Monday 25 December 2023

Multi-Level Marketing Regulation in India

Multi-Level Marketing Regulation in India

The regulatory framework for multi-level marketing (MLM) businesses in India is primarily governed by the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, and the Consumer Protection Act, 2019. However, regulations can change, so it's essential to verify with updated sources.



  1. Prize Chits and Money Circulation Schemes (Banning) Act, 1978:

    • The Act aims to ban the promotion or conduct of prize chits and money circulation schemes.
    • MLM companies need to ensure that their business models do not fall under the definition of money circulation schemes as per this Act.
  2. Consumer Protection Act, 2019:

    • The Consumer Protection Act, 2019, replaced the earlier Consumer Protection Act, 1986, and introduced provisions to protect consumers from unfair trade practices, including misleading advertisements and false representations.
    • MLM companies are subject to the provisions of this Act, and they need to ensure that their marketing and business practices comply with consumer protection laws.
  3. Direct Selling Guidelines:

    • The Ministry of Consumer Affairs, Food and Public Distribution issued guidelines in 2016 for direct selling entities. These guidelines set certain standards for direct selling and aim to protect consumers from fraudulent schemes.
    • MLM companies often need to adhere to these guidelines to operate legally in India.
  4. Goods and Services Tax (GST):

    • MLM companies are subject to the Goods and Services Tax (GST) in India. They need to comply with the relevant GST regulations.
  5. Company Law:

    • MLM companies must comply with the Companies Act, 2013, which governs the incorporation, functioning, and dissolution of companies in India.

It's crucial for MLM businesses to operate ethically and transparently to avoid legal issues. It is also advisable for individuals interested in joining MLM schemes to thoroughly research the company and its practices to ensure legitimacy.

Regulations can be subject to change, and it's advisable to check with legal experts or regulatory authorities for the latest information on MLM regulations in India.

The Transformation of Individual Disputes into Industrial Disputes

The Transformation of Individual Disputes into Industrial Disputes

Workmen Of Indian Express (P) Ltd. vs The Management on 27 November, 1968

A dispute between two workmen of Indian Express Newspapers Ltd was espoused by the Delhi Union of Journalists which was an outside union. About 25 per cent of the working journalists of the Indian Express were members of that union. But there was no union of the journalists of the Indian Express. It was held that the Delhi Union of Journalists could be said to have a representative character as the working journalists employed at Indian Express and the dispute was thus transformed into an industrial dispute. Thus, an individual dispute to fall within the definition of industrial dispute, it must be sponsored by the Trade Union of the workmen or if there is no trade union, it must be sponsored by the majority of the workmen or it must comply with the requirements of Section 2-A of the Industrial Disputes Act, 1947.

In the landmark case of Workmen of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate Supreme Court identified two tests to determine whether a dispute was industrial or individual,

Supreme Court held that an individual dispute could be transformed into an industrial dispute if it was sponsored by a trade union or if it was sponsored by a significant number of workers. To make an individual dispute into an industrial dispute, it must be taken up by a union of employees of the establishment and, where no such union exists, it can be married by any union of workers employed in similar trade. Concerning the second condition, if an individual dispute between a worker is dealt with by a considerable number of workers of the same establishment, it becomes an industrial dispute. The Court admitted that the term “number appreciable” does not mean a majority of the workers.




Workmen Of Indian Express (P) Ltd. vs The Management on 27 November, 1968

Equivalent citations: AIR 1970 SC 737, 1970 (20) FLR 157, (1970) IILLJ 132 SC, (1969) 1 SCC 228, 1969 2 SCR 913
Author: Shelat
Bench: J Shelat, V Bhargava

JUDGMENT Shelat, J.

1. The workmen, Gulab Singh and Satya Pal, were appointed by the respondent company in December, 1956 and February, 1955, respectively under the designation of copy-holders. It was alleged that they were entrusted with the duties of proof-readers and therefore they claimed that they should be treated as such. In July, 1959, the management issued an order in which the two workmen described as copy-holders. It was alleged that in spite of this order the management continued to give the workmen the work of proof-readers. A dispute whether the two workmen should be treated as proof-readers having arisen and having been espoused by the Delhi Union of Journalists, the Delhi Administration, by a notification dated August 2, 1961, referred it to the Industrial Tribunal, Delhi.

