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EPF & ESI – Companies that are eligible? How to Register? What documents are required?

Introduction:

The constitution of India ensures social-economic justice to the people and establishing of a Welfare State.  The inequalities in the society were slowly being dismantled by regulations brought in by the government.  One such regulation was to introduce a long-term savings scheme for employees, especially in the Private sector, that would support them in retirement or superannuation.  This regulation is the Employees Provident Fund & Miscellaneous Provisions Act, 1952.

With the view to provide further security to the employees in times of adversity like ill-health or accidents, the government introduced the Employees State Insurance (ESI) scheme in the year 1948. Both these acts have gone a very long way in supporting the employees in the organized sector when they are out of job and in times of adversity.

The EPF Act

EPF Act:  the EPF act ensures that all employees have to contribute a percentage of their basic salary to the EPF every month.  An equal is contributed by the employer towards the fund. The amount so contributed would earn interest and can be withdrawn under certain conditions.  The scheme is managed by the Employees Provident Fund Organization (EPFO).

Eligibility – for Employer

Any organization that has 20 or more employees is required to register with the EPFO and contribute towards EPF.  However, subject to certain conditions even organizations employing less than 20 employees are permitted to register and contribute to the fund.

Eligibility – for Employee

Any employee drawing a monthly salary of less than ₹15,000/- has to compulsorily become a member of the EPF.  If any employee drawing a monthly salary more than ₹15,000/- desires to become a member he may do so subject to getting the approval from the Asst. PF Commissioner and the Employer.

How to Register?

EPF Registration is mandatory for all organizations that meet the eligibility criteria of 20 or more employees.  The registration must be obtained within one month of the attaining the minimum strength.  Failure to register will attract penalties.

The registrations can be made offline or online through the official website of the Employees Provident Fund Organization.  Online registration is an early process when you have all the required documents/information readily available, the registration form can be downloaded from www.epfindia.gov.in.

The following information has to be furnished:

Name and address of the Organization

Details of Head Office and Branches if any

Date of Incorporation/Registration of Firm

Details of ownership:  Designation and address of Directors or Partners

PAN details

GST details

Contact details:  email ID and mobile number of authorised person

Name of contact person, Address, Date of Birth, Gender, PAN, Designation and date        of joining

In addition to these, details regarding the type of company have to be furnished.

For Proprietorship Firm

Registration of Firm with date of registration

Name of the Employer

PAN details

Identify proof

Address of the Proprietor (Official)

Address of the Proprietor (Residential)

Contact Number

For Co-operative Societies (Trusts/Societies)

Certificate of Incorporation

Memorandum of Association

Articles of Association

PAN

Address Proof

For Partnership Firm

Name and address

Identity proof of Partners

Certificate of Registration

Details of Partners

For Limited Liability Partnership firm (LLP)

Certificate of Incorporation

Identify proof of Directors

Details of all Directors

Address Proof and ID Proof of all Directors

Memorandum of Association

Article of Association

Other Businesses

If Factory, then the Factory license and date have to given

First Sale Bill

First Purchase Bill towards machinery

Bank name, account Number, IFSC, address

Salary details

Employee details

Number of employees employed, Gender, Type of work

Salary details

Documents Required for ESI Registration

  1. Company Pan Card (Scan Copy & Hard Copy)
  2. Partners/Directors Pan Card (Scan Copy & Hard Copy)
  3. Current Account Cancelled Cheque Leaf (Scan Copy & Hard Copy)
  4. Company Registration Copy (ROC / Partnership Deed)
  5. Partners Details (Name, DOB, Father Name, Partnership starting date)
  6. Employees Aadhaar Card Copy
  7. Employees Bank Passbook Copy
  8. Digital Signature of Authorized Signatory
  9. Specimen Signature
  10. EPF & ESI Application forms
  11. GST Registrations Copy
  12. Rental/Lease Agreement

Steps for Online Registration

Be prepared with all the required documents

Login to the EPF website @ epfindia.gov.in

Read the instructions thoroughly

Fill in the required information

A Digital Signature Certificate of the Authorised Signatory – Proprietor/Partner/Director

Verify their correctness and then submit the form online

Type in the CAPTCHA code and click on “GET PIN” option

Enter the PIN that you receive on your registered mobile or email ID

Click on the SUBMIT button

Download the PDF

Save and take a printout of the PDF

This has to be submitted to the EPF Office.

