required to

comply as un-exempt by remitting their contributions to the EPFO. This involves:

Remittance of contributions till grant of exemption to be remitted to EPFO

On obtaining exemption, transfer of balances of individual employees back to the

exempt trust.

A number of new companies (IT, Multinationals, etc) that have large growth plans would like

to provide retirement benefits including Provident Fund by setting up a private trust from

day one. However, these companies are forced to comply as un-exempt for their

application for exemption to be considered. This exercise involves the EPFO allocating

resources for an employer who, in any case, wants an exemption

Suggestion

It is suggested that companies may be granted exemption under clearly laid guidelines

within 30 days of their meeting any criteria of coverage under the PF Act. They may be

allowed from the date of coverage continued to remit their PF contributions to their own

Provident Fund Trust. This ensures that the resources of EPFO are not wasted on anemployer who is capable of administering the Provident Fund for the benefit of his

employees. To safeguard against these companies folding up and leaving the employees in

the lurch, EPFO may insist on a Bank Guarantee for a percentage of salary based on time

bound approval of exemptions.

11. Exemption Process

The process of granting exemption has been found to be very tedious. The entire process

takes more than a year and depending upon the appropriate government, often gets

delayed beyond that period. The power granted to RPFCs under Para 79 of the EPF Scheme1952 to issue relaxation orders now stand withdrawn. This order would have allowed the

employer to avail the benefits of Exemption till the final approval is granted by EPFO at

Delhi.

The delay causes avoidable friction between the Companies and the EPFO, with the

applicants for exemption feeling aggrieved at the whole situation.


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Suggestion

It is suggested that clear guidelines (size of employees, base of calculation, profitability, etc)

and simple documentation need to be specified.

Any employer employing more than 500 employees should be given automatic exemption.

There is a need to re-instate the power of relaxation to RPFCs with a caveat that it should

only do so if it is satisfied compliance status of the applicant.

There is a need to delegate the power to notify exemption to the CPFCs or even RPFCs.

There is a need to prescribe an automatic approval or time-bound approvals for the process.

12. Regulator vs. Administrator

EPFO enjoys the power of Regulator while being the administrator of PF Scheme.

As a result, it has been found that EPFOs role as a service provider role is compromised and

the regulator role is emphasized. There is often a conflict of interest in decisions regarding

granting of exemption. The focus of the EPFO staff is not on service but on compliance.

Suggestion

It is suggested that EPFO should only be a administrator providing PF services to the

Employers and Employee members. All regulatory powers should be shifted to the recently

constituted Pension Fund Regulatory and Development Authority.

13. PF Withdrawal submission limit

The EPFO has asked companies to submit only 500 Forms per month and that too within 1st

week of the month. This becomes a major hindrance for staffing companies who have many

more people on their rolls.

Suggestion

It is suggested that the PF Office create a special cell for staffing companies as there will be

high turnover due to which, there will be high No. of PF withdrawal submissions.

C.Employees State Insurance

1. Centralized Compliance Sub-Code Number Allotment

As per ESIC rules, companies are required to obtain a sub-code number in every location

where there are employees eligible for ESI benefits. This is in addition to the registration at


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the principal place of business. A local Address is a requirement for a Sub-Code which is

allotted by the local Branch of Office of the ESIC.

For employers with dispersed employee basis, typically for service oriented companies with

national/state wide presence, they may not have offices in a location but will have number

of employees in that location.

Employers are not able to obtain sub-codes at remote locations away from the cities/towns

where they do not have offices. Their employees located at such locations being denied ESIC

benefits.

Suggestion

It is suggested that ESIC:

Accepts the corporate address of an employer as the address for communication for all

the sub-codes across the country.

Allot sub-code numbers at all locations where ever employees are present

Such sub-code could be issued with the prefix/suffix of the locations from the mainbranch office itself.

Internally the communication could be forwarded to the respective branch offices of

ESIC by the main branch as and when they are allotted.

