What are Social Security laws related to Employment in India?


Social Security laws related to Employment in India

The Employees Provident Funds and Miscellaneous Provisions Act, 1952 (the “EPF Act”) provides for the institution of provident funds, pension funds, and deposit-linked insurance funds for employees and applies to all establishments employing 20 or more persons or class of persons. Accordingly, the wage ceiling for an employee to be eligible for the PF Scheme has been increased from Rs 6,500 per month to Rs 15,000 per month. It further provides that every employee employed in or in connection with the work of a factory or other establishment is required to become a member of the Provident Fund. An establishment to which the EPF Act applies shall continue to be governed by this Act, notwithstanding that the number of persons employed therein at any time falls below 20.

Contributions to the Provident Fund are to be made at the rate of 12% of the wages by the employers with the employee contributing an equal amount. The employee may voluntarily contribute a higher amount but the employer is not obliged to contribute more than the prescribed amount. Further, the EPF Act contains provisions for transfer of accumulations in case of change of employment. On account of 2014 Amendment to the said Act, The definition of “excluded employee” has been amended whereby the members drawing wages exceeding Rs 15,000 per month have been excluded from the provisions of the PF Scheme.

The [Statutory] Auditor has to report:

  • Is the company regular in depositing undisputed statutory dues, eg, Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, income tax, wealth tax, service tax, sales tax, customs duty, excise duty, cess and any other statutory duties with the appropriate authorities?
  • If not paid regularly, the extent of the arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable, then it shall be indicated in the report.
  • If such non-payment of dues is on account of any dispute, then the amount involved and for the forum where the dispute is pending should also be mentioned.

The 2014 Amendment further lays down the following changes:

  1. New members (joining on or after 1 September 2014) drawing wages above Rs 15,000 per month shall not be eligible to voluntarily contribute to the Pension Scheme.
  2. The pensionable salary shall be calculated on the average monthly pay for the contribution period of the last 60 months (earlier 12 months) preceding the date of exit from the membership.
  3. The monthly pension for any existing or future member shall not be less than Rs 1,000 for the financial year 2014-2015.
  4. The contribution payable under the Insurance Scheme shall also be calculated on a monthly pay of Rs 15,000, instead of Rs 6,500.
  5. In the event of the death of a member (on or after 1 September 2014), the assurance benefits available under the Insurance Scheme has been increased by twenty percent (20%) in addition to the already admissible benefits.
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