The ESI Act, 1948

The Employees State Insurance (ESI) scheme is a welfare scheme for the benefit of employees in the organized sector.  The scheme was introduced by the Government under the ESI Act, 1948 with the objective of providing social-economic protection to employees during adverse situations brought on by ill-health or accidents.  The funding for the scheme comes from the contribution from the employee and employer.  Under this scheme, the employer contributes 3.25% of the monthly salary + dearness allowance, whereas the employees contribute only 0.75% of the salary.  Any establishment employing more than 10 employees (20 in some states) have to register with the Employees State Insurance Corporation (ESIC), an autonomous body under the Ministry of Labour & Employment, Government of India.

Eligibility

Any organization that employs 10 or more (20 or more in some states) is required to register with the ESIC and contribute towards ESI.  The Act however applies for both the employer and the employee.  In case the wage of the employee is less than Rs:176/- per day then the employee is exempted from contributing to the fund.  All employees whose salary does not exceed Rs:21,000/- are eligible to be beneficiaries to the scheme.

The ESI Act covers the following establishments:

  • Shops, Road Transport organizations, Cinema Houses/Theatres, Newspaper Establishments, Non-seasonal Factories, Hospitals & Medical Institutions, Educational Institutions, Restaurants & Hotels. If any of these establishments employ 10 or more persons, they have to register with ESIC.

How to Register?

Registration can be manual or online.  However, now the ESIC registration is fully online.  The steps involved in online registration are given below:

Step 1:  Here you have to login to the ESIC portal @ www.esic.in.  Click on the “Employer Login” option on the home screen.  On the next page click on “Signup” button and fill in the details called for and then submit the form.

Step 2:  The employer will receive a confirmation mail to the email address and mobile number provided earlier at the time of sign-up.  This email will contain the username and password details for registering as an employer under the scheme.

Step 3 :  In this step you have to fill-up the Registration Form-1.  For this you have to login to the ESIC portal and click on the “Employer Login” option and enter the User name and password received in your email or mobile.  You will get redirected to the “New Employer Registration” option.  Click on the option and you will be asked to select the “Type of Unit” from the dropdown list and click on the “Submit” button.

The Employer Registration Form_1 will appear on the screen and all the details required have to be filled in.  The details include Employer details, establishment details, and employee details.  Once this is completed, click on the “Submit” button.

Step 4 :  In this step you have to make the Payment for Registration.  Once the Registration Form is submitted, the “Payment of Advance Contribution” page will be open.  Fill in the amount to be paid and select the payment mode.  Payment of advance contribution for 6 months is required to be remitted.

Step 5 :  This is where you will be sent a system generated “Registration Letter”.  This will contain a 17 digit Registration Number and is a valid proof of registration of the employer under the ESI Scheme.

Documents Required for ESI Registration

The following documents have to be scanned and uploaded

  1. Company Pan Card (Scan Copy & Hard Copy)
  2. Partners/Directors Pan Card (Scan Copy & Hard Copy)
  3. Current Account Cancelled Cheque Leaf (Scan Copy & Hard Copy)
  4. Company Registration Copy (ROC / Partnership Deed)
  5. Partners Details (Name, DOB, Father Name, Partnership starting date)
  6. Employees Aadhaar Card Copy
  7. Employees Bank Passbook Copy (If Gross is below 21 thousand)
  8. Digital Signature of Authorized Signatory
  9. Specimen Signature
  10. EPF & ESI Application forms
  11. GST Registrations Copy
  12. Rental/Lease Agreement

These two Acts have provided the employees and their dependents in the organized sector solace during times of adversity like ill-health and accidents and when they are in retirement.  They have been a great boon for such employees.

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Risks of Non-Compliance and How to Avoid Compliance Penalties?

Compliance is a generalized term that indicates adherence to varying rules and laws passed by the Government. Statutory Compliance is complying with or adhering to rules and laws about labour and human resource.

Organizations that employ people are required to follow a set of guidelines that fall under statutory compliance. Penalties include fines and in some cases imprisonment if companies fail to fully comply with these rules and regulations. Following these rules and laws is, therefore, very important for the organization if it needs to function smoothly. In this article, we will discuss how companies can avoid compliance penalties.

What are the risks of non-compliance?

Statutory compliance is vital for any company and their HR teams have to be on their toes to frequently update the new regulations and see that the company is fully compliant. Let us first understand the consequences of failing to comply with the rules and regulations.

Fines

The first risk of non-compliance is the possibility of fines.  Governing bodies have put in place stringent penalties to compel companies to comply with the rules and regulations, and fines are their first line of penalties.  Thousands of rupees are collected as fines for non-compliance and the amounts would vary based on the seriousness of the offense. This entails that you not only have to pay the fines but will also have to spend for legal costs.

Imprisonment

For very serious lapses in complying with the Statutory Compliance rules and regulations, imprisonment of up to 6 months with or without fines is enforced.

