Minister C.V. Ganesan introduces Bill in T.N. Assembly reducing penalty on employers failing to pay full wages

The Tamil Nadu government has tabled a Bill that seeks to reduce the penalty on shops and establishments if they fail to pay full wages to its employees if the employers challenge the order of their reinstatement in higher courts.

When Minister for Labour Welfare and Skill Development C.V. Ganesan tabled the Bill in the House, AIADMK’s Agri S.S. Krishnamoorthy, Congress’ S. Rajesh Kumar, CPI’s T. Ramachandran, PMK’s G.K. Mani, and Panruti MLA T. Velmurugan sought some corrections in it.

Earlier, as per Section 45-A of the Act, any employer who failed to comply with the provisions of Section 41-A shall be punishable with imprisonment for a term which may extend to six months or with fine, or both. However, the Bill tabled in the House on Tuesday, removed Section 45-A. “Any employer who fails to comply a per Section 41-A shall be liable for penalty which may extend to ₹50,000 and where such failure is a continuing one, with a further penalty which may extend to ₹200 for every day,” it read.

If such failure continued after the imposition of penalty or compounding of contravention, the penalty shall not exceed ₹1 lakh in the aggregate, it said. As per Section 41-A of the Act, if the appellate authority directed the reinstatement of any employee and if the employer preferred any proceeding in a High Court or the Supreme Court, the employer was to pay full wages during the pendency of such proceedings.

The Bill also seeks to empower the State government to appoint an adjudicating officer(s), below the rank of Joint Commissioner of Labour, who would determine the penalties under the Act. It also provided for appeal over compounding of offences to the appellate authority. The government said it was making sincere efforts to implement the reforms envisaged in the Business Reforms Action Plan, 2024, and the Reducing Compliance Burden Plus 2024 (RCB 2024+) initiative.

“It is essential to decriminalise the offences under the Tamil Nadu Shops and Establishments Act, 1947, by replacing punishments of imprisonment and fine with penalties and to establish adjudication and appellate mechanism for ease of doing business,” the Bill read. The RCB 2024+, decriminalisation has been clarified as reducing the severity of punishments by removal of imprisonment, introduction of penalty mechanisms, proportionate or graded punishments, and establishing adjudication and appellate mechanisms, it said.