Inspector-cum-Facilitators, Records and Wages

Section 122(3), randomised selection. Those Governments may by notification confer on Inspector-cum-Facilitators such jurisdiction of randomised selection of inspection as may be specified.

Section 122(4), what the scheme takes into account. The scheme may be designed considering, among other things:

• (a) assignment of a unique number to each establishment, which is the same as its registration number, to each Inspector-cum-Facilitator and to each inspection;
• (b) timely uploading of inspection reports;
• (c) provision for special inspections on notified parameters; and
• (d) the characteristics of employment relationships, the nature of work and the characteristics of the workplaces on notified parameters.

Clause (a) is quietly important. The establishment's inspection number is its registration number under section 3, so registration, inspection, assessment and recovery all run on one identity.

Section 122(5), the two functions. The Inspector-cum-Facilitator may:

• (a) advise employers and employees relating to compliance with the provisions of this Code; and
• (b) inspect the establishments as assigned to him,

subject to the instructions or guidelines issued by the appropriate Government from time to time.

Advice comes first in the section, and that ordering is the whole reform. In an exam, name both functions and say which the Code lists first.

Section 122(6), the powers. Subject to sub-section (4), he may:

• (a) examine any person found in any premises of the establishment whom he has reasonable cause to believe is an employee;
• (b) require any person he has reasonable cause to believe is an employer to produce any document or give any information in his power, for any of the purposes of the inspection;
• (c) search, seize or take copies of any register, record of wages or notices, or portions of them, which he considers relevant in respect of an offence under the Code which he has reason to believe the employer has committed;
• (d) bring to the notice of the appropriate Government defects or abuses not covered by any law for the time being in force; and
• (e) exercise such other powers as the appropriate Government prescribes.

Notice the threshold on each. Examination needs reasonable cause to believe the person is an employee; requisition needs the same as to the employer; and search and seizure need a reason to believe an offence has been committed. The powers are not at large.

Section 122(7), refusal is an offence. Any person required to produce a document or give information under sub-section (6) is deemed legally bound to do so within the meaning of sections 175 and 176 of the Indian Penal Code 1860.

Section 122(8), search and seizure. The provisions of the Code of Criminal Procedure 1973 apply, so far as may be, to a search or seizure under sub-section (6), as they apply to a search or seizure under a warrant issued under section 94 of that Code.

Section 123: records, registers, returns and notices

An employer of an establishment shall maintain records and registers, in the form prescribed by the appropriate Government, electronically or otherwise, with particulars of persons employed, muster roll, wages and other details, including:

1. number of days for which work was performed by employees;
2. number of hours of work performed;
3. wage paid;
4. leave, leave wages, wages for overtime work and attendance;
5. employees identification number, by whatever name called;
6. number of dangerous occurrences, accidents and injuries for which compensation has been paid, and the amount, relating to Chapter IV and Chapter VII respectively;
7. statutory deductions made from wages in respect of Chapter III and Chapter IV;
8. details of cess paid in respect of building and other construction work;
9. total number of employees, regular, contractual or fixed term, on the specified day;
10. persons recruited during a particular period;
11. occupational details of the employees; and
12. vacancies for which suitable candidates were not available during the specified period.

The section then adds three more duties, and one of them is easily missed:

• (b) display notices at the workplaces of the employees, in the prescribed manner and form;
• (c) issue wage slips to the employees, in electronic form or otherwise; and
• (d) file returns, electronically or otherwise, to the prescribed officer or authority, in the prescribed manner and periods. This is the clause section 103(1) points to for the building cess return.

Two provisos fix where the detail lives. For Chapter III, the matters that would otherwise be in rules made by the Central Government are instead provided in the Provident Fund Scheme, the Pension Scheme or the Insurance Scheme. For Chapter IV, the forms of records, registers and returns are specified in the regulations rather than in rules.

Clause (c), the wage slip, is the one students omit. It is a duty owed to the employee, not to the Government, and it is the document by which a worker can see what has been deducted from him.

Item (xii) is the one to notice. It ties back to Chapter XIII, the career centre provisions, because a record of unfilled vacancies is the raw material of the employment information system.

Section 124: no reduction of wages

No employer in relation to an establishment to which the Code or any scheme framed under it applies shall, by reason only of his liability for the payment of any contribution or charges under the Code, reduce, whether directly or indirectly:

• the wages of any employee to whom the Code or a scheme applies; or
• the total quantum of benefits to which the employee is entitled under the terms of his employment, express or implied.

Short, and among the most important sections in the Code, because it stops the whole scheme from being self-defeating. If an employer could recover his contribution by cutting the wage it is calculated on, the worker would pay for his own social security twice over.

Three words carry the section.

"By reason only of" is the limit. An employer may still reduce wages for a genuine independent reason, such as a business downturn. What he may not do is reduce them because of the contribution.

"Directly or indirectly" is the reach. Cutting the basic wage is direct. Withdrawing an allowance, a bonus or a facility to fund the contribution is indirect, and equally caught.

"Total quantum of benefits" extends the protection beyond money to the whole package under the contract, express or implied.

A worked example

Kiran runs a printing works with forty employees, covered by Chapters III to VII.

Who appoints the officer who may inspect her? For Chapters III and IV, the Central Government; for the rest of the Code, the appropriate Government: section 122(1).

Can he simply arrive because he chooses to? He discharges his duties and exercises his powers in accordance with the inspection scheme notified under section 122(2), and inspects establishments as assigned to him under section 122(5)(b). Section 122(3) allows the jurisdiction of inspection to be conferred by randomised selection.

