In The Light of Slew of Steps Taken by The Centre, Pf & ESI Merger May Soon Become Inevitable? - Karma Global

In The Light of Slew of Steps Taken by The Centre, Pf & ESI Merger May Soon Become Inevitable?

 

Karma Management Global Consulting Solutions Pvt. Ltd. is one of the top 5 consultancy firms, established in the year 2004, with headquarters in the business district of Santacruz East, Mumbai, India, and full-scale operation in all the States, having about 200 direct and indirect staff on its roll, is a leading service provider for payroll and payroll compliances, outsourcing, facility services, HR services, Training & Development, Recruitment & Talent Acquisition, Legal and Para legal services, Disputes and Litigation Handling,  Inspection Management and Liaisoning, Advisory Services, Social, Environment and Vendor Audits, Regulatory Compliances ad Governance.

Compliance with labour and employment laws has become one of the most important issues that many establishments in India have to deal with. Many of employment disputes result in litigation and take a prolonged time for effective conclusions.  Karma Global is an Indian HR, Payroll, and Compliance Firm advising clients worldwide on local, regional and global regulatory compliances in relation to their business goals, business strategies, and resolving disputes.

It gives valuable suggestions and advice to Corporates, Investors, Institutions, Contractors, Establishments, Industries, etc. on the need for lowering employment risk across all levels and adhering to the laws of the land. It has a lot of expertise on employment-related compliance issues, as well as day-to-day support for Human Resource Services with in-house Counsel. Karma Global is also into employment agreements and policies, structuring of compensation and benefits, employment aspects of merger and takeover, etc. 

Karma Global’s force, strength, and reach have brought in tremendous change over from its earlier image of being a consultancy firm in the period of 2000, to now embarking on setting strategies and practices abroad in highly regulated markets and competing in the global arena.  

With India overtaking the UK to emerge as the fifth largest economy in the world and setting to become the third largest by 2029, Karma Global is all poised for long-term value in terms of client outreach and giving state-of-the-art technology and excellent services to global clients better than ever before.

 

SINGLE PAYMENT IN THE OFFING FOR SOCIAL SECURITY!

 

4 Labour Codes and Freedom from the Web of Legislation

As per the Social Security Code, 2020, the government can formulate new schemes or modify the existing ones via notification to allow for enhanced coverage under various social security schemes.

The Centre may soon do away with separate contributions towards provident funds, pensions, and insurance for small enterprises, allowing them to make a single payment towards the social security of their employees, as per news reports. This is expected to boost compliance among small firms.

Currently, Companies have to make separate payments to the Employees’ Provident Fund Organization (EPFO) and Employees’ State Insurance Corporation (ESIC).

An expert committee will finalize the plan. The contribution may be kept at 10-12 percent of the wages. This will be applicable to an organization with 10-20 employees, as per the news report.

“An expert committee will be set up to arrive at the final unified rate…the labour ministry will notify it subsequently,” an official was quoted as saying in the report.

Currently, organizations with 10 or more employees need to make contributions under the ESIC. In organizations with over 20 employees, contributions are made under EPFO. The Centre may also reduce the threshold for contribution to EPFO from 20 to 10 employees.

Under ESIC, the criteria are expected to stay the same. The employers contribute 3.25 percent of the wages while employees contribute 0.75 percent of the wages to the ESIC. It provides employees with insurance coverage.

Also, the government is considering a universal security scheme to protect small companies in case of financial troubles. It would, in such a situation, get difficult for them to contribute to several schemes. This is also expected to boost compliance.

 

SOME MORE ACTIONS – ANTICIPATING WAGE CEILING INCREASE WHILE HIGHER PENSION HAS BEEN GIVEN THE GO-AHEAD BY SC:  

 

EPFO WAGE CEILING COULD BE REVISED SOON; CENTRE LIKELY TO INCREASE LIMIT

“An expert committee will be set up to arrive at the final unified rate… the Labour Ministry will notify it subsequently,” as per unofficial reports.

Currently, organizations with 10 or more employees have to contribute under the ESIC scheme for the health insurance of their workers. In establishments with 20 or more workers, contributions are made under the EPFO for provident fund, pension, and insurance benefits.

The employers contribute 3.25 percent of the wages while the employees contribute 0.75 percent % of the wages to the ESIC fund, which is then used to give insurance cover to the employees.

