FAQ's
Q.1. What is provident fund? When does statutory provision relating to it become applicable? Please also provide working details under the enactment.
Ans. Provident fund is the contribution deposited with the 'Employees' Provident Fund Organisation' as per the statutory provisions contained in EMPLOYEES' PROVIDENT FUND & MISCELLANEOUS PROVISIONS ACT, 1952. It becomes applicable when an establishment employs 20 or more employees' within one given day, whether, regular or otherwise.
It is payable on 'Basic-wages, Dearness-allowance and Retaining allowance' paid to the employee every month which does not include leave-encashment, over-time and yearly bonus.
CAUTION:
- Presently wage ceiling under PF Act is Rs.6,500/- p.m.
- Under this Act once an employee is covered, contributions are payable with respect to him up to maximum limit prescribed under the Act.
- Contribution on higher salary than the prescribed wage limit could be made by the employee concerned and employer if so wishes. Employer cannot deduct its share from the salary of employee.
- The ceiling of wages for transfer to 'EMPLOYEES PENSION SCHEME' is @ 8.33% from employer's share of contribution. On employee attaining age of 58 years, no deposit need be mentioned under a/c no.10.
- The ceiling of wages for transfer to 'EMPLOYEES LINKED DEPOSIT INSURANCE' is restricted to Rs.6,500/- p.m.
Employees' contribution: 12% of wages |a/c. no.1|
Employer's contribution:
- 12% of wages |3.67% to a/c no.1 & 8.33% to a/c no.10|
- Administrative charges @1.10% |a/c no.2|
- ELDI contribution @ 0.50% |a/c no.21|
- Administrative charges on ELDI @ 0/01% |a/c no.22|
Q.2. Whether there is compulsory insurance cover & medical facilities under the government for the employees' of private sector? If yes, please provide the details.
Ans. In India, it is under the provisions of Employees' State Insurance Act, 1948 that provision is made for insurance cover & medical facilities for employees' of such factories which employ 10 or more persons with or without aid of power (as amended on 01-06-2010). Otherwise, even this enactment becomes applicable when the organisation employs 20 or more employees' in the notified areas.
Contribution is payable on 'Basic-wages, Dearness-allowance, CCA, Over-time, House-rent-allowance, incentive allowance or bonus, and Conveyance allowance, etc.' paid to the employee every month. However, it does not include annual bonus, rewards to employee, ex-gratia payment, commission, leave-encashment and retrenchment compensation. However, unlike PF no voluntary contribution is permissible. Wage limit as regards deductions under this Act is Rs.15,000/-.
CAUTION:
Employer cannot deduct its share from the salary of employee. If an employee was covered initially under ESI Act but later on his wages exceed beyond monetary limit of Rs.15,000/-, then he will be out of ESI Scheme from the next contribution period which commences w.e.f. April or October as the case may be. For eg., if his wages are revised in August 2008, then he will be continued to pay contributions till September 2008.
Employees' contribution: 1.75% of employees' salary
Employer's contribution: 4.75% of employees' salary
Q.2A. What are the notified areas in the State of Madhya Pradesh under the ESI Act, 1948? How do I access the pan-India information?
Ans. The areas which have been notified wherein the provisions of ESI Act, 1948 has been made applicable are as follows: Amlai, Banmore, Bhopal including Govindpura & revenue village of Habibganj, Burhanpur, Dewas including industrial area as well as Lohar Piplia, Gwalior including Mahalgaon, Indore including its Municipal limits & Devguradia, Itarsi, Jabalpur including Richhai, Katni, Khandwa, Malanpur, Mandideep including Sarakia & Simrai, Mandsaur including Multanpura, Manglia, Neemuch, Niwar, Pithampur including Sector 3 & 4, Ratlam including Sejawata, Bibrod & Kharakhadi, Rewa, Sagar, Satna, Sanawad, Ujjain including Naulakhbir.
Q.3. What is the monetary limit of salary for payment of BONUS? If some employees have been in receipt of bonus for some years and now their basic salary exceeds the monetary limit, what is the liability in those cases?
Ans. It emanates from the provisions contained in PAYMENT OF BONUS ACT, 1965 that for purposes of computation, only 'Basic-wages and Dearness allowance' are to be considered, to the exclusion of all other allowances.
CAUTION:
Employees' who are drawing salary more then Rs.10,000/- p.m. are excluded from the purview of the benefit. However, computation of bonus is to be made for the employees' who are drawing wages more than Rs.3,500/- p.m. up to ceiling limit of Rs.10,000/- p.m..
RATE:
8.33% to 20% of salary/wages up to Rs.3,500/- p.m. depending upon available surplus.
Q.4. What is EX-GRATIA? It is generally perceived that ex-gratia is paid to such employees who are not entitled for bonus, is it correct?
Ans. Ex-gratia is a payment to an employee on a special occasion as a reward by the management. The payment under this head does not form part of wages under any of the Labour-law enactments.
Q.5. Where do we find 'minimum-wages? Is it compulsory that basic salary/wages should be equal to minimum-wages?
Ans. It emanates from the provisions of MINIMUM WAGES ACT, 1948 that 'minimum-wages' does not include any amount paid towards medical assistance, conveyance and other allowances to defray special expenses by the employee due to the nature of his employment. Thus, minimum-wages means 'Basic-wages, Dearness allowance and House-rent-allowance'. Dearness-allowance is fixed by the government for every half year commencing April and October.