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India – Employment Updates.

27 October, 2014

 

 

  • The Ministry of Labour and Employment has increased the wage ceiling from INR 6,500 to INR 15k with respect to the Employees’ Provident Funds Scheme, 1952, Employees’ Pension Scheme, 1995 (‘Pension Scheme’) and the Employees’ Deposit-Linked Insurance Scheme, 1976 (‘EDLI Scheme’) with effect from September 1, 2014. The amendment will result in an increase in the number of employees who were not previously members, but are now covered due to the increased limits. In addition, the amount of contribution by the employer and the employee will now have to be calculated on INR 15k instead of the earlier limit of INR 6,500. This will impact many companies except those that made contributions on their employees’ full wages without following the caps for the contribution prescribed under the schemes.

 

Further, membership of the Pension Scheme has now been limited to members whose wages are less than or equal to INR 15k. Accordingly, employees who are currently not members of the Pension Scheme and whose salary exceeds INR 15k will not be entitled to seek membership under the Pension Scheme. Existing members who had voluntarily been contributing to the Pension Scheme in excess of the previous ceiling of INR 6,500 and wish to continue making contributions in excess of the new ceiling of INR 15k, will be limited to contributing an additional amount at the fixed rate of 1.16% of the salary in excess of INR 15k to the Pension Scheme This additional contribution will probably be made payable out of the employee’s 12% under the EPF Scheme, which will require a fresh option to be executed and be jointly exercised by the employer and the employee within the stipulated time period failing which no such additional contribution will be permitted.

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com


Shuva Mandal, AZB & Partners 

shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com


Percy Billimoria, AZB & Partners 

percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com


Labour & Employment Law Firms in India

 

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