Is the Apprentices Act Applicable to Your Business?

Background

The Apprentices Act, 1961 was brought in to regulate and promote the training of trade apprentices. The objective was to create a set of proficient tradesmen with specialized skills in their craft. A class of trained personnel who are able to perform specialized functions was seen as fundamental to boosting industrial development. Later amendments to the Act extended its scope and coverage to ensure that it remains relevant in the face of industrial innovation.

The altered landscape of industry brought about by the birth of IT and software-driven innovation is the most recent example of a change that prompted the promulgation of amendments. Other issues with the Act prior to amendment included a complex compliance mechanism, doubts over implementation and hefty penalties. These contributed to the apprenticeship program being unsuccessful in several respects.

It is the most recent amendment to the enactment that draws our attention to the reforms brought in to rationalize the program. The 2014 amendment to the Act aimed to diversify India’s flagship apprenticeship program. It replaced trade-wise regulation of apprentices with a flexible proportion-based system of hiring apprentices. Another major change brought in was the introduction of optional trades. This created apprenticeship opportunities in non-engineering fields as opposed to the traditional engineering-focused schemes of yesteryear.

Several establishments are unaware of the implications of these changes and its applicability to their business/undertaking. This article seeks to clear some of the prevailing confusion surrounding the same and provide employers with answers to frequently asked questions.

Does the Apprentices Act apply to my establishment?

The provisions of the Apprentices Act, 1961 make it abundantly clear that the aim is for the enactment to have the widest possible coverage. The definition of industry is the first example of the above, it encompasses any industry or business in which any trade, occupation or subject field is carried on. These subject fields may be in engineering, non-engineering, technological or vocational domains. The definition of establishment offers another example of the above intention, it includes any place where any industry is carried on. Since industry is so expansively defined it is reasonable to conclude that establishment encompasses all types of undertakings.

Another document that makes the applicability of the Act clear is the Apprenticeship Rules, 1992. Rule-7B makes it abundantly clear that employers having 30 or more employees (both regular and contract) employees are mandated to undertake apprenticeship programs. The same can be found in the FAQs document on the national apprenticeship portal as well.

The term employer is defined to mean any person who employs one or more persons to do any work in an establishment for remuneration and is inclusive of persons entrusted with supervision and control of employees.

A combined reading of the industry, establishment and employer definitions with Rule-7B makes it abundantly clear that the Act applies to all types of establishments. The Central Government has also repeatedly expressed its desire for the enactment to drive an upskilling revolution in India. Therefore, attempting to argue that the Act is not applicable to your establishment as it does not fall under an industry is futile.

Another provision that cements the above conclusion is Section-1(4) of the Apprentices Act, 1961. It clearly specifies that the provisions of the Act shall not apply to the following:

(a)  Any area or any industry in any area unless the Central Government by notification in the Official Gazette specifies it as an area or industry to which the said provisions shall apply with effect from such date as may be mentioned in the notification

(b)  Any such special apprenticeship scheme for imparting training to apprentices as may be notified by the Central Government in the Official Gazette

The above clearly presents us with the only valid manner in which an establishment can argue the Act is inapplicable to them. That is, if the Central Government does not list the industry vide notification in the Official Gazette. Barring the existence of the same it is quite clear that the Act shall apply.

Penalties for Non-Compliance

Section-30 of the Act prescribes the offences and penalties from an employer perspective. Whereas Section-32 prescribes penalties in cases where the person committing an offence under the Act is a company. In case of contravention, employers are given a notice under Section-30 to show cause with regards to the reasons for contravention. Failure to reply to the notice entails a fine of Rs. 500 per shortfall of apprenticeship for the first three months and thereafter Rs. 1000 until such number of seats are filled up. Section-32 deems the persons in charge of and responsible to the company guilty of the offence and liable to be punished.

While the penalties under the Act have been diluted under the 2014 amendment, the same can become hefty as it is based on the number of vacant seats. Therefore, an establishment with 100 vacant seats would have to shell out Rs. 50,000 for shortfall in case of failure to reply to the notice. Compliance is therefore not only imperative due to the above but also because it presents establishments with an opportunity to train and hire talent with significant Government subsidies available for the same.

Is your establishment compliant with the Apprentices Act, 1961?

Do you know how to register on the Apprenticeship Portal?

Are you aware of the compliance requirements under the Act?

Drop your queries and answers in the comments below.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney. Simpliance makes no representations or warranties in relation to the information on this article.