Higher Pension

The EPFO Higher Pension Scheme: Guidelines, Forms, Calculation, Formula, Eligibility, Benefits

The Employees Provident Fund Organization (EPFO) launched the Employees Pension Scheme (EPS) in the year 1995.  Through this scheme EPFO members are entitled to a pension after retirement.  The employee’s contribution of 12% of salary was fully utilised towards EPF, whereas from the employer’s contribution 8.33% goes to EPS and 3.67% to the EPF.

Initially, the pensionable salary was capped at ₹ 5000 and was subsequently raised to ₹ 6500.  In March 1996, a provision was added to para 11(3) of the EPS-95 act giving the option to the employee and employer to contribute at the actual salary (above the cap of ₹ 6,500) to the EPS.  However, the members were given 6 months to file a joint option form for higher pension contribution to the EPS.

On 01-09-2014, the Government amended the EPS-95 through the Employees Pension (Amendment) Scheme, 2014 in which the maximum pensionable salary was raised to ₹ 15,000.  However, the provision to para 11(3) that allowed the option of joint filing by the employee and employer for higher contribution to the EPS has been omitted.

Employees who joined the EPS after 01-09-2014 can only make the contribution at 8.33% of the maximum pensionable salary of ₹ 15,000, even though they drew a higher salary.  Employees who joined before 01-09-2014 could, however, contribute to EPS on the actual salary as against the cap of ₹ 15,000 if they filed a new joint option with the EPFO within 6 months, i.e., 28-02-2015.

Pension Contribution on Higher Salary under EPS

The Employees Pension (Amendment) Scheme 2014 regarding pension contribution on higher salary became contentious as many employees are not fully aware of these options.  EPFO also rejected the joint option filed by many employees and where the employers contributed 8.33% towards EPS on employees’ actual salaries without filing joint option, the pensionable salary was taken as ₹ 15,000 for pension calculation.

This prompted many employees to file cases in various High Courts and the matter was finally taken up by the Supreme Court.  The decision of the Supreme Court is briefly tabulated hereunder:

Employee Status Whether Joint option exercised Whether eligible to claim 8.33% pension contribution on higher salary Mode for claiming higher pension.
Employee in service as on 01-09-2014 Yes.  Joint option rejected by the EPFO YES By filing an application for higher pension

 

Employee who retired before 01-09-2014 No.  Contribution to EPS above its cap of  ₹ 5000 / 6500 YES By exercising the option before  03-05-2023
Employee who retired before 01-09-2014 Yes.  Joint option rejected by EPFO YES By filing both, a joint option and an application for higher pension
Employee who retired before 01-09-2014 No.  Did not exercise joint option. NO Not applicable

The Supreme Court ruled that employees who were part of the EPS but have not exercised the joint option can do so before 03-05-2023.  For such employees, the higher EPS contribution will be calculated from the date of joining.

Eligibility for EPS Higher Pension

The eligibility criteria and application process for claiming higher pension has been set out in the circular issued by EPFO in December 2022.  The following are the eligibility criteria:

  • All member employees who retired before 01-09-2014
  • All member employees who exercised the joint option under para 11(3) of EPS-95.
  • The employees and employers who contributed towards EPS on salaries exceeding the wage ceiling of ₹ 5000 or ₹ 6500
  • In case the EPFO has declined the exercise of such option.

However, the circular has not provision to provide a higher pension option for employees who were members of the EPF before 01-09-2014 but are still working or who retired after 2014.  The Supreme Court judgement however, ruled that such employees are eligible to claim a higher pension.

In response, the EPFO issued another circular in February 2023 providing higher pension eligibility or employees in service or who retired after 2014.  The eligibility criteria to file a joint option for getting a higher pension as per the new circular are given below:

  • All employees who were members before 01-09-2014 and continue to be members after that date.
  • The employees and employers who contributed to EPS on salaries exceeding the wage ceiling of ₹ 5000 or ₹ 6500
  • The employees and employers who were members of EPS-95 and did not exercise the joint option provided under the deleted para 11(3) of the EPS and the Amendment of 2014.

The employees who were members of EPS-95 and exercised the joint option under the deleted para 11(3) of the EPS but did not file new joint option after the amendment of 2014 are not eligible to claim a higher pension.  The EPS contribution of such employees will be 8.33% on the maximum amount of ₹ 15,000, irrespective of their actual salaries.

The Process of applying for Higher Pension in EPS

The application for joint option or claim for higher pension is specified by the concerned Regional Provident Fund Commissioner (RPFC).  The EPFO has released a URL for applying online.  Four steps are involved in this process.

Step 1:   The employee has to visit the EPFO Unified Member Portal.  The Universal Account Number (UAN) has to be used for this purpose.

Step 2:   Click on the application Form for “Joint Option” option.

Step 3:   This step is to validate your option.  If you retired before 2014 then click on “Validation of Joint Option for employees who retired before 01-09-2014 and exercised joint option”.

If you retired after 2014, then click on “Exercise of Joint Option for employees who were in service prior to 01-09-2014 and continued to be in service on 01-09-2014 but could not exercise the joint option”.

Step 4:   Fill in all the relevant details and submit the form.

The EPFO will digitally register each application and a receipt number will be allotted to the applicant.  The application is then forwarded to the respective employer for verification.  The verified files with the e-sign/digital signature will go for further processing.  The RPFC will convert all the applications received into e-files.

The application will be examined and forwarded to the section account officer/supervisor by the dealing assistant.  The concerned section account officer/supervisor will mark all discrepancies and forward to the Asst. Provident Fund Commissioner (APFC/RPFC-II).

The APFC/RPFC-II will examine the application and convey the decision regarding higher pension to the applicant via email, post or SMS.

Submission of Higher Pension Option Form

All eligible employees who become members of EPS-95 but are retired/working after 2014 can apply and submit the joint option forms online or with the concerned Regional Provident Fund Officer within 03-05-2023 to receive higher pension.

Guidelines for receiving Higher Pension through EPS

The following are the guidelines to be followed for receiving higher pension:

  • All joint option forms or higher pension claim applications should be accompanied by a disclaimer or declaration.
  • The employee has to give full consent in the joint option/application for a share adjustment from EPF to EPS and for a re-deposit of the amount.
  • The employee has to give an undertaking to the trustee for a share transfer of funds from exempted PF Trust to the EPS fund. The undertaking will be effective for the deposit of due contribution and interest thereon up to the payment date within the specified time.
  • The employees’ share of contribution will be deposited with interest at the rate declared under para 60 or the EPF scheme, 1952 for employees of unexempted establishments.
Documents to be submitted with Higher Pension claim application
  • Proof of joint option verified by the employer filed under para 26(6) of the EPF scheme.
  • Proof of joint option verified by the employer filed under para 11(3) of the Act.
  • Proof of remittance of EPS contribution in the PF Account exceeding the capped wage limit of ₹ 5,000 or ₹ 6,500.
  • The written refusal of APFC or EPFO to such remittance or request.
Documents to be submitted for joint option application
  • Proof of remittance of EPS contribution in the PF Account exceeding the capped wage limit of ₹ 5,000 or ₹ 6,500.
  • Proof of joint option verified by the employer filed under para 26(6) of the EPF scheme.
EPS Higher Pension Calculation

The formula for calculating the EPS higher pension is as follows:

Monthly Pension amount  =   Pensionable Salary  x  Pensionable Service/70

Pensionable Salary is the average salary drawn over the last 60 months.