2. Insurance Numbers and Identity Cards

Employees are required to file a declaration (the basic details of employee, their

dependants) with the family photographs at the time of joining with their employer. The

Employer in turn is required to submit the same to ESIC offices within 10 days of the

employee submitting the declaration with his employer. Employees are issued an insurancenumber and a temporary insurance card (essentially an identity card) which is a must to get

the benefits.At the end of three months from the date of joining, the temporary cards are

substituted by permanent cards. The cards are issued to the employer and employers

distributes to his employees.

This process ideally suited for a single location employer. It takes a lot of time and results in

substantial time gap since the time of the employee joins and starts contribution to the time

he is in possession of the identity card to avail benefits. When the employees are asked to

join at a short notice during which time he or she is not able to get the family photographs

as required. In the case of employees required to travel immediately on joining duty whichagain delays the process of submitting the declaration forms. With issues related to sub-

code discussed earlier, the employees at locations where their employer is not able to

obtain sub-codes will not be able to get the identity cards issued by the local ESIC office.

Suggestion

It is suggested that employees should be allowed to avail medical benefits at any of the ESI

Facilities for the first 6 months from the date of joining based on that certificate.


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ESIC could insist on safeguards such tamper proof certificate with proper authentication to

ensure that only genuine employees and their dependants are issued such certificate

ESIC should allow the employers to serially number the Temporary Identification Certificates

and use the same numbers in the half yearly returns and the Registers.

3. Permanent Identity CardsAt the end of three months from the date of joining, the temporary cards are substituted by

permanent cards. The cards are issued by ESIC offices to the employer and employers

distributes to his employees.

This again designed for a single location employer and the employee does not get the

permanent card in time. Employees at distant locations will not be able to avail benefits till

the card reaches him.

Suggestion


Removes the requirement of Temporary Card followed by Permanent Card

Allots the Permanent Card or the ID card (issued by Employer) to all employees from 1st

day of employment. The ID Cards should be printed with holograms of the employer and

the ESIC and could be made tamper proof in many ways such as Bar Coding.The same

can be deactivated the moment an employee goes above the ESI threshold or leaves the

employment.

4. ESIC Benefits for Employees

a) Accident Claim benefit

A claim benefit is required to be made off-line with multiple follow-up and process for

realizing the benefit. This leads to delays in getting benefit for the employee and

dependants and hassled for employer in the administrative follow up route.

Suggestion

Any accident claim should be allowed to be made or registered on line. Death/Permanent

disablement compensation should be at par of Workmen Compensation Act.

b) Maternity benefit under ESIC

There is a maternity benefit under ESIC as well as benefit under Maternity benefit Act,

which leads to confusion in actual benefit to be given


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Suggestion

The disparity for getting maternity benefit under ESI Act has to be removed. It should be as

stated in Maternity Benefit Act.

c) Employees travelling outside the ESIC Applicable Zone

Any employee traveling outside the ESIC applicable zone is required to notify ESIC

authorities prior to travelling in order to avail of benefits

This increases the administrative work for the employee and the ESIC authorities. Due to the

above and delays in the filing of this travel application, employee does not get benefit, if

required, while traveling since the Local ESIC Hospital is not notified in time. This leads to

employers paying out from their pocket to take care of medical expenses for their traveling

employees (like sales etc).

Suggestion


Issues Permanent Cards from 1st

day of employment

Issue Permanent Card which can be used all over India, at any ESIC hospital/ facility

Move towards connecting ESIC office electronically to facilitate the above

5. ESIC Biometric Cards

The introduction of biometric cards by the ESIC is a welcome measure and removes the

need for the employee to obtain Form 37 every 3-6 months. However, these cards have not

been received as yet.

Suggestion

It is suggested that the issuance of these cards is expedited.

6. Central payment of ESIC and Central Half Yearly Returns

Central payment of ESIC and Central Half Yearly Returns are allowed. However, companies

still get notices stating that their returns are not submitted on time. Also, employees are

denied ESIC benefits on the grounds that the company has not submitted their returns.

This is despite making all payments on time and submitting Returns on time centrally and

providing a copy of this submission to the Branch Offices.

It is suggested that this process be streamlined and all ESI branch offices be intimated by the

ESIC headquarters electronically once a company has filed its returns.


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D.Contract Labour

1. National/State-wise Registration of Principal Employer

Rule 17(1) of the Contract Labour Central/state Rules currently requires the Principal

Employer to apply for Registration at the location where Contract Labour is to be engaged.

