• J. MEHTA & Company
  • J. MEHTA & Company
  • J. MEHTA & Company
  • J. MEHTA & Company
  • J. MEHTA & Company

The Employees' Provident Funds Misc. Provisions Act & The Schemes

Employees Provident Fund

Eligibility

Any person who is employed for work of an establishment or employed through contractor in or in connection with the work of an establishment.

Applicability

  • Every establishment which is a factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed.
  • Any other establishment employing 20 or more persons which Central Government may, by notification, specify in this behalf.
  • Any establishment employing even less than 20 persons can be covered voluntarily u/s 1 (4) of the Act.

Penal Provision

Liable to be arrested without warrant being a cognizable 2ji offence. Defaults by employer in paying contributions or ^^2i|H7 inspection/adminis tra tive charges attract imprisonment upto 3 years and fine upto Rs. 10,000 (Sec. 14). For any 15 "r retrospective application, all dues have to be paid by employer with damages upto 100% of arrears.

  • Payment of Contribution

    • The employer shall pay the contribution payable to the EPF, DLI and Employees' Pension Fund in respect of the member of the Employees' Pension Fund employed by him directly by or through a contractor.
    • It shall be the responsibility of the principal employer to pay the contributions payable to the EPF, DLI and Employees' Pension Fund by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor.
  • Benefits

    Employees covered enjoy a benefit of Social Security in the form of an un-attachable and un withdrawable (except in severely restricted circumstances like buying house, marriage/education, etc.) financial nest egg to which employees and employers contribute equally throughout the covered persons' employment.

    This sum is payable normally on retirement or death. Other Benefits include Employees' Pension Scheme and Employees' Deposit Linked insurance Scheme

Clarification about Contribution

Alter revision in wage ceiling from Rs. 5000 to Rs. 6500 w.e.f. 1-6-2001 per month, the government will continue to contribute 1.16% upto the actual wage of maximum Rs .6500 per month towards Employees' Pension Scheme. The employer's share in the Pension Scheme will be Rs. 541 w.e.f. 1-6-2001.

Under Employees' Deposit-Linked Insurance Scheme the contribution of 0.50% is required to be paid upto a maximum limit of < Rs. 6500. The employer will pay administrative charge & 0.01% on a maximum limit of Rs. 6500.

The employer will also pay administrative charges @ 0.01% on maximum limit of Rs.6500 whereas an exempted establishment will pay inspection charges @ 0.005% on the total wages paid

Notes

The above clarification is given by taking wages upto a maximum of Rs. 6500 towards wage (basic + DA).

Since an excluded employee i.e. drawing wages more than Rs. 6500 can also become member of the Fund and the Schemes on joint request and will, for instance, such an employee is getting Rs. 10,000 per month, his share towards provident fund contribution will be Rs. 1200 e.g. 12% and employer's share towards provident fund contribution will be Rs 659 and Rs.541 towards Employees Pension Fund.


Rates of Contribution

Scheme Employees' Employers' Central Govt.'s
Provident Fund Scheme 12% Amount > 8.33% (in case where contribution is 12% or 10%) 10% (in case of certain Establishments as per details given earlier) NIL
Insurance Scheme NIL 0.5% NIL
Pension Scheme NIL 8.33% (Diverted out of Provident Fund Contributions) 1.16%

Damages
Damages Per annum
Less than 2 months @17%
Two months and above but less than four months @22%
Four months and above but less than six months @27%
Six months and above @37%

The Employees' State Insurance Act & The Scheme Checklist

The Employees' State Insurance Act

Applicability of the Act & Scheme

Is extended area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establishments employing 20 or more persons upto Rs. 6500/- per month. It has also been extended upon shops, hotels, restaurants, road motor transport undertakings. equipment maintenance staff in the hospitals.

Coverage of employees

Drawing wages (w.e.f. 1-10-2006) upto Rs. 1,00,007 - per month engaged either directly or thru' contractor.

Rate of Contribution of the wages

Employers' 4.75%
Employees' 1.75%

Contribution period

1st April to 30th September
1st October to 31st March

Benefit period

When obtained by misrepresentation or suppression of material facts etc. after opportunity to the principal employer.

The Esi Scheme Today
Description Value
No. of implemented Centers 677
No. of Employers covered 2.38 lacs
No. of Insured Persons 85 lacs
No. of Beneficiaries 330 lacs
No. of Regional Offices/SRO's 26
No. of ESI Hospitals/Annexes 183
No. of ESI Dispensaries 1453
No. of Panel Clinics 2950

Wages for Esi Contributions

Registers/fifes to be maintained by the employers

To be deemed as wages

  • Basic pay
  • Dearness allowance
  • House rent allowance
  • City compensatory
  • Overtime wages (but not to be taken into account for determining the coverage of an employee)
  • Payment for day of rest
  • Production incentive
  • Bonus other than statutory bonus
  • Night shift allowance
  • Heat, Gas & Dust allowance
  • Payment for unsubstituted holidays
  • Meal/food allowance
  • Suspension allowance
  • Lay off compensation
  • Children education allowance (not being reimbursement for actual tuition fee)
  • Conveyance

NOT to be deemed as wages

  • Contribution paid by the employer to any pension/provident fund
  • Sum paid to defray special Daily allowance paid for the period spent on tour.
  • Gratuity payable on discharge
  • Pay in lieu of notice of retrenchment compensation
  • Benefits paid under the ESI Scheme
  • Encashment of leave
  • Payment of Inam which does not form part of the terms of employment
  • Washing allowance
  • Amount towards reimbursement for duty related journey.