Pensionable Service is the number of years contributions were made to the EPS account.

In case an employee renders more than 20 years of service before retirement at 58 years, then a weightage of 2 years is added to the service period.  However, the maximum pensionable service is limited to 35 years.

Calculation on cap of ₹ 15,000 for a pensionable service of 25 years:

Salary EPF Contribution EPS @ 8.33% of ₹ 15,000 EPF Contribution
50,000 6,000 1,250 4,750

Calculation on Actual salary for a Pensionable Service of 25 years:

Salary EPF Contribution EPS @ 8.33% of ₹ 50,000 EPF Contribution
50,000 6,000 4,165 1,835

Monthly Pension when you do not file a Joint Option:

Age when joined EPF Retirement Age Pensionable Salary Pensionable Service Pension Amount due
30 58 15,000 28 15,000 x 30 (28+2)/70 = 6428

Monthly Pension when you file a Joint Option:

Age when joined EPF Retirement Age Pensionable Salary Pensionable Service Pension Amount due
30 58 50,000 28 50,000 x 30 (28+2)/70 = 21,428
Employees' Pension Scheme

Employees’ Pension Scheme and the types of Pension available

The Employees’ Pension Scheme (EPS) is a social security scheme administered by the Employees’ Provident Fund Organization (EPFO). Launched in the year 1995, the scheme provides for employees working in the organized sector pension after their retirement at the age of 58 years. The benefits of the scheme can be availed by employees who have put in service for at least 10 years and this does not have to be continuous service. The scheme allows both existing and new EPF members to avail the benefit.

The pension fund is created from the contribution made by the employees and employers towards EPF.

Both the employees and the employer contribute 12 percent each of the basic salary towards the fund of which the entire share from the employees is contributed towards EPF, whereas, 8.33 percent of the employer share is contributed towards EPS, and the balance of 3.67 percent is contributed towards EPF every month. The government of India contributes 1.16% of your average salary (Basic Wages) towards this fund.

EPS eligibility criteria

To be eligible to avail of the benefits under the Employees’ Pension scheme, the employee should be a member of EPFO. Apart from this, the following conditions apply.

  • The employee should have completed 10 years of active service (need not be continuous service) along with an active contribution towards the pension fund for the same number of years. If an Employee is still in service and hasn’t completed 10 years, EPS amount cannot be withdrawn.
  • Should have reached the age of 58 years.
  • Should have attained 50 years of age to withdraw EPS pension at the lower rate.
  • Can delay the withdrawal of pension by 2 years i.e., till he reaches 60 years, to be eligible to get pension under EPS at the additional rate of 4% annually.
  • If a member becomes totally and permanently disabled he is entitled to a pension irrespective of whether the member has served the pensionable service period or not.
How to calculate Pension under EPS?

To calculate the pension we have to understand two terms, and they are Pensionable salary and Pensionable service.

Pensionable Salary

Pensionable salary is the average salary in the last 60 months before exiting the scheme. During the 60 months, if there are non-contributory periods, these periods will not be considered and the benefit of the days of non-contribution would be given to the employee.

Pensionable Service

The actual duration of employment is the pensionable service of the individual. Service periods under different employers are all added together at the time of calculating the pensionable service periods.

The minimum pensionable service period is 6 months and, therefore, the service period is considered on a 6-monthly basis. For an individual who has put in service of say, 9 years and 2 months, the pensionable service is considered as 9 years. Likewise, if the service duration is 9 years and 10 months then the pensionable service is considered 10 years.

The Calculation

The Pension amount due to an employee depends on the pensionable salary of the member and the pensionable service. The Pension amount is calculated on the following formula:

Monthly Pension due to a member = Pensionable Salary x Pensionable Service/70

The maximum pensionable salary as per EPS is limited to ₹ 15,000 per month. Considering that the employer contributes 8.33% of the salary in the employees’ EPS account, the amount deposited into the account every month is

₹ 15,000 x 8.33/100 = ₹ 1250

Monthly Pension due to a member = Pensionable Salary x Pensionable Service/70. For a person who has put in 20 years of service the pension will be:

₹ 15,000 x 20/70 = 4285

What are the Benefits of EPS?

All eligible members of EPF can avail of pension benefits in accordance with their age from when they decide to withdraw their pension. The pension amount will vary in different cases.

  • Pension at the time of Retirement.

    An employee becomes eligible for pension benefits once he/she retires at the age of 58 years. During this period of service the member should have been in service for 10 years (this need not be continuous). A certificate is generated that can be used to withdraw monthly pensions by filling out Form 10D.

  • Pension on leaving service prior to becoming eligible for monthly pension

This benefit is available to an individual who has not put in 10 years of service before attaining the age of 58 years. The member can withdraw the entire sum on attaining 58 years by filling out Form 10C.

  • Total Disability Pension

A member who suffers total and permanent disability is entitled to receive a monthly pension irrespective of the fact that he has not fulfilled the pensionable service period. The employer has to contribute to his EPS account for at least one month to be eligible for the pension.

The pension has to be paid from the date of permanent disability and is payable for a lifetime. The member has to undergo a thorough medical examination to identify whether he is unfit for the job that he was performing before becoming disabled.

  • Pension for the Family after the death of the member

The family of the member becomes eligible for pension benefits in the following cases

– In case of the death of the member while in service and the employer has deposited    funds into the EPS account for at least one month

– In case the member dies before attaining 58 years but has put in 10 years of service.

– In case of the death of a member after the commencement of the monthly pension.

Different Types of Pensions under EPS

EPS offers different types of pensions. They include pensions for women, children, and orphans and these provide additional income to the family member of the subscriber.

  • Widow Pension

Widow Pension or Vridha Pension as it is also known is applicable to the widow of the member eligible for pension. The pension amount will be payable until the death of the widow or until her remarriage. In cases where there is more than one widow, the pension amount will be payable to the eldest widow. The minimum pension amount is ₹ 1,000 and the ceiling for the pensionable salary has been increased to ₹ 15,000 from the earlier ₹ 6,500. Hence higher pensions will now be available.

  • Child Pension

In the event of the death of a member, a monthly child pension is applicable for the surviving children in the family in addition to the monthly widow pension. Child pension will be paid till the child attains the age of 25 years. The amount payable is 25% of the widow’s pension and will be paid to a maximum of two children.

  • Orphan Pension

In case the member dies and does not have a surviving widow, then the children are entitled to receive a pension under the scheme. The benefit will be available to two surviving children and they will get 75% of the value of the monthly widow pension.

  • Reduced Pension

Under the EPS scheme, a member can withdraw early pension if he or she has not attained 58 years but has reached 50 years on condition that they have actively contributed towards EPF for 10 years or more. The value of the pension is slashed by 4% for every year the age is less than 58 years. On attaining 58 years the pension will be paid at the actual rate.