2. The management contended that the said dispute was an individual dispute and not an industrial dispute and that, that being so it was wrongly referred to the Tribunal and the Tribunal had no jurisdiction to adjudicate it. The Tribunal raised the preliminary issue, namely, whether the dispute relating to the said two workmen was an industrial dispute. The Tribunal held that it was not an industrial dispute but was only an individual dispute of the two workmen and therefore it had no jurisdiction to adjudicate the said reference. The workmen obtained special leave from this court and that is how this appeal has come up before us for disposal.

3. Apart from the oral evidence, the appellants relied on two documents, Ex. WW-1/A, which purported to be the minutes of a meeting held on November 15, 1960 of 17 working journalists and Ex. WB-1, purporting to be the minutes of a meeting of the Executive Committee of the Delhi Union of Journalists held on December 1, 1960. The union maintained that these two resolutions were proof of espousal of the dispute, the first by an appreciable number of the co-workers of the two aggrieved workmen and the second by the union and therefore the dispute though originally an individual dispute was converted into an industrial dispute. The Tribunal rejected Ex. WW-1/A, namely, the minutes of the alleged meeting of the 17 working journalists in the employ of the respondent company as unreliable. The Tribunal next considered whether, even assuming that the said 17 working journalists espoused the cause of the two workmen that espousal transformed the dispute in question into an industrial dispute, in other words, whether they constituted an appreciable number sufficient to change the dispute into an industrial dispute. At the material time the Branch Office of the respondent company at Delhi consisted in all of 388 employees, out of whom 140 were working in the press. The working journalists numbered 131, out of whom 63 were outstation correspondents and the remaining 68 were working journalists performing their duties in Delhi and New Delhi. The Tribunal held that though the said 63 working journalists were outstation journalists, they nevertheless belonged to the staff of the respondent company's Delhi Branch, and therefore, could not be excluded from consideration. The question which the tribunal posed to itself was whether 17 out of the said 131 working journalists could be said to be an appreciable number. According go the Tribunal, even if those 63 outstation correspondents were excluded and only 68 working journalists were considered, 17 of them would not constitute an appreciable number sufficient to convert said dispute into an industrial dispute. It also held that mere passing of a resolution without anything done to follow it up was not sufficient to constitute espousal. There was no evidence that after passing the said alleged resolution on November 15, 1960, anything further was done. On these facts the Tribunal did not consider the aforesaid resolution, assuming that it was passed, as constituting espousal.

4. As regards the resolution, dated December 1, 1960, the minutes of the meeting of the Executive Committee of the Delhi Union of Journalists were produced before the Tribunal. The minutes stated that the meeting after considering the representation made to it by the employees of the Indian Express decided to take up the case of the two workmen and authorised the office bearers of the union to initiate the necessary proceedings. The Tribunal found that the union initiated a fresh dispute before the Conciliation Officer and that there was no pending case initiated earlier, i.e. before December 1, 1960, by another union as alleged by the appellants which could have been continued by the union. A copy of the statement of claim filed by the union before the Conciliation Officer was also produced before the Tribunal. There was evidence that 31 working journalists employed in the respondent company had become the members of the Delhi Union of Journalists. But they had joined the union after the said order of July, 1959. The Tribunal's view was that the said 31 working journalists having joined the Delhi Union of Journalists after the cause of action had arisen in July, 1959, the said resolution of the union's Executive Committee would not constitute espousal, as there would be no nexus between the dispute and the union, and therefore, resolution dated December 1, 1960, did not have the effect of converting the said dispute into an industrial dispute.

5. Mr. Ramamurti, for the appellants, contended that the resolution, dated December 1, 1960, coupled with the fact that the union initiated conciliation proceedings in respect of the demand of the said two workmen was sufficient to transform the dispute into an industrial dispute. On the other hand, Mr. Gupte, appearing for the company, contended that a dispute which is prima facie an individual dispute may assume the character of an industrial dispute, if it is taken up or espoused by an appreciable body of the workmen of the establishment. Espousal by a union is regarded as sufficient, for that means that it is an espousal by an appreciable number of workmen in that establishment. If such a dispute is espoused by an outside union, the workmen of the establishment, appreciable in number, must be members of such a union. On these contentions the question for our determination is whether the Delhi Union of Journalists can be said to have espoused the dispute of the two workmen; if so, whether it did in time, and whether the union not being exclusively a union of the workmen employed in the respondent company, could espouse the said cause.