Suggestion

It is suggested that Rule 17 (1) should be replaced by the following rule:

Every application by a Principal Employer for the grant of a Registration shall be made in

triplicate in Form I to the appropriate National (State) licensing officer at Delhi (State

Capital)

This will remove one of the biggest constraints on compliance which requires the Principal

Employer to obtain location-wise Registration.

2. Form I - Application for Obtaining Registration

Suggestion

The Application format should be changed to collect general information about the Principal

Employer and the Contract Labour likely to be engaged across the State/Country as the case

may be.

The application for Registration should capture all the info required by the authorities toissue the Registration.

3. Contract by Contract License for Temping firms

Rule 21(1) of the Contract Labour Central/state Rules currently requires the contractor to

apply for license at the location where the establishment to which the contractor is

supplying Contract Labour is situated.

Suggestion

It is suggested that Rule 21(1) should be replaced by the following rule:

Every application by a Contract for the grant of a license shall be made in triplicate in Form

IV to the appropriate National (State) licensing officer at Delhi (State Capital)

This removes one of the biggest constraints on compliance which requires the contractor to

obtain location wise licenses.


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4. State / Nationwide Licenses

Suggestion

The state/nationwide licenses could be issued subject to certain guidelines/norms. It is

suggested that a new Rule 21(1a) be introduced which would prescribe the conditions for

granting state / nationwide license as follows:

Every such as under Rule 21(1) shall be granted only if the following conditions are fulfilled

by a contract:

a) Should be a Company incorporated under the Companies Act, 1956

b) Should have offices in all the metropolitan cities

c) Should have PF/ESI registrations.

d) Should employ one direct employee for every 150 contract labour

e) Should possess IT infrastructure to provide help desks on salary, benefits and rights

of Contract Labour.

5. Form IV - Application for Obtaining State / Nationwide

Licenses

Suggestion

The Application format should be changed to collect information regarding the conditions

for license as prescribed above. The application for license should capture all the info

required by the authorities to issue the licence.

6. Cumbersome and redundant paperwork

Rules 67/68/69 & 71 provides that the wages shall be paid on working day / working hours,

in currency etc, date of payment etc to intimated to the Contract labour etc

Suggestion

It is suggested that these rules should be replaced with the following rule:

All the payment of wages shall be by way of cheque or by way of transfer of funds to the

bank account of the Contract labour

Provided that a Contract Labour does not have a Bank Account, the wages could be paid by

Cash and such payment shall be acknowledged by way of signed receipt by the Contract

Labour.

Rules should reflect the current realities of the payment wages methods adopted by the

Industry


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7. Format of Register of Workmen and Muster Roll

Rules 75, 78 & Forms XIII & XIV provide the format of Register of Workmen & Muster Roll

which again requires the Principal Employer and contain mostly the same information.

Suggestion

Only the Register of workmen should be retained and the details relating to the Client to be

provided against each workmen as the place where he/she is working to avoid the

duplication of forms.

8. Format of the Wages Register

Rule 78 & Form XVII specifies the format of the wages register and again asks for Client wise

register and requires the signature or thumb impression of the Contract Labour.

Suggestion

It is suggested that the Wages Register should contain the details of the Bank

Account/Cheque Number/Receipt Details depending upon the mode of salary payment. This

should be allowed to be maintained in soft copy doing away with the requirement of

signature/thumb impression of the Contract Labour. This will enable the maintenance of the

Wage Register with updated information on a monthly basis.

9. Rule 79 & 81

Rule 79 & 81 refer to requirement display an abstract of the Act and display notices showing

the rates of wages, hours of work, wage periods, dates of payment of wages, names and

addresses of the Inspectors having jurisdiction and date of payment of unpaid wages. The

rules require that the Contractor should display the same in English, Hindi and in the

language spoken by the majority of workers.

Suggestion

It is suggested that the Principal Employer should be made liable for the same as the

contract employees are on the worksite of the Principal Employer.

10. Rule 80(1)

Rule 80(1) of the Contract Labour Central/state Rules requires the contractor /Principal

Employer to maintain all records in hard copy and within a particular distance.