Pension Forms that are to be submitted to avail of benefits

A member or family member eligible to receive the pension has to submit the following forms to avail of the pension benefits.

FORM 10C

Form 10C is for claiming a withdrawal/Scheme Certificate. The form can be used by:

  • Any member who has left the employment before completion of 10 years of service.
  • Any member who has attained 58 years before completion of 10 years of service irrespective of whether the member is in service or has left service.
  • A member who has completed 10 years of service on leaving service but has not attained the age of 50 years on the date of applying or
  • If a member has attained the age of 50 years or more but less than 58 years and is not willing for a reduced pension.
  • The family members or legal heirs or nominee of a deceased member who had died after attaining 58 years of age but had not completed the eligibility criteria of 10 years of service.
FORM 10D

Form 10D is the normal form that a member needs to fill to withdraw pension under the following conditions:

  • Retirement Pension by a member on attaining 58 years of age, whether in service or not.
  • By a member who leaves service after the age of 50 years but below 58 years and opts for a Reduced Pension.
  • To claim Disablement Pension by a member on leaving service due to total and permanent disablement.
  • For claiming widow and child pension by the family (spouse and children) on the death of the member.
  • For claiming Orphan Pension by surviving son/daughter on the death or remarriage of the spouse of the deceased member.
  • For claiming Nominee Pension by nominee declared by the member through his/her Form 2(R) in case the member had no family (spouse and children).
  • For claiming Dependent Pension by the dependent father or mother of the deceased member who died without a family (spouse and children) and failed to nominate a person for claiming the pension.
Points to remember about EPS
  • The employee does not contribute towards the fund. The employer makes all contributions towards EPF.
  • From the 12% contributed by the employer, 8.33% goes towards EPS.
  • The employees’ pay is made of Basic wages, retaining allowance, and admissible cash value of food concessions.
  • The employer has to contribute within 15 days of the close of every month.
  • The employer should meet all the applicable costs involved.
  • The principal employer is responsible for making contributions for all employees working for him directly or under a contractor.
  • The minimum service period to be eligible for availing pension benefits is 10 years.
  • In case an employee has completed less than 10 years of service but has served for more than 6 months, you can withdraw the EPS amount on being unemployed for more than two months.
  • The scheme has fixed 58 years as the age for retirement.
  • On reaching the age of 58 a member ceases to be a member of the Pension Fund.
  • An employee who starts availing reduced pension at the age of 50 ceases to be a member of the Pension Fund.
Conclusion

The Employees Pension Scheme has been a great boon for employees especially post-retirement. Like all other social security schemes, it has provided a lifeline to employees who have retired or who have opted for pension before reaching the retirement age of 58 years. Where the EPS member has died during service or post-retirement it has extended this benefit to the family members, namely the spouse, and children.

Overall, the scheme has brought cheer to a great many families whose bread-winner had either retired or had become fully disabled due to an accident or disease.

GetifyHR, one of the leading Payroll and HR management outsourcers in the region have assisted numerous clients spread across the country in handling not only the Payroll and HR activities but also have supported the employees to get their due benefits from the various government agencies that are promoting schemes to support them. An association with GetifyHR will not only ease the pressures in the workplace and promote growth but will also provide support to the employees in multiple ways.

 

 

Budget 2023

Budget 2023 and the effect on salaried employees

Smt. Nirmala Sitharaman, the honorable Finance Minister, presented the Union Budget 2023 in Parliament on 1st February 2023. This is the last full-year budget to be presented by this government before the national elections in 2024. The Budget has been widely welcomed by all sections of society and has been hailed as growth-oriented, forward-looking, and one that will support inclusive growth. In this article, we shall analyze how the 2023 budget would affect the salaried class.

The Budget has several proposals for the benefit of taxpayers in the lowest and highest tax bracket.

The proposals also include several proposals for the benefit of salaried individuals, senior citizens, and pensioners. In her budget speech, the Finance Minister has some important announcements for hardworking middle-class citizens who pay taxes. This tax regime called the new income tax slabs is set to be the default regime in the future.

However, the old tax regime has not been abolished and taxpayers now have the option to choose between these two regimes when paying taxes.

Major changes in Income Tax slabs & rates as proposed in budget 2023.

The first change made in the budget 2023 relates to the rebate on Income tax. Rebate limit of Personal Income Tax to be increased to ₹ 7.0 lakh from the current ₹ 5.0 lakh in the new tax regime.  Thus, persons in the new tax regime with income up to ₹ 7.0 lakh need not pay any tax.

The tax structure in the new personal income tax regime, introduced in 2020 with six income slabs to change by reducing the number of slabs to five and increasing the tax exemption limit to ₹ 3.0 lakh.

The tax rates as per the Old and New regimes are given hereunder.

Old Income tax regime: (Existing & Continuing)
Old Income tax slab Income tax rates
Income slab of 2.5 lakh Nil
Income slab of 2.5 to 5.0 lakh 5%
Income slab of 5.0 to 10.0 lakh 20%
Income slab of 10.0 lakh and above 30%
New Income tax regime (Existing and applicable for FY 22-23)
New Income tax slab ( Previous) Income tax rates
Income slab of 2.5 lakh Nil
Income slab of 2.5 to 5.0 lakh 5%
Income slab of 5.0 to 7.5 lakh 10%
Income slab of 7.5 to 10.0 lakh 15%
Income slab of 10.0 to 12.5 lakh 20%
Income slab of 12.5 to 15.0 lakh 25%
Income slab of 15.0 lakh and above 30%
New Income tax regime (Revised in Budget 2023)(For FY 23-24)
New Income tax slab (Revised) Income tax rates
Income slab of 3.0 lakh Nil
Income slab of 3.0 to 6.0 lakh 5%
Income slab of 6.0 to 9.0 lakh 10%
Income slab of 9.0 to 12.0 lakh 15%
Income slab of 12.0 to 15.0 lakh 20%
Income slab of 15.0 and above 30%

The tax payers still have the option to choose between these two regimes when paying taxes.

In addition to the above, there is a reduction in surcharge on the rate of the highest tax rate in the country of 42.74%, which is the highest in the world, from 37% to 25%. With this reduction, the maximum rate would be 39%.

The Finance Minister has also proposed to extend the benefit of standard deductions to the new tax regime. Each salaried person with an income of ₹15.5 lakhs or more will thus benefit by ₹ 50,000.

Under the old tax regime, these are some of the income tax deductions that you can claim:
  • Standard deductions
  • HRA and Leave Travel Allowance
  • Interest on Home loans
  • Medical Insurance Premium
  • Interest on Education loan
The new tax regime is different in two aspects:
  • The government has reduced the income slabs accompanied by lower tax rates.
  • All tax exemptions and deductions claimed under the old regime will not be available under the new regime.

The advantage here is that the taxpayer has the liberty to decide where and how to save/invest their money. This means you no longer have to rush to tax-saving schemes or investments that may not be in line with your financial needs.

PAN is to be used as a common identifier!