Loss of Reputation

One of the serious outcomes of non-compliance is the loss of reputation suffered by the company and this, in turn, will amount to a loss of customers.

Dissatisfaction of Employees

When penal action is taken against a company for non-compliance it also brings in dissatisfaction within the employees as non-compliance of any degree would also affect them. This would in turn bring about unwanted tension and would provide enough fodder for potential employees to stay away from joining the company. Employee retention would suffer and it also curtails the entry of new employees. Overall this would harm the company’s working.

Loss of Productivity

Non-compliance would also result in loss of production due to the stoppage of production brought about by unscheduled inspections and audits by the authorities. This would lead to a waste of time and money. In cases where non-compliance is serious, the authorities can even order companies to suspend operations.

What are the Acts businesses have to comply with?

Before we venture into the penalties of non-compliance with Statutory Compliance rules and regulations, let’s have a look at what these Acts are that all businesses have to comply with.  We can divide these Acts into 5 sections.  They are:

  1. Acts that control Wages
  2. Acts that provide for Social Security
  3. Acts that control Industrial Relations
  4. Acts to benefit Women and
  5. Acts that control other aspects of the employees

1.  Acts that control Wages

1.1  Payment of Wages Act, 1936

1.2  Minimum Wages Act, 1948

1.3  Payment of Bonus Act, 1965

1.4  Equal Remuneration Act, 1976

2.  Acts that provide for Social Security

2.1  Employees’ Provident Fund Act, 1952

2.2  Employees’ State Insurance Act, 1948

2.3  Payment of Gratuity Act, 1972

2.4  Labour Welfare Fund Act, 1965

3.  Acts that control Industrial Relations

3.1  Industrial Disputes Act, 1947

3.2  Industrial Employment (Standing Orders) Act, 1946

3.3  Trade Unions Act, 1926

3.4  Factories Act, 1948

3.5  Shops and Establishment Act, 1947

3.6  The Industrial Establishment Act, 1963

4.  Acts for the benefit of Women

4.1  Equal Remuneration Act, 1976

4.2  Maternity Benefit Act, 1961

4.3  Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

5.  Other Acts

Apart from these a group of Acts is in force to take care of other aspects of the employee that does not find representation in the above mentioned Acts. They are:

5.1  The Professional Tax Act, 1975

5.2  The Child Labour (Prohibition & Regulation Act, 1986

5.3  The Contract Labour (Regulation and Abolition) Act, 1970

5.4  The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959

5.5  The Apprentice Act, 19651

5.6  The Employees Compensation Act, 1923

5.7  The Interstate  Migrant Workmen (Regulation and Conditions of Services) Act, 1979

What are the penalties for non-compliance?

Statutory Compliance is a critical aspect of any business or organization. Failure to comply with these statutory requirements can pose immense problems. These include penalties in the form of fines and imprisonment when the non-compliance issue is serious. We shall briefly discuss the penalties under the various important Acts pertaining to Payment of Wages and Social Security in the following paragraphs.

1.  Penalty for non-compliance with the EPF Act, 1952

Any person who fails to pay the contribution towards EPF or makes false statements or representation is liable to be punished with imprisonment for a period that may extend up to 1 year or with a fine of ₹5000/- or with both. The Act also enforces penalties for non-payment of inspection charges or administrative charges. The penalty for such non-compliance is punishable with imprisonment for a period that is not less than 6 months and may extend up to 1 year and a fine of ₹5000/-.

However, if the employee contribution is also not paid then the punishment may extend to a term of 3 years but not less than 1 year and a fine of ₹10000/-.

The filing date for the Monthly EPF returns is 25th of each month, and for the Annual Return under Form 3A and 6A it is on or before the 30th of April every year. The Act also requires the filing of Form 2, Form 5, and Form 10 as and when required.

2.  Penalty for non-compliance with the ESI Act, 1948

Penalties for non-payment, delayed payment, or falsifying payments and returns include imprisonment for a period extending up to 2 years and a fine of ₹5,000/-. For non-payment, simple interest @ 12% per annum for each day of delay is collected.

Filing of return for the half-year from April to September is on or before 12th November, and for  the period October to March is on or before 12 May.

3.  Penalty for non-payment of Gratuity under the Payment of Gratuity Act, 1972

Failure to make the gratuity payment or providing false statement or giving false representation is punishable with imprisonment for a term which may extend to six months or with a fine of ₹1000/- or with both. As soon as the Gratuity is due, the employer shall determine the amount due to the employee. The amount has to be paid to the employee within 30 days from the date it becomes payable.

