The Ministry of Labour and Employment, Government
of India has, with effect from 1 September 2014, brought into force
several important amendments to the schemes framed under the
Employees' Provident Funds and Miscellaneous Provisions Act,
1952 ("EPF Act") i.e. (i) The Employees' Provident
Funds Scheme, 1952 ("PF Scheme"); (ii) The Employees'
Pension Scheme, 1995 ("Pension Scheme"); and (iii) The
Employees' Deposit-linked Insurance Scheme, 1976
The definition of 'excluded employee' has been amended
whereby the members drawing wages exceeding INR 15,000 per month
are excluded from the provisions of the PF Scheme. Accordingly, the
wage ceiling for an employee to be eligible for the PF Scheme has
been increased from INR 6,500 per month to INR 15,000 per
New members (joining on or after 1 September 2014) drawing
wages exceeding INR 15,000 per month shall not be eligible to
voluntarily contribute to the Pension Scheme.
The maximum pensionable salary for the purpose of determining
the monthly pension has been revised from INR 6,500 to INR 15,000
The pensionable salary shall be calculated on the average
monthly pay for the contribution period of the last 60 months
(earlier 12 months) preceding the date of exit from the
The monthly pension for any existing or future member shall not
be less than INR 1,000 for the financial year 2014-15.
The contribution payable under the Insurance Scheme shall now
be calculated on a monthly pay of INR 15,000, instead of INR
In the event of death of a member (on or after 1 September
2014), the assurance benefits available under the Insurance Scheme
has been increased by twenty percent (20%) in addition to the
already admissible benefits.
Implications of the Amendments
The amendments to the three schemes by the Government of India,
post the proposal made by the Union Minister of Finance in his
Union Budget speech (for the financial year 2014-2015), have
enhanced the applicability, scope and benefits provided to
employees under the EPF Act. However, at the same time, it has also
increased the liability of the employers who would now be
responsible to enroll additional eligible employees and to
contribute on the increased statutory wage ceiling.
*Clasis Law is Clyde & Co's associated firm in
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On 31 December 2015 the President gave his assent to certain amendments to the Payment of Bonus Act, 1965. The amendments have increased the wage threshold for determining applicability of the Act from INR 10,000 to INR 21,000 per month.
The Payment of Bonus Act, 1965 provides for the payment of statutory bonus to eligible employees. The bonus payable is to be determined on the basis of profits or on the basis of production or productivity of the establishment.
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