6. The resolution, dated December 1, 1960, passed by the Executive Committee of the union was not disbelieved by the Tribunal. That, coupled with the fact that the union authorities initiated the conciliation proceeding, must mean that union had espoused the cause of the two workmen. The dispute arose in July, 1959, when the management refused to treat the two workmen as proof-readers. Thereafter the Executive Committee, after considering a representation made to it by the employees of the respondent company, as the resolution reads, passed the said resolution authorizing the officer-bearers of the union to initiate proceedings in the matter of the said dispute and the Secretary accordingly initiated proceedings before the Conciliation Officer. In these circumstances, it is not possible to appreciate how the espousal by the union can be said to be beyond time, as such espousal can only take place after and not before the dispute arose, or as counsel put it, the cause of action arose. In The Bombay Union of Journalists v. The Hindu, Bombay , this court in clear terms laid down that the test of an industrial dispute is whether at the date of the reference the dispute was taken up and supported by a union, or by an appreciable number of workmen. There being no doubt of the union having taken up the cause of the two workmen before the reference the first two parts of the question must be answered in the affirmative.

7. The next question is whether the cause of a workman in a particular establishment in an industry can be sponsored by a union which is not of workmen of that establishment but is one of which membership is open to workmen of other establishments is that industry. In Central Provinces Transport Services Ltd. v. Raghunath Gopal Patwardhan (1956 SCR 956), this court noted that decided cases in India disclosed three views as to the meaning of an industrial dispute : (1) a dispute between an employer and a single workman cannot be an industrial dispute, (2) it can be an industrial dispute, and (3) it cannot per se be an industrial dispute but may become one if taken up by a trade union or a number of workmen. After discussing the scope of industrial dispute as defined in Section 2(k) of the Act it observed that the preponderance of judicial opinion was clearly in favour of the last of the three views and that there was considerable reason behind it. In the Newspapers Ltd. v. The State Industrial Tribunal, U.P. (1957 SCR 754), the third respondent was employed as a lino typist by the appellant company. On an allegation of incompetence he was dismissed from service. His case was not taken up by any union of workers of the appellant company, nor by any of the unions of workmen employed in similar or allied trades. But the U.P. Working Journalists Union, Lucknow, with which the third respondent had no concern, took the matter to the Conciliation Board. On a reference being made to the Industrial Tribunal by the Government the legality of that reference was challenged by the appellant company on the ground that the said dispute could not be treated as an industrial dispute under the U.P. Industrial Disputes Act, 1947, which defined by Section 2 an industrial dispute as having the same meaning assigned to it in Section 2(k) of the Central Act. This court upheld the contention observing that the notification referring the said dispute proceeded on an assumption that a dispute existed between the employer and "his workmen", that Tajammul Hussain, the workman concerned, could not be described as "workman" nor could the U.P. Working Journalists Union be called "his workman" nor was there any evidence to show that a dispute had got transformed into an industrial dispute. The question whether the union sponsoring a dispute must be the union of workmen in the establishment in which the workman concerned is employed or not had not so far arisen. It seems such a question arose for the first time in the case of Bombay Union of Journalists v. The Hindu, Bombay (supra). The decision in that case laid down - 

(1) that the Industrial Disputes Act excluded its application to an individual dispute as distinguished from a dispute involving a group of workmen unless such a dispute is made a common cause by a body or a considerable section of workmen and 

(2) the members of a union who are not workmen of the employer against whom the dispute is sought to be raised cannot by their support convert an individual dispute into an industrial dispute. Persons who seek to support the cause must themselves be directly and substantially interested in the dispute and persons who are not the employees of the same employer cannot be regarded as so interested. 

The court held that the dispute there being prima facie an individual dispute it was necessary in order to convert it into an industrial dispute that it should be taken up by a union of the employees or by an appreciable number of employees of Hindu, Bombay. The Bombay Union of Journalists not being a union of the employees of the Hindu, Bombay, but a union of all employees in the industry of journalism in Bombay, its support of the cause of the workman concerned would not convert the individual dispute into an industrial dispute. The members of such a union cannot be said to be persons substantially and directly interested in the dispute between the workman concerned and his employer, the Hindu Bombay. But in Workmen v. M/s. Dharampal Premchand , this court, after reviewing the previous decisions, distinguished the case of Hindu, Bombay and held that notwithstanding the width of the words used in Section 2(k) of the Act a dispute raised by an individual workman cannot become an industrial dispute, unless it is supported either by his union or in the absence of a union by a number of workmen, that a union may validly raise a dispute though it may be a minority union of the workmen employed in an establishment, that if there was no union of workmen in an establishment a group of employees can raise the dispute which becomes an industrial dispute even though it is a dispute relating to an individual workman and lastly that where the workmen of an establishment have no union of their own and some or all of then have joined a union of another establishment belonging to the same industry, if such a union takes up the cause of the workman working in an establishment which has no union of its own, the dispute would become an industrial dispute if such a union can claim a representative character in a way that its support would make the dispute an industrial dispute.

