NASSCOM Feedback on the Draft PF Amendment Bill 2019

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NASSCOM Feedback on the Draft PF Amendment Bill 2019

Deepak Arora

@deepakarora

September 26, 2019

Public Policy

720

NASSCOM recently made its submission on the Draft Employees’ Provident Funds and Miscellaneous Provisions (Amendment) Bill 2019 (hereinafter referred to as “Bill”). The Bill was published by Ministry of Labour and Employment on August 23^rd for public Comments.

Following are summary of recommendation made by us to the Government.

Definition of ‘Wages’: The draft bill contains various allowances that are excluded from the definition of ‘Wages’. In addition we have suggested that any other allowance that is not universally paid to all employees should also not form part of Wages.

Percentage of contribution: As per the current provision, the Central Government may notify different percentage of total remuneration which is to be considered Wages. We have suggested that notifying different percentages from time to time will cause administrative burden for the industry and provision related to the same should be deleted.
Statutory contributions towards ESI: Although statutory contributions such as PF, pension are excluded from the definition of wages, there is no clarity regarding the statutory contribution made towards ESI. We suggested that contribution made by employers towards ESI should also be excluded.
Period of limitation: The Bill clarifies that no inquiry can be initiated after 5 years from the date that the dispute is alleged to have arisen or the amount is alleged to have become due, however there is no clarity as to when it can be deemed that ‘a dispute has arisen’. We have therefore suggested that period of limitation should begin only from when the amount is alleged to have become due.
Option to choose NPS: The Bill enables employees to switch between EPS and NPS at any point in time. The ability to keep switching between EPS and NPS will pose huge administrative burden for the employer every time that the employee exercises the option. We suggested that option to switch between EPS and NPS should be allowed only once.
Bonus /incentives: The manner in which the definition of ‘Wages’ has been drafted, it appears that any such performance based amounts or bonus paid to an employee under the terms of employment will have to be included under ‘Wages’ of an employee. We suggested that any performance based bonus /incentive should be excluded from the definition of Wages.

Our detailed feedback is enclosed.

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Deepak Arora