4.  Penalty under Labour Welfare Fund Act, 1965

In Tamilnadu, if any person who willfully fails to produce any document required by the Board or fails to furnish any information called for by the Board or fails to comply with any directions issued by the Board is liable to be imprisoned for a term or 3 months or with fine of five hundred rupees or with both.

The rules vary from state to state. The Labour Welfare Fund requires the filing of an annual return and the dates vary from state to state. In Tamil Nadu, the due date is 31st January of every year.

5.  Penalty for non-payment of wages under the Payment of Wages Act, 1936

Wages have to be disbursed to the employees on the dates mentioned in the state’s Payment of Wages Act. For non-payment of wages on time by the employer a penalty in the form of a fine not less than ₹1000/- that may extend to ₹5000 is enforced.  For subsequent convictions the fine will not be less than ₹5000/- and may extend up to ₹10000/-.

Similarly, for failing to maintain the register or not furnishing the required information or giving false information, the fine shall not be less than ₹1000/- and may extend up to ₹5000/-. For repeat conviction of non-payment of wages, imprisonment not less than one month which may extend up to 6 months, and fine not less than ₹2000/- and extendable up to ₹15000/- may be collected. There is also provision for collecting additional fine up to ₹100/- per day.

This is a state subject and therefore varies from state to state. In Tamil Nadu, an Annual Return in Form IV has to be filed with the Inspector within the jurisdiction of the factory or industrial establishment not later than 31st January of each year.

6.  Penalty for non-payment of minimum wages under the Minimum Wages Act, 1948

Non-payment of minimum wages as per the Minimum Wages Act, 1948 is punishable under section 22 of the Act by imprisonment up to 6 months or fine or both. This may differ from state to state. Incidentally, the Delhi Government has increased the fine from ₹500/- to ₹50000/- for non-payment of Minimum wages and the imprisonment has been increased from 6 months to 3 years.

This is state-specific and varies from state to state. In Tamil Nadu, filing of an Annual return in Form III is mandatory, and the Government will notify the dates.

7.  Penalty for non-compliance with the Payment of Bonus Act, 1965

If any person does not comply with the provisions of the Bonus Act 1965 or any rule made thereunder or fails to meet the direction or requisition, shall be punishable for a term which may extend up to 6 months or with a fine of ₹1000/- or with both. However, if there is a dispute and the employer and employees are not in agreement with the terms, then the issue comes under the purview of the Industrial Disputes Act.

The annual return under Form D for payment under the Bonus Act has to be filed for every calendar year before 1st February of the following year irrespective of the financial year that an employer follows.

8.  Penalty for non-compliance with the Equal Remuneration Act, 1976

If an employee contravenes the provisions of the Act by not paying equal remuneration to men and women workers for the same work or work of similar nature, or discriminates between men and women, he shall be punishable with a fine which shall not be less than ₹1000/- which may extend to ₹ 20000/- or with imprisonment for a term which shall be not less than 3 months but which may extend for 1 year or with both. For subsequent offenses, the imprisonment may extend to two years.

If the employer omits or fails to maintain any registers or other documents, or fails to produce when called for, or refuses to produce the same, he will be punishable with simple imprisonment for a term which may extend to one month or with a fine which may extend to ₹ 10000/- or with both.

The Act does not require the submission of any return. However, the employer has to maintain a Register of employed in Form D that has to be produced before the Inspector appointed under the Act.

How do you avoid the risks of non-compliance?

Payroll is a vital part of any organization that employs people. Businesses generally maintain their payroll function in-house either manually or by relying on a do-it-yourself payroll application. Whether you perform this task manually using a desktop with customized software or an online solution, there are serious issues especially when it comes to statutory compliance. Doing it in-house may not be able to keep you fully updated on the changes and this would pose serious problems in the working of the business.

Payroll and Statutory Compliance tasks are time-consuming and complicated. Any mistakes in payslip generation or filing the compliance reports would have serious consequences. The best option is to outsource this task to a reputed concern whose payroll module and expertise in statutory compliance would help to drastically reduce the burden and the risks.

The present crop of high-tech firms offers a lasting solution to this vexing problem. This would not only help to reduce the in-house workload but also help to generate the regular reports more accurately and in full compliance with the rules and regulations. The present-day payroll packages using cloud technology provide the ideal solution.

Outsourcing to a company like GetifyHR helps the organization to mitigate risks and lessens the in-house workload. This can help the company to regularly identify compliance obligations and act accordingly. GetifyH, with its vast experience in managing Payroll and Statutory Compliance issues, has the right tools and trained professionals to handle this task with ease. This will enable the company to focus fully on developing the business.