Suggestion

It is suggested that Rule 80(1) be replaced by the following rule:


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All registers and other records required to be maintained under the Act and rules, shall be

maintained complete and up-to-date in either physical or any electronic format by the

Contractor.

This Rule should be made applicable and mandatory across India and not left to the

discretion of the Local Labour office.

11. Uniform rates of Security Deposit and License Fees

under CLRA

It has been observed that the rate for security deposit and license fees vary from state to

state thereby leading to a lot of confusion.

Suggestion

This process needs to be made uniform across the country as the process to be followed is

the same.

12. Termination

Suggestion

In cases of termination, it is suggested that the Principal Employer be held responsible as all

terminations are as per instructions of the client and not of the staffing company.

13. Overtime

Suggestion

It is suggested that the Principal Employer or the client should be held responsible for

authorising and maintaining a record of overtime as it is principal employer who is getting

work done from the employee.


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Long Term Issues

A.Industrial Disputes Act, 1947

1. Section 25G: Procedure for Retrenchment Last come

First Go

This provision is hindering smooth enforcement due to stringency in flushing out employees

with greater calibre simply on the ground of being junior.

Suggestion

An amendment is required to this provision so as to ensure the employees with calibre,

competencies, knowledge & skills can be retained by employer irrespective of his/hercommencement of tenure with the employer. The provision should allow employer to

exercise his option to select employees to be retrenched based on performance, need and

disciplinary ground.

2. Proviso to Section 2(s) definition of workman

This provision of ID Act, 1947 should have clear and widespread coverage on all classes of

employees whereas the definition of workman specifies a specific class of employees in a

specific nature of work which simply puts other class of employees beyond coverage of the

Act and becomes a factor of confusion amongst employers, employees and theGovernments in determining the beneficiaries of the legislation.

Suggestion

Definition to be amended as employee which may include workman as a class of employee

with specific nature of job in specific nature of industries such as factory, mines, plantations,

port, railways, air transport services, etc.

3. Notice of Change (Sec.9A)

As per Sec 9A, no employer who proposes to effect any change in the conditions of services

applicable to workmen in respect of any matter specified in the fourth schedule to the Act,

shall effect any change without giving to the workmen a notice of twenty-one days for

change, in the prescribed manner. Two of the matters included in the fourth schedule,

which are relevant to the issue are Item No. 10 (Rationalization, Standardization or

improvement of plant, or techniques which is likely to lead to retrenchment of workmen)

and Item No. 11 (increase or decrease in the number of persons employed).


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This is leading to employers suffering due to slower execution of issues pertaining to Fourth

Schedule which often leads to losing business due to a delay in decision making in line with

the market needs.

Suggestion

Section 9B of the Act empowers the State (appropriate) Government to grant exemptions

from the provisions of Sec 9A. Items No. 10 and 11 of the fourth schedule should be deleted

in view of the changing industrial scenario as it will be in the larger interests of the workmen

to ensure competitiveness of the unit in which they are working.

4. Special Provisions relating to Lay-off, Retrenchment and

Closure (Chapter V-B)

Chapter V-B of ID Act, 1947 applies to an industrial establishment (not being an

establishment of a seasonal character or in which work is performed only intermittently) in

which not less than 100 workmen were employed on an average per working day for thepreceding 12 months.

The stipulation of 100 workmen has become totally obsolete. In several segments of the

service industry e.g. BFSI, Retail, several establishments have much larger employee

strength and therefore obtaining permission for various issues from the department

becomes a problem and leads to huge financial losses for the employers.

Suggestion

The number filter of 300 was the limit prescribed originally when chapter V-B was added in

the ID Act in 1976. It was reduced to 100 through an amendment in 1982. This number of

100 workmen should be increased to 300 employees to ensure higher investment, which

would in turn result in increased employment opportunities. Simultaneously, it will also

attract foreign companies to invest more in India.

5. 25N (b) the prior permission of appropriate Government

on an application made in this behalf.

