Challenged Paragraph 83: Special Provision in Respect of International Workers

The landscape of employment is ever-evolving, especially in a globalized world where workers often move across borders for work opportunities. In India, the treatment of international workers concerning their provident fund contributions has been a topic of recent contention. The insertion of Paragraph 83 in the Employees’ Provident Fund Scheme, 1952, by the Central Government, brought about significant changes and challenges, particularly in establishments in Bangalore.

Who Qualifies as an International Worker?

An international worker is broadly defined as an Indian worker who has split their career between India and another country with which India has a bilateral Social Security agreement (SSA). Additionally, it includes foreign nationals working in India.

Initially, when Paragraph 83 was inserted, there was a statutory basic wages limit of Rs. 6,500 per month for international workers, similar to Indian employees as defined under Section 2(f) of the Act, 1952. However, this salary rider was removed by a subsequent notification (G.S.R. 148 dated 03.09.2010), effectively subjecting international workers to EPF contribution on their total basic wages, without any salary cap.

Legal Challenge and Landmark Judgment

This notification regarding international workers' EPF contribution was challenged before the Hon’ble Karnataka High Court. In a landmark judgment delivered on 25.04.2024, the High Court pronounced Paragraph 83 of the Employees’ Provident Fund Scheme, 1952, as well as Paragraph 43-A of the Employees’ Pension Scheme, 1995, as unconstitutional and violative of Articles 14 and 21 of the Indian Constitution.

The legal battle was spearheaded by Learned Advocate Mr. B C Prabhakar, Bangalore, who filed eight writ petitions challenging the treatment of international workers. His efforts were instrumental in protecting employers from potential harassment regarding EPF contributions, including retrospective determinations, penal damages, and interest.

Moving Forward

The judgment by the Karnataka High Court brings clarity and relief to employers dealing with international workers in Bangalore. It underscores the importance of fairness and equality in the treatment of all workers, regardless of their nationality. Employers and employees alike should stay informed about such legal developments to ensure compliance and fair treatment in the workplace.

Extension for doing Maharashtra PT March 24 Return 

Extension for doing West Bengal PT Annual  Return 23-24

Person At Managerial Or Supervisory Role Is Not 'Workman' Under ID Act

Person At Managerial Or Supervisory Role Is Not 'Workman' Under ID Act, Karnataka High Court Sets Aside Relief Granted By Labour Court

Case Title: Smt. N. Bhuvaneshwari vs The Management of M/s Ambuthirtha Power Pvt. Ltd.

Case No.: Writ Petition No. 49982/2018 (L-TER) C/W Writ Petition No.6531/2019 (L-RES)

Advocate for the Petitioner: Party-in-Person

Advocate for the Respondent: Sri C.K. Surahmanya for Sri B.C. Prabhakar

The High Court of Karnataka single bench of Mrs Justice K.S Hemalekha held that persons carrying managerial and supervisory responsibilities do not fall within the scope of 'workman', as defined under Section 2(s) of the Industrial Disputes Act. Once it is determined that the person is not a 'workman' under the Act, the labour court does not have jurisdiction to adjudicate whether their termination was proper or not.

Brief Facts:

Smt. N. Bhuvaneshwari (“Applicant”) was employed as an 'Executive Secretary' at Ambuthirtha Power Pvt. Ltd. (“Ambuthirtha”). She raised a dispute with the labour court after her employment was terminated at Ambuthirtha. The question before the labour court was whether she would be a 'workman' within the scope of Section 2(s) of the Industrial Disputes Act (“ID Act) and what relief she would be entitled to. The labour court held in favour of the Applicant, qualifying her under the definition of 'workman', and directing Ambuthirtha to pay Rs. 5,00,000/- as compensation to her. Additionally, Ambuthirtha was directed to reinstate her and continue her service, along with benefits like back wages.

Thereafter, the Applicant filed a writ petition in the High Court of Karnataka (“High Court”), contending that the labour court did not provide a suitable relief and that the compensation should have been higher. Ambuthirtha also filed a writ petition in the High Court against the ruling of the labour court. Both writ petitions were clubbed and heard together by the High Court.