The Finance Minister has announced that the Permanent Account Number (PAN) will be used as common identifier for all digital systems of specified government agencies. PAN is the 10-digit alphanumeric number allotted by the Income-tax Department to a person, firm, or entity. This move would assist in further promoting ease of doing business in the country.

KYC process to be simplified

The Finance Minister has announced that a system of unified filing process will be set up to enable agencies to get all data from a common portal as per the choice of those filing returns.

For individuals Digilocker and Aadhar will serve as a “foundational identity” and with this facility changes in address or identity will be reflected across other platforms. This means that the government is working to synchronize citizens’ data across multiple portals when just Aadhar is updated. As of now when you update your Aadhar it does not update the changes say in the Income Tax portal. This is now set to change.

The Digital India program by the Government of India has introduced the Digilocker initiative where citizens can get authentic documents/certificates in digital format from the original issuers of these certificates. The aim is to eliminate or minimize the use of physical documents to enhance the effectiveness of service delivery paving the way for hassle-free and friendly service to the citizens.

Conclusion

These announcements made in the Union Budget 2023 will benefit the salaried employees and leave more disposable income in the hands of individuals thus enabling higher investments. We at GetifyHR are fully prepared to handle these changes and support our clients in seamlessly running their statutory compliance requirements and keeping them fully compliant always.

late commers

How to avoid/reduce latecomers in the industry/establishment?

Employers expect employees to be punctual in their work. Being punctual goes a long way in establishing greater workplace harmony and paves the way for establishing a better employer-employee relationship. Factors like excessive traffic, late running of trains or buses, or some unexpected family issues can sometimes make employees come late to work.

When these are not regular it is a non-issue but when coming late to work is habitual, then it becomes a serious issue and has to be nipped in the bud. Chronic lateness affects the workplace atmosphere and will contribute to significant time and cost implications that will have a negative effect on the company’s growth.

Being late regularly costs the company in payroll and has a negative effect on productivity. If this late coming remains unchecked it will set a bad example for other employees who may also be encouraged to start coming late for work. In this article, we offer tips to deal with habitual latecomers.

1. Frame proper ground rules

Establish a set of rules on coming late to work and communicate this to all the employees.

The policy should include:

• Employer expectations on the working time and the importance of starting work at the scheduled time.
• Avoid un-informed or non-approved late arrivals during work as this will disrupt the work atmosphere.
• Clearly define the consequences of arriving late to work.
• Decide on how to compensate for the time missed out by working extra during later working hours?
• The procedure for reporting late to work should include the details of the higher-ups who should be notified about coming late to work and when.

2. Take action immediately

When you identify a pattern of habitual late coming, don’t postpone speaking to the employee. The earlier you begin a dialogue with the habitual offender the better.

3. Talk to the employee and make your expectations clear

Sit with the employee and clearly explain what your expectations are and the consequences of coming late to work habitually. Present the facts and try to identify the reasons for the habitual late coming.

4. Set self-improvement goals

Once the discussion is over and you have explained your expectations and the consequences encourage the employee to set self-improvement goals. This should help the employee to break the habit and be on time or on the contrary you can suggest a reduced lunch break to compensate for the lost time.

5. Check for changes and show appreciation

Follow up on the discussion by encouraging the employee to overcome this habit of tardiness. Show that you care for his well-being and be appreciative of improvement in their habit. Appreciation sets the path for greater improvement and this may help to solve the problem.

6. Maintain a record of all discussions and interactions

Maintaining a record of the interactions with the employee will ensure that there are no miscommunications and leaves no room for any misunderstanding at a later date. Documenting the discussions and the steps taken to identify and correct the issues and the changes in the employee’s performance can be pinned to the employee’s HR file.

7. Enable automatic shutdown of the swiping machine after a particular period.

This is a very strict method used in some establishments. Activate automatic closure of the Swiping machine after the normal login time plus the grace time given for logging in has to be. If an employee reaches the workplace after the grace time, he has to get approval from the Manager/Supervisor and will be then allowed inside the premises using their password. This strict measure will ensure discipline.

8. Implement a ‘Send Home’ policy

Here the habitual latecomer is sent home when he or she arrives late for work. Warnings about earlier tardiness should precede this action. This will enable the employee to make a serious effort to reach on time as there is the fear that he or she would be sent home and would be marked absent.

Normally a grace period, say 15 minutes is given to every employee. If the employee doesn’t arrive within this grace period then he/she will be asked to go home. This ‘go home’ policy is a very effective tool in curbing the issue of coming late to the office.

9. Link punctuality with performance reviews.

Linking punctuality with performance reviews can also address the issue of habitual late coming. Performance reviews are important as it sets the tone for climbing up the ladder. Therefore, if your performance review is positive then the chances of moving up the ladder are greater. If you are a habitual latecomer it will reflect in your performance review and this in turn will negatively impact growth within the establishment.

10. Have a policy with a flexible work schedule.

Having a company policy that allows for a flexible work schedule is another option to handle the issue of habitual latecomers. For example, you can have a policy in place where the habitual latecomer is allowed to come late with the condition that this time is compensated during the day’s work schedule. This will help to avoid loss of working hours due to late coming. However, the problem with this policy is that when you allow it to one employee you should be prepared to allow it to others also.

Conclusion

Habitual latecomers harm the workplace and they may adversely affect the growth of the establishment. Therefore, it is in the interest of the employer to find ways to reduce this activity so that there is greater harmony in the workplace. The measures explained above will go a long way in reducing the issue of habitual late coming and set the tone for better employer-employee relationships.

GetifyHR, one of the leading outsourcers of payroll and HR management in this region has been able to guide our clients in successfully handling the issue of latecomers. Our solutions have enabled a large section of our clients to focus on core business activity thus enhancing growth. We are here to reduce the stress attributed to payroll and HR management.

January 23 is the right time to outsource your Payroll to GetifyHR!

January 2023 is the right time to outsource your Payroll to GetifyHR!

When is the right time to outsource your Payroll? Well, this is the question that has put business owners in a real dilemma. On the one hand, they have to be right with the timing and on the other hand, they have to be right with the choice of the perfect outsourcer. A difficult task indeed for any establishment whether big or small.

Payroll processing is one of the most important non-core activities and will remain so in the future. Its importance has manifested in companies opting to outsource the process with the view to not only bring greater accuracy but also to keep the company fully compliant with all the Statutory Compliance rules and regulations. By doing so establishments have been able to create greater harmony in the workplace and have been on the right side of all tax and compliance laws.

The goal of every establishment is to achieve greater growth and as it grows the greater the need to have a perfectly working system to handle all compliance issues. This is not an easy task and one way to keep things moving smoothly is by outsourcing this process to a service provider. By outsourcing payroll, companies will be able to prioritize core business processes and strategies to guide the business toward its goal.

In this article, we will discuss the ideal time to outsource the payroll process to an external service provider and why GetifyHR would be the best choice to undertake the process.

When to Outsource your Payroll?

The beginning of the year is the ideal time to go live with your payroll processing. While this may not be the beginning of the financial year followed in India, which is from 1st April onwards, we at GetifyHR would recommend the month of January to go live with payroll processing through a service provider.

