PRESENTATION ON

LABOUR ACCOUNTING IN

ORDNANCE FACTORIES

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Structure of the Presentation

1.Industrial Employees of Ordnance Factories – its classification, categorization etc.

2.Payment to Industrial Employees - Financial Accounting.

3.Formulas different entitlements and distribution of profit.

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Semi Skilled : Tradesmen and Labours

• Semi-Skilled workers in Ordnance/Ordnance Equipment Factories are of two types viz. Semi-Skilled Tradesmen and Semi-Skilled Labours.

• The tradesmen who are having adequate trade training are

recruited in the semi skilled grade on probation against the available vacancies in skilled grade and after successful completion of probation period and passing of the requisite trade test they are placed as skilled workers.

• Such placement in the skilled grade after putting in the

specific length of service in the Semi-Skilled grade should not be treated as promotion/up-gradation for the purpose of their future financial up-gradations.

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Semi Skilled : Tradesmen and Labours

• The semi skilled labours are basically unskilled and do not have any trade training.

• Such semi-skilled labours must pass necessary trade

test for the Semi-skilled grade to be entitled for appearing the trade test of the skilled grade and further advancement in the hierarchy of the artisan cadre.

• These Semiskilled labours are mainly the erstwhile

Group "D" unskilled labours and NIEs transferred / redesignated as IEs.

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Master Craftsman

• Industrial workers have been classified w.e.f. 01-01-2006 into four grades viz, Skilled, Highly Skilled Grade II, Highly Skilled grade I and Master Craftsman.

• With the issue of the above order of the Ministry of Defence the post of Master Craftsman which was previously within the strength of Highly Skilled grade, has become part of the hierarchy of the artisan cadre w.e.f. 01-01-2006 .

• The movement of Highly Skilled Grade I to the grade of Master Craftsman has become a promotional movement.

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• On Cadre restructuring Industrial Employees in Ordnance Factories (commonly referred to as I.Es) are classified into following categories: -

Grade Percentage of Sanctioned Posts less Sanction for Labours

Master Craftsman 13.75%

Highly Skilled Grade I 20.625%

Highly Skilled Grade II 20.625%

Skilled 45%

Unlike previous restructuring on 20.05.2003 the movement from Skd to HS – II, HS-II to HS-I and HS-I to MCM are all treated as promotion. As such Master Craftsman is now a promotional post.

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• For the purpose of Payment and Cost Accounting, Industrial Employees are further classified into following categories: -

Piece Workers – I.Es engaged in standard jobs which can be estimated in terms of standard time are paid on the basis of Piece Rate system. Day Workers: - All other I.Es are paid on time basis. Direct I.Es – I.Es engaged in Direct outturn Work orders. Mostly Piece Workers,. A few Day Workers may also be engaged in Direct Outturn Work orders. Indirect I.Es – Those engaged in Indirect Work Orders. All Indirect I.Es are Day Workers.

For Purpose of Payment For Costing Purpose

PIECE WORKERS DIRECT I.Es

DAY WORKERS INDIRECT I.Es

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Piece work system – History in Ordnance Factories • Concept of career progression in respect of IEs – 1st introduced

with implementation of Expert Classification Committee (ECC)’s

recommendation in 1981.

• Evolution of norms for career progression of IEs in Ordnance

Factories: -

Expert classification Committee: 16/10/81

For 6 - 15 I.Es – 1 HS I//HS II 16 - 25 I.Es – 2 HS I/HS II 26 – 35 I.Es – 3 HS I/HS II 36 - 45 I.Es – 4 HS I/HS II 46 – 55 I.Es – 5 HS I/HS II each Addl 10 I.Es – 1 Addl HS I/HS II

GOI, MOD letter No 3808/DS (O&M)/Civ-I/84 dt 15/10/84

HS Gr I 15% HS GR II 20% Skilled 65%

Present Master Craftsman (placement) 13.75% Highly Skilled Gr I 20.625% Highly Skilled Gr II 20.625% Skilled 45% 12/17/2018 8

