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EPF/ESIC Registration
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EPF/ESIC Registration
Labor Laws are the laws which are enacted to govern the welfare of the workers, employees and laborers. These are made to ensure that employers do not exploit the employees. These laws give directions for working conditions, working hours, minimum salaries and various employees’ welfare schemes etc. Employee or laborer is in the center of these laws and different laws have been enacted to take care of their well-being. All these laws are made primarily by central government hence they are same for the whole of India. However some laws are governed by state government also which are state specific.
Below are the key labor laws applicable in India:
1.Industrial Disputes Act, 1947
This law takes care of all the disputes happen at workplace between the employers and employees or trade unions.
2. Minimum Wages Act, 1948
This law gives direction for minimum wages which an employer has to pay to its employees; he can-not pay less than the minimum wages in any case. These minimum wages are fixed by state governments hence differ for all states. Delhi has the highest minimum wages in India. Central government also stipulates minimum wages for its undertakings which are normally higher than the state minimum wages. Minimum wages gets revised every year or half yearly.
3. Payment of Wages Act, 1936
It governs timely payment of the wages or salaries to employees. It also prohibits any unauthorized deductions. Hence ensures timely and correct salary or wages for the employees.
4. Employees Provident Fund and Miscellaneous Provision Act, 1952
4.It gives guidelines regarding establishing a provident fund and contributing the monthly provident fund to the same.
5. Employees State Insurance Act, 1948
This law provides the insurance scheme for the employees of a certain wages or salaries. The employer has to contribute a certain percentage of employees’ salary to this insurance along with employees share and in return, the employee gets free medical facilities and compensation/pension in case of injury or death at the work place.
6. Payment of Gratuity Act, 1972
This law gives directions for certain benefits at the time of employee’s retirement or termination. The employer is bound to pay gratuity to its employees at predetermined rates, at the time of retirement or termination.
7. Workmen Compensation Act, 1923
It provides directions for payment of compensation at pre-determined rates to an employee, in case death or injury at the workplace.
8. Equal Remuneration Act, 1976
This law provides assurance that men and women will be paid equal pay for the equal work.
9. Factories Act, 1948
This law provides assurance that men and women will be paid equal pay for the equal work.
10.The Mines Act, 1952
This act provides for specific safeguards for the workers working in mines which provides for their safety and well-being.
11. Contractor Labor (Regulation and Abolition) Act, 1970
This act provides for specific safeguards for the workers working in mines which provides for their safety and well-being.
12. Maternity Benefit Act, 1961
This act provides for the facilities and maternity benefits to the women workers.
13. Child Labor (Prohibiting and Regulation) Act, 1986
This act provides for the minimum age for the worker in different working conditions and regulates the working conditions for the adolescents.
14. The code on Labor Laws
India has recently codified its 29 various labor laws into 4 labor codes, these codes are as follows:
I.Code on Wages, 2019
II.Industrial Relation Code, 2020
III.Code on Social Security, 2020
IV.Occupational Safety, Health and Working Conditions Code, 2020
These codes have been enacted to promote ease of business along with better compliance of the existing regulations to safeguard the employees’ interest.
Employee Provident Fund
Provident Funds are governed by Employees Provident Fund and Miscellaneous Provisions Act, 1952. These are social security scheme wherein an employee and employer contribute certain percentage of employee’s salary which can be withdrawn after leaving the particular establishment or can get in terms of pension after retirement. There are different types of provident funds in India:
I.Employee Provident Fund
II.General Provident Fund
III.Public Provident Fund
IV.Unrecognized Provident Fund
Out of all these, Employee Provident Fund is most commonly used by all organizations. Employee Provident Fund or EPF is a government managed retirement saving scheme. It is managed by Employee Provident Fund Organization or EPFO which operates under the Ministry of Labor and Employment, Government of India.
Applicability:
Employee Provident Fund is mandatorily applicable for the establishment which employs 20 or more employees. Hence, any organization which has 20 or more employees will have to mandatorily register them with EPFO and get EPFO registration and submit the monthly contribution. It is optional for the organization which has less than 20 employees to get registered in EPF. It is mandatory to submit the contribution for the employees having their basic salary less than 15000/- per month. It is optional for the employees having basic salary more then 15000/- after fulfilling certain conditions.
Contribution Structure:
For the employees having basic salary 15000/- or less per month, Employee contributes minimum 12% of their basic salary + Dearness Allowance and same is contributed by the employer along with applicable Admin charges. For the employees have basic salary more than 15000/- per month, it is mandatory to contribute 12% of 15000/- and above that it is optional to the employer. Entire employee contribution i.e. 12% goes towards EPF whereas employer contribution goes in different heads. Only 3.67% of employer contribution goes to EPF, 8.33% goes towards EPS (pension scheme) and 0.50% goes towards Employees Deposit Linked Insurance (EDLI). Administrative charges are born by employer only.
Contribution Date:
Monthly contribution should be credited by 15th of succeeding month with the EPF. Late contribution carries damage and interest charges and the employer contribution also gets disqualified from the income tax.