This is the time when employees normally resign and move on to greener pastures. Hiring new hands and retraining them is a task that most establishments shun and the sensible solution is to perfect the payroll processing activity so that you can avoid hiring employees for both the core activity and to exclusively handle the payroll process.

When you start your payroll process through an outsourcer during the month of January, you have a clear 3 months to complete the parallel runs and perfect the system. This allows the time to verify and correct all employee records and reports and streamline the demands of statutory compliance.

This will enable you to start the new financial year on a clean slate and give you adequate time to straighten all loose ends and see that you are starting the process perfectly.

The benefits of outsourcing the payroll!

Let’s briefly delve into the benefits of outsourcing your payroll processing to an external service provider. Payroll processing remains the most popular area among the non-core processes that organizations tend to outsource and their benefits are many.

1.  Leads to lower Upfront Investment

One of the most important benefits of outsourcing Payroll is that it leads to lowering the investments upfront.  Outsourcing helps in reducing the investment on costly hardware and accessories as the package relies on high-end cloud technology; therefore you can do away with costly hardware onsite.

2.  Maintain accurate records

Having a perfectly running payroll that generates highly accurate payslips and all related records remains the top requirement of every organization. Payroll generated with errors can create great disharmony in the workplace and throw all activities out of gear. This will inevitably affect the growth of the organization. Outsourcing assures you of a perfectly running payroll process that will help you to maintain highly accurate records, and this will go a long way in promoting workplace harmony and enhancing growth.

3.  Comprehensive Payroll Support

Outsourcing the Payroll ensures comprehensive payroll support. This means that all requirements of payroll and HR management are seamlessly handled so that your month-end stress is drastically reduced.  The high level of integration that these packages achieve enables smooth and comprehensive payroll operations. All the modules are perfectly integrated thus reducing the need for frequent key-ins.

For the management the biggest need is to have access to an array of highly useful MIS reports as and when required, and this is what you get when you outsource. Armed with these reports, the management will be in a position to take timely decisions that would ultimately lead to greater growth.

Data security is a vital factor when you are handling sensitive employee data. In-house payroll processing may not be secure enough and the leak of sensitive data is always a possibility. When you outsource the process to a service provider, you can greatly reduce the possibility of a leak of sensitive data. Outsourcers have a robust security system in place with proper backup and multiple server locations to ensure a high level of data security.

4.  Leveraging expertise to ensure compliance

Experts with deep knowledge of all payroll and compliance norms man outsourcing service agencies. By outsourcing you are shifting the onus of keeping the organization compliant to a team of highly efficient individuals. Outsourcing the payroll and HR process will enable companies to minimize compliance and regulatory risks. This will ensure that the company is compliant at all times.

There are a few more reasons why you should outsource your payroll to an external service provider. However, we shall take a detour from that topic and focus on why you should outsource to GetifyHR.

Why GetifyHR?

GetifyHR is one of the leading Payroll and HRMS outsourcing companies based out of Coimbatore. With a vast clientele spread across the country, we have been providing excellent service across states and platforms.

Our vision is to make GetifyHR one of the leading outsourcers in the industry. Simplifying the rather complex Payroll and HR operations has been our goal and this we have achieved through our commitment and dedication to providing the very best to our clients.

Ours is a highly efficient and fully functional module that can manage these complex operations in any organization. This is a high-end module using the latest cloud-based technology. The module fully automates the payroll and HR processes and empowers employees with a highly efficient self-service module. The important features of our module are briefly described hereunder.

Payroll Module

This is a module that simplifies the rather cumbersome and complex payroll process. The module is highly customizable and is fully integrated to maintain all the requirements of Payroll processing and HR management.

This includes generating highly accurate Payslips and the relevant reports, handling all statutory compliance requirements, and maintaining employee Leave & Attendance, and Recruitment. The module ensures the generation of accurate payslips and on-time disbursement of salaries every month. All reports required to keep the company compliant are readily available and it is only a matter of remitting the deductions to the authorities.

These activities can be performed without a hitch every month seamlessly and smoothly.

The module ensures accurate calculation of salaries and timely disbursement every month. This will pave the way for greater harmony within the workplace.

  • Salaries can be disbursed by cash, or cheque or can be directly transferred to the employees’ bank accounts
  • The payments can be released either Batch wise or Bank wise
  • Track the status of all cash and cheque payments.

Statutory Compliance Module

This module helps you to save precious time that you would have spent keeping yourself updated of the changes in compliance rules. The changes in EPF, ESI, and other labour laws are immediately updated in the system.

Similarly, changes in tax slabs are updated as and when announced so that the employees do not lose the benefit.

In other words, GetifyHR frees you from the burden of updating the changes in statutory rules and regulations and creates a stress-free month-end operation.

GetifyHR’s outsourcing module allows you to perform the following tasks:

  • Calculate PF deductions and generate ECR
  • Compute ESI
  • Calculate state-specific Professional Tax component
  • Calculate TDS and generate the returns
  • Generate Form 24Q, Form 16 and Form 12BA
  • LWF calculations and deductions
  • Bonus calculations.

Excellent Reporting

Our Payroll module provides access to more than 150 MIS reports. You can customize the reports for your specific needs. Additionally, payroll analytics provide insightful details that help you to take the right decisions at the appropriate time. The reports include…

  • A large array of MIS Reports
  • Reports and Forms for Statutory Compliance requirements
  • Reconciliation and other reports specific to the Accounts department.

Conclusion

The right time to outsource the Payroll and HR operations and make your choice of the right outsourcer is an onerous task for any business owner. Choosing the right time is best left to the management as they know their situation better than anyone else. However, we have suggested January to be the ideal time purely taking into consideration the beginning of the financial year. Taking such a decision would enable the user to be ready to go live beginning in April when the new financial year begins. But again the choice is best left to the management.

Choosing GetifyHR to outsource the Payroll process is again the ideal choice considering that we enjoy a sound reputation in the industry. We rank among the top outsourcers in the country with a large number of satisfied customers spread across the country. The user-friendly interface and varied functionalities incorporated in this package will not only provide accurate payslips and insightful reports but will also enable immediate updation of changes effected in compliance rules and regulations. We are here to simplify the task and amplify your vision towards greater growth.

Holidays list to labour office

When do we need to declare the Holiday List to the Labour Officer?

Introduction

We are closing in on the last few days of an eventful year. The excitement of celebrating Christmas and welcoming the New Year has never diminished and never will. But one set of people is busy formulating the New Holiday List for the forthcoming year.

Yes, HR managers in companies, both large and small are engrossed in preparing the holiday list for filing with the concerned Labour Officer at the end of the year.

Holidays are declared under the Negotiable Instruments Act, 1981. Though they apply to all government departments and more particularly Banks, all establishments in the public and private sectors irrespective of the laws under which they are formed have to adopt these holidays. It is mandatory to adopt a pattern of national and festival holidays in the country. In addition to these, there is the option of granting restricted holidays to employees.

