Central

Section 5 of The Labour Laws (Simplification of Procedure for Furnishing Returns and Maintaining Registers by certain Establishments) Act, 1988

The commencement of this Act shall not affect--

(a)the previous operation of any provision of any Scheduled Act or the validity, invalidity, effect or consequence of anything done or suffered under that provision, before the relevant period;
(b)any right, privilege, obligation or liability already acquired, accrued or incurred under any Scheduled Act, before the relevant period;
(c)any penalty, forfeiture or punishment incurred or inflicted in respect of any offence committed under any Scheduled Act, before the relevant period;
(d)any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment aforesaid, and any such investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeitureor punishment shall be instituted, continued or disposed of, as the case may be, in accordance with that Scheduled Act. Explanation.--For the purpose of this section, the expression "relevant period" means the period during which an establishment is or was a small establishment or a very small establishment under this Act.

Summary

This section protects past actions, rights, and legal proceedings that occurred before a business became a small or very small establishment.
It ensures that any legal obligation, right, or liability acquired under a Scheduled Act before this relevant period remains fully active.
Any penalty or punishment for past offences committed before the business qualified under this Act still has to be paid or served.
Any ongoing or new investigation or lawsuit about these past rights or offences must continue or start under the original Scheduled Act.
The relevant period is defined as the time during which the business actually qualifies as a small or very small establishment.

Practical examples

1In 2023, Sunil ran a factory with 50 workers and failed to file his annual return, which was an offence under the Factories Act, 1948. In 2025, his workforce dropped to 12, making him a small establishment. Section 5 means the government can still prosecute him for his 2023 violation under the Factories Act.

2Rekha's business qualified as a small establishment starting January 2025. In December 2024, an employee had filed a claim for unpaid wages under the Payment of Wages Act, 1936. Section 5 ensures this proceeding continues under the old law, even though Rekha's business is now simplified.

FAQ

1. What does the term "relevant period" mean in Section 5?

It means the period of time during which an establishment is or was classified as a small establishment or a very small establishment under this Act.

2. If an offence was committed before the relevant period, can the employer still be punished?

Yes, any penalty, forfeiture, or punishment for offences committed before the relevant period is not affected and still applies.

3. What happens to legal proceedings started before the relevant period?

They will be instituted, continued, or resolved in accordance with the original Scheduled Act.

4. Does the start of this Act erase past liabilities?

No, any right, obligation, or liability acquired or incurred under a Scheduled Act before the relevant period remains fully active.

Test yourself

Q1.What does the "relevant period" refer to under Section 5?

Q2.Does the commencement of this Act affect penalties incurred before the relevant period?

Q3.Under which law must a legal proceeding for an obligation incurred before the relevant period be continued?

Q4.Which of the following is NOT protected from being affected by the commencement of this Act under Section 5?

Q5.What happens to a right or privilege acquired under a Scheduled Act before the relevant period?

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