Conclusion

Statutory Compliance is a highly complicated function and companies should be on their toes to keep themselves fully updated on the changes in rules and regulations. When you get the assistance of professional service providers, you get the required expertise to guide you and keep you fully updated. You will not only be able to mitigate the risks but would also be able to:

  • Identify the compliance obligations and keep abreast of the changes.
  • Meet all compliance rules and regulations.
  • Ensure filing of returns, and remittance of dues to the department on time, without any mistakes.
  • Ensure that the employees get their share of remittances regularly under prevailing rates.
  • Streamline the workflow and help the HR team to focus more on managing the staff and employees.
  • Storing the information in an organized manner for future use by the accounts department.
  • Providing adequate security to vital data.

Failure to comply with government rules and regulations can endanger your profitability. As an employer, you are duty-bound to comply with these rules and regulations and the best option is to outsource these operations to a company like GetifyHR. You not only reduce your stress levels but will also be able to free time for your HR teams in particular. This will help you to focus more on business development.

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Understanding the EPF Act, 1952, and EPS & EDLI Schemes

Employees’ Provident Fund Act, 1952

The Directive Principles of State Policy enshrined in the Constitution of India aims at ensuring socio-economic justice to the people and in establishing a Welfare State.  Private sector Employees’ who retired found themselves in trouble to earn a normal livelihood.

The government passed a legislation to introduce a long-term savings scheme that would support them in retirement or superannuation.  This gave them a life of dignity and a strong social security cover. This legislation is the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952.

As a follow-up, in the year 1976, the government introduced the Employees’ Deposit Linked Insurance Scheme (EDLI) as a part of the EPF Act. This paved the way for the nominee of the policy to receive a lump-sum payment in the event of the death during the period of service, of the person insured.

To provide further security, in the year 1995 the government introduced the Employees’ Pension Scheme (EPS) to ensure more support.

Who the Act is Applicable to?

The Act applies to both the Employer and the Employee.

The Employer

The EPF Act provides that any establishment having 20 or more Employees’ comes under the purview of the Act. However, even organizations with less than 20 Employees’ can opt to register for this scheme.

The Employee

The Act mandates that all Employees’ who draw a salary (Basic wages) that is less than INR 15,000/- should become a member under the scheme. For those drawing more than INR 15,000/-, you are given the option to either join or not join as a member. However, once an employee drawing more than INR 15,000/- has become a member, he cannot opt-out of the scheme at a later date.

All the 3 Schemes, EPF, EPS & EDLI are bundled as one package and there is no option to choose as per one’s discretion.

How to contribute?

Both the Employer and the Employee have to mutually contribute to the EPF. Employees’ contribute 12% of their basic salary towards this fund and the employer contributes an equal amount. The entire portion of the contribution of the Employee is allocated to the EPF A/c. This accumulated fund earns interest at a specific rate as declared by the government from time to time.

The Employer also contributes 12% out of which 8.33% of the salary is allocated to the Employees’ Pension Fund (subject to a maximum of INR1250/-) and the remaining 3.67% is allocated to the EPF A/c. In addition to this, the employer also contributes to the Employee Deposit Linked Insurance Scheme. This is 0.50% of the basic pay subject to a minimum of INR 75/- per month per employee.

Apart from this, the employer has to contribute 0.50% of the basic towards the PF Administrative charges subject to a minimum of INR 75/- per month for a non-functional organization without any contributory member and INR 500/- for other establishments.

As mentioned earlier, the three schemes EPF, EPS, and EDLI are bundled schemes with no option to contribute separately as per our choice.

Therefore, we must understand the key functions of the 3 schemes.

Employees’ Provident Fund

This is the main ingredient of the EPF Act 1952. The main purpose of this enactment is to provide security to the employee on retirement. The Employees’ Provident Fund Organization (EPFO) controls this scheme.

In this scheme, the Employee and Employer contribute to the scheme. The Employee contributes 12% of salary (Basic wages) and the Employer contributes 3.67% of basic salary from the 12% that he contributes. The Employees’ Pension Scheme and the Employees’ Deposit Link Insurance scheme share the balance 8.67%.

The EPF scheme is exempt under the Income-tax Act.  This is the EEE exemption. The First E indicates that this investment is exempt from tax; the Second E indicates that the interest earned on this investment is exempt from tax and the Third E indicates that the income generated from this investment will not be taxable at the time of withdrawal.

The Finance Act, 2020, has modified this rule.  The rule now states that if the funds contributed by the employer in any of the schemes go beyond 7.50 lakhs, then the interest income on the incremental contribution is taxable.

