India: Employees' Pension (Amendment) Scheme 2014 Struck Down: Employees' Gain Or Employers' Problem?

Last Updated: 11 April 2019
Article by Anshul Prakash, Abhisek Choudhury and Deeksha Malik

Most Read Contributor in India, July 2019

On 1 April 2019, the Supreme Court of India (Supreme Court) in Employees Provident Fund Organisation v Sunil Kumar and Ors, SLP (C) 9610/2019 dismissed a special leave petition filed by the Employees Provident Fund Organisation (EPFO) against the judgment of the Kerala High Court in the case of P. Sasikumar and Ors v Union of India and Ors, (2019) ILLJ 494 Ker (Sasikumar), holding that it found no merit in the petition. The Kerala High Court had set aside the Employees' Pension (Amendment) Scheme, 2014 (EPS Amendment), which inter alia capped the maximum pensionable salary at INR 15,000 (Indian Rupees Fifteen thousand) per month and created additional obligations of payment of contribution on the salary exceeding the said ceiling.


Prior to the EPS Amendment, Paragraph 6 of the Employees' Pension Scheme 1995 (EPS Scheme) provided that the EPS Scheme would apply to every employee who, on or after 16 November 1995, became a member of the Employees' Provident Fund Scheme 1952 (EPF Scheme). Further, Paragraph 11 of the EPS Scheme provided that the pensionable salary shall be the average monthly pay drawn during the contributory period of service in the span of the 12 (twelve) months preceding the date of the employee's exit from the membership of the employees' pension fund. The said provision had capped the maximum pensionable salary at INR 6,500 (Indian Rupees Six thousand five hundred) per month but had allowed the contribution to be made as per the actual salary of the employees at the option of the employer and the employees.

Through the EPS Amendment which became effective from 1 September 2014, the conditions of membership of the EPS Scheme underwent a change. The EPS Scheme was now applicable to such employees who on or after 16 November 1995 became a member of the EPF Scheme and whose monthly salary on the date of joining was less than or equal to INR 15,000 (Indian Rupees Fifteen thousand). Further, determination of pensionable salary was as per the average monthly salary drawn during the contributory period of service in the span of 60 (sixty) months preceding the date of the employee's exit from the membership of the employees' pension fund. The maximum pensionable salary was set at INR 15,000 (Indian Rupees Fifteen thousand) per month. While the option of contribution on a monthly salary exceeding INR 15,000 (Indian Rupees Fifteen thousand) was allowed upon making a fresh option, such option had to be exercised within a period of 6 (six) months from 1 September 2014. Further, the employees were required to contribute at the rate of 1.16% (one point one six per cent) of the salary exceeding INR 15,000 (Indian Rupees Fifteen thousand) as an additional contribution to the contributions payable by them under the EPF Scheme. It was further provided that for the computation of the monthly pension payable to employees, the employees' salary shall be capped at INR 6,500 (Indian Rupees Six thousand five hundred) per month up to 1 September 2014 and at INR 15,000 (Indian Rupees Fifteen thousand) per month for the period thereafter.

The Sasikumar Case

The petitioners in Sasikumar were employees working in different establishments and had approached the Kerala High Court to challenge the validity of the EPS Amendment on the ground that the same had placed them in an adverse position by making it onerous for them if they contribute towards the pension fund based on their actual salary. It was also argued that the cap of INR 15,000 (Indian Rupees Fifteen thousand) was unrealistic and had no relation to the actual salaries drawn by employees across the country. Another contention put forth by the petitioners was that the cut-off date provided by the EPS Amendment for making a fresh option to contribute on the basis of a higher salary was inconsistent with the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act 1952 (EPF Act) and the schemes framed thereunder. They referred to Paragraph 26(6) of the EPF Scheme, which does not set any cut-off date for making a similar option for employees' provident fund contribution.

The Kerala High Court held in the petitioners' favour, observing that nowhere in the EPF Act does it allow an additional rate of interest to be imposed for making contributions based on the actual salary of the employees. Since employees have the option to make contributions in excess of the wage ceiling, no other restriction could be imposed on their right to exercise such option. The Kerala High Court also held that the respondents' contention of depletion of the pension fund was unsustainable as the respondents failed to adduce any evidence in this regard. On the contrary, the contributions paid by the ever-increasing workforce in India based on their actual salaries led to accretion of the pension fund. The stipulation of a cut-off date for conferring the benefits under the EPS Scheme was also held to be invalid, for such a requirement would have the effect of classifying the employees based on their retirement before or after the prescribed date.

In view of the above, the Kerala High Court set aside the EPS Amendment along with all consequential orders and proceedings issued by the provident fund authorities based on the EPS Amendment.


The order of the Supreme Court dismissing the special leave petition of the EPFO and thereby reaffirming the judgment of the Kerala High Court in Sasikumar is indeed a relief for employees working across different establishments. The earlier position regarding membership of the EPS Scheme appears to have been restored, thereby allowing any member of the EPF Scheme, including those earning more than INR 15,000 (Indian Rupees Fifteen thousand) per month and who became members by virtue of a request under Paragraph 26(6) of the EPF Scheme, to become members of the EPS Scheme. Similarly, the pensionable salary would now be based on the average salary in the span of 12 (twelve) months instead of 60 (sixty) months. The amount of monthly pension would, therefore, increase as employees normally draw a higher salary towards the end of their service.

However, with the EPS Amendment including the ceiling of INR 15,000 (Indian Rupees Fifteen thousand) being shown the door, there is lack of clarity regarding the situation where an employer has chosen to limit the provident fund contribution to of INR 15,000 (Indian Rupees Fifteen thousand), as is permissible under the EPF Scheme. In this case, the pension fund contribution would also be based on INR 15,000 (Indian Rupees Fifteen thousand) and not the actual salary of the employees since the pension fund contribution is made from the employer's contribution (that is, 8.33% out of 12%).

Regarding the question of the date on which the Supreme Court's order becomes effective, one may take a cue from the order passed by the Kerala High Court in Sasikumar. As per the said order, the employees 'shall' be entitled to exercise their right of option without any restriction of a cut-off date. With the Supreme Court reaffirming the said order, it appears that the same would have a prospective operation regarding the option the employees may exercise under the EPS Scheme. However, it does appear that the orders passed by the EPFO in relation to exercise of fresh option based on the EPS Amendment will be impacted.

With the Supreme Court's dismissal of the special leave petition, it is hoped that the EPFO issues a clarification on the aforementioned aspects and allays confusion within the industry.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions