Solutions

PF (Employees’ Provident Fund)

A provident fund is created with a purpose of providing financial security and stability to elderly people. Generally, one contributes in these funds when one starts as employee, the contributions are made on a regular basis (monthly in most cases). Its purpose is to help employees save a fraction of their salary every month, to be used in an event that the employee is temporarily or no longer fit to work or at retirement. The investments made by many people / employees are pooled together and invested by a trust.

Employer having 20 or more employees are required to get themselves covered under the Act. Employees having wages (i.e., Basic, DA, and cash value of food allowances) upto Rs 15000/- are Mandatory and covered under Provident Fund.

PF A/c Type Employee Contribution Employer Contribution
A/c No 1 (EPF Fund) 12% 3.67%
A/c No 2 (Admin on PF) - 0.50%
A/c No 10 (EPS Fund) - 8.33%
A/c No 21 (EDLI) - 0.50%
Total 12% 13.15%

UAN is Universal Account Number. The UAN is a 12-digit number allotted to employee who is contributing to EPF. Universal number is a big step towards shifting the EPF services to online platform and making it more user-friendly. An employee will have one UAN or Universal Account number, which as the name implies will remain the same. It will maintain all your Member Ids. It’s like you can have multiple Saving Bank account but all these are tied to your one Permanent Account Number or PAN. So, when you change your job and the new employer, if contributing to EPF, gives you a new Member ID. This new Member ID must be linked to your UAN number.

Benefits:

  1. Withdrawal in Form 19 & 10C
  2. Transfer through Online portal or Form 13
  3. Advance withdrawal in Form 31
  4. Monthly Pension in Form 10D
  5. Death Benefit in Form 20, 10D & 5IF

ESI (Employees’ State Insurance Corporation)

The promulgation of Employees State Insurance Act, 1948 envisaged an integrated need based social insurance scheme that would protect the interest of workers in contingencies such as sickness, maternity, temporary or permanent physical disablement, death due to employment injury resulting in loss of wages or earning capacity. the Act also guarantees reasonably good medical care to workers and their immediate dependents.

Employer having 10 or more employees are required to get themselves covered under the Act. ESIC is applicable to all employees whose gross salary is upto Rs 21000/-.

Contribution Period Cash Benefit Period
1st April to 30th Sept. 1st Jan of the following year to 30th June
1st Oct to 31st March of the year following. 1st July to 31st December

E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Corporation in respect of an employee shall comprise of employer's contribution and employee's contribution at a specified rate. Currently, the employee's contribution rate is 0.75% of the wages and that of employer's is 3.25% of the wages paid/payable in respect of the employees in every wage period.

The Act envisages following six social security benefits:

  1. Medical Benefit
  2. Sickness Benefit(SB)
  3. Maternity Benefit (MB)
  4. Disablement Benefit
  5. Dependent Benefit(DB)
  6. Other Benefits (Funeral Expenses, etc.)

PT (Professional Tax)

Profession tax is the tax by the state governments in India. Anyone earning an income from salary or anyone practicing a profession such as chartered accountant, company secretary, lawyer, doctor etc. are required to pay this professional tax. Different states have different rates and methods of collection. Professional tax is collected by the employers from the monthly salaries. It is then paid by them to the government failing which they can have penalties imposed on them for not collecting or failing to pay the professional tax. The States where Professional Tax is not applicable are as follows:

SN STATES NAME
1 ANDAMAN & NICOBAR
2 ARUNACHAL PRADESH
3 CHANDIGARH
4 DADRA & NAGAR HAVELI
5 DAMAN & DIU
6 DELHI
7 GOA
8 HARYANA
9 HIMACHAL PRADESH
10 JAMMU & KASHMIR
11 LAKSHADEEP
12 NAGALAND
13 PUNJAB
14 RAJASTHAN
15 UTTAR PRADESH
16 UTTARANCHAL

LWF

Labour welfare fund is a statutory contribution managed by individual state authorities. The state labour welfare board determine the rate of the contribution and frequency of the contribution. The contribution and periodicity of remittance differs with every state. In some states, the periodicity is annual (Andhra Pradesh, Haryana, Karnataka, Tamil Nadu etc.) and in some states, it is to be contributed during the month of June & December (Gujarat, Madhya Pradesh, Maharashtra etc.).

CONTRACT LABOUR (REGULATION & ABOLITION) ACT

The Act applies:

  • (i) to every establishment employing twenty or more contract labours and
  • (ii) to every contractor who employs/employed twenty or more workmen [Sec.I(4)].

In West Bengal, the number of workmen is 10 or more.

The Act provides for regulation of contract labour coming within its purview. It also provides for prohibition of employment of contract labour in any process, operation of other work in any establishment by issue of a notification by the appropriate Government in the Official Gazette after consultation with Central or state Contract Labour Advisory Board as the case may be. The Act also provides for registration of establishments and licensing of contractors.

