Employee’s Provident Fund and Miscellaneous Provisions (Amendment) Bill, 2019

The Ministry of Labour and Employment in its notification dated 23^rd August 2019 has proposed to amend the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. The Bill has been issued as part of the Government’s pre-legislative consultative process and comments and inputs from stakeholders and public have been invited which can be submitted by September 15^th, 2019.

The following are the proposed key amendments of employees’ Provident Funds & Miscellaneous Provisions Act, 1952– 

1. New definition of wages: The Draft Bill proposes to replace the currently highly-debated definition of ‘basic wages’ with a new definition of ‘wages’ in alignment with the definition prescribed under the Code of Wages, 2019. The new definition is an attempt to put an end to the ambiguities concerning inclusion of allowances and certain other components for computation of provident fund contributions. As per the definition, allowances that exceed 50% of the total remuneration (or such other prescribed percentage) will be included in computing the contributory wages.
2. Varying rates of ‘employee’ PF contribution: While the EPF Act enabled employees to make higher contributions (if they so desired), the EPF Bill, 2019 introduces a new provision which enables the Central Government to specify the rate of employee contributions (which maybe lesser than 12%) and the period for which such contribution rates would apply for any class of employees, after making such inquiry as it deems fit, by way of a notification in the Official Gazette.
3. Limitation on proceedings: Presently, the EPF Act and the schemes thereunder, do not contemplate any limitation period for initiation of proceedings under Section 7A to determine applicability of the EPF Act or determine amounts due from the employers. The Draft Bill proposes a limitation period of 5 years from the date on which the PF contributions / deficit amounts have been alleged to be due from an employer.
4. National Pension Scheme: In line with the announcements made in the Union Budget (2015-2016), the Draft Bill proposes to allow employees covered under The Employees’ Pension Scheme, 1995 (EPS Scheme) to opt for the ‘National Pension Scheme’ governed under the Pension Fund Regulatory and Development Authority Act, 2013.
5. Enhanced monetary penalties & composition of offences: The EPF Bill, 2019 proposes to significantly enhance the monetary penalties for non-compliance of the EPF Act.

Click here to read the Notification