Article (December-2019)


EPF & MP (Amendments) Bill 2019

Ram Niwas Bairwa

Designation : -   Regional PF Commissioner (II)- Retired

Organization : -  Jaipur


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The proposed amendments may fulfill expectations of the erring/defaulting employers and highly paid employees aimed to provide additional funds to the market through the pension fund companies.

The Government of India has proposed various amendments by proposing the Bill on which comments have been invited. The bill is proposed to be placed before parliament in the next session. After 1988 they proposed amendments our comprehensive.

Mainly various judgments of supreme courts and high courts made the definition of basic wages and assessments period of dues have been made complex which are after seventy years need to be re-defined. Similarly, the employee's pension system is also to facilitate new pension system (NPS). Accordingly, the bill tries to remedy these issues.

Recently, a code on wages 2019 has been notified replacing for enactments namely: Minimum wages Act 1948, Payments of wages Act 1936, Payment of Bonus Act 1965 & Equal Remuneration Act 1976. In the new court a new definition of wages has been given. In the post amendments bill same definition of post amendment bill same definition of wages has been taken by inserting section 2(n) and they called definition of basic wages in section 2(b) has been omitted.

In the new definition of wages basic pay, dearness allowance and retaining allowance have been made part of the wages and 11 items have been excluded from the definition of wages. Total of these items 11+3 will from part of total remuneration but the pay for PF and other purposes shall not be less than 50% of total remuneration if the elements of wages (basic pay, dearness allowance and retaining allowance) is below 50% then it will be make 50% by including items from 11 items.

Thus, it has been right to clarify that any remuneration fixed and minimum wages declared, the wages for PF and other purposes will not be less than 50% however; the wages can be more than 50% for the purpose of the Act.

In the excluded items overtime allowance and commission payable to an employee have also been kept out of the wages. In case the wages for PF is less than the ceiling fixed in the law will attract these two items will invite disputes has authorities may insist for contribution and employers may dispute.

Initiation of proceedings under section 7A and 14B as to for what period in be initiative has also been matter of dispute. Supreme Court and various high courts have ruled that no time limit is prescribed in the law that's why no limitation could be imposed by courts. Recently, as per Supreme Court judgment on splitting of wages has may cause authorities to initiate cases for a period in definitely that may be since 2001 and also many employers may again dispute this matter if cases initiated for a quite back period. To address this problem a proviso to section 7A (1) has been inserted which provides that "no enquiry under this sub section shall be initiated after the expiry of the period of five years from the date on which the dispute referred to in clause (a) is alleged to have been arisen or the amount referred to in clause (b) alleged to have been due from an employer". By the above provision it may again be a matter of dispute that any period comprising amount due or a composite period counting beyond five years may be questioned and it may be pleaded that a notice for inquiry under section 7A cannot include a period beyond five years from the date of issuance of notice and as such it is obvious that period beyond five years will be excluded from the notice issued section 7A.

Further, the employees' pension scheme 1995 has been envy for with the market place in the field of pension from the date of EPS 1995 was proposed it has taken more than twenty five years to make provisions in the Act for new pension system. Two new sections have been proposed to be inserted in the act facilitating for option to go out of the EPS 1995 and join NPS. In the proposed provisions a member of EPS will have an option to join NPS and to contribute on the salary and at the rate which is to be notified in the scheme or notification for this purpose. Further, the members have been given to re-opt for EPS 1995 and in that case what pension and benefits will be available are proposed to be notified.

Thus the proposed amendments may fulfill expectations of the erring/defaulting employers and highly paid employees aimed to provide additional funds to the market through the pension fund companies.