SHOP & ESTABLISHMENT

The Shops and Establishments Act regulates conditions of work, lists rights of employees in the un-organized sector and provides a list of obligations for every employer. It applies nationwide to shops, commercial establishments, hotels, restaurants, eating houses, theatres and other places of public amusement or entertainments. Every shop and establishment is required to register itself under the Act within 30 days of commencement of work, whether or not it has employees.

Under the Shop and Establishment Act, every business has to seek approval from Department of Labour and keep up-to-date registers regarding details of employment, fines, deductions and advances, salary and holidays. The requirements may vary from state to state. Files related to annual holidays and number of employees need to be submitted to the office of the Municipal Corporation annually.

Bonus Acts

The Payment of Bonus Act, 1965 provides for the payment of bonus to persons employed in certain establishments, employing 20 or more persons, on the basis of profits or on the basis of production or productivity and matters connected there with.

The minimum bonus of 8.33% is payable by every industry and establishment under section 10 of the Act. The maximum bonus including productivity linked bonus that can be paid in any accounting year shall not exceed 20% of the salary/wage of an employee under the section 31 A of the Act.

Amendments:-

  • (a) Revision of wage threshold for eligibility: The wage threshold for determining eligibility of employees has been revised from INR 10,000 to INR 21,000 per month, covering a larger pool of employees.

  • (b) Change in the wage ceiling used for calculation of bonus: Previously the maximum bonus payable was 20% of INR 3500 per month. The minimum bonus payment was also capped at 8.33% of INR 3500 per month or INR 100, whichever is higher. The calculation ceiling of INR 3500 has now been doubled to INR 7000 per month "or the minimum wage for the scheduled employment, as fixed by the appropriate Government" (whichever is higher). Therefore, the cost associated with bonus payments could double (or be greater still, depending on applicable minimum wages), based on the organization's performance.

  • (c) Retrospective Effect: The amendment has been brought into effect from 1 April 2014.

OTHER LABOUR LAWS

There are other Labour laws as follows:

  • 1.PAYMENT OF WAGES: The Payment of Wages Act, 1936 regulates payment of wages to employees (direct and indirect). The act is intended to be a remedy against unauthorized deductions made by employer and/or unjustified delay in payment of wages. Payment should be made before the 7th day of a month where the number of workers is less than 1000 and 10th day otherwise. The wage-period shall not exceed 1 month.

  • 2.MINIMUM WAGES: An Act to provide for fixing minimum rates of wages in certain employments. The Minimum Wages Act 1948 is an Act of Parliament concerning Indian labour law that sets the minimum wages that must be paid to skilled and unskilled labours. Since labour is a concurrent subject under the Indian Constitution, minimum wage rates are determined both by the Central Government and the Provincial Governments. Minimum wage rates in India are declared at the national, state, sectoral and skill/occupational levels. Minimum rate of wages may consist of a basic rate of wages and a cost of living allowance; or a basic rate of wages, with or without the cost of living allowance, and the cash value of concessions in respect of the supply of essential commodities at concession rates (if authorized); or an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions (if any).

  • 3.MATERNITY BENEFIT ACT: Under the new Law, maternity leave is raised from current 12 weeks to 26 weeks. The prenatal leave is also extended from six to eight weeks. However, a woman with already two or more children is entitled to 12 weeks’ maternity leave. The prenatal leave in this case remains six weeks. The Act also provides for adoption leave of 12 weeks for a woman who adopts a child under the age of three months.

  • 4.PAYMENT OF BONUS: Bonus is a reward that is paid to an employee for his good work towards the organisation. The basic objective to give bonus is to share the profit earned by the organisation amongst the employees and staff members. The Payment of Bonus Act applies to every factory and establishment employing not less than 20 persons on any day during the accounting year. The establishments covered under the Act shall continue to pay bonus even if the number of employees fall below 20 subsequently. Every employee not drawing salary/wages beyond Rs. 10,000 per month who has worked for not less than 30 days in an accounting year, shall be eligible for bonus for minimum of 8.33% of the salary/wages even if there is loss in the establishment whereas a maximum of 20% of the employee’s salary/wages is payable as bonus in an accounting year. However, in case of the employees whose salary/wages range between Rs. 3500 to Rs. 10,000 per month for the purpose of payment of bonus, their salaries/wages would be deemed to be Rs. 3500.

  • 5.EQUAL REMUNERATION ACT: The enforcement of Equal Remuneration Act, 1976 is entrusted to the Chief Labour Commissioner (Central) who heads the Central Industrial Relations Machinery (CIRM). The Central Government has appointed Labour Enforcement Officers as Inspectors for the purpose of making investigation by causing production of relevant registers/records as to whether the provisions of the Equal Remuneration Act, 1976 are being complied with by the employers, who are required to maintain the roll of employee in Form-D. Assistant Labour Commissioners have been appointed as authorities for the purpose of hearing and deciding complaints with regard to the contravention of any provision of the Act, claims arising out of nonpayment of wages at equal rate to men and women workers.

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