National Holidays

The three National Holidays observed in India are Republic Day (Jan. 26), Independence Day (Aug. 15), and Gandhi Jayanthi (Oct. 2), however, in some states, May 1 (Workers Day) is also declared as a National Holiday. On these days all establishments irrespective of what law they come under should necessarily remain closed. If for some reason the establishment needs to function on these days, they need to get prior approval from the concerned authority. In case employees work on national holidays, then they are entitled to get double wages for the day. The laws regarding national holidays are subject to Central legislation, and some states have made provisions to claim compensatory leave or pay double wages for working on those days.

Festival Holidays

Festival Holidays are based on local festivals and, therefore, may differ from state to state and also could depend on the company policies. The number of holidays would differ from state to state based on the festivals celebrated in that particular state.

Restricted Holidays

A restricted holiday is an optional public holiday that can be availed by a particular set of employees celebrating a special occasion. On a National or Festival holiday, the entire establishment is closed, whereas; on a Restricted Holiday only a particular group of employees avail of the holiday.

A Restricted Holiday enables the organization to serve its customers with a fewer number of employees.

Employees on the other hand get the benefit of claiming paid leave of absence on 2 or 3 restricted holidays during the year. These restricted holidays are marked as optional in the holiday list and are valid only for the specific days mentioned therein.

Declaring the Holiday List

The employer has to submit the finalized Holiday List to the concerned authority for approval in the form as stipulated in each state. In Tamil Nadu, one has to get approval from the Asst. Inspector of Labour/Labour Inspector/Labour Officer.  The details of the forms required for submission/acceptance given hereunder pertain to the state of TamilNadu.

The List Festival Holidays has to be submitted to the Labour Officer in Form No: I.

A notice in Form No: II has to be exhibited in the establishment and a copy has to be submitted to the Labour Officer.  The form should specify the period within which objections or suggestions of the employees referred to in sub-rule (3) will be received.

Where the employer or a majority of employees or any trade union representing a vast number of employees desires a change in the festivals, they may apply to the Labour Officer in Form IV, in duplicate indicating the changes.  The Labour Officer will communicate these changes to the employer in Form III in duplicate. The employer has to display a copy of this communication on the notice board within 7 days of receipt.

The employer should submit a statement under sub-rule (1) of rule 5 in Form V to the Labour Officer indicating the National and Festival Holidays allowed for that calendar year.  The last date for submission of this form is 31st of December every year.  The employer has to display a copy of this statement in a prominent location on the premises.

In all 9 holidays have to be declared in a year (3/4 national holidays and 4/5 festival holidays). The number of holidays would vary from state to state as each state has its festivals and policies on approving holidays. The employer should submit the finalized Holiday List in the stipulated form to the authorities before 31st December of each year for approval.

Conclusion

Preparing the Holiday List and Leave entitlement of employees is a complex task that needs a lot of thought and effort. A lot of effort goes into framing the company’s leave policy and the HR team would be hard-pressed to achieve this task. GetifyHR has years of experience in framing such leave policies for organizations spread across the country and is also adept in formulating National Holiday and Festival Holiday lists across multiple states. Our Payroll and HR management module facilitates simplifying this task and makes it easier for handling the Holidays and Leave eligibility of employees. Associate with us now for seamless handling of all Payroll Processing, Statutory Compliance issues and Leave and Attendance management.

contract labour

The Contract Labour (Regulation and Abolition) Act, 1970

Introduction

A contract labourer is one who is assigned to work in an establishment for a specific period through a contract by a contractor with or without the knowledge of the principal employer. They are indirect employees who are either paid daily wages or paid the accumulated daily wage at the end of the month. The contractor is responsible to hire, supervise and remunerate the contract labourers.

The practice of employing workers on a contract has been widely used in India for a very long time. Before and after independence the issue of contract labour has been a seriously analyzed topic and innumerable commissions, committees and even the Ministry of Labour have tried to identify the working conditions of such workers.

Studies have shown that contract labourers live in poor economic conditions and since their job is casual in nature they lack job security. Since there were no regulations and controls, the contract labourers were exploited for the gain of the employer and contractor. To regulate the employment of contract labour and free them from exploitation the government enacted a legislation called the Contract Labour (Regulation and Abolition) Act, 1970. On 10th February 1971, the Act came into force and will be applicable throughout the country.

Objectives and scope of this Act

The main objectives and scope of the Act are:

  • To prevent the exploitation of contract labour
  • To provide proper working conditions
  • To lay down the rules and regulations regarding the registration process of the establishments employing contract labour.
  • To state the requirements and the procedures of licensing contracts.
Who does the Act apply to?

The Act will apply to establishments under the following conditions:

  • Any establishment where 20 or more workmen are employed or were contracted as contract labour on any day during the preceding 12 months.
  • Any Contractor who employs or has employed 20 or more workmen on contract labour on any day of the preceding 12 months.
Establishments to which the Act does not apply

The Act does not apply to establishments that perform works of casual or intermittent nature

  • Seasonal work that is performed for less than 60 days
  • The work is considered intermittent if the work is performed for less than 120 days in the preceding 12 months.

Main Definitions

Principal Employer

The Principal Employer includes the head of any government or local authority, the owner or occupier, or the Manager of a factory (Under the Factories Act). The Owner, Agent, or Manager of a mine or any person responsible for the supervision and control of the establishment is also included.

Contractor

The Contractor refers to any person who supplies contract labour for any work to any establishment. This could also include the sub-contractor. A contractor to whom the Act applies has to take a license under the Act.

Establishment and Composition of the Advisory Boards

The Contract Labour (Regulation and Abolition) Act, 1970 provides for the establishment of Central and State Advisory Boards. The Boards are established to advise the Central and State governments respectively on matters concerning the administration of the Act and to carry out the functions assigned under the Act.

The Central Advisory Board

The Central Government constitutes the Central Advisory Board with representation from the Government, the Railways, the coal industry, the mining sector, the contractors, the workmen, and any other sector that is deemed fit by the government. The Central Government may nominate eleven to seventeen members to the Advisory Board.  The Number of members nominated from the workmen’s side should not be less that the number of members representing the principal employer and contractors. Apart from these members, the Board consists of a Chairman appointed by the Central Government and the Chief Labour Commissioner.

The State Advisory Board

The State Advisory Board is constituted by the respective State Governments and consists of a Chairman appointed by the government, the Labour Commissioner of that State and in their absence the State Government will appoint any other officer.

Apart from these members, the State government may nominate nine to eleven members to represent the government, industry, contractors, workmen, and other members from any other sector that the State government decides. The number of members nominated to represent the workmen shall not be less than the members nominated to represent the principal employer and the contractors.

The Central and State Advisory Boards have the power to form committees under the Act as they deem fit. The committee will discharge their duties and responsibilities in accordance with the provisions of the Act.