8. The evidence of the union secretary as that in 1959-60, 31 working journalists of the respondent company were members of the Delhi Union of Journalists. It was nobody's case that these 31 members did not continue to be the members of that union in 1960-61 also. If the number of working journalists in the respondent company were to be taken as 68, membership of the union by as many as 31 working journalists would certainly confer on the union a representative character. Even if the number of working journalists were to be taken as 131, it would not be unreasonable to say that 31, i.e., about 25 per cent. of them would, by becoming the members of the union, give a representative character to the union. It is clear from the evidence that at the material time there was no union of working journalists employed by the respondent company. Therefore, in accordance with the decision in the Workmen v. M/s. Dharampal Premchand (supra), the union can be said to have a representative character qua the working journalists employed in the respondent company. There can be no doubt that the union had taken up the cause of the two workmen by its executive committee passing the said resolution and its office-bearers having followed up that resolution by taking the matter before the Conciliation Officer. Though the grievance of the two workmen arose in July, 1959, when the management declined to accept them as proof-readers the union had sponsored their cause before the date of reference as laid down in the case of Hindu, Bombay. That being the position it cannot be gainsaid that the dispute was transformed into an industrial dispute as it was sponsored by a union which possessed a representative character vis-a-vis the working journalists in the employ of the respondent company.
9. We must, therefore, hold that the tribunal's view that the dispute was not an industrial dispute was incorrect. The award, therefore, will have to be aside and the appeal of the workmen allowed. There will be no order as to costs.

Tuesday 19 December 2023

Employee Benefits under ESIC - Medical Benefit, Sickness Benefit, Maternity Benefits & Other Benefits

Employee Benefits under ESIC - Medical Benefit, Sickness Benefit, Maternity Benefits & Other Benefits



The section 46 of the Act envisages following six social security benefits :-

(a) Medical Benefit
(b) Sickness Benefit(SB)

1. Extended sickness Benefit(ESB)
2. Enhanced Sickness Benefit

(c) Maternity Benefit(MB)

(d) Disablement Benefit

1. Temporary disablement benefit(TDB)
2. Permanent disablement benefit(PDB)

(e) Dependant's Benefit(DB)

(f) Funeral Expenses

An interesting feature of the ESI Scheme is that the contributions are related to the paying capacity as a fixed percentage of the workers wages, whereas, they are provided social security benefits according to individual needs without distinction.

Cash Benefits are disbursed by the Corporation through its Local Offices LOs/ Mini Local Offices (MLOs)/Sub Local Offices SLOs)/pay offices, subject to certain contributory conditions.

In addition, the scheme also provides some other need based benefits to insured workers.

These includes :

i. Rehabilitation allowance
ii. Vocational Rehabilitation
iii. Unemployment Allowance (Under Rajiv Gandhi Shramik Kalyan Yojana)

Wednesday 13 December 2023

FAQs - For the Field Offices for Implementation of Judgment of Hon’ble Supreme Court dated 04.11.2022


FAQs - For the Field Offices for Implementation of Judgment of Hon’ble Supreme Court dated 04.11.2022

Annexure I

 



(Revised) Frequently Asked Questions (FAQs) for the field offices for Implementation of Judgment of Hon’ble Supreme Court dated 04.11.2022


Proof of joint option under Para 26 (6) of the EPFS 1952

Ques. 1: The circulars no. Pension/2022/54877/15149 dated 29.12.2022 and circular no. Pension/2022/56259/16541 dated 20.02.2023 specify requirement of proof of joint option under Para 26(6) of EPF Scheme, 1952 duly verified by the employer. What documentary evidence can be considered as proof of joint option under Para 26(6)?

Ans. 1:

1.     Permission under Para 26(6) uploaded by the applicant at the time submission of Application for Validation of Option / Joint Option or available in Office.