Also, the Centre is considering cutting the employee limit to 10 from 20 now under the EPFO as part of a plan to bring many small-scale firms under the ambit of the EPFO. Under the ESIC, the criterion for obligatory coverage is already 10 workers and above.

 

ELIGIBILITY FOR HIGHER EPS PENSION UNDER EPF SCHEME; ALL YOU NEED TO KNOW! 

As per the Employees’ Provident Funds and Miscellaneous Provisions (EPF & MP) Act, the employers have to contribute 12 percent of the basic wage of the employees. The wage floor for the coverage under the Act is fixed at 15,000

 Putting to rest confusion and speculation, the Supreme Court has upheld the Employees’ Pension (Amendment) Scheme, 2014, giving another opportunity to members of the Employees Provident Fund Organization (EPFO) who had not opted for enhanced pension coverage prior to 2014 to jointly do so with their employers within the next four months.

Those employees who were existing EPS members as on September 1, 2014, can contribute up to 8.33 percent of their ‘actual’ salaries — as against 8.33 percent of the pensionable salary capped at Rs. 15,000 a month — towards pension.

The court has also struck down the requirement in the 2014 amendments mandating employee contribution of 1.16 percent of the salary exceeding Rs 15,000 per month.

The maximum pensionable salary for the purposes of calculating the pension is still Rs 15,000 per month as notified by the EPFO in 2014. This means that even if the basic salary is higher than Rs 15,000 the employer’s contribution to the pension will continue to be calculated on a basic salary of Rs 15,000.

The DC ruling has offered a one-time relief to employees who were members of the EPS as on September 1, 2014, and had been making a higher contribution to the EPS – i.e., contribution on their actual salary if it was higher than Rs 15,000 per month. These employees are now required to give a joint declaration, along with their employer, to the EPFO in order to continue making contributions on the higher amount. This declaration must be given within four months from the date of the judgment (November 4, 2022), which means on or before March 4, 2023. For employees making this declaration, the pension will be calculated on their higher salary (and not at the capped Rs 15,000 per month).

The apex court held that the power to require members to make these additional contributions were not available under Section 6A of the EPF Act (under which the EPS was framed). However, it has kept this portion in abeyance for 6 months, so that the EPFO can understand how to obtain additional contributions to the pension fund in such a way that the fund is not depleted.

 

CONCLUSION:

Prime Minister, Shri Narendra Modi’s quote is as follows:  ……!

“We need to come out of the mindset that industry and labour are always in conflict with each other. Why not have a mechanism where both benefit equally? Since labour is a concurrent subject, the law gives flexibility to state governments to modify the codes further as per their unique situation and requirements. The right to strike has not been curtailed at all. In fact, trade unions have been conferred with a new right, enabling them to get statutory recognition. We have made the employer-employee relationship more systematic and symmetrical. The provision of notice period gives an opportunity for amicable settlement of any grievance between employees and employers.” – Prime Minister Narendra Modi

Karma Global is a fully homegrown successful Outsourcing and Labour Laws Organization, operating both with contract employees as well as with permanent types of employees who are placed in the locations of global and domestic clients.

Karma Global has traditionally been a dynamic Regulatory Compliance driven organization with an integrated and up to mark the approach to HR Services.

Karma Global has always set its sights on keeping a tab and interpreting the regulatory changes in the manner required by authorities with a focus on the implementation of these new rules coupled with the adeptness to sophisticated technology, which has placed them in the top 5 consulting organizations today as far as HR Service Organization is concerned.

Karma Global’s experts sitting in various offices and catering to over 500 clients are fully intertwined with the workflow and processes that are leading most of its clients to convert their value drivers into the transformation of their businesses and objectives for effective results.

Karma Global’s technology securely integrates regulatory compliance across all types of businesses from trading to operations to investor services to financials and banks while also providing the clients access to these technologies with the power to control process operations with a dashboard and ready updates on the workflows done monthly and timely as per stipulated dates set by the authorities.

The greatest satisfaction comes from the outflow of communication to clients for future reviews and analysis of the monthly work done with data visualization tools that surface their activities done by the professional teams of Karma Global in its Corporate Headquarters in Mumbai and Branch Offices in Bangalore, Tamil Nadu, Gurgaon, Gujarat, Pune, etc.

 

Proprietary blog of Karma Global Tech Management LLC

This blog has been collated and compiled by the internal staff of Karma Global with the knowledge and expertise that they possess, for its monthly newsletter Issue 07 of January 2023 in case of specific or general information or compliance updates that matter, kindly reach out to the

 

Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com

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