Contentions put forth by Ambuthritha:

Ambuthirtha challenged the classification of the Applicant as a 'workman' under Section 2(s) of the ID Act. It asserted that the Applicant's role as an 'Executive Secretary' was predominantly managerial and supervisory, as evidenced by her extensive experience spanning 17 years, her educational qualifications, and her substantial monthly salary exceeding Rs. 30,000/-. Further, her termination process followed company protocols, including a three-month notice period and an exit interview where the Applicant indicated no desire to return. Regarding the compensation awarded by the labour court, Ambuthirtha stated that the decision was flawed because it overlooked evidence indicating the Applicant's poor performance, particularly in coordinating travel plans for the Managing Director, which caused inconvenience.

Contentions put forth by the Applicant:

The Applicant argued that despite the management's assertion that her role as an Executive Secretary entailed managerial and supervisory duties, her job primarily involved tasks typical of a clerical position. Further, the labour court failed to exercise its discretion appropriately under Section 11A of the ID Act. She argued that given the court's finding of illegal termination and potential victimization by the management, it should have exercised its discretion in favour of providing suitable relief to remedy the situation.

Observations by the High Court:

At the outset, the High Court perused the definition of 'workman' under section 2(s) of the ID Act. The analysis of the section was broken down into three parts:

“(i) Any person (including an apprentice) employed in an 'industry' to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward;

(ii) It includes something more in what the term primarily denotes and this part, it defines the person who has been dismissed, discharged, or retrenched in connection with an industrial dispute; and

(iii) This part specifically excludes the categories of person specified in Clause-i to iv of this Sub- Section.”

The High Court also noted the exceptions to this section under subclauses (iii) and (iv). The exceptions encompass individuals engaged in managerial or administrative roles, or those in supervisory positions earning wages surpassing Rs. 10,000 per month. This applies to individuals whose job responsibilities primarily involve managerial duties or are supervisory.

From the appointment letter and the Applicant's resume, it was evident that her responsibilities included assisting the Chairman, Managing Director, and Director in their day-to-day tasks. It included managing their travel arrangements, ensuring timely payment of bills related to travel expenses, updating schedules, and adhering to established company policies and procedures. The High Court noted that despite her designation as 'Executive Secretary', the Applicant's duties were more akin to managerial and supervisory roles rather than clerical work.

Moreover, the High Court observed the Applicant had an extensive experience of 17 years in secretarial assistance before joining the company, which undoubtedly influenced her appointment. The documents provided delineated her managerial and supervisory responsibilities, particularly in maintaining records for the Managing Director and the Chairman. The High Court concluded that the duties performed by the Applicant aligned more closely with those of a manager, rather than fitting within the scope of a 'workman' as defined under Section 2(s) of the ID Act.

Regarding the termination of the Applicant's employment, the High Court emphasized that the question of whether the termination was proper or not is not within the purview of the labour court. The crucial factor is the Applicant's classification as a 'workman,' which she failed to establish convincingly.

Consequently, Ambuthirtha's writ petition was allowed, and the order passed by the labour court was set aside.

Employees' Pension (Second Amendment) Scheme, 2016 - Defer the age of Drawing Pension

MINISTRY OF LABOUR AND EMPLOYMENT NOTIFICATION

New Delhi, the 25th April, 2016

G.S.R. 440(E).-In exercise of powers conferred by section 6A read with sub- section (1) of section 7 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the Central Government hereby makes the following Scheme further to amend the Employees' Pension Scheme, 1995, namely :-

1. (1) This Scheme may be called the Employees' Pension (Second Amendment) Scheme, 2016.

(2) It shall come into force from the date of its publication in the Official Gazette.

2. In the Employees' Pension Scheme, 1995 in paragraph 12, after sub- paragraph (7-A), the following sub-paragraph shall be inserted, namely:-

"(7B) (a) A member who has attained the age of fifty-eight years and is otherwise eligible for pension under clause (a) of sub-paragraph (1) of this paragraph, if he so desires, may be allowed to defer the age of drawing pension later than fifty-eight years but not beyond sixty years of age.