2.     If permission under Para 26(6) is not readily available then Field Offices should verify that

 a)    Employer share of PF contribution has been remitted on employee’s pay exceeding the prevalent statutory wage ceiling of Rs.5000/6500/15000 per month from the day the pay exceeded the wage ceiling or 16.11.95 whichever is later, till date/ till the date of retirement or superannuation as the case may be; and

b)    Administrative charges payable by employer have been remitted; and

c)     Provident Fund account of employee has been updated with interest as per Para 60 of EPFS,1952 on the basis of such contribution received; and

d)    Any of the following documents have been submitted along with Applications for Validation of Option / Joint Options as proof of joint option and permission under Para 26(6).

           Wage   Details   submitted  by   the            employer                 along            with Applications for Validation of Option / Joint Options

           Any salary slip / letter from employer authenticated by employer

           Copy of joint request and undertaking from employer

           Letter from PF office issued prior to 04.11.2022 indicating PF contribution on higher wages. 

The applicants who qualify 2(a) to (d) above and are already contributing/ have contributed till retirement/superannuation on actual (higher) pay, if they have not submitted their joint requests and undertaking of employer, can submit the same at the time of final claim settlement through their last employer. Joint Request and Undertaking of employer for permission under Para 26(6) (performa enclosed) can be submitted by pensioners/members any time before the grant of pension on higher wages in accordance with decision of Hon’ble Supreme Court dated 04.11.2022.

Ques. 2: While filing online Application for Validation of Option / Joint Options, no documentary evidence has been submitted as proof of joint option under Para 26(6) of EPF Scheme, 1952. Whether this Application / Joint Option can be rejected on this ground?

Ans. 2: No. The RPFC will obtain any of the documents as mentioned in Answer 1 from the employer and no Application for Validation of Option / Joint Option can be rejected only on this ground if otherwise eligible. It will be the duty of the RPFC to make sure that any of the proofs as mentioned in Ans 1 above is obtained from the employer. 

Members of Exempted PF establishments

Ques. 3: If a member/past member of a PF exempted establishment has not submitted Joint Request and undertaking from the employer to the Trust for contribution on higher wages under the rules of the Trust, how will such cases be governed?

 

Ans. 3: The cases shall be governed in the same manner as at Answers 1 and 2 above. 

Computation of Pension

 Ques. 4: What will be the applicable formula for member pension calculation?

Ans. 4: The pension calculation will be as per para 12 of EPS 95. The date of commencement of pension will determine the applicable formula for calculation of pensionable service, pensionable salary and pension.

Ques. 5: How will member pensionable salary be calculated for members of EPS, 95 eligible for pension on higher wages who retired prior to 01.09.2014, where the date of commencement of pension is prior to 01.09.2014?

Ans. 5: Since date of commencement of pension is prior to 01.09.2014, the pensionable salary shall be calculated based on the average monthly pay drawn during contributory period of service in the span of 12 months preceding the date of exit from the membership of the pension fund.

Ques. 6: How will member pensionable salary be calculated for members of EPS, 95 eligible for pension on higher wages, who retired prior to 01.09.2014 but where the date of commencement of pension is on or after 01.09.2014?

Ans. 6: Since date of commencement of pension is on or after 01.09.2014, the member pensionable salary shall be calculated based on the average monthly pay drawn during the contributory period of service in the span of 60 months preceding the date of exit from the membership of the pension fund.

Ques. 7: How will member pensionable salary be calculated for members of EPS, 1995 who have retired after 01.09.2014?

Ans. 7: The member pensionable salary calculation shall depend on the date of commencement of pension. For example:-

i.          A’ retired from establishment ‘X’ at the age of 60 years on 01.01.2015. Even though his date of retirement is 01.01.2015, for the purpose of EPS, 1995 he will be treated as superannuated at the age of 58 i.e. prior to 01.09.2014. Accordingly, his pensionable salary shall be calculated based on the average monthly pay drawn during contributory period of service in the span of 12 months preceding the date of exit from the membership of the pension fund.

ii.        ‘B’ retired from establishment ‘X’ at the age of 50 years on 01.01.2012. Even though he retired in 2012, he can opt to take pension at the age of 58 i.e. after 01.09.2014. Accordingly, his pensionable salary shall be calculated based on the average monthly pay drawn during contributory period of service in the span of 60 months preceding the date of exit from the membership of the pension fund.

Ques. 8: A member will be retiring in future (say for example 2030). How will his pension be calculated?

Ans. 8: The pension will be calculated based on the provisions of EPS, 1995 that will exist as on the date of commencement of pension.