Registrations of Establishments hiring contract labour

Every establishment that proposes to hire contract labour is required to obtain a certificate of registration from the respective government. The registration procedure is as follows:

  • The Establishment should submit the application in Form No.1 to the Registration Authority along with the receipt of payment of the prescribed registration fee.
  • If the application is found correct in all respects, the Registering authority can register the establishment and issue a copy of the registration certificate in Form II.
  • The Certificate of Registration will contain the name and address of the establishment, the maximum number of workers to be hired as contract labour, the type of business, and any other important particulars.
The Responsibilities of the Employer

The employer has to fulfill the following responsibilities:

  • Register the Establishment.
  • Engage contract labour only through licensed contractors.
  • Display a notice showing the name and address of the Inspector in English and the local language along with details of wages and date of payment of wages.
  • Should ensure that the contractor pays the wages as per the wages fixed by the government or as fixed by the Commissioner of Labour or in their absence pay fair wages.
Licensing of Contractors

Every Contractor who wishes to undertake or execute any work through contract labour is required to obtain a license from the Licensing Authority. This condition applies to a contractor who has employed twenty or more workers during any day of the month.

The Procedure for obtaining a License

The licensing authority issues the license under Sec.12 of the Act.

  • The contractor has to make an official request to the Licensing Authority along with the application form.
  • Deposit the appropriate security deposit.
  • The license will include such conditions as the hours of work, fixation of wages, and other amenities due to contract labour.
  • The application in the prescribed form should contain the particulars regarding the location of the establishment, the nature of the process, operation, or work for which contract labour is to be employed, and such other details.
  • The license is valid for the period mentioned therein and may be renewed from time to time for such a period. The relevant fee has to be paid.

Provide the following facilities:

  • A canteen to the contract labour when they employ 100 or more workers and the work is performed for 6 months or more.
  • Provide adequate urinals for men and women separately.
  • Provide drinking water, washing facility, first aid, crèche, etc.
  • Properly maintain the various registers and records
  • Maintain a separate register of Contractors in Form XII
  • File the required returns (Annual) to the licensing authority by 15th February of the year.

Responsibilities of the Contractor

The Contractor has the following responsibilities:

  • Has to get approval from the Principal Employer.
  • Has to obtain a license from the Licensing Authority.
  • Raise monthly Bills for payment to the contract labour.
  • Maintain all relevant Registers likeMuster Roll, Wage register, etc.
  • Has to pay the wages on or before the 7th of each month.
  • Disburse the wages in the presence of the representative of the employer.
  • Have to distribute employment cards to all the workers three days before the commencement of work.
  • Have to file the half-yearly return in Form XXIV after 30 days from the close of the half-year, i.e. June and December.

Penalties

Anyone who violates any clause of the Act or any of the rules under the Act will be liable to imprisonment to the extent of 3 months or with a penalty of One thousand rupees or both. If the violation continues then an additional fine of one hundred rupees per day for every day of contravention will be imposed.

Shortcomings in the Act that need change

The Contract Labour (Regulation and Abolition) Act, 1970 has several drawbacks that need to be addressed by the legislature for better implementation.

  • The Act does not differentiate between core and peripheral activities and this has led to non-implementation.
  • The Act applies to establishments employing 20 or more contract labourers. Establishments and contractors avoid this responsibility by employing less than 20 labourers.
  • Establishments misuse the provision by taking licenses under different names, a single-window system should be adopted for issuing the registration and there should be a licensing authority to handle the issue in every state.
  • The penal provisions of the Act are not deterrent enough and, therefore, principal employers prefer to pay the penalty rather than follow the provisions of the Act.
  • There is a need to extend the education scheme to contract labour as most of them are unskilled, illiterate, and ignorant of their rights.
  • As there are no direct or independent provisions under the Act to file for claims etc., these claims are filed under the Payment of Wages Act or Minimum Wages Act. This has to be included in the Act itself.

Conclusion

The Central Government enacted the Contract Labour (Regulation and Abolition) Act, 1970 to prevent exploitation of the contract labour by both employers and contractors. The Act provides them with certain rights as contract labour and gives them a legal provision to demand their just dues. However, the shortcomings have to be addressed and must be legislated so that necessary changes can be made to strengthen the provisions. There is also a need to make the Act less complicated for the principal employers and contractors and with provisions for better safeguards and amenities to contract labourers.

GetifyHR, with its years of experience in handlingPayroll and all Statutory Compliance rules and regulations, have assisted clients in handling their requirements of contract labour. We expertly handle all issues pertaining to the employment of contract labour, and establishments have gained from our expertise in the eficient handling of contract labour.  Our high-end, cloud based Payroll module is capable of handling these issues in a seamless manner, making it easier for organizations to have the relevant details at the click of a button, as and when they require it.

 

Labour Welfare Fund

Tamil Nadu Labour Welfare Fund New Amendment


The Tamil Nadu Legislative Assembly introduced a Bill in the Legislative Assembly of the State on 6th September 2021, called the Tamil Nadu Labour Welfare Fund (Amendment) Act, 2021. The Act amends the Tamil Nadu Labour Welfare Fund Act, 1972 with regard to the contribution towards the TNLWF. By this amendment, changes were made in the contribution towards the fund from the employee, employer and the government.

However, by the Notification issued by the Government of Tamil Nadu vide G.O. Ms. No.160 dated 2nd December 2022, the amount of contribution has been further substituted as follows:

1. The employee contribution has been substituted from the earlier sum not exceeding ₹ 10 per year to a sum not exceeding ₹ 20 per year.

2. The employer contribution has been substituted from the earlier sum not exceeding ₹ 20 per year to a sum not exceeding ₹ 40 per year.

3. The Government contribution has been substituted from the earlier sum not exceeding ₹ 10 per year to a sum not exceeding ₹ 20 per year.

G.O Copy link


Changes have been introduced in various labour laws across the country and most companies are hard-pressed to keep track of these changes. GetifyHR has been providing highly efficient service to companies to handle Payroll Processing, Leave and Attendance, Statutory Compliance requirements, etc. Importantly, GetifyHr has enabled companies to be fully updated of all the frequent changes in the different labour laws in operation across the country. With our high-end, cloud-based payroll module we have been able to keep our clients fully compliant of all the statutory rules and regulations.
PF and ESI Inspections

EPF and ESI Inspection criteria and the documents to be produced before the Inspectors!

The need to ensure social-economic justice for the people and establish a Welfare state is enshrined in the Constitution of India. Employees, especially in the private sector found themselves in trouble once they retired.

To alleviate this problem the government introduced a long-term savings scheme that would support them in retirement or superannuation. This legislation is the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 (EPF and MP Act).

Similarly, there was a need to safeguard the lives of employees against the effect of sickness, physical disability, and death due to the nature of work. The Employees’ State Insurance Act, 1948 was legislated by the government to take care of this aspect. This Act supports them during such eventualities.

Inspection Policy for EPF and ESI

Both these Acts have proper guidelines on the inspection of the registered entities under the Act. In this article, we shall delve into the criteria for inspection and the documents that are required to be produced during such inspections.

EPF Inspection criteria

Inspection guidelines have been passed to achieve the objectives of simplifying business regulation and bring in transparency and accountability to labour inspections.

The inspections can be either mandatory or optional.

