Complying with SC directive, govt clarifies pension on higher wages

In accordance with the letter and spirit of the EPF and MP Act and the code, the government decided to draw an additional contribution of 1.16% from employees

The government clarified on Wednesday that the additional 1.16 per cent contribution towards pension on higher wages would be taken from within the overall 12 per cent contribution of the employers. This is consistent with the Supreme Court directives issued on November 4, 2022.

The change will be implemented in a retrospective manner and will benefit employees who had subscribed to the Employees'Pension Scheme.

Elaborating on its decision, the labour ministry said in its statement that taking employee contributions is against the fundamental idea behind the Employees' Provident Fund & Miscellaneous Provisions Act (EPF and MP Act) and the Social Security Code and thus we have decided to not take the additional contributions from employees.

The labour ministry in its statement said that “For implementing the above direction, all aspects of the matter including legal and administrative were examined in detail. It was decided that since the Code on Social Security,2020 (the Code ) has already been notified, it would be appropriate to bring relevant provisions of the Code into effect.”

It is important to take note of the Supreme Court judgement on the issue which in its order said that the requirement of 1.16 per cent of additional contribution from salaried employees earning more than Rs 15,000 monthly was inconsistent with the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act 1952.

The apex court had thus directed in its judgement dated November 4, 2022, that the authorities make changes in the scheme within a period of six months.