STRICTLY STATUTES

A Newsletter from ADP India

SEPTEMBER 2013

EDITORS NOTE
Hello Readers, The month of August 2013 saw some developments in the EPF and Gratuity space. interesting

TABLE OF CONTENTS
Pages

Compliance calendar for Aug 13 (Time line for Sep 13) An insight into PF Trusts pending approval Certificate of Coverage (COC) to be issued by Regional / Sub-regional PF Offices Employers Share of EPF Contribution can be reduced to Rs. 6500/ Delayed payment of Gratuity will attract Interest... Travelling Allowance is Included for calculation of Gratuity

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The EPFO is lately becoming tougher with defaulting employers for not remitting the PF contribution. As part of this recent development, the EPFOs official website listed the names of top defaulting employers, in an effort to warn them and has asked the exempted EPF trusts to send their pending income tax proposals by November. We appreciate these moves by the EPFO, as it is in the positive direction of ensuring that the employers do not cheat their employees of their benefits. Also, publishing the list is a good move that will help to create awareness among the employees and general public and dissuade the employers from future defaults. In two separate judgements, our High Courts have re-affirmed the rights of employees with regard to Gratuity settlement, directing the employers to include travelling allowance for calculation of Gratuity and pay the employee with interest for the delayed settlement. These benchmark judgments we hope would now help to clear a lot of long pending petitions and ensure justice, to many petitioners, across the country. This issue covers these developments in detail, along with other interesting information in the statutory compliance space. We hope you enjoy reading this issue and find it useful. Please do share your inputs / suggestions and help us to enrich the newsletter content. You may write to us at contactadp@adp.com Regards, Editor

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STRICTLY STATUTES
Compliance Calendar for September 2013
Due Date Scope

A Newsletter from ADP India

Due Under

Mode

Professional Tax Remittances 10th Sep 13 15th Sep13 15th Sep13 20th Sep 13 21st Sep 13 30th Aug Sep 13 Andhra Pradesh & Madhya Pradesh Tamil Nadu Gujarat Karnataka West Bengal Maharashtra, Assam & Orissa State-wise regulations State-wise regulations Gujarat PT regulations Karnataka PT regulations WB PT regulations State-wise State Wise regulations regulations By Challan By Challan By Challan By Challan By Challan By Challan

Labour Welfare Fund Remittances 20th Sep 13 Kerala Kerala State Labour Welfare Fund By Challan

PF 15th Sep 13 15th Sep 13 Central - Remittance of Contribution Central - International worker with wages and nationality EPF & MP Act 1952 EPF & MP Act 1952 By Challan Statement in IW1

ESI 21st Sep 13 Main Code & Sub Codes - Remittance of Contribution ESIC Act 1948 By Challan

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STRICTLY STATUTES

A Newsletter from ADP India

Flash News

An insight into PF Trusts pending approval

Through a web circulation No. C-II/MISC/02/06/EX/EZ/Vol-I/9360, dated 16th Aug 2013, the Employees Provident Fund Organisation (EPFO) asked 295 exempted private provident fund trusts to send their pending income tax exemption proposals by November. All these trusts had been exempted on a deemed basis so far. And, these may get approval if, among other reasons, they have been regular with submission of provident fund money deducted from their employees salaries. The EPFO website has a list of the top 50 defaulters. Many companies, which deduct contribution towards PF from their employees salaries, do not deposit the amount with their trust or with EPFO. These companies continue this for years at length, while most employees aren't aware of it. EPFO has now said that, if a company is found to be non-compliant with its PF deposits, it will not only have to pay the dues, but also pay interest and penalty on the same, depending on the number of days payment delayed. This move from EPFO will encourage employers to deposit the contributions in time, thus protecting employees from defaulting employers.

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STRICTLY STATUTES

A Newsletter from ADP India

Certificate of Coverage (COC) to be issued by Regional / Sub-regional PF Offices

Through a Circular No. IWU/7(15)2011Gen(Software), dated 13th Aug 2013, the Employees Provident Fund Organisation (EPFO) gave consolidated guide lines for issuing Certificate of Coverage (COC); whereby it is conveyed that from 15th Aug 2013 onwards, the COCs will be issued by the Regional/Sub Regional PF offices, in whose jurisdiction, a particular establishment in which the eligible member is employed, is covered.

In this context, the process flow for issuing COCs is reiterated as below:
All applications for COCs will be received and be acknowledged by the inward section and entered into a separate register. All Applications received by the inward section will be forwarded directly to the Regional Commissioner (FA)/OIC as the case may be. Entry of these applications will be made in a separate register by the PA to Regional Commissioner (FA)/OIC and the application will be sent to the concerned sections for verifications of details of the employee and the signature of the employer. After verification, the concerned section will return the application to PA to Regional Commissioner (FA)/OIC, to be forwarded to the EDP cell for data entry. Verification of data in the system through the application software will be done by the Accounts Officer designated for this purpose. After verification of data, fair copies of the COCs will be printed and the hard copy will be signed by the Regional Commissioner (FA)/OIC. Signed COCs will be dispatched through speed post to the employer, to be handed over to the applicable employee. COCs for of non-PF employees like the Bank employees etc, are also issued by the EPFOs. However, such COCs will be issued on receipt of Rs. 10000/-, through a bank draft, payable to EPFO; and the same will be accounted in Account No.2 (Admin Account) of the respective RO/SRO. COCs can also be issued for the retrospective periods, if compliance in respect of the member has been received by the office.

