Under Employees Provident Fund & Miscellaneous Provisions Act’1952

1. Latest Amendments on Labour Laws and its impact on IndustryPresented By: Mr. Hiral Manilal Chheda

2. Under Employees Provident Fund & Miscellaneous Provisions Act’1952 • All PF Claims, Withdrawals, Transfers have to be now submitted online w.e.f Dec’18,hence KYC’s (like Aadhar, Pan and Bank details) to be updated on PF Portal for all PF Eligible Employees to ensure smooth process. • PF Interest rate hiked from 8.55% to 8.65% for 2018-19. • PMPRY Benefit for new eligible employees wont be applicable w.e.f 01.04.19 but would continue for existing employee covered under PMPRY.

3. Supreme Court PF Judgment on Allowances What does the Judgment Say? • Allowances which are uniformly, necessarily and ordinarily paid to all employees across the board in a particular category, would be form part of Basic Wages. • Allowances paid to employees without proper justification / clarification would form of basic wages. • HRA, Statutory Bonus paid along with monthly salary untouched.

4. Supreme Court PF Judgment on Allowances What does the Judgment Say? • Variable Pay like Overtime, Incentive linked to Production, Commission paid against sales which are genuine would be untouched. • Judgment would have an impact to employees contributing PF under 15000pm Basic Salary. • International Workers who were earlier contributing PF of only Basic Salary, would have to now contribute PF on allowances too.

5. Supreme Court PF Judgment on Allowances What is the Impact of Judgment on us? • Employees take home to get reduced with the increase in the employees share of contribution. • Employer cost to increase with the increase in the employer share of PF Contribution. • Pending PF Inspection with the department , tribunal, high court would be now treated accordingly keeping in view the new SC Judgment.

6. Supreme Court PF Judgment on Allowances What is the Impact of Judgment on us? • Since there is similar “basic wage” defination under Gratuity Act, there is a possibility that we may have to pay Gratuity going forward on allowances too. • Retaining employees would now be difficult since the judgment would have an impact in employees take home salary. • Cost of contracting employees thru third party vendors would also go high, which indirectly would have an impact on Principal Employer.

7. Supreme Court PF Judgment on Allowances Example 1:-Gross Salary is more than 15K But Basic is less than 15K Old PF Contribution – 10,000*12% =1200 New PF Contribution –14,000*12% =1680 Example 2:-Gross Sal more than 15K but Basic Sal less then 15K,where Statutory wage limit becomes applicable. Old PF Contribution –12,000*12% =1440 New PF Contribution –15,000*12% =1800

8. Supreme Court PF Judgment on Allowances Example 3:-Where Gross Sal is more than 15K and Basic Sal is also more than 15K, but contributing PF on restricted Wages. Old PF Contribution –15,000*12% =1800 New PF Contribution-15,000*12%=1800 (No Change) Example 4:-Where Gross Sal is more than 15K and Basic Sal is also more than 15K and contributing PF on Full Basic. Old PF Contribution –20,000*12%=2,400 New PF Contribution:-20,000*12%=2,400 ( No Change)

9. Supreme Court PF Judgment on Allowances What an Employer should do now? • Filter employees contributing PF on less than 15000pm Basic Salary. • Divide Salary preferably into Basic and HRA in the ratio of 70:30 to be safe. • Incase if you want to give any specific allowance to a set of employees, create a specific policy.

10. Supreme Court PF Judgment on Allowances What an Employer should do now? • Allowances like Washing Allowances can be provided to employees to whom uniform is provided, Medical Allowances to employees who are excluded under ESI Act. (i.e drawing Gross Salary 21000 pm and above) • Avoid defaulting in remitting PF monthly contribution as this could be one of the reasons for popping PF Inspection. • HRA can be kept to the extent of 50% of Basic for Metro Cities and to the extent of 40% of Basic for non Metro Cities.

11. Supreme Court PF Judgment on Allowances What an Employer should do now? • Avoid showing allowances with name Special Allowance, Misc. Allowance, Supplementary Allowance, Other Allowance, Fitment Allowance, etc. which are with very generic nomenclature. • Indirect employees engaged thru contractors should immediately be informed to ensure compliance of their employee accordingly and supporting to be collected. • PF Inspections (if any) to be settled immediately and at department level only.

12. Under Employee State Insurance Act’1948 • ESI Wage Limit has been increased from earlier 15000pm to 21000pm. • ESI has come up with Health Passbook with unique QR Code, photo, mobile number of member, validity Date and eligible benefits. • Benefit of 1% & 3% has now been stopped w.e.f around Oct’18 towards new implemented area i.ePalghar, Boisar, etc. • Funeral Benefits under ESI has increased from 10000 to 15000. • ESI Contribution are likely to revise to 1 % and 4% from earlier 1.75% and 4.75% towards Employee and Employer Share (Proposed).

13. Under Maternity Benefit Act’1971 • Women employees are now eligible for maternity benefit under MB Act for 26 weeks from earlier 12 weeks. • The benefit of 26 weeks to any women is upto first two Childs only and for the third child onwards its 12 weeks. • Establishments with 50 and more persons, should make a provision of crèche facility.

14. Under Payment of Bonus Act’1965 • Bonus is applicable to all employees who have served for minimum of 30 days and are having less than 21000 Basic Salary. • Bonus has to be paid minimum upto 7000 or minimum wages as applicable to your Industry, whichever is higher. • Bonus percentage ranges from 8.33% to 20% depending upon the profits of the company. • Payment of Bonus has to be made with 8 months from the close of financial year (i.e before 30th Nov)

15. Thanking You M/s. Chheda Management Consultants LLP 301,Uma Smruti, S. V. Road, Goregaon (W), Mumbai – 400 104 Tel :- 022-2872 4783 / 98215 43843 Web:- www.labourlawexperts.com Email:- info@chhedaconsultants.com