Piece work system – History in Ord. Fys

Evolution of pay scales of I.E’s in Ordnance Factories: -

1st CPC 2nd CPC 3rd CPC ECC 4th CPC 5th CPC 6th CPC

PB +GP

1947 1959 1973 1981 1986 1996 2006

HS Gr-I 80-220 130-300 330-560 380-560 1320-2040 4000-6000 1+ 2800

HS Gr-II 330-480 330-480 1200-1800 1+ 2400

SK 60-130 110-180 260-400 260-400 950-1500 3050-4590 1+ 1900

SSK 35-60 75-110 210-290 210-290 800-1150 2650-4000 1+ 1800

USK 30-35 70-85 196-232 196-232 750- 940 2550-3200 1 + 1300

PB-1 = 5200-20200 , PB-2 = 9300-34800 12/17/2018 9

Piece work system – History in Ord. Fys

Evolution of pay scales of I.E’s in Ordnance Factories: -

7th

CPC 6th

CPC

PB +GP

2016 2006

MCM Level 6 PB 2 +4200

HS Gr-I Level 5 PB1+ 2800

HS Gr-II Level 4 PB1+ 2400

SK Level 2 PB1+ 1900

SSK Level 1 PB1+ 1800

PB-1 = 5200-20200 PB-2 = 9300-34800 12/17/2018 10

Piece work system – Administration in Ord. Fys

• Piece Work System – Conducive for all standard & repetitive jobs.

• To start with, labour estimates are to be prepared [ consult Section –IV

of Chapter XXXI of OFB Procedure Manual]

– Estimates to be priced correct to two places of decimal.

– A list of production groups in a section to be maintained –

number of groups to be restricted to minimum, e.g. autos,

capstans, lathes, turrets, fitters etc.

– Grades of labour to apply to each production group.

– Standard data sheets to be prepared for use of estimating staff

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TURRET

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LATHES

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CAPSTAN

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FITTER

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Piece work system – Administration in Ord. Fys

• Standard Man hour (SMH) for a job = Preparation Time + Operation Time.

• Estimate for a Job will be prepared in terms of Total SMH required to

perform the job.

• Warrant quantity to be decided as (i) Ordered Qty + (ii) Normal unavoidable

rejection + (iii) Proof Quantity, if any. Total time required for a Warrant =

SMH as per Estimate X Warrant Quantity.

• Warrants are issued in terms of Time, i.e. Bare Standard Man Hours For

purpose of calculation of PW Profit, built in incentive factor (25%) will be

taken into account.

• For time rejected on the ground ‘bad workmanship’ – No Piece Work

Payment to be admitted.

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* Daily working hours of an OF are 8 hours without recesses & lunch break. * The factory gate is opened half an hour before the time fixed for commencement of work and closed at fixed time. * The procedure of attendance for late comers will be made indicating late by 15 minutes, 30 minutes and up to one hour. * After implementation of Electronic Attendance Recording System late is marked on minute to minute basis instead of 15 minutes slot. * No one is normally allowed inside the factory after one hour

Cont…

Mustering system

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•The late attendance of workers due to late running/cancellation of local/shuttle trains may be condoned up to a maximum limit of three hours by the GM of the Factory if he satisfied that late attendance is solely due to late running of trains.

Marking of attendance in muster rolls will be done with reference to the actual time of attendance of the

workers.

If any over time is worked by the affected personnel on the date of late attendance, the overtime will be reduced proportionately.

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Mustering on Saturday is distinct from other working days UNDER Factory Act 1948, no adult worker in a factory is required to work more than 48 hours in a week. The total normal working hours in a week in the Ordnance and Ordnance Clothing Factories have however been fixed at 44¾ hours excluding intervals for recess. The difference between 48 hours and 44¾ hours i.e. 3¼ hours has been viewed as Saturday Bonus

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Present on Saturday for

hours

Booking of Attendance

0 13/32

1 17/32

2 21/32

3 25/32

4 29/32

4 ¾ (Full present) 32/32 = I

SATURDAY BONUS

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FOLLOWING ARE THE STAGES OF ACCOUNTING OF WAGES: -

1. Recording of attendance to fetch input hours.

2. Booking in the DW/PW cards.

3. Posting & up gradation of Warrant.

4. Element wise workout of different scale of entitlement.

5. Reconciliation of gross entitlement with available budget.

6. Disbursement of pay & booking of the financial code head.

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Wage Period

• Wage paid to the workmen otherwise known as industrial employees cater on monthly basis starting from first of the wage month (calendar month) to last day of the wage month excluding off days

• Under the payment of wages Act’ 1936 the

wages for any wage period in OF’s are payable before the expiry of 10th day following the last day of wage period, If the total IE’s are 1000 or more otherwise before expiry of 7th day following.