Payment of Arrears of Pension

Ques. 9: Will my pension arrears be paid to me or adjusted against the demand of the contributions on the higher wages?

Ans. 9: Arrears of pension will be paid to the pensioners in accordance with the existing process to comply with income tax provision relating to TDS.

 

****


PERFORMA FOR JOINT REQUEST UNDER PARAGRAPH 26(6) OF THE EPFSCHEME 1952


(For implementation of Hon’ble Supreme Court judgment, dated the 04th November, 2022, in Civil Appeal No. 8143-8144 of 2022 [SLP (C) Nos. 8658-8659 of 2019] in the matter of the Employees’ Provident Fund Organisation and others versus Sunil Kumar B. and others)


To,

The Regional Provident Fund Commissioner Regional Office…

I ………..am an existing member of the EPF Scheme, 1952 having UAN ….. I have read and understood the provisions of paragraph 26(6) as well as the definition of ‘pay’ under paragraph 2 of the Scheme. I wish to contribute towards my EPF on actual (higher) pay exceeding the statutory wage ceiling (presently Rs 15,000/ per month) w.e.f. ………..and accordingly, submit my o p t i o n t o c on t r i b u te on my a c t u a l ( h i g h er ) p a y

OR



I…… having read and understood Para 26(6) and the definitions of ‘pay’, and ‘excluded employee’ as mentioned under Para 2 of EPF Scheme, 1952, hereby declare that I am an ‘Excluded Employee’ as per Para 2(f)(ii) of the Scheme and am not enrolled as a member of the Scheme as my ‘ pay’ from the date of joining my establishment ……….having PF Code……..has been above the statutory wage ceiling (presently Rs.15,000/- per month).Now, I wish to become a member of the EPF Scheme, 1952 w.e.f…………and accordingly hereby exercise my option for the same. I undertake to contribute to Employees’ Provident Fund on actual (higher) pay.

I… , being the employer as per the provisions of Section 2(e) of the EPF & MP Act 1952, in respect of the above-mentioned employee and am submitting a joint request for the purpose of enrolling the member/existing member who has been paying contribution on actual pay exceeding statutory wage ceiling/existing members whose actual pay exceeds statutory wage ceiling.

 Place: 

Signature of Employer

Name, Designation of the employer                                               Name & Signature of the employee





(For implementation of Hon’ble Supreme Court judgment, dated the 04th November, 2022, in Civil Appeal No. 8143-8144 of 2022 [SLP (C) Nos. 8658-8659 of 2019] in the matter of the Employees’ Provident Fund Organisation and others versus Sunil Kumar B. and others)

 

UNDERTAKING BY THE EMPLOYER



I… , being the employer as per the provisions of Section 2(e) of the EPF & MP Act 1952, in respect of the above-mentioned employee, hereby undertake to pay the administrative charges payable at prescribed rates towards EPF contribution made by/ in respect of the said employee, including his/ her contribution on pay exceeding the statutory wage ceiling.
I further undertake to comply with all the statutory provisions under EPF & MP Act, 1952 and Schemes framed there under in respect of such employee with effect from……..

 

Place:

Date:

 Signature of Employer

Name,

Designation of the employer

 (For Office use)


OFFICE OF THE REGIONAL PROVIDENT FUND COMMISSIONER

 

The above Joint Request is accepted with effect from with a direction to make necessary entries in the records of the establishment and the Account of the Employee/Member*.


Unraveling the ESI Act Your Guide to Employee Benefits

Unraveling the ESI Act Your Guide to Employee Benefits




The Employees' State Insurance Act, 1948, is a social welfare legislation in India that provides certain benefits to employees in case of sickness, maternity, disablement, and death due to employment injury. Chapter 5 of the ESI Act, 1948, specifically deals with the benefits available under the Act. Here are the main benefits covered under Chapter 5:

  1. Sickness Benefit (Section 46): Sickness benefit is payable to insured persons in cash during the period of certified sickness. It is provided to compensate for the loss of wages during the period of sickness.
  2. Maternity Benefit (Section 50): Maternity benefit is payable to insured women in case of confinement or miscarriage, and it includes cash and medical benefits.
  3. Disablement Benefit (Section 51): Disablement benefit is payable to an insured person who is temporarily or permanently disabled due to an employment injury. It includes temporary disablement benefit and permanent disablement benefit.
  4. Dependants' Benefit (Section 52): In the case of an insured person's death due to an employment injury, dependants' benefit is payable to the dependants of the deceased.
  5. Medical Benefit (Section 56): Medical benefits include medical care to insured persons and their dependants. It covers outpatient treatment, specialist services, hospitalization, and other medical services.
  6. Funeral Expenses (Section 57): In the event of the death of an insured person, funeral expenses are payable to cover the cost of the funeral.