EPF Features and Benefits:
1.Savings:
EPF does mandatory savings for employees which they may not do if not imposed. A certain amount continuously gets deposited in their EPF account which becomes a good amount at the time of their retirement.
2. Interest:
EPF amount carries interest also at predetermined rates which is normally higher than Bank Fixed Deposit.
3. Tax Saving:
EPF provides income tax saving to the employees. Both employee and employer contribution are exempt from income tax under section 80C. The interest earned on the same and its withdrawal also exempt from income tax if some certain conditions are fulfilled.
4. Universal Account Number:
UAN is a unique number allotted to the employees which helps them to manage its EPF account easily. He can transfer balance of all his EPF account into one account. He can track his balance through the pass book which is similar to bank pass book. He can also withdraw EPF online through UAN login. He can update his KYC and bank details through UAN login.
5. Partial Withdrawals
Employees can withdraw partial funds from their EPF account for specific needs i.e. medical emergency, marriage, education and home loan etc.
6. Insurance Cover
An employee gets life insurance cover also under EPF through Employee Deposit Linked Insurance without paying any extra contribution. Under this, employee’s dependent gets a lump sum amount in case of his death.
7. Pension Provisions
A portion of employer’s contribution goes towards Employees Pensions Scheme (EPS) which helps employee to get monthly pension after retirement.
Employee State Insurance Scheme
Employees State Insurance Scheme (ESI) refers to a social security scheme established under Employee State Insurance Act, 1948. It aims at providing medical insurance to the employees to fulfill medical needs of the employees and their dependents. It is managed by Employee State Insurance Corporation (ESIC) which is an autonomous body set up under the ministry of Labor and Employment, Government of India. Both employer and employee contribute a certain percentage of employee’s salary to ESIC and in return, employee gets medical benefit.
Applicability:
Employee State Insurance scheme is mandatorily applicable for the organizations which employ 10 or more employees. Hence, any organization which has 10 or more employees will have to mandatorily register them with ESIC and get ESIC code and submit the monthly contribution. The organizations which have less than 10 employees can’t register with ESIC. It is mandatory to submit the contribution for the employees having their gross salary less than 21000/- per month. Employees having gross salary more then 21000/- per month can-not be enrolled in ESIC.
Contribution Structure:
For the employees having gross salary 21000/- or less per month, Employee contributes 0.75% of their gross salary and 3.25% is contributed by the employer along with applicable Admin charges. For the employees having gross salary more than 21000/- per month, they can-not be enrolled in ESIC. Administrative charges are born by employer only.
Contribution Date:
Monthly contribution should be credited by 15th of succeeding month with the ESIC. Late contribution carries interest charges and the employer contribution also gets disqualified from the income tax.
Features and Benefits of ESIC
1.Medical Care: Employees and their family members enrolled in ESIC are called insured person and they get access to free medical facilities.
2.Financial Support: ESIC provides financial support to the employees during sickness or injury. They get pension if permanent disability or death happens at the workplace.
3.Maternity Benefits: ESIC provides maternity benefits to the pregnant women employees.
4.Working Methodology: ESI provide medical facilities through a network of hospitals and dispensaries across the country.
- FAQ
1. First, what is EPF?
The Employees' Provident Fund Organization (EPFO) oversees the Employee Provident Fund (EPF), a retirement savings plan established by the Employees' Provident Fund and Miscellaneous Provisions Act of 1952. Contributions to this fund come from both the company and the employee.
2. To whom does EPF apply?
Any worker in a company with 20 or more employees who makes up to ₹15,000 a month is required to be covered by EPF. Employees with higher incomes may also choose to actively participate in EPF.
3. How much is the EPF contribution rate?
i) Employee: DA plus 12% of base pay
ii) Employer: 12% (3.67% for EPF and 8.33% for EPS)
4. How do I take my EPF out?
i) Partial Withdrawal: Permitted for emergencies, marriage, home loan repayment, etc.
ii) Complete Withdrawal: Permitted following retirement or after two or more months of unemployment.
5. Are withdrawals from an EPF taxable?
i) It is taxable if it is withdrawn before five years.
ii) It is tax-free if removed after five years.
6. First, what is ESI?
Under the ESI Act of 1948, ESI is a social security program that offers employees making up to ₹21,000 a month medical, maternity, disability, and dependant benefits. The Employees' State Insurance Corporation, or ESIC, is in charge of overseeing it.
7. For whom is ESI applicable?
Workers at a company with ten or more employees who make ₹21,000 or less per year in gross pay.
8. What is the rate of ESI contributions?
i) Contribution from employees: 0.75 percent of gross pay.
ii) 3.25 percent of gross pay is the employer's contribution.
9. What advantages does ESI offer?
i) Employee and family health benefits.
ii) Benefits related to maternity (paid leave for birthing).
iii) Benefits for Sickness (paid leave for illness).
iv) Benefits for Disablement (for work injuries).
v) Benefits for Dependents (in the event of death).
10. How do I submit an ESI claim?
With their ESI card and UAN number, employees can visit any ESIC hospital or ESI dispensary to receive benefits.