Mandatory Inspections

Inspections are mandatory under these conditions:

  1. All new covered/registered establishments are prone to mandatory inspections.
  2. All establishments registered on the Electronic Challan cum Return Portal (ECR) that are not marked as closed and are not complying.
  3. All establishments that have sent in a closure request.
Optional Inspections

Optional Inspections are undertaken under the following conditions:

  1. When the remittances towards EPF drop in excess of Rs:10,000
  2. Membership drops in excess of 50 members
  3. All other units where there is a weightage drop of 20%.
Inspection procedure

Normally the establishment is informed about the inspection and these are carried out during normal working hours. At the time of inspection the following documents have to be produced:

A 100-page notebook that is generally available in Labour Law Stationery Book stores should be kept ready for the Inspector to note his/her remarks. All other records/registers in respect of EPF have to be submitted for inspection and they are:

  1. Attendance Register or Muster Roll
  2. Wage/Salary Register
  3. Bank Statement
  4. Ledger/Cash Book/Vouchers
  5. Copies of the Audited Balance Sheet
  6. Challan Copies
  7. EPF Code Allotment Letter & Form 5A
  8. Bonus Register
  9. Overtime Register
  10. Active UAN List
  11. List of Contractors, nature of work, and compliance made by the

The Inspector, after the inspection, has to note down his/her remarks in the Inspection Book and sign the same.

ESI Inspection criteria

ESI Inspections also follow the same pattern as EPF.

  1. All new units that are covered/registered.
  2. All establishments that have defaulted for a period of 6 months
  3. Units that have made closure requests.
  4. Units where no inspection has been carried out in the last 3 years.
  5. Whenever such inspection is required by Central Data Analysis Unit (CDAU).
  6. When there is a 30% drop in the contribution when compared to the previous contribution period. The top 30% of such units will be inspected.
  7. When there is a drop in the number of employees by 30% and above when compared to the previous contribution period (over a period of 6 months). The top 30% of such units are to be inspected.
  8. Security/Manpower agencies that employ more than 250 employees where inspection has not been conducted in the last 2 years. The top 30% of such units are to be inspected.
  9. Any other units that do not fall into any of the above categories. The top 10% of such units are inspected.
 Inspection procedure

Normally the units are informed about the inspection and these are carried out during normal working hours. At the time of inspection the following documents have to be produced:

  1. Attendance Register
  2. Wages or Salary Register
  3. Bank Statement
  4. Ledger/Cash Book/Vouchers
  5. Copies of the Audited Balance Sheet
  6. Challan copies
  7. ESIC Form 32 register
  8. Accident Book under Rule 66
  9. All other documents related to payments made to employees
  10. List of Contractors, nature of work, and compliance made by them.
Conclusion

The Inspection procedure for both EPF and ESIC are very similar. The Registered units have to be fully prepared with all the relevant records/registers during the time of inspection. Non-availability of such records or registers will be viewed seriously and the authorities are empowered to take strict action against such units.

GetifyHR, which has years of experience in handling these matters can provide the ideal solution for companies to go through these procedures without any stress. Our Payroll and HR module can provide all the required inputs to the authorities as and when required and in the process keep the company fully compliant at all times.

Outsourcing Payroll Services: What to expect when you modernize your Payroll Processes?

Outsourcing Payroll Services: What to expect when you modernize your Payroll Processes?

Introduction

Payroll processing is a daunting task in any business regardless of the size of the workforce. The process involves highly critical tasks other than generating the payslips and disbursing the salaries. Managing Leave and Attendance has always been a complex task and businesses have to face the consequences of errors in handling this crucial activity. Even more daunting is handling the Statutory Compliance rules and regulations. Any errors in handling this vital task could lead to penalties and other legal issues.

A fully integrated Payroll System ensures the smooth functioning of the business and this would lead to greater growth. Outsourcing the Payroll process to an outside agency is the ideal solution as it ensures stress-free operations and helps in addressing the loopholes found in handling payroll either manually or through custom-made software operated by one’s team. The advantages of outsourcing your Payroll process are many and have been discussed in our earlier blogs. In this article, we will limit ourselves to discussing what you can expect when you modernize your payroll process by outsourcing to a reputed third-party service provider.

Impact of Technology

Technology is impacting every walk of our personal and professional life. The pandemic has demonstrated our reliance on technology to keep society and businesses running normally. Not only business transactions but also employees were moved online and payroll services have also been immensely affected. GetifyHR has established itself as a leading player in outsourcing payroll processing using cloud technology.

Cloud Computing

Payroll outsourcing services have embraced the latest in technology to offer greater functionality and performance of their modules. The use of cloud computing has dramatically changed the ways that data is accessible not only from one location but also from multiple locations. Processing and backup is now fully automated.

This has enabled businesses to enter and approve payroll operations across locations. Adopting a cloud-based system has many benefits and the key benefits are briefed here below:

Greater Accessibility

Every branch, every office, and every factory across the states are easily connected. This provides improved access to data and everyone can get up-to-date information whether they are in the office or on the go.

Cut down on costs by reducing the use of costly hardware and software

With the use of cloud computing, you can do away with costly servers, backup generators, network switches, routers cables, etc. All the payroll activities can be handled on the cloud by just paying a monthly fee. This reduces expenses dramatically.

Keeping the company compliant

Statutory Compliance is a vital activity that needs extra care and awareness of the changes in rules that are frequently affected by the government. These changes have to be updated immediately so that the company can remain compliant. Failure to do so will result in penalties and lead to legal issues that the company may well neigh avoid. These issues will also damage the cordial employee-employer relationship. The technology in use now allows the employee to have greater access to their records through a highly efficient ESS portal that is available on the system and their smartphones. GetifyHR is one of the leading HR Outsourcing Services in the country with a reputation for top-notch service

Eliminate repetitive tasks

Payroll processing is a highly repetitive task, especially when using Excel spreadsheets or any customized software. When you outsource to a service provider who uses cloud computing, you are fully automating these time-consuming tasks by leveraging the best of technology. This will bring about a significant reduction in errors and enhance the performance of the administration.

Identify and reduce fraudulent practices

The use of current technology like cloud computing enables the employer to identify whether the employees are billing for hours that they have not worked. With the available data, employers can determine whether an employee is reporting excessive overtime or is abusing sick leave. The available payroll analytics provides employers with trends in employee behavior and information that they need to take corrective measures.

Enhance HR functions

The use of high-end technology in payroll software generates a wealth of information that was previously not available to the user. With the help of the present technology, we can mine this huge volume of data for strategic decision-making purposes. This wealth of information will enhance the HR experience and aid in workforce planning, performance, gender pay equalities, benefits and pensions, and onboarding.

Conclusion

The currently available technology offers the scope for bettering the payroll system under use now. Embracing this technology will offer solutions that will enhance the payroll experience for the company and its employees. Employee retention is very important in today’s labor market. Any small error in payroll preparation would cause employees to leave and this would disrupt the functioning of the workforce and adversely affect the company’s performance. A perfectly working payroll is the need of the hour and this can be achieved only when you have a system that uses the latest technology that is available now. We at GetifyHR are committed to offering the best to our clients and to achieve this we are constantly upgrading our outsourcing module to be in line with the latest technology.