Existing provisions call for prior permission to be obtained from the authority for

retrenchment which again delays the process and defeats the purpose of the employer

Suggestion

Additional retrenchment compensation @15 days for every completed year of continuous

service or part thereof in excess of six months subject to a maximum limit upto Rs.5.0 lakhs

should replace the existing provision for a smooth settlement of industrial disputes.


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6. Abandonment of Service

Sometimes the workmen just leave the establishment and cease to come, or over-stay the

sanctioned leave without intimation. Their intention in such situations is mostly to abandon

the service but they do not submit a formal letter of resignation and this creates problems

for the employer to plan his manpower requirements.

Suggestion

Retrenchment, which in common parlance, means the termination of the services of surplus

workmen has been given wide meaning in Section 2(oo) to include all types of termination

of services of the workmen except resignation, expiry of the specified period of

employment, dismissal for misconduct and continued ill health. It is therefore, suggested

that scope of the term retrenchment under sub-clause (a) of Section 2(oo) should be

confined only to termination of surplus labour and may be amended to include

abandonment of service in terms of standing orders, or conditions of employment as

voluntary retirement of the workman.

7. Go-Slow

In recent times the practice of go-slow/ work to rule has become a major means of

industrial action by workmen as there is deliberate delay of production by them. The

Supreme Court has held that go-slow is a pernicious and dishonest practice which cannot

be regarded as anything but very serious misconduct and a worker who wilfully holds up the

wheels of production deserves to be removed without tears. But it is not a strike as the

term is defined in Section 2(q) of the Act because there is no cessation of work.

Strike under section 2(q) means a cessation of work by a body of persons employed in any

industry acting in combination, or a concerted refusal, or a refusal under common under-

standing of any number of persons who are, or have been so employed to work or to accept

employment.

Suggestion

Section 2(q) defining the term strike needs to be enlarged to include obstructive practices

such as go-slow or work to rule and mass casual leave, which are more pernicious than

strike per se, It may be mentioned that go slow and sit down have been listed as unfair

labour practices on the part of the workmen at item number 5 of part II of the 5th scheduleread with Section 2(ra) of the Act.

8. Grievance Settlement Authority: Formal notification of

Section 9-C

Section 9-C which provides for setting up of grievance settlement authorities in industrial

establishments employing 50 or more workmen, was inserted in the main Act more than


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two decades ago by the Industrial Disputes (Amendments) Act, 1982. However, no formal

notification has been issued so far.

Suggestion

It is suggested that necessary formal notification to enforce this Section may be issued

without further loss of time. This would expedite settlement of grievances at the shop floor

level, which may otherwise snowball into major industrial conflicts resulting in interruption

in production programmes.

9. Proviso to Section 2(s) definition of workman

This proviso covers all the workmen by nature of work and not by salary/wages, which

covers even a Pilot.

Suggestion

Clause VI in Section 2(s) of definitions be amended so that it is line with other labourenactments like ESI, Bonus Act, PF Act etc.

B.Employees Compensation Act, 1923

Major Amendments under the Act (Notification No. S.O. 1258(E), dated 31-5-2010):

The move to amend the title of the Act to Employee from Workmen is welcome and will

lead to a more widespread coverage to include persons in clerical cadre and casual

employees. The amendment will benefit a large section of the working class who were

deprived of the fruits of the legislation until the amendment took place. An enhancement in

the wage limit for calculation of compensation is a big leap to social security amelioration

which would enable receiving of a higher quantum of benefit by beneficiaries. It proves the

transformation of governments view to maximise the security to working class for

strengthening the economic growth of the country. However, a few such provisions are still

considered archaic and needs to amended, as discussed below.

1. Liability of Contractor in the event of accidental injury

resulting death or disablement to the contract workman

at Principal Employers (PE) establishment

This unnecessarily puts the burden on the Contractor for not fault of his as the

establishment & workplace where the contract workman met the accident belongs to the

PE. For any defective machinery, or unsafe working condition, on which Principal Employer

is having the ultimate control, the liability of the Contractor is very much inappropriate

under the law.


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Suggestion

The Principal Employer should be held liable for any sorts of accidental injury to the contract

workman who is engaged in his establishment / office and ensuring safe & secured

environment is his prime responsibility.

2. Coverage of employees not covered by ESI ActESI Act, 1948 provides for day to day care to covered employees but in non-implemented

areas which are covered under the EC Act, 1923, employees are only entitled to receive

benefits in case of accidental injury out of employment and no daily medical care such as

sickness or medical benefits are provided under the EC Act, 1923.

Suggestion

It is suggested that a provision should be made for a Dispensary Service or service from a

State Hospital for enabling employees to avail sickness and medical benefit.

3. Other issues

Suggestion

It is suggested that the:

Period of disability should be reduced to 24 hours (1 day) from existing 72 hours (3 days)

for enabling an employee to avail the benefit.

Coverage for benefits to be extended to employees in any class specifically those who

are beyond ESI coverage. Aforesaid Acts must be exempted in case the Insurance schemes cover by the Principal

Employer or Contractor offers benefits that are better than those stipulated under the

above Acts. This would be more beneficial for the employees as they will get a better

coverage and medical benefits. This would also be beneficial for the contractors /

employers from dual payment of premium.

C.Payment of Gratuity Act, 1972

1. Contractor liable to pay gratuity to Contract employee

As per the Payment of Gratuity Act, 1972, contractors are liable to pay gratuity to contract

employees. This is a financial Burden on the contractor which is not met by the PE.

Contractors work on thin margins and hence it becomes difficult for them to pay Gratuity on

eligibility (or in Death or Permanent Disablement cases). Besides, the length of service of an

employee in contractors roll also depends on the PEs choice of retaining the old employee

on roll as he/she gets acquainted with the job. This may go upto 5 years / 4 years 240 days

at times.


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Suggestion

The Principal Employer should be held liable for payment of Gratuity to contract employee

like PF & ESI Contribution of Employer which is paid by the PE. Filing of Nomination Form

(Form-F) should be the responsibility of Principal Employer for contract employees.

The Contractors liability should be restricted to payment of wages / salary to contract

employees, provided the same is released by the PE in time.

D.Factories Act 1948

1. Working Hours of Female Employees

According to Section 66 of the Factories Act, no woman worker can be required to work

between 7.00 PM and 6.00 A.M. That is to say they cannot work in the night shift.

Restrictions on the working hours of female employees pose problems for the industryespecially in certain seasons where skilled manpower is not readily available. Also

restrictions in this regard are antiquated with women playing a more assertive role in

society today.

Suggestion

However, the proviso thereto empowers the government to authorize employment

between 5.00 am to 10.00 pm, by issuing a simple notification in this behalf in the official

gazette. The Government may exercise this power to facilitate two-shift operation with

women workers and may require the management to make adequate transport and security

arrangements for the women workers. The Punjab Government has already allowed

employment of women workers during night in the units dealing with information

technology covered under the Punjab Shops and Commercial Establishments Act, 1958, vide

notification dated 6th September 2000.

2. Full Time Medical Practitioner

State Factory Rules requires the ambulance room to be in the charge of a qualified medical

practitioner assisted by at least one qualified nurse and other subordinate staff as directed

by the Chief Inspector.

The requirement of having a full time qualified medical practitioner put unnecessary

additional burden on employer even when medical care is available nearby.

Suggestion

It is suggested that the rules may be suitably amended to empower the Chief Inspector of

Factories to exempt from companies providing of ambulance room where a dispensary is


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situated within 1 km. or a hospital is located within 10 kilometers and an ambulance service

van, with a person trained in first-aid is available within 1 km of the perimeter of the unit.

3. Safety Officers:

Lack of adequate safety training facilities in various states is leading to a shortage of

Qualified Safety Officers in the state as required under Section 40(B) of the Factories Act.

Also the Diploma in Safety offered at Kanpur is very detailed with a lot of focus on chemical

related safety whereas most industries may not require such detailed knowledge.

Suggestion

State Governments should organize such safety-training program in the State. It may hold

industry specific programs with relevant inputs for the industry concerned. Qualified

engineers attending such programs be made eligible for the Safety Officer role in concerned

industry.