Penalty for late payment /non-payment

The Act mandates that the employer has to remit his part of the contribution along with the employee portion on or before the 15th day of every month without fail. In case of default of payment, the employer is liable to pay U/s.7Q of the Act, simple interest at the rate of 12% per annum for each day of the default.

Under Section 14B of the Act, late filing of EPF Challan and contribution will attract the following penalties.

5% interest p.a for a delay of upto 2 months

10% interest p.a for a delay of 2-4 months

15% interest p.a for a delay of 4-6 months

25% interest p.a for a delay of more than 6 months

The PF a/c’s of members will be credited the interest once the penal dues are realized and the employer will be charged penal interest to cover the interest dues and also has to pay a penalty in case the employer is declared bankrupt. This indicates that the EPF dues are more important than any other debts or dues. Non-payment of dues could also attract arrest proceedings. The EPFO has the right to attach the bank a/c of the employer for non-payment of these dues.

Interest Rate on EPF

The interest rate for EPF contributions was 8.5% for the fiscal year 2020-21 and this remains unchanged for the fiscal year 2021-22 also. The interest calculation depends on the monthly running balance and the rate announced by the government.

Employees’ Pension Scheme (EPS)

The Employees’ Pension Scheme is a social security scheme launched in the year 1995 by the Employees’ Provident Fund Organization. The scheme provides a pension to an employee of the organized sector after retirement at the age of 58. This is subject to the employee having being employed for at least 10 years (this need not be continuous years of service).

The following are the criteria to become eligible for the scheme.

  • The employee should be a member of EPFO
  • He should have completed 10 years of service
  • The employee should be 58 years of age

The amount of premium is arrived at using the following computation:

Month Pension = Pensionable service x Pensionable salary /70

The maximum pensionable salary is INR15000/- per month

EPS funds don’t generate any interest.

Employees’ Deposit Linked Insurance (EDLI)

Introduced in the year 1976, the EDLI scheme provides the nominee a lump-sum amount in the event of the death of the person insured during the period of service.

Eligibility and other criteria

  • All EPF members get the benefit of the EDLI scheme
  • The plan is a term plan and the sum insured is variable as it depends on the remuneration of the person insured.
  • The Employer pays the premium amount.
  • The minimum assurance benefit for the scheme is INR 2.5 lakhs and the maximum is capped at INR 7 lakhs.

The Employees’ Provident Fund Act, 1952, the Employees’ Deposit Linked Insurance Scheme, 1976, and the Employees’ Pension Scheme, 1995 provide a strong social security cover to Employees’ in the private sector. These are a means of supporting the livelihood of such Employees’ once they retire from service. They are one among the pillars of a society that believes in being identified as a Welfare State.

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Aatmanirbar Bharat Rozgar Yojana (ABRY Scheme)

  • What is ABRY Scheme?.

ABRY Scheme ( Aatmanirbar Bharat Rozgar Yojana Scheme) is announced to incentivize the employers who registered with EPFO. Employer’s can avail this benefit by recruiting freshers or the employee’s who lost their job during the period (01/03/2020 – 30/09/2020).

Government will pay both Employee & Employer EPF contribution if the employer meets ABRY Scheme conditions.

What are the Scheme Conditions:

Fresh Employment – Employee who joined on or after 01/10/2020 and wages is less than Rs.15,000/- is eligible for ABRY Scheme.

Experienced Employment – Employee who resigned from previous employment during the period 01/03/2020 – 30/09/2020 and joined with present employer on or after 01/10/2020 is eligible for ABRY Scheme.

* Wages means on which contribution is payable in terms of section 6 of EPF & MP Act 1952.

Scheme Validity:

  • The scheme is valid for the joiners during the period 01/10/2020 – 30/06/2021
  • Again EPFO has extended the ABRY scheme registration date from 30-June-2021 to 31-March-2022.
  • Employees & Employers will get this benefit for next 2 years from the joining date.

Click here to know more about the scheme.

Feel free to call incase if any clarifications:

Name: Dinesh Ramakrishnan

Email: sales@getifyhr.com

Phone: 0422 2969666 (or) 3513520

Mobile: +91 97897 29394

payment of gratuity

Payment of Gratuity Act, 1972

Any shop or foundation with 10+ workers employed for the preceding 12 months is under the application of The Payment of Gratuity Act.

There is no definite percentage set by gratuity act for any employee. Based on a formula, an employer pays the gratuity to his employee.

Factors to consider

  • Last drawn salary
  • Years of service

There are 2 categories of non-government employees divided by The Payment of Gratuity Act to calculate the payable amount. Those are,

  • Employees covered under the Act
  • Employees not covered under the Act

Employees covered under the Act

     For the employees those who are covered under the act.

