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E-inspection process, decrimilisation of defaulters and other significant developments proposed by EPFO
The Employees' Provident Fund Organisation ("EPFO") is set to introduce a new e-inspection system that will simplify the inspection process and ensure organisations with open communications will not be subject to physical inspection until necessary. In order to provide an alternate to employees who are unable to generate UAN (a 12-digit Universal Account Number to all employees entitled to employee provident fund) due to the mismatch in data, EPFO is looking at alternative authentication vis-a-vis the employee database. Further, EPFO is working towards a three-day settlement period for KYC (Know Your Customer) compliant beneficiaries who have UAN linked to Aadhaar, have a bank account and a registered mobile number.
EPFO also proposed to set up a society of self-regulating consultants, similar to The Institute of Chartered Accountants of India ("ICAI") in order to curb misuse and corruption. In yet another significant development, EPFO proposes to decriminalise defaulters and treat the cases as economic offences and to limit enquiry period to a maximum of two (2) years in order to curtail harassment.
The aforesaid update is based on the statement made by the Central Provident Fund Commissioner during an interactive session held on August 23, 2019 at Confederation of Indian Industry (CII).
Karnataka Government notifies Karnataka Maternity Benefit (Amendment) Rules 2019
The Government of Karnataka has notified the Karnataka Maternity Benefit (Amendment) Rules 2019 ("Rules") pertaining to creche facilities. The Rules are applicable to commercial establishment with 50 or more employees in the State. They have come into effect from August 8, 2019. The Rules, inter-alia, mandates every establishment to provide and maintain creche facility either in the premises or within 500 meters distance from the entrance gate of the establishment to children upto 6 years of age; one creche for every 30 children, operating hours of the creche shall corresponds to the working hours of the parents of the children, every creche should have crèche-in-charge to look after the children. the Rules further prescribes minimum requirements for building material and facilities required for setting up creche facilities.
Employees' State Insurance ("ESI") contribution rate slashed to 4% from 6.5%
On June 13, 2019, the Central Government has reduced the rate under Employees' State Insurance Act, 1948 ("Act") to 4 % from 6.5%. This is the first reduction in 22 years and will be effective from July 1, 2019. With this reduction, the employers’ contribution under the ESI scheme has been reduced to 3.25 % from 4.75 % and the employees' contribution has been reduced to 0.75 % from 1.75 %, however the healthcare benefits under the ESI scheme will remain the same.
The Act applies to organisations with 10 or more employees, drawing a
salary of up to ₹21,000. The scheme, which is governed by the
state-administered Employees' State Insurance Corporation ("ESIC"),
provides for medical, cash, maternity, disability, and dependent benefits to
the insured. Any benefit provided as per the terms of ESI are funded by the
contributions made by the employers and the employees.
The Supreme Court clarifies that special allowances to be construed as a part of the term ‘basic wages’ for the purposes of provident fund.
Supreme Court judgement rejecting the plea resurrecting Employees' Pension (Amendment) Scheme, 2014
The Supreme Court on 1st April, 2019 in the Employees Provident Fund Organisation & Anr. vs. Sunil Kumar B & Ors. [S.L.P (Civil) No.9610/2019] dismissed the Special Leave Petition filed by Employees Provident Fund Organisation against the Kerala High Court judgment in P. Sasikumar & Ors. vs. Union of India (UOI) WP(C). No. 13120 of 2015 dated 12.10.2018, thereby setting aside the amendment brought in the Employee Pension Scheme, 1995 vide Employee's Pension (Amendment) Scheme, 2014 which had capped the maximum pensionable salary to INR 15,000/- per month.