4. Definition of Factory in Respect of Small Scale

Establishments

Section 2(m) defines factory as any premises including the precincts thereof:

(i) whereon ten or more workers are working or were working on any day of the

preceding 12 months, and in any part of which a manufacturing process is being

carried on with the aid of power, or

(ii) whereon twenty or more workers are working or were working on any day of the

preceding 12 months, and in any part of which a manufacturing process is beingcarried on without the aid of power.

Suggestion

The definition of Factory should be amended to exempt Small Scale Establishments from its

ambit. Establishments with power, employing upto 25 workers and without power upto 50

workers should be exempted.

In case of factories run by Labour Co-operatives the numbers could be 50 and 100

respectively.

5. Definition of manufacturing process

The definition of manufacturing process in the Factories Act includes packing/repacking or

labeling/stickering

Suggestion

To exclude specifically packing/repacking or labeling/stickering


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6. Extra Wages for Overtime (Section 59)

According to Section 59(1) of the Act, where a worker works in a factory for more than 9

hours in any day or for more than 48 hours in any week, he shall, in respect of overtime

work, be entitled to wages at the rate of twice his ordinary rate of wages.

Suggestion

An amendment in Section 59 of the Act may be made to enable the employer to grant

compensatory-off to the workmen for such no. of hours worked extra beyond 48 hours per

week, provided such compensatory-off is granted within 6 months of extra working in case

an employer is unable to grant such compensatory off shall be liable to pay overtime wages

for the extra hours worked over and above 48 hours per week, to the extent the overtime

working could not be offset by the compensatory off granted to the workman.

Accordingly the provision of extra wages for overtime under Section 59(1) may be amended

suitably to provide for overtime wages only to such number of hours worked beyond 48

hours in a week and to the extent cannot be set-off against compensatory-off within 6

months of such working.

E. Shops and Establishment Act

1. Coverage under provisions of the Act

Currently, the Shops and Establishment Act covers any shop or establishment engaging even

one employee.

Suggestion

The provisions of this Act should apply to corporates registered under the Companies Act.

operating premises as offices for 100 or more of their employees. These offices being

directly owned/leased by the company.

2. Definition of workmen or employee

Suggestion

The definition of employee or workman should exclude a workman or employee drawing

wages/salary, inclusive of allowances, over Rs.3,500/- p.m. or such higher amount as may be

specified by the appropriate Government from time to time by a notification in the official

gazette


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F. The Employees State Insurance Act 1948

1. Inadequate Infrastructure

Employees complain about the inadequate medical treatment at ESI hospitals /

dispensaries. This can be attributed to an inadequate number of ESI dispensaries andhospitals which are situated at distant places, insufficient number of doctors and

paramedical staff and non-availability of medicine, dressings and injections.

Suggestion

It is suggested that in addition to setting up more dispensaries and hospitals and appointing

more doctors and medical staff, the Medical Superintendents should have adequate

financial powers to make local purchases of medicines which may be out of stock.

In fact, the Central Government should make a sufficient budget for medical care available

to Medical Superintendents to remove the dissatisfaction amongst the workers for non-

availability or inferior availability of medical treatment or else allow medical facilities be

contracted through local leading Hospitals/Medical practitioners.

Under Section 58 of the Act, the state government is required to provide reasonable

medical, surgical and obstetric treatment for the insured persons. The state government

may, with the approval of the ESIC, arrange for medical treatment at clinics of medical

treatment at clinics of medical practitioners.

2. Delay in reimbursement of medicine bills

Suggestion

To avoid delays in the reimbursement of medicine bills, it is suggested that the powers and

duties of Medical Referee be vested in Medical Superintendent of ESI Hospital. The time

limit for reimbursement of medicine bills should be specified.

3. Annual Inspection

Suggestion

It is suggested that the annual inspection of each and every establishment may be

dispensed with. Random inspection, after giving due notice to selective employers, may take

place instead to check defaulters. In this regard a certificate of compliance could be

obtained from all employers in lieu of this inspection.

4. Partial reimbursement of Outside Bills

Bills of outside agencies are reimbursed at ESI rates which are below market rates.


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Suggestion

Medicines and paramedical services should be made available by the ESI

hospitals/dispensaries or the bills of certified outside agencies be reimbursed (certain

outside agencies could be nominated as certified agencies) .