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DAILY RATES OF PAY • DAY WORKERS:-

(BASIC PAY RATE)/(N-(S+H))

WHERE N = NUMBER OF DAYS IN A MONTH

S = NUMBER OF SUNDAYS IN THE MONTH

H = NUMBER OF HOLIDAYS IN THE MONTH

• PIECE WORKERS:-

(BASIC PAY RATE)/(N-S)

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DIFFERENT ELEMENT OF WAGES ENTITLED TO

INDUSTRIAL EMPLOYEES • Duty pay at basic monthly rate (for day workers) based on

attendance or Duty pay at basic monthly rate and an element of profit (for piece workers) calculated on the basis of input hours.

• Other elements of pay e.g. Idle Time Pay, Over Time Pay, Leave Pay, Holiday Pay, Injury Pay, etc.

• Certain allowances like DA, HRA, Transport allowance at the prescribed paid down by the Govt. under different rules.

• Overtime bonus, Night Shift Allowance, Night Shift Bonus, Incentive Bonus (for Maintenance works only) and other remuneration payable under rules.

• Duty pay at basic monthly rate is also called time wage in respect of D. W. This is because the day workers are to be paid on time basis without regard to output.

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Payments to Industrial Employees

Piece Workers: elements of Pay: -

Basic Pay (Band Pay + Grade Pay) for attended days.

Holiday Pay.

Leave pay for sanctioned Leave days.

Dearness Allowance as per prescribed rate.

House Rent Allowance, if admissible.

Transport Allowance

NSB , NDA, Guarantee Pay, Idle Time Pay

Piece Work Profit.

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Payments to Industrial Employees Day Workers: elements of Pay: -

Basic Pay (Band Pay + Grade Pay) for attended days.

Leave pay for sanctioned Leave days.

Dearness Allowance as per prescribed rate.

House Rent Allowance, if admissible.

Transport Allowance

NDA , Idle Time Pay

Incentive Bonus for Maintenance Workers.

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Payments to Industrial Employees Incentive Bonus: -

Incentive Bonus will be paid to all maintenance workers (other than Unskilled Workers).

Incentive Bonus for maintenance workers attached to Production shops = @ 50% of Piece Work Profit earned by Piece Workers attached to the shop.

Incentive Bonus for certain categories of maintenance workers not attached to Production shops = @ 50% of the average Piece Work Profit earned by Piece Workers attached in the whole factory..

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Payments to Industrial Employees During Strike • The period of strike/token strike resorted to by industrial employees

is to be regarded as ‘Dies-non’. It counts neither as service nor as break in service.

• Unless otherwise stated no pay and allowance will be admissible to workers for the period they are on strike/token strike, etc.

• Deduction of wages on account of periods of strike for part of a day will be made as under:

• For Day Workers: • {Basic monthly pay+ DA+Other Allowances} x Period of Strike (Dies non Period) in hour

N-(S+H) Normal working hours per day

• For Piece Workers: • {Basic monthly pay + DA+Other Allowances} x Period of Strike (Dies non Period) in hour

N-S Normal working hours per day

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Idle time • When under certain conditions, as specified below, workmen neither can be

engaged in the normal production activities nor can suitable alternative employment arrangement be made for them, in such circumstances ‘Idle Time’ payment may be made to workmen.

• Conditions for grant of Idle Time

• 1. High atmospheric humidity hindering certain operations in explosive factories or Unfavorable weather

• conditions hindering specialized optical work depending on sun light.

• 2. Plants, furnace and transport break downs, inspection & repairs.

• 3. Temporary shortage of material.

• 4. Failure of power supply.

• 5. Temporary shortage of work in highly specialized sections such as instrument repair and optical sections

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Payments to Industrial Employees

Overtime Payment: -

Piece Workers: -

For OT hrs worked upto 48 hrs a week or 9 hrs a day: - @ (P1/200) X No of OT Hrs worked upto 48 hrs a week or 9 hrs a day. Where, P1 denotes @ correlated pay of 6th CPC

For OT hrs worked beyond 48 hrs a week or 9 hrs a day: - @ [(2.25 P2 + 2DA)/200)] X No of OT Hrs worked beyond 48 hrs a week or 9 hrs a day. Where, P2 denotes actual Basic Pay as per 7th CPC scale.