These benefits are provided to employees covered under the ESI Act, and the scheme is administered by the Employees' State Insurance Corporation (ESIC), which is a statutory body set up under the Act. Employers and employees covered under the ESI Act contribute towards the ESI fund, which is used to finance these benefits.

It's important to note that the ESI Act may be amended from time to time, so it's advisable to refer to the latest version of the Act or consult legal experts for the most up-to-date information.

Wednesday 10 May 2023

Higher Pension - Applications for Validation of Option / Joint Options - Deposit / Transfer of due contribution with interest into Pension Fund

 Higher Pension - Applications for Validation of Option / Joint Options - Deposit / Transfer of due contribution with interest into Pension Fund


In refer to the instructions issued vide circulars dated 29th December 2022, 05th December 2023, 25th January 2023, 20th February 2023 and 23 January 2023 regarding the Hon'ble Supreme Court judgment dated 04th November 2022 in the case of Sunil Kumar B. vs. Others. This circular is in continuation of the earlier instructions issued vide above circulars.

 

Notification of the Government

The following provisions have come into force on the 1st September, 2014. vide GOI notification S.O. 2061(E) Dated 03.05.3023:

"(i) In respect of members who have exercised joint option for contributing under the provisions of paragraph 11 of the Employees' Pension Scheme, 1995 and who are found eligible, the employer's contribution shall be nine and forty-ninth per cent. (9.49%) of the basic wages, dearness allowance and retaining allowance of each member by increasing one and sixteenth per cent. (1.16%) from the extant eight and one-third per cent. (8.33%); and

(ii) the increased contribution shall be applicable to basic wages, dearness allowance and retaining allowance to the extent such basic wages, dearness allowance and retaining allowance exceed fifteen thousand rupees per month.”

 

To give effect to the above notification there will be need to undertake following:-

 

  1. In all eligible cases of Joint Options, there will be a requirement for accounting 1.16% additional contribution on the pay above Rs. 15,000/- p.m. of the employer share to the Pension Fund.
  2. Similarly, in eligible cases of Applications/Joint Options, where past remittances on higher pay were made in Provident Fund but not in Pension Fund, adjustments will be required for 8.33% contribution from the employer's share.
  3. In case of acceptance of joint option of members who are still in service and OIC has passed the requisite speaking order, the present employer shall continue to pay pension contribution on higher wages in future also including the increased 1.16% on wages above Rs. 15000/- per month.

 

Calculation of Dues : The dues will be calculated by the Field Office after the verification of wage details submitted by the employer(s) and taking care of following in the process:-

i.                     Each member/pensioner's case shall be processed in a separate file, created in e-office with clear marking of the Application ID (system generated acknowledgement number for online application for validation/joint option).

ii.                   In case of exempted establishments, the wage details for the entire period and the matching contribution should be available with the exempted establishments and consistent with the records of the Trust.

 

Dues should be calculated month wise in the following manner:

 

  1. 8.33% of employer's share on higher pay (w.e.f. 16.11.1995 or the date the pay exceeds the wage ceiling; whichever is later) will be calculated as per records.
  2. 1.16% of employers share higher pay above Rs. 15,000/- p.m. (w.e.f. 01.09.2014) will be calculated as per records towards increased contribution.
  3. All amounts already deposited into the Pension Fund shall be deducted from the sum of 5 (i) and 5 (ii) above.
  4. The interest to be charged on dues as calculated above shall be the interest earned by the members on their PF accumulations.
    1. For un-exempted establishments, the interest shall be calculated at the rate declared under Para 60 of EPF Scheme, 1952.
    2. For exempted establishments, the interest shall be calculated at the rate declared under Para 60 of EPF Scheme, 1952 or at the rate declared by the Trust of exempted establishment from time to time, whichever is higher, if any.