Certificate of Coverage (COC) exempts a citizen of a country from contributing to the Social Security Systems of the foreign country where he is employed. This exemption is applicable only if there is a Social Service Agreement (SSA) signed between the employees home country and the country of his / her work. The list of SSA signed countries with India is available in the foreign ministry website and can be accessed at
http://www.moia.gov.in/services .aspx?ID1=285&id=m4&idp=81& mainid=73

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STRICTLY STATUTES SIGNIFICANT RECENT JUDGMENTS EMPLOYERS SHARE OF EPF CONTRIBUTION CAN BE REDUCED TO RS. 6500/In a recent judgment (L.P.A. No. 293/2013 in SCA no. 3191/1995, D/-18-3-2013), Gujarat High Court has pronounced that the employers share of EPF contribution can be reduced to Rs. 6500/-. According to this ruling, which was given in the case of Jamnagar Rajkot Gramin Bank Officers Association (now Saurash &1) vs. Saurashtra Gramin Bank through Chairman & 1, now an employee may be allowed to contribute on more than the statutory limit of Rs. 6,500 per month. And the employers obligation is only to pay administrative charges.

A Newsletter from ADP India

Now, the employer is not prohibited for reduction of contribution on the amount exceeding Rs. 6,500 /month to mandatory stipulation of Rs. 6500/month, as decided by Supreme Court (in the Case of Committee for Protection of Rights of ONGC employees & others vs. ONGC, Dehradun & others, 1990 (20 SCC 272) . Until the action taken by the management is not violative of any statutory provision, settlement or agreement, any change in service condition by the employer, cannot be considered under Article 226 of our Constitution. And reduction of contribution by the employer, to the mandatory stipulation of Rs. 6500 per month is not violative of section 9A of the Industrial Disputes Act 1947.

DELAYED PAYMENT OF GRATUITY WILL ATTRACT INTEREST

In another judgment in the case(W.P.(C) Nos. 159,280 and 281/2012, D/-13-3-2013) between Babul Ranjan Singha, S/o Late Rash Mohan Singha, Tripura vs. Tripura Road Transport Corporation & Ors., Gauhati High Court has ruled that the stringency of fund would not absolve the employer from its liability to the delayed payment of gratuity that is legally due to the employee. The Court observed that the delay in payment of Gratuity, on the part of the employer, would attract a penal interest as provided under section 7 (3A) of the Payment of Gratuity Act 1972. The Court directed the employer to pay the employee the Gratuity that is due, with interest @ of 6% per annum, from the date of retirement within 4 months and further delayed beyond 4 months warranting an interest of 8% per annum

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STRICTLY STATUTES

A Newsletter from ADP India

TRAVELLING ALLOWANCE IS INCLUDED FOR CALCULATION OF GRATUITY

the High Court challenging the orders of the lower authorities, which was dismissed by a single learned judge. The employer again filed a Letters Patent Appeal (LPA) before two judges of same High Court against judgment of the single judge. Judgment: But the division bench consisting of Honble Mr. S. Jayant Patel, J. and Honble Mr. Mohinder Pal, J dismissed the appeal by the employer. The bench held that the employee is entitled for Gratuity with interest, since the date of his retirement. They also held that the lump sum compensation, in lieu of reinstatement awarded by the Labour Court, would not debar the employee from getting Gratuity, as per the provisions of the Payment of Gratuity Act 1952.

In a case (L.P.A. No. 529/2012 in SCA No. 830/2012, D/-16-4-2013) of R. M Engineering Works vs. Kushalbhai Manilal Chavda & 2 Ors., the Gujarat High Court has ruled that the travelling allowance is included for calculation of Gratuity. Case History: The employers version of the case is that the employee retired from 15.11.2000, whereas the employee stated that he has not reached the age of super annulation on 15.11, 2000, hence an Industrial dispute was raised. In the meantime employer/appellant closed the firm, and the Labour Court awarded Rs. 50,000 as lump sum compensation towards reinstatement. Thereafter, the employee filed an application under the Payment of Gratuity Act claiming Gratuity and the appeal filed by the employer was dismissed by the Appellate Authority. Employer then filed a Special Civil Application (SCA) before

The bench further held, that according to Section 2(s) of Payment of Gratuity Act, 1972 Wages include travelling allowance for calculation of Gratuity, hence it cannot be excluded while calculating wages for payment of Gratuity. The ruling also stated that the liability to pay interest, as per provisions of the Payment of the Gratuity Act, 1972, on the amount of Gratuity, delayed by the employer, accrues from the date of when the employee is made to retire and not from the date of lump sum compensation is awarded by the Labour Court.

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STRICTLY STATUTES

A Newsletter from ADP India

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