The Central Government (Ministry of Labor and Employment) has issued a strict advisory to all companies and employers in the country. The mandatory wage limit under Employees Provident Fund Organization (EPFO) is Rs. 15,000 to Rs. 25,000 per month, the government has clarified that no company can deduct take-home pay from employees citing the new rule. The main objective of this notification is to ensure that the employees get the real benefit of the extension of PF scope and there is no negative impact on their monthly budget. Let us also tell you what kind of directions have been given by the government.
Government Notices to Company
The Ministry of Labor and Employment has instructed employers that after implementing the increased salary limit of Rs 25,000 under EPFO, the take home salary of employees should not be reduced at all. The move is aimed at allaying apprehensions that the employer’s share under the increased salary cap may be adjusted from the ‘cost-to-company’ (CTC) of employees. On September 17, the government raised the salary limit under EPFO from Rs 15,000 to Rs 25,000 to bring over 1 crore additional employees under compulsory coverage and to further formalize the workforce. The ministry suggested that employers view their share of social security contributions as a way to promote good human resource practices, increase employee satisfaction and retention.
There will be an expected increase in the expenses of the bureaucrats
The Ministry said that the employer’s statutory contribution cannot be treated as employee’s deduction merely by showing it as part of ‘Cost-to-Company’ (CTC). Also, the employer’s contribution should be properly made and the legitimate salary of the employees should not be reduced against the law. In the FAQs issued in this regard, the Ministry admitted that there would be an estimated increase in the cost of employers. The Ministry said that for every additional employment under the ‘Pradhan Mantri Vikas Bharat Rojraj Yojana’ (PMVBRY) employers will get Rs. 3,000 can offset this additional financial burden to some extent with incentives of up to 3,000. Additionally, formalizing the workforce also improves India’s image as an investment destination.
This work has to be started immediately
The ministry has directed employers to start reviewing affected employees and not wait for the next payroll cycle. “The immediate priority should be to identify, calculate, register, report, deposit and reconcile,” the ministry said. He also clarified that Rs. 15,000 and above Rs. All eligible employees earning less than 25,000 will be required to become members of the ‘Employees Pension Scheme’ (EPS). The employee’s required 12 percent contribution will go entirely to the EPF, while the employer’s 12 percent contribution will go to the EPF. It will be divided into two parts, with 8.33 percent going to EPS and the rest to EPF.