 

Classification of Applications for validation/Joint Options :- The Field Office will examine each case and classify it into the following categories:

 

i.                     Dues calculated have already been fully remitted to the EPS in the due months

ii.                   Dues calculated have not been remitted to the EPS but contribution on higher wages have been fully remitted to EPF and there is adequate balance in PF account.

iii.                 Dues calculated have not been remitted to the EPS but contribution on higher wages have been fully remitted to EPF and there is inadequate balance in PF account or the PF account is with trust of PF exempted establishments.

 

Information on Dues and its deposit - The field office (FO) will intimate the pensioners/members in each of the above category about the dues and if any amount that needs to be deposited/diverted, as per the table provided in the attached notification. Pensioner/member may be given up to 3 months’ time to deposit and to give consent for diversion of these dues to be communicated in the manner provided in the notification attached.

 

Method of payment by the pensioners/members

 

In category 6(1) and 6(1), of attached notification, there will be no requirement of any additional deposit by the pensioner/member. The contributions due with interest receivable may first be diverted from the PF balance in respect of 6(ii) and 6(1). In Category 6(ii), as per attached notification, deposits will be made by the concerned pensioner/member only from the bank account available in EPFO records. The deposits may be made as under:-

  1. Any online facility, if provided by EPFO.
  2. Cheque (payable at par at all branches) drawn in favour of concerning RPFC (and as communicated in the demand letter issued by FO). It is to be ensured that Cheque should have following details on its back side:
    • Application ID
    • UAN/PPO number
    • Name and Mobile number
    • Demand notice number and date

 

Accounting and adjustments of the dues - Accounting adjustments of diversion from Provident Fund to Pension Fund through Appendix-E.

i.                     Appendix-E functionality will be used for accounting and adjusting diversion from Member's PF account to Pension Fund.

ii.             In the software, provision for a separate code has been introduced for adjusting amount from EPF employer share (Account No. 01) to Employees' Pension Fund (Account No. 10).

iii.            This is to be mandatorily selected by Field Offices while using Appendix-E for the purpose of adjusting amount from EPF employer share (Account No. 01) to Employees' Pension Fund (Account No.10).

iv.                 This is essential for generating the reports, monitoring and accounting.

v.             A cheque from Account 01 of concerned Regional Office shall be drawn as "Misc. Payment: Pension on Higher Wages" and be deposited in the centralized receipt account (Account 10) through Member VDR.

vi.                 This may be done on peak collection days of the month like 12th, 13th, 14th and 15th day of the month to minimize the cost of transfer.

 

Accounting adjustments of deposits made by pensioners/members (Including all eligible pensioners/members of PF exempted establishments) in the Pension Fund:

  1. The cheques deposited by the pensioners/members as per Para 9 of the circular shall be deposited in Centralized Receipt Account through member VDR.
  2. The software shall have a provision for selecting "Pension on Higher wages” from the drop-down menu of member VDR.
  3. It would be mandatory to mention Application ID.
  4. System will provide to enter 8.33% regular contribution and 1.16% additional contribution separately in the member VDR module.

 

Utmost care should be taken to ensure that each VDR entry both for Para 10 & 11, as per attached notification, is used only for the concerned pensioner/member.

  1. VDR document should be uploaded in e-office while processing pension on higher wages.
  2. The VDR document has the member details i.e. Application ID, UAN, PPO, Member ID etc., the same can be verified while processing pension on higher wages in e-office file to check the use of VDR for the concerned pensioner/member.
  3. Correct entries in the VDR should be ensured as it will be very difficult to reverse a wrong VDR or make corrections later.

 

After credit of said deposits in the centralized receipt account through VDR and after considering all the facts the competent authority will pass a speaking order.

i.                     OIC/ RPFC-I will pass a speaking order in accordance with the H.O. Circular 29.12.2022 in case of application form for validation of joint options from pensioners who retired prior to 01.09.2014.

ii.                   APFC/RPFC-II will examine each case of joint option from employees who were member prior to 01.09.2014 and continued to be members on or after 01.09.2014 and will take decision.

iii.                 Due care, checks and caution must be taken before accepting / rejecting any case by passing speaking order / taking decision.

iv.                 While evaluating various proofs to determine eligibility of pensioners/members for higher pension, request for error corrections from pensioners/members/employers should also be taken into account along with the existing/additional proof/evidence submitted by them.

v.                   The speaking order/decision shall be uploaded in e-office in the separate e-file created for the purpose.

vi.                 vi. The speaking order/decision shall be intimated to the applicant through e-mail /letter with a copy to the last employer.

 

Note :- The method of computation of pension will follow through subsequent circular by the RPFC

Higher Pension