• Provident fund subscription and gratuity payout

1. My organisation is having about 25 employees, and does not subscribe to EPF. Is it a breaking the EPF Law? What can I do to ensure that my organisation starts the EPF Subscription? I do not want to be identified because of the obvious reasons.

2. Within how many days of leaving the employer has to pay out the Gratuity? What can one do if that timeline is not adhered to? Is there any forum whereon the complaint can be filed?
Asked 7 years ago in Labour

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5 Answers

As a rule, any company having more than 20 employees has to register with the EPFO.

2) If you find your employer has not deposited the deducted PF with the trust or EPF, you can file a complaint with either RPFC or a criminal case against your employer with the police or complain to the chief vigilance officer appointed by the labour ministry

3) Company should ensure that it pays gratuity within 30 days from the date when gratuity become payable to an employee.

4) Payment of gratuity is a statutory requirement. In case an employer fails to pay gratuity amount to an employee, he shall be liable for punishment. Where the employer fails to make payment of any gratuity payable to the employee, he shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to two years. Any employer who contravenes or makes default in complying with any of the provisions of the Act or any rule or order made there under shall be punishable with imprisonment for a term which shall not be less than three months but which may extend to one year or with fine which shall not be less than ten thousand rupees but which may extend to twenty thousand rupees, or with both

5) f the amount of gratuity is not paid by the employer within the prescribed time to the said person, he/she has the right to file a complaint to the Controlling Authority under the Payment of Gratuity Act within the area where the employer’s establishment is situated or where the employee was working at the time of termination. Moreover, the aggrieved person can also approach Labour Courts to get relief

Ajay Sethi
Advocate, Mumbai
96383 Answers
7766 Consultations

5.0 on 5.0

1. Yes, it is violative of ID Act for which they can be penalised by the PF Commissioner.

2. There is no time limit but it should be paid asap. if not then you can lodge complaint with the PF COMMISSIONER on which basis a criminal case may be initiated agaisnt the employer.

Devajyoti Barman
Advocate, Kolkata
23149 Answers
506 Consultations

5.0 on 5.0

Hi

1) Under the new guidelines, any Firm which has a minimum of 10 employees(earlier it was 20 employees) has to be registered with the Employees’ Provident Fund and Miscellaneous Provisions Act.

2) Though there is no penalty for not subscribing to EPF on the following grounds

a) Your employee head count had reached 25 in the last 6 months or

b) that your current employers did not want to opt for Provident fund and were offered better benefits than the statutory Provident fund scheme.

3) Off late, the labour officer's are renewing the labour licence only if there is EPF subscription and hence in the interest of the management of company, you should opt for EPF registration at least now.

4) You can now opt to register your company with Employer Provident Fund organisation online using http://www.epfindia.gov.in.

5) you can also pursue http://www.epfindia.com/site_docs/PDFs/OLRE_PDFs/OLRE_withDSC.pdf for more information, required documentation etc .

6) Gratuity is payable only if it was part of employment contract and not otherwise. Gratuity is payable to the employee only if the employee is a Good Leaver and only if the employee does not owe any monies to the employer.

7) Gratuity becomes payable only if the employee completes 5 continuous years of service and thereafter resigns / retires from the services of the company. Gratuity is paid only after the exit of the employee and NOT whilst in service.

8) The company needs to pay gratuity to the employee within 60 days from the date of the employee being relieved from the services of the company failing which penalties under section 9 of Payment of Gratuity Act will apply.

9) In the event of non payment of gratuity within 60 days from the date of relieving, the employee can file a case in labour court or with EPFO office or in Civil court if the Gratuity is not paid within the stipulated 60 days by the employer.

Hope this information is useful.

Rajgopalan Sripathi
Advocate, Hyderabad
2173 Answers
394 Consultations

5.0 on 5.0

1. The Payment of Gratuity Act 1972 applies to the whole of India and so far as it relates to ports and plantations it does not apply to the State of Jammu and Kashmir. It applies to: (a) every factory, mine, oilfield, plantation, port and railway company. (b) Every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishment in a State, in which 10 or more persons are or were employed on any day in the preceding 12 months. (c) Such other establishments or class of establishment, in which 10 or more employees are or were employed on any day in the preceding 12 months, as the Central Government may notify in this behalf.

2. Gratuity is payable within 30 days of due on completion of 5 years of service. File a complaint to the Inspector under Gratuity Act and also mark a copy to Labour Commissioner of the area.

2.

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

As on date, the EPF & MP Act extends to 187 classes of establishments - External website that opens in a new window. Any establishment falling in any of the 187 categories mentioned above and employing more than 19 persons automatically comes under the purview of the EPF & MP Act 1952. If an employer makes default in the payment of any contribution to the Employees' Pension Fund, or in the payment of any charges payable under any other provisions of the Act or the Scheme, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf,

At present, provident fund is mandatory in establishments hiring 20 people or more, and employees and employers contribute 12 per cent each of a worker's salary.

The labour ministry has proposed that the Establishments with at least 10 workers might have to pay provident fund, with the employer contributing nine per cent of a worker's salary.

For eligibility of gratuity an employee should have been at least 5 years continuously in the service.

If the employer is not paying the gratuity despite the employee meeting the eligibility conditions, then he may approach the commissioner for gratuity payments within the region where he was employed.

It is a retirement benefit paid as gratitude to the employees who have rendered a continuous service for at least five years to incentivize them so that they continue working efficiently. It is an amount paid to an employee based on the duration of his total service but an employee becomes eligible only after he has completed 5 years of his service. Gratuity is paid to an employee when he either retires or his employment is terminated or he resigns or upon his death. Gratuity is given the force of law by the Payment of Gratuity Act 1972, which is further administered and enforced by the Central Government and the designated establishments under its control.

T Kalaiselvan
Advocate, Vellore
86586 Answers
2311 Consultations

5.0 on 5.0

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