     Formula

                     (15 X Last Drawn Salary X Tenure of Working) / 26

            That is 15 days of last drawn salary for years of service.

 

Employees not covered under the Act

Though the employees are not covered under the act, there are no restrictions for paying the gratuity.

       Formula

                    (15 X Last Drawn Salary X Tenure of Working) / 30

                  half a month salary for each serviced years.

According to the portal of government pensioners, retirement gratuity is determined this way: one-fourth of a month’s compensation in addition to dearness stipend is drawn before retirement for each completed six mothy periods of qualifying service.

If there is an occurrence of death of an employee, the gratuity is paid depending on the service tenure, where the highest to procure is limited to Rs 20 lakh.

shops act 2

Shops & Establishment Act

The Shop and Establishment Act is to direct the employment state of labourers in shops and foundations. This encapsulates work hours, breaks, overtime, holidays, termination of service, and more.

Enrolment should be done in 30 days from the date of initiation of business. Regardless of the presence of the employee, the enterprise needs to get enrolled under this act.

An application must be submitted alongside the expense and the scanned copies of documents on the web. Once the documents are submitted, within 15 days, the registration is approved by the concerned department and the certificate of registration can be downloaded from the portal.

Upon completing 5 years, the registration should be renewed.

Change of address, status and partner intimation is supposed to be informed through online application within 30 days for which registration fee may be incurred depending upon the headcounts of employees and other metrics.

The yearly return ought to be documented online in Form U before 31st January of the forthcoming year.

ESI

The ESI Act, 1948 – A helping hand in the time of crises

ESI Scheme

There has been an ever-growing need to protect the interests and lives of employees against the effect of sickness, physical disability, and death due to the nature of work.  Promulgation of the Employee State Insurance Scheme as defined under the Employees’ State Insurance Act, 1948, accomplished this need.  This was the first major legislation passed by Parliament to provide social security to workers in independent India.

People are prone to health-related eventualities more so the workers who are exposed to sickness, a physical disability that is either temporary or permanent in nature, maternity periods, and death. Such eventualities due to occupational hazards will result in loss of wage that is partial or loss of full earning capacity. The Act provides a counterbalance to such eventualities and hopes to uphold human dignity and value in times of such crises. This Act protects the worker from deprivations, destitution, and social degradation and gives a life of dignity and value.

Who does it apply to?

The ESI Scheme applies to factories and other establishments like Road Transport, Shops, Cinema Halls, Restaurants, Hotels, Educational Institutions, and Medical Institutions employing 10 or more persons.   The Employees’ State Insurance Corporation which administers the scheme has enhanced the wage limit for coverage of employees under the ESI Act.  Accordingly, employees of these organizations drawing wages up to Rs:21,000/- a month are entitled to social security cover under the ESI Act.

How do Finances work?

Social Security Schemes of his nature are usually self-financing. The ESI scheme is a self-financing scheme with contributions from the covered employees and their employers. As per the provisions of the Act, the state government meets 1/8th of the expenditure of medical benefits capped at Rs:1500/- per insured person per annum.

How do they contribute?

The ESI Scheme benefits all the employees in the factories and establishments coming under its purview. Both the employee and the employer as per the rate fixed by the Employees’ State Insurance Corporation make the contributions. The ESIC makes revision to these rates from time to time.

The prevailing rate of employee contribution is 0.75% of the wages and 3.25% of the wages payable by the employer for the first 24 months. Employees drawing an average daily wage of Rs:137/- are exempted from contributing. However, the employer has to contribute his part of the share in respect of these employees.

How the contribution is collected?

The employer has to pay his part of the contribution in respect of every employee and also the employee contribution deducted from the wages within the 15th of every month in which they fall due. The ESIC has authorized 65 Banks to collect these contributions.

Contributing period and Benefit period

The Scheme provides 2 contributing periods in a year and a corresponding 2 Benefit periods with duration of 6 months.

No.

Contributing Period

Benefit Period

1.

1st April to 30th September

1st January to 30th June of the following year

2.

1st October to 31st March

1st July to 31st December of the following year

Benefits to Insured

The ESI Scheme provides the following benefits to the insured person.  Section 46 of the ESI Act provides the insured person the opportunity to avail these 6 benefits.