Besides, for working during OT hrs, Piece Workers also get PW Profit on OT Pay amount calculated @ correlated pay of 6th CPC

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Payments to Industrial Employees

• Overtime Payment:

Day Workers: -

• For every hour of overtime work between 8 hours and 9 hours on any day or between 44 ¾ hours and 48 hours in a week.

: - @ [(P2 + DA)/200]

For each hour of overtime work beyond 9 hours a day or 48 hours in a week. : - @ [(2 P2 + 2DA)/200)]

Where, P2 denotes actual Basic Pay as per 7th CPC scale.

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Accounting of I.E’s payments • For each section there will be two labour rates, one

each for Piece Workers and Day Workers.

• Labour rates will be worked out with reference to actual payment made during the month.

• Calculation of labour rates for a section: -

Labour rate in respect of Piece Wkrs

Gross wages paid to the Piece Wkrs in the section during the month / Total SMH discharged through PW Cards

Labour rate in respect of Day Wkrs

Gross wages paid to the Day Wkrs in the section during the month / Total hours worked by Day Wkrs.

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Accounting of I.E’s payments • Gross Wages of the Sec (both for Piece Wkrs & Day

Wkrs) will include all elements of pay except: -

• PLB.

• Arrears of Pay & Allowances.

• Idle time beyond control.

• Re-imbursement of Med expenses.

• Direct Labour cost for each warrant under series of outturn Work Orders for a section during a month will be computed as ∑[(Piece Wkr’s rate of the Sec X Card Hrs for respective warrant ) + (Day Wkr’s rate of the sec X No of hrs shown against particular warrant as per Day Wkrs allocation sheet)] 12/17/2018 35

Accounting of I.E’s payments • Similarly , Indirect Labour cost for each Indirect Work

Order for a section during a month will be computed as (Day Wkr’s rate of the sec X No of hrs shown against particular Indirect Work Order as per Day Wkrs allocation sheet)]

• For purpose of estimation, labour estimates will be priced in computer, on half yearly basis with reference to the average Direct Labour rate based on the actual of past six months.

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When an worker was deployed partly on piece work basis and partly on Day work basis, as per the existing system,

The individual is paid PW Earning (NTW+Profit) for the period he was engaged on the piece work system and the time wages calculated at the rate of 1/N-S for the period he was deployed as a day worker.

To Implement the present system, other elements of pay like DA, HRA, TA, OT, OTB, NSA, Leave Pay etc., are to be bifurcated pro-rata of PW & DW Days and will be shown separately for Day work and Piece work period.

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Agreement Form of Labour

• Prepared by Accounts Office in duplicate .

• Shows the total amount passed for payment section wise.

• Forwarded to GM Factory who returns one copy duly completed.

• It shows amount actually paid, undisbursed wages, LF etc recovered, IT ,PF recoveries and other deductions.

• All supporting documents and schedules are also forwarded by 10th of the following month

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Disbursement Certificate

• Prepared monthly by Fys for IEs who are paid out of advances obtained from LAO .

• The payment side of DC shows the following.

i) Total Amt passed for payment

ii) Deductions made

iii) The net amount payable and actual amt disbursed.

• Arrear wages paid and also the payments made through supplementary bills are also noted

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Disbursement Certificate (DC) DC is a statement furnished by factory management for IEs Payment. The DC Shows the following information.

Payment Side Receipt Side • Total amount passed for

payment in the Muster Roll

• The Net Amount payable and actual amount disbursed

• Payment of arrear wages

• Payment through Supple-mentary Bills.

• Undisbursed Wages

• Advances received from the AO and sums, if any, drawn on Emergency Cash Requisition

• Any receipt for undisbursed Wages remitted by money order.

Absentee Payment Register

Maintained separately for

each section for each month in the loose leaf form

in which all amounts remaining undisbursed on the regular pay day are noted and

so also the payments made there­ from.

When all payments have been completed from a sheet in the Absentee Payment Register and necessary audit check has been carried out

the sheet will be removed from the register and attached with the last page, of the relevant acquaintance (Muster Roll).

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