5. Coverage to factory and establishmentsAt present, the ESI Act follows the definition of factory as defined by the Factories Act and

commercial establishments engaging 10 or more persons.

Suggestion

In view of changes we are seeking under Factories Act and Shops and Establishment Act, to

small and medium units, the ESI Act provisions should be also amended accordingly to

exclude coverage to small and medium units.

G.Employment Exchanges (CompulsoryNotification of Vacancies) Act 1959

1. Notification of Vacancies

Under this Act, the employer is under no legal obligation to recruit any person who is

sponsored by the Employment Exchange, though it is obligatory on his part to notify

vacancies (Section 4) submit quarterly and biennial returns (Section 5) and give access

(section 6) to authorised Government Officers to records and documents.

Suggestion

The Act should be amended to provide for notification of vacancies in private sector purely

on voluntary basis, to save the employers from unnecessary and unproductive obligations of

Section 4, 5 & 6 of the Act.

H.Contract Labour Act

1. Prohibition of employment of Contract Labour

Section 10 of the Act empowers the Government to prohibit contract labour in any process,

operation or other work in any establishment. There is no specific provision about the

absorption of such contract labour. However, the Supreme Court in the care of Air India v/s

United Labour Union (1997 LLR 288) has held that on abolition of contract labour system,

the principal employer is bound to absorb the contract labour, in their regular service. The

current provisions of the Contract Labour Act do not recognize the role of contractors.


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Suggestion

It is suggested that Section 10 providing for abolition of contract labour should be omitted

from the Act renaming it as the Contract Labour Regulation Act 1970. Regulatory provisions

may also be reviewed and the responsibility of the contractors should be enlarged &

defined. The trend worldwide is to outsource and hiring contract labour with a view to

create a hassle free, cost-effective and flexible atmosphere for the industry. Of courseregulatory provisions should be strengthened to enlarge the responsibility of the contractor

and to ensure that contract workers are paid minimum wages and enjoy the statutory cover

of social security measures provided under the ESI and EPF.

I. Service Tax

The Union Budget 2011 has changed the Point of Taxation Rules (POTR) with regard to the

levy of Service Tax from collection to accrual basis. Effective 01st

July 2011, service

providers will be required to follow the accrual basis to remit service tax charged on their

invoices.

In light of the proposed rules on POTR that would come into effect from 01st

July 2011,

service providers would be required to discharge their liability of Service Tax on accrual

basis, i.e. as soon as invoices are raised rather than on collection thereof as is the case

currently.

The rule does not take into account the principle of credit and From a cash flow perspective

this would mean service providers would have to arrange for increased working capital to

fund service tax payouts.

Suggestion

This rule needs to be revised and the earlier rules restored.


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About Indian Staffing Federation (ISF)

Indian Staffing Federation (ISF) has been founded by leading staffing companies with one

common goal - Staffing India's Growth.

Staffing, though is an established form of outsourcing, India is yet to recognise and adopt Staffing

as an effective means to running its businesses. With a penetration of just 2%, ISF is championingthis industry, with a suitable and supporting regulation. The Staffing Industry provides a platform

for recognised employment, work choice, even compensation, annual benefits and health

benefits for the temporary workforce that constitutes almost 70% of Indias total workforce.

The purpose of ISF is to enhance long-term growth and ensure its continued ability to make

positive contributions to the economy as well as the society through the services of the Staffing

Industry. The principal focus of the Federation's activities shall be triangular employment

relationships, in which the staffing company is the employer of the temporary worker, who works

under the supervision of the user company.

Objectives

Indian Staffing Federation has set upon itself, several objectives. The Federation shall:

1. Champion sustainable growth of the Staffing Industry

2. Be the authoritative voice of the Staffing Industry

3. Establish quality standards for the Staffing Industry at large & a code of conduct for the

members

4. Increase visibility and enhance the image of the Staffing industry & strengthen its

representation

5. Promote Staffing as an effective enabler of socio-economic growth

6. Develop Staffing Industry as a choice of employment


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Indian Staffing Federation

D-6, Sector 10, NOIDA, UP 201 301Ph: +91-120-4510900

E-mail: [email protected]: www.indianstaffingfederation.org

isf issue paper dec 11

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