  1. Medical Benefits
  2. Sickness Benefits
  3. Maternity Benefits
  4. Dependent’s Benefits
  5. Disablement Benefits
  6. Other Benefits
  1. Medical Benefits: This is a benefit that starts from day one of insurable employment. Full medical benefit is provided to an insured person and his family members. The Act also covers Medical Care to retired and permanently disabled persons and their spouses on payment of a token annual premium of Rs:120/-. This benefit does not have any ceiling on expenditure incurred on the treatment.
  1. Sickness Benefits: A cash compensation of 70% of wages is payable to the insured worker during the period of certified medical care, subject to a maximum of 91 days in a year. The insured worker requires to have been working for 78 days in a 6 months contribution period. Other benefits under this include:
  • Extended Sickness Benefit (ESB): Here the sickness benefit is extendable up to two years in case the insured person is suffering from any of the 34 malignant and long-term diseases detailed therein, at an enhanced rate of 80% of the wages.
  • Enhanced Sickness Benefit: In the event of the insured person undergoing sterilization for 7 days/14 days for male and female workers respectively, they are liable to get Enhanced Sickness Benefit equal to full wages.
  1. Maternity Benefit: Female employees can avail of Maternity Benefit during confinement/pregnancy. They are eligible for 26 weeks Maternity benefit at the rate of full wage subject to contributing for 70 days in the preceding 2 contributing periods.
  1. Disablement Benefit: These are of 2 types.
  • Temporary Disablement Benefit (TDB): This is payable at the rate of 90% of the wage as long as the disability continues. A person is eligible for the benefit from day one of entering insurable employment and this is irrespective of having paid any contribution for employment injury.
  • Permanent Disability Benefit (PDB): This benefit is payable at the rate of 90% of wage every month depending upon the extent of loss of earning capacity as certified by a Medical Board.
  1. Dependent’s Benefit: Where death occurs due to occupational hazard or injury during employment, Dependent’s Benefit is payable at the rate of 90% of wage as a monthly payment to the dependents of the deceased.
  1. Other Benefits:
  • Funeral Expenses: An amount of Rs:15,000/- is payable to the dependents or the person performing the last rites in the event of the death of the insured employee. The eligibility is from day one of entering insurable employment.
  • Confinement Expenses: This is a benefit for pregnant employees who are not able to avail of maternity services of ESIC Hospitals due to unavoidable reasons and are forced to take treatment in other hospitals. The amount has been enhanced to Rs:7,500/- and these are paid for two deliveries only.
  • Vocational Rehabilitation Benefit: This benefit is eligible for a permanently disabled insured person for undergoing VR training at VRS.
  • Physical Rehabilitation Benefit: This is paid to the insured in case of physical disablement due to injury suffered during employment.
  • Old Age Medical Care: For an insured employee who has retired or attained the age of superannuation or under VRS/ERS or leaving service due to permanent disability. The insured person or spouse is aid Rs:120/- per annum.
  • Rajiv Gandhi Shramik Kalyan Yojana (01-04-2005) and Atal BeemitVyakti Kalyan Yojana (18-09-2018): These two schemes provide social security to the insured person who becomes unemployed due to: 1. Retrenchment. 2. Closure of Factory/Establishment. 3. Permanent disablement of at least 40% due to non-employment injury.

ESI Scheme – a great way to support the employee

The ESI Scheme has provided succor to a large section of employees and their dependents that have passed through a traumatic period in life due to sickness, confinement/pregnancy, and disability due to occupational hazard or death.  As of 3-03-2020, there are 3.41 crore insured persons under the scheme.

payment of act

Payment of Bonus Act, 1965

The Payment of Bonus Act gives a yearly reward to the worker in the industries and foundations utilizing at least 20 people. Under the Act, the bonus is summed up by the employee’s compensation and the remuneration of the enterprise.

Workers procuring ₹21000 every month or less (fundamental + DA, barring other particulars) and have finished 30 working days in that year are eligible for the bonus payment.

Compensation covers basic and DA for the bonus payment, and other allowances (e.g., HRA, overtime, etc.) are barred. Bonus must be paid at the rate of 8.33% as minimal and 20% max. It should be paid within 8 months from the date of account closure.

employees can be excluded from bonus payment when warned or excused by fraud, poor conduct, or in terms of irregularity.

minimum wages act

Minimum Wages Act, 1948

The Minimum Wages Act of 1948 is responsible for having fixed the minimum wages rates which are determined by both Central and state governments. Minimum wages rates might be set up for any state, occupation, and domain and legalised at the national, state, sectoral and occupation levels. The basic wages are determined by the living cost.

There are two techniques for fixing/overhauling minimum wages:

Under the panel technique, the government sets up boards of committee and subcommittees to hold requests and suggestions for fixing and changing the least wages.

whereas, in the method of notification, government proposition gets published officially for people who are probably going to be influenced and determines a date (at the very least two months from the hour of the notice) where the recommendations are taken into the examination.