Can he ask her accounts clerk questions? He may examine any person found on the premises whom he has reasonable cause to believe is an employee: section 122(6)(a).

Can he take the wage register away? He may search, seize or take copies of a register, record of wages or notices which he considers relevant in respect of an offence under the Code which he has reason to believe the employer has committed: section 122(6)(c). The Code of Criminal Procedure 1973 applies to that search or seizure as it applies to one under a section 94 warrant: section 122(8).

Kiran refuses to produce the muster roll. She is deemed legally bound to produce it within the meaning of sections 175 and 176 of the Indian Penal Code 1860: section 122(7).

She asks him how to compute the contribution correctly. That is squarely his job. Section 122(5)(a) makes advising employers and employees on compliance his first listed function.

What must she keep? One set of records and registers under section 123, electronic or otherwise, covering days and hours worked, wages, leave and overtime, employee identification numbers, accidents and compensation for Chapters IV and VII, statutory deductions for Chapters III and IV, building cess, headcount by category, recruitment, occupational details, and vacancies she could not fill.

Her provident fund liability rises and she cuts the transport allowance to pay for it. That is unlawful. Section 124 forbids reducing, directly or indirectly, the wages or the total quantum of benefits, by reason only of liability for a contribution. Cutting an allowance to fund the contribution is the paradigm indirect reduction.

She instead cuts wages across the board because she has lost her largest customer. Section 124 does not bite, because the reduction is not by reason only of the contribution liability.

What this does NOT mean

The Inspector-cum-Facilitator is not merely a renamed inspector. Section 122(5) gives him a distinct advisory function, and section 122(2) to (4) subject his inspections to a notified scheme with unique numbering, uploaded reports and randomised selection.

His powers are not unconditional. Each requires reasonable cause or reason to believe, and search and seizure attract the Code of Criminal Procedure.

Section 123 is not nine registers. It is one set of records for the whole Code, in a prescribed form, electronic or otherwise.

Section 124 does not freeze wages. It forbids a reduction made by reason only of the liability to contribute.

Section 124 is not confined to cash. It protects the total quantum of benefits under the terms of employment, express or implied.

Limits and criticism

The inspection scheme is entirely delegated. Section 122(2) to (4) describe what a scheme may provide. Until one is notified, the reform exists on paper.

"Special inspections" survive randomisation. Section 122(4)(c) preserves inspections on notified parameters, which is necessary but is also the route by which targeted inspection returns.

Section 124 has no stated remedy. It prohibits the reduction but the consequence must be found in Chapter XII and in the general law of contract.

The record keeping list is long for a small employer, and the relief the Code offers is that it is one list rather than nine, not that it is short.

Quick revision

• Section 122(1) to (4): Central Government for Chapters III and IV, appropriate Government otherwise; a notified inspection scheme, web based, with unique numbers matching the registration number, timely uploaded reports, special inspections and randomised selection.
• Section 122(5): advise on compliance, and inspect as assigned. Advice is listed first.
• Section 122(6): examine a person reasonably believed to be an employee; require an employer to produce documents or information; search, seize or copy registers where there is reason to believe an offence has been committed; report defects or abuses not covered by law; other prescribed powers.
• Section 122(7): refusal engages sections 175 and 176 of the Indian Penal Code 1860. Section 122(8): the Code of Criminal Procedure 1973 applies to search and seizure as under a section 94 warrant.
• Section 123: (a) one set of records and registers, electronic or otherwise, covering twelve listed matters including accidents and compensation, statutory deductions, building cess and unfilled vacancies; (b) display notices; (c) issue wage slips to employees; (d) file returns. Chapter III detail sits in the Schemes, Chapter IV forms in the regulations.
• Section 124: no reduction of wages or of the total quantum of benefits, directly or indirectly, by reason only of liability to contribute.

Test yourself

1. What are the two functions of an Inspector-cum-Facilitator, and which does the Code list first? To advise employers and employees relating to compliance with the Code, and to inspect the establishments assigned to him: section 122(5). Advice is listed first, which is the change from the old inspectorate.

2. On what basis may an establishment be selected for inspection? In accordance with the inspection scheme notified under section 122(2), and section 122(3) allows the Government to confer jurisdiction of randomised selection of inspection.

3. What must the officer have before he may seize a wage register? He must consider it relevant in respect of an offence under the Code and have reason to believe that the employer has committed it: section 122(6)(c). The Code of Criminal Procedure 1973 then applies to the search or seizure as it would to one under a warrant issued under section 94 of that Code.

4. An employer refuses to give information to the officer. What follows? He is deemed legally bound to give it within the meaning of sections 175 and 176 of the Indian Penal Code 1860: section 122(7).

5. An employer withdraws a canteen subsidy to pay for his increased provident fund liability. Is that lawful? No. Section 124 forbids an employer from reducing, directly or indirectly, the wages or the total quantum of benefits to which an employee is entitled under the terms of his employment, express or implied, by reason only of his liability to pay a contribution or charges under the Code. Withdrawing a benefit to fund the contribution is an indirect reduction.

6. Could that employer lawfully cut wages after losing a major contract? Yes. Section 124 bites only where the reduction is by reason only of the liability to contribute. A genuine independent business reason is outside it.

7. Name three of the particulars section 123 requires an employer to record. Any three of: days worked; hours worked; wages paid; leave, leave wages, overtime wages and attendance; employee identification numbers; dangerous occurrences, accidents and injuries with compensation paid under Chapters IV and VII; statutory deductions under Chapters III and IV; cess paid on building work; total employees by category; persons recruited; occupational details; and vacancies for which suitable candidates were not available.