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Employees to get 12% interest from employer on compensation delayed beyond 30 days: New rules proposed

The Financial Express logo The Financial Express 19-06-2021 Rajeev Kumar
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Employee’s Compensation payment (draft) rules 2021: The Union Ministry of Labour and Employment has put draft Code on Social Security (Employee's Compensation) (Central) Rules, 2021 in the public domain for feedback from various stakeholders. The draft compensation rules have been proposed in suppression to the previous such rules that have been repealed by section 164 of Code on Social Security 2020.

The draft rules have proposed that the employee should be paid simple interest at the rate of 12 per cent on compensation delayed by more than 30 days by the employer. "If the amount of compensation payable under sub-section (3) of section 77 is not paid by the employer within the period of thirty days, the employer shall pay, from the date on which the compensation become payable to the date on which it is paid, simple interest at the rate of twelve per cent. per annum or any other rate notified by the Central Government from time to time," the draft rules say.

Sub-section (3) of section 77 of the Code on Social Security provides the rule to be followed if the employer is in default in paying the compensation within one month from the due date. According to Section 76 of the Code on Social Security, the amount of compensation in case of death due to injury should be 50% of the monthly wages of the deceased employee multiplied by the "relevant factor" as notified by the Central Government. In case of permanent total disablement due to the injury, an amount equal to 60 per cent of the monthly wages of the injured employee multiplied by the "relevant factor" or an amount as may be notified by the Central Government from time to time, should be paid.

Sub-section (1) of section 77 says that the compensation under Section 76 should be paid as soon as it falls due.

The draft rules propose that money transmitted by one competent authority to another in accordance with sub-section (3) of section 92 should be either by remittance receipt or by e-transfer or by net banking or by Demand Draft, as the competent authority transmitting the money may direct.

In case of transfer of money paid as compensation in arrangement with other countries, the new proposed rules say that the cost of such transmission may be deducted from the amount to be transmitted.

"When any sum is transmitted by any authority in India to any other authority in accordance with these rules, the costs of such transmission may be deducted from the sum so transmitted," the rules say. Money transmitted by any authority in India to any other authority in India in accordance with these rules, has been proposed to be transmitted by remittance transfer receipt or by money order.

The draft rules further propose that if the whole or any part of a lump sum deposited with a competent authority for payment as compensation under the Code is payable to any person or persons residing or about to reside in any other country, the competent authority may order the transfer to that country of the sum so payable.

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