The ESI Benefits

Employees' State Insurance Act, 1946 Is the first major legislation on comprehensive social security for workers in Independent India. The Act envisages social protection of workers in conceivable exigencies such as deployed In organized sector of Independent India. The details of benefits, conditions for eligibility ana duration or benefits as follows:

1. Sickness Benefit (SB)

Sr. No. Benefits Eligibility Conditions Duration & Scale of Benefits
1.a Ordinary SB Payment of contribution for 7B days In one contribution period of 6 months. Upto 91 days in 2 consecutive benefit periods at the standard Sickness Benefit Rate (S0R) i.e. just above 50% of the wages.
1.b Enhanced SB Payment of contribution for 7B days In one contribution period of 6 months. 14 flays for ubectomy & 7 days (or vasectomy. extendable on medical advice. Rate Of payment 100% of the wages.
1.c Extended SB For 34 specific iong-ierm diseases. Continuous insurable employment for 2 years with 156 days contribution in consecutive contribution periods. 124 days which may be extended up lo 2 years on medical advice during a period of three years in insurance employment. Rate: 70% wages approx.

2. Disablement Benefit (DB)

Sr. No. Benefits Eligibility Conditions Duration & Scale of Benefits
2.a Temporary DB From day 1 of entering employ man! & irrespective of having paid any contribution. As long as temporary disablement lasts Rate : 70% of wages approx.
2.b Permanent DB From day 1 of entering employ man! & irrespective of having paid any contribution. For whole life. Rate ; Up to 70% of wages depending upon loss of earning capacity.

3. Dependents Benefit

Benefits Eligibility Conditions Duration & Scale of Benefits
Dependents Benefit From day 1 of entoring insurable employment & Irrespective of having paid any contribution in case of death due to employment injury. For life to the widow or until her re-marriage. To the legitlmate dependant children till the age of 18 years. To dependent parents for life, Rate; 70% of the wages approx. shareable in fixed proportion.

4. Maternity Benefit

Benefits Eligibility Conditions Duration & Scale of Benefits
Maternity Benefit Payment of contribution for 70 days in 2 preceding contribution periods (1 year) 12 Weeks in case of normal delivery. 6 weeks in case of miscarriage. Extendable by 4 weeks on medical advice Rate : Almost full wages.

5. Medical Benefit

Benefits Eligibility Conditions Duration & Scale of Benefits
Medical Benefit Full medical facilities for self and dependants from day 1 of entering insurable employment. Full medical care till disease or disablement lasts. No ceiling or upper limit on expenditure for individual cases, Retired insured persons who have been in insurance employment for atleast 5 years before superannuation and disabled insured persons and entitled to full medical care for self and spouse only on payment of Rs. 120/- as annual contribution.

6. Funeral Expenses

Benefits Eligibility Conditions Duration & Scale of Benefits
Funeral Expenses From day 1 of entering insurable employment. For defraying expenses on the funeral of an Insured person. Rate: Actual expenses subject to a maximum of Rs. 2500/-

7. Vocational Rehabilitation

Benefits Eligibility Conditions Duration & Scale of Benefits
Vocational Rehabilitation In case of physical disablement due to employment injury. As long as vocational training lasts. Actual fee charged or Rs. 45/- a day whichever Is more.

8. Physical Rehabilitation

Benefits Eligibility Conditions Duration & Scale of Benefits
Physical Rehabilitation In case of physical disablement due to employment injury. As long as a person is admitted In an artificial llmb center. Rate: 100 percent of wages.

The Employment Exchanges [Compulsory Notification Of Vacancies] Act, 1959

Employment Exchanges Act

Object of the Act

To provide for the compulsory of vacancies to employment exchanges.

Applicability of the Act

By notification in the Official Gazette, appoint In this behalf for such State and different dates may be appointed for different Slates or for different areas of a State.

When Act is not applicable

  • Any employment in agriculture, horticulture etc.
  • Any employment in domestic service.
  • Any employment, the total duration of which is less than three months.
  • Any employment lo do unskilled office work.
  • Any employment connected with the staff of Parliament.

Sec. 3

  • Time limit for notification of vacancies and selection

    • At least 15 days before the applicants will be Interviewed or tested.
    • Employer to furnish the result of selection within 15 days

    Rule 5

  • Submission of Returns

    • Quarterly in Form ER-l
    • Biennial Return in Form ER-ll
    • Within 30 days by 30th June, 31st March, 30th September & 31st December

    Rule 6


Notification of vacancies to Employment Exchanges

  • Before filling up any vacancy as prescribed.
  • Employer not obliged to recruit the person through employment exchange.
  • To notify the vacancies to such employment exchanges as may be prescribed

Sec. 4

Furnishing Information and returns

The employer in every establishment in public sector in that State or area shall furnish such information or return as may be prescribed in relation or vacancies that have occurred or are about to occur in that establishment, to such employment exchanges as may be prescribed.

Sec. 5


Penalties
  • An employer contravening the provisions of Sec. 4(1) or (2).
  • Fine upto Rs. 500 for first offence and for every subsequent offence fine Rs. 1000.
  • If any person-
    • Required to furnish any information or return Refuses or neglects to furnish such information or return.
    • Required to furnish any information or return Furnishes or causes to be furnished any information or return which he knows to be false
    • Required to furnish any information or return Refuses to answer, or gives a false answer to any question necessary for obtaining any information required to be furnished under section 5
  • Impedes the right of access to relevant records or documents or the right of entry conferred by section 6; he shall be punishable for the first offence with fine upto Rs.250 and for every subsequent offence with fine upto Rs.500

Sec. 7