Bill to empower centre to reduce, waive-off PF dues soon

Last Updated 21 January 2015, 10:56 IST

Government has firmed up amendments to Employees Provident Fund & Miscellaneous Provisions Act, to enable the centre to reduce or waive-off mandatory PF contributions by employees in certain cases.

As per the proposed changes, the centre would take a decision in this regard based on financial position of class of industry or other circumstances.

"The Labour Ministry has completed consultation on the proposed bill to amend the EPF & MP Act," a source said.

The source said that besides proposed amendments, Labour Ministry is firming up its views to add some more changes to the Act before introducing the bill in Parliament.

The amendment bill is likely to be introduced in the forthcoming Budget session next month.
The Labour Ministry had invited public comments on the draft bill till January 10. It received several representations from various employers and employees bodies.

"..if the central government is of the opinion that having regard to the financial position of any class of establishments or other circumstances of the case, it is necessary or expedient to do so, it may, by notification... reduce or waive off the contribution payable by the employees for such period as may be specified in the notification," states the proposed amendments to the Act.

At present, the organised sector workers who are mainly covered under the Act, contribute 12 per cent of their basic wages which include basic pay and dearness allowance.

The draft bill also enables central government to reduce the PF contribution to 10 per cent from existing 12 per cent of basic wages.

It is proposed to reduce the threshold limit of workers for coverage under the Act.
At present firms which have employed 20 or more employees are covered under the legislations which is proposed to be reduced to 10 workers.

Reduction in the threshold limit of workers is expected to bring 50 lakh more employees under the purview of Employees' Provident Fund Organisation (EPFO) which implements social security schemes under the legislation.

The ministry, in the draft bill, has proposed reducing the number of representatives of employers as well employees to half on the Central Board of Trustees which is an apex decision making body of the EPFO.

The employers' and employees' have equal number of 10 representatives on the CBT which is proposed to be reduced to 5 members from each side.

Besides, the bill provides that no representative of the employers' as well as employees' shall be member of board for more than two terms consecutively.

However, the unions have expressed their reservations against the amendments to reduce their representation in the CBT as well as caping number of consecutive terms to two.

A senior official said that the amendment to cap the number of consecutive terms is to avoid pressure groups and lobbies.

The draft bill also proposes reducing the number of representative of states and employers. But they have no reservation against it, he added.

The proposed amendment also provides for reducing the number of state government representatives on the board from 15 to 8. However, there is no change in the number of central government representatives on CBT. Centre can appoint its five members on the board.

The bill has proposed increasing the minimum fine for default on payment of employees' PF contribution which has been deducted by employers from their wages, to Rs 70,000 from existing Rs 10,000.

In cases of other defaults under the Act, a minimum fine of Rs 35,000 has been proposed from existing Rs 5,000.

(Published 21 January 2015, 10:56 IST)

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