(b) In such cases as is referred to in clause (a),-

(i) the amount of pension shall be increased at the rate of four per cent, for every completed year after the age of fifty-eight years which shall be restricted to the wage ceiling given under the proviso to sub-paragraph (2) of paragraph 3;

(ii) the member, at his or her option, may also be allowed to continue contributions under paragraph 3 to the Employees' Pension Fund for the period for which the drawal of pension has been deferred, if the member is continuing in employment after the age of fifty-eight years, and the pensionable service and pensionable salary for the purpose of determination of pension under sub-paragraph (2) will be reckoned taking into account the period for which contributions were made after the age of fifty-eight years but not beyond the age of sixty years;

(iii) in the event of death of the member, who has opted for deferring the age of drawing pension under this sub-paragraph, after attaining the age of fifty-eight years and before the commencement of the pension so deferred, the family of the member will be entitled to pension under clause (c) of sub-paragraph (1) of paragraph 16 from the date following the date of death of the member as if the member monthly pension had commenced on the date of death of the member.".

Key notes Pension - EPS 2nd Amendments 2016

• If Pension member desires, may be allowed to defer the age of drawing pension later than 58 years but not beyond 60 years of age
• The amount of pension shall be increased at the rate of 4%
• the member, at his or her option, may also be allowed to continue contributions under paragraph 3 to the Employees' Pension Fund for the period for which the drawal of pension has been deferred,
• In the event of death, the family of the member will be entitled to pension under para 16 (1)(c) from the date following the date of death of the member as if the member monthly pension had commenced on the date of death of the member.".

Employee Pension Amendment Scheme 2016 - Monthly Orphan Pension

Employee Pension Amendment Scheme 2016

Monthly Orphan Pension

In the Employees' Pension Scheme, 1995, in paragraph 16, in sub- paragraph (4), after the proviso to clause (a), the following shall be inserted, namely:- "(aa) The monthly orphan pension shall be payable to each orphan till such orphan attains the age of twenty-five years: Provided that the monthly orphan pension shall be payable to an orphan beyond the age of twenty-five years, if such orphan is suffering from disorder or disability of mind or who is physically crippled or disabled.".

PF Advance Claim Increased to 1Lakh from 50K

Threshold raised from 50K to 1 lakh for auto claims processing... para 68J Advance from Fund for treatment of illness

In a significant move aimed at providing greater financial support during medical emergencies, the Employees’ Provident Fund Organisation (EPFO) has announced an increase in the withdrawal limit from Provident Fund (PF) accounts. Starting from the new financial year, account holders can now withdraw up to INR 1 lakh for medical treatments, a substantial increase from the previous limit of INR 50,000. Overview of the New EPFO Rule Effective April 16, following approval from the Central Provident Fund Commissioner, the new rule allows PF account holders to access funds for the medical treatment of themselves or their dependents. This change was implemented after modifications were made to the application software on April 10, facilitating a smoother claim process. Claiming Process Explained PF account holders can file their claims online through the official EPFO website (www.epfindia.gov.in). The process involves: Logging into the portal. Navigating to ‘Online Services’ and selecting the relevant claim forms (Form 31, 19, 10C, and 10D). Verifying account details by entering the last four digits of the PF account number. Completing the online claim by clicking ‘Proceed for Online Claim’ and filling out Form 31 for an advance. Uploading a copy of a check or bank passbook and entering the address details. Submitting the claim after receiving and entering an Aadhaar OTP. Medical Emergencies and Hospitalization Withdrawals under Provision 68 JK are specifically for medical emergencies, where the patient must be admitted to a government hospital or one affiliated with the government. In cases where a patient is admitted to a private hospital, the claim will be processed only after an investigation. Additionally, funds can be directly transferred to the hospital’s account, and the treatment receipt must be submitted within 45 days of discharge for final settlement. Additional Provisions Beyond medical emergencies, Form 31 also allows for partial withdrawals under various circumstances such as marriage, loan repayments, and construction or purchase of a property. However, subscribers cannot claim more than six months of basic wages and dearness allowance (or with interest) under these provisions. Key Takeaways Increased Withdrawal Limit: The increase to INR 1 lakh provides substantial financial relief to EPFO subscribers during medical emergencies. Streamlined Online Claims: The updated online system simplifies the application process, making it more user-friendly for subscribers. Restrictions on Use: Withdrawals are strictly for serious health conditions and require hospitalization in specific types of hospitals to qualify for a claim. Direct Payment to Hospitals: For added convenience, payments can be directly made to hospital accounts, ensuring swift financial handling during emergencies.