Middle East

Legality of Deduction of Wages of Factory Workers for Failure to Serve Notice Period

Employees resigning and ceasing to report to work without due notice and employers facing issues due to lack of proper handover and replacements is a common concern of employer companies. In an earlier article1, we had assessed the issue of deduction of wages of employees of a corporate office in Delhi, upon their failure to serve the required notice period. As a follow up, this article seeks to examine the legality of deduction of wages by employers due to lack of notice by a resigning employee, employed in a factory.

The ‘workers’ employed in a factory in Delhi are governed under the provisions of the Factories Act, 1948 (“Factories Act”). The term “workers” under the Factories Act, has been defined in a wide manner to mean any “person employed, directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer, whether for remuneration or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the Union”.

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Indian Bankruptcy Law: Appeals and Challenges to Arbital Award Cannot Stall Bankruptcy Proceedings

Judgment: M/s Annapurna Infrastructure Private Limited and Another (“Appellants”) vs. M/s. SORIL Infra Resources Limited (“Respondent”).

Forum: The National Company Law Appellate Tribunal (“NCLAT”).

Act/Law: The Insolvency and Bankruptcy Code, 2016 (“IB Code”) and the Arbitration and Conciliation Act (“A&C Act”).

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Legality of Deduction of Wages Upon Failure to Serve Notice Period by Employees

  1. Introduction.

A common and regular concern faced by employers is the practice of resignation without notice by their employees and consequent disassociation without providing adequate time for due and proper handover. The question which the employers then face is, do we have the right to deduct amounts as payment in lieu of the unserved notice period from the outstanding wages of such employees?

An assessment as to the ability of an employer to deduct outstanding salary in lieu of unserved notice period is a mixed question of fact and law. First of all, it requires an assessment of whether the employee is employed in a corporate office or in a factory or in any other industrial establishment, as that determines the applicability of the relevant legislations. This assessment is also based on determination of the role and responsibility of the concerned employee, his/her salary, place of employment and several other related factors.

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RBI proposes higher net worth, KYC and other changes for issuers of prepaid payment instruments

The Indian e-commerce boom coupled with the recent demonetization drive by the Indian Government has put the online payment systems to the forefront as a means of easy e-payments. While cash continues to be the predominant and most preferred mode of payment, the prepaid payment instruments (“PPIs”) such as e-wallets etc. are growing in popularity. As a consequence, the Reserve Bank of India has re-assessed the extant regulations as applicable to the PPIs to make the non-cash payment modes safe, secure and KYC compliant for better risk mitigation and customer protection.

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The Predicament of Linguistic Minority Schools

With the intent to enable minorities to protect and preserve their language, culture and religion and also to promote and provide education to minorities in general, Article 30 of the Constitution of India (“CoI”) grants minorities the right to establish and administer educational institutions/schools of their choice. Minority status educational institutions enjoy several rights/liberties and a much higher level of administrative and operational freedom as compared to non-minority institutions. The obligations of a non-minority institution is further compounded by the provisions of the Right of Children to Free and Compulsory Education Act, 2009 (“RTE Act”), which inter alia requires admission to students of weaker sections and economically deprived community constituting 25% of the total strength of students, an obligation which is not applicable to minority institutions1. Post implementation of the RTE Act, the applications seeking minority status has seen significant increase for the obvious reasons.

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Future of Virtual Currencies in India

The legal status of virtual currencies (“VCs”) such as Bitcoins continues to be debated as it remains unrecognized in India.

The Reserve Bank of India (“RBI”) in the past had issued several advisories clarifying that creation, trading or usage of VCs, as a medium for payment are not authorized by any central bank or monetary authority in India and entails various risks, but RBI stopped short of declaring VCs as illegal. However, pursuant to issuance of these advisories, the Enforcement Directorate did reportedly conduct raids against operators of trading platforms of VCs in India, creating an atmosphere of regulatory uncertainty for the VC industry. In absence of any clear direction or regulation by the Government, the matter of VCs seems to have remained in an uncertain limbo riddled with regulatory pitfalls.  

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“Existence Of A Dispute” Under The Insolvency And Bankruptcy Code Clarified By The NCLAT

The issue concerning conflicting interpretations of the phrase “existence of a dispute” under the Insolvency & Bankruptcy Code, 2016 (“Code”) by the Delhi and Mumbai benches of the National Company Law Tribunal (“Tribunal”) (see One Coat Plaster vs. Ambience Pvt. Ltd., Annapurna Infrastructure Pvt. Ltd. & Ors. vs. Soril Infra Resources Ltd. and Essar Projects India Ltd. vs. MCL Global Steel Pvt. Ltd.), seems to have been put to rest by the National Company Law Appellate Tribunal (“Appellate Tribunal”) for the time being.

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Arbitrator Cannot Lift The Corporate Veil – Delhi High Court

The law with respect to lifting of the corporate veil is well established in India. The courts have time and again held that corporate veil can be pierced only in rare cases where the court concludes that the conduct of the shareholder is abusive and the corporate facade is used for an improper purpose, for perpetuating a fraud, or for circumventing a statute. At the same time, the courts have also taken a view that corporate veil cannot be lifted by an arbitrator in an arbitration proceeding. While discussing the law on the subject in detail, the Delhi High Court (“DHC”) has recently in a judgment passed in the matter of Sudhir Gopi vs. Indira Gandhi National Open University and Another reinforced the said legal position.

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India notifies WTO of Draft Quality Control Solar Photovoltaic Systems, Devices and Components Goods Order 2017

India has, in accordance with the Agreement on Technical Barriers to Trade, through the Ministry of New and Renewable Energy (“MNRE”) notified the World Trade Organization’s (“WTO”) Committee on Technical Barriers to Trade, for circulation of a draft quality control order (G/TBT/N/IND/59) on solar photovoltaic systems, devices and components amongst other member countries and interested international standardizing and conformity assessment bodies to elicit their comments.

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How compliance is the biggest issue for CFOs

As much as Chief Executive Officers (“CEOs”), Chief Financial Officers (“CFOs”) have been involved in corporate scandals reported around the world. There have been instances of connivance between CEOs and CFOs in fraudulent irregularities. Corporate scandals often involve material accounting manipulations, or what is commonly referred to as “cooking the books” which cannot otherwise be accomplished without the tacit nod of the CFO.

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