Gratuity cover for employees on wages and audit of local bodies soon

GANGTOK, 19 March: The two day Assembly session which began today to Vote on Accounts and pass the supplementary demand for grants might have met for only a brief while today, but saw the tabling of two substantial Bills, one an amendment and the other a new Bill, which should gladden many hearts and, in their individual capacities, will go a long way towards ensuring social security for employees by making payment of gratuity mandatory and determining accountability among elected local bodies.
The two Bills in question are the Sikkim Shops and Commercial Establishments [Amendment] Bill, Bill No. 21 of 2012, presented by the Labour Minister, Neeru Sewa, and the Sikkim Local Fund Audit Bill, Bill No. 22 of 2012, introduced by Chief Minister Pawan Chamling, who is also the Minister-in-Charge of Finance, Revenue and Expenditure Department.
The statement of objects and reason accompanying the Amendment to the Sikkim Shops and Commercial Establishments of 1983 explains that the State Government “deemed it expedient to amend the Sikkim Shops and Commercial Establishment Act, 1983 with the view to dispose of the disputes/ offences expeditiously by making provision for compounding the offences committed by the shopkeepers/ employers.”
Among amendments, the said Bill seeks to add that “the employee shall be entitled to gratuity as per the provisions of the Payment of Gratuity Act, 1972 and the rules framed there under.”
The Payment of Gratuity Act 1972 is a social security enactment. It is derived from the word ‘gratuitous’, which means ‘gift’ or ‘present’. However, having being enacted as a social security form, it ceases to retain the concept of a gift but it has to be seen as a social obligation by an employer towards his employee.
This Act extends to “every factory, mine, oilfield, plantation, port and railway company; every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishment in a State, in which 10 or more persons are or were employed on any day in the preceding 12 months; Such other establishments or class of establishment, in which 10 or more employees are or were employed on any day in the preceding 12 months, as the Central Government may notify in this behalf; Any shop or establishment shall continue to be governed by the Act even if the number of its employees comes below 10 persons at any time in the future.”
The Act dictates that gratuity be paid to an employee hired on wages on the termination of her/ his employment after s/he has rendered continuous service of not less than 5 years i.e. on superannuation, retirement, resignation, death or disablement due to accident or disease. The period of 5 years is however not necessary if the termination of the employee is because of death or disablement.
As per the Payment of Gratuity Act 1972, the amount of gratuity is to be calculated in the following way: “For every completed year of service or part thereof in excess of six months, the employees, other than the seasonal employees are entitled to gratuity at the rate of fifteen days’ wages based on the rate of wages last drawn.  The employees of seasonal establishment who do not work throughout the year are entitled to gratuity at the rate of seven days’ wages for each season.  These provisions do not, however, affect the right of an employee to receive better terms of gratuity under any award or agreement of contract with the employer.”
Also, the employers have to pay the gratuity within thirty days from the date it becomes due and if the gratuity is not paid within the prescribed time limit, the employer is required to pay the amount of gratuity with interest as specified by the Government from time to time.
The amendment tabled in the Assembly today, also seeks to insert a new section- “78A. Composition of certain offences 78A” which proposes that offences may, either before or after the institution of the prosecution, be compounded by any officer not below the rank of Joint Labour Commissioner, authorized by the Government, by notification, for an amount which shall not be less than five hundred rupees and not exceeding two thousand rupees. Another part of new section states: “(2) on payment of such sum under sub-section (1), the offender, if in custody, shall be discharged and no further proceeding shall be taken against him in respect of the said offence: Provided that if a person commits similar offence again within the period of first offence, the same shall not be compounded.”
The other Bill placed in the House today is the Sikkim Local Fund Audit Bill, which seeks to provide for and regulate the audit of the local funds under the management or control of local authorities in the State, viz, the panchayats and the urban local bodies.
The statement of objects and reasons for this Bill explains that it is required to “obtain credible data on the financial performance of Local Bodies and to ensure that all Panchayati Raj Institutions and Urban Local Bodies maintain up to date and audited accounts.” Towards this end, the Thirteenth Finance Commission has recommended for preparation, and auditing of accounts of all local bodies on a regular basis in a uniform manner across the State.
The new Bill requires that the Annual Report of the Director of Local Fund Audit be placed before the State Legislature.
The State Government meanwhile is required to put in place an audit system for all local bodies and that the Annual Report be placed before the Sikkim Legislature in order to be eligible to draw down its share of the general performance grant.
The bill proposes that the State government, by Notification in the Official Gazette, appoint a Director of Local Fund Audit In-charge of the Audit of Accounts of the Local Authority.
The Bill also states that “whenever any defalcation or loss in money or stores of a local authority is discovered, the fact shall be promptly reported by the Executive Authority to the Director and to the Controlling Authority giving in detail the circumstances which led to such defalcation or loss.”
This Act covers all Municipal Corporations, Municipalities, Gram Panchayat Units and Zilla Panchayats.