Compliance News

The Central Government vide notifications (no. G.S.R. 325 (E)), (no. G.S.R. 326 (E)) and (no. G.S. R. 327 (E)) dated 14 June 2024 has passed various amendments under the Employees’ Pension Scheme 1995. The Employees’ Pension Scheme, 1995 incorporates a unique pension calculation method for members who were employed before 16 November 1995 and are eligible for pension after 16 November 2005. For these individuals, the monthly pension is determined based on Paragraph 12(2) for the period starting from 16 November 1995 (Table A), as well as the past service pension (Table B). The recent amendment introduces a new actuarial factor in Table B specifically for employees retiring with a service duration of less than 42 years.

The recent amendment replaces Table D in the Employees’ Pension Scheme, 1995, which determines the factor for calculating employees’ pension withdrawal benefits. According to the amendment, starting from 14 June 2024, the calculation of employee pension will consider months of service rather than years of service. This structured approach ensures fair and transparent compensation for employees when they cease employment.

Further, the present amendment empowers the Central Provident Fund Commissioner or designated officers to impose a 1 per cent monthly penalty on unpaid contributions to the Employees’ Pension Fund. This is to enhance compliance measures, ensure timely and complete contributions, and strengthen the financial security of future pensioners.

The Central Government vide notification (no. (G.S.R. 329(E)) dated 14 June 2024 has passed an amendment under the Employees Provident Funds (Amendment) Scheme 2024. The recent amendment establishes a penalty framework for employers who either fail to contribute to the provident fund or neglect to transfer the required accumulations. All the defaulting employers may face a penalty of 1 per cent of the arrears in contributions per month or any portion thereof. The amendment aims to improve enforcement mechanisms and foster compliances regarding the contributions to be made by the employer. 

The Central Government vide notification (no. (G.S.R. 330(E)) dated 14 June 2024 has passed an amendment under the Employees Deposit Linked Insurance (Amendment) Scheme 2024. As per the amendment an employer who fails to contribute to the insurance fund or pay charges as required may face a penalty of 1 per cent of the arrears per month or part thereof. The adherence to funding requirements fortifies the insurance benefits available to employees, enhancing their financial security.

In the recent case (heard with several other petitions) of Karnataka High Court titled Stonehill Education Foundation v. EPFO (2024 SCC Online Kar 49), delivered on 25 April 2024, the Karnataka High Court ruled that Para 83 of the Employees’ Provident Fund Scheme 1952 and Para 43-A of the Employees’ Pension Scheme 1995 and struck down these special provisions for ‘International Workers’. 

The Hon’ble High court found these provisions, introduced in 2008, to be discriminatory as they mandated international workers to contribute to the Provident Fund irrespective of their salary, while domestic workers earning above INR 15,000/- per month were excluded. The Hon’ble High court ruled that the distinction between international and domestic workers violated Article 14 of the Constitution, which guarantees equality before the law. 

However, it is important to note that this judgement was passed by a single-judge bench of the Karnataka High Court. Such ruling may be subjected to challenge before larger benches of the High Court or the Hon’ble Supreme Court.  The EPFO is reportedly contemplating an appeal against the ruling until the matter is finally decided, employers may continue to deposit EPF contributions for international workers to ensure compliance, unless specific guidance is provided by the EPFO. 

The Ministry of Commerce and Industry has passed an order under the Copper Products (Quality Control) Orders-2024 vide notification S.O. 1801 (E) dated 25 April 2024. As per the Order, all the copper wires rods, copper bars used for electrical application or general engineering purposes must bear a standard mark under a license from the Bureau of Indian Standards. All the micro and small enterprise formed under the Micro, Small and Medium Enterprises Development Act are required to comply with the standards and timelines specifies in the order. 

The small-scale enterprises are required to adhere to the provisions outlined under this order from 19 January 2025 while the micro scale enterprises must comply from 19 April 2025.  However, if these enterprises use copper products in domestically manufactured goods or articles for export, they are exempt from using the standard mark. Non-compliance with the provisions may result in a penalty of up to INR 500,000/- for the defaulting enterprise.

The Ministry of Commerce and Industry has passed an order under the Precision Roller and Bush Chains (Quality Control) Orders, 2024 vide notification S.O. 2174 (E) dated 3 June 2024. As per the Order, all the pitch transmission precision roller and bush chain attachments used by micro, small and medium enterprises for the purpose of carrying out their manufacturing activities must bear a standard mark under a license from the Bureau of Indian Standards. 

The small-scale enterprises are required to adhere to the provisions outlined under this order from 1 January 2025 while the micro scale enterprises must comply from 1 April 2025.  However, if such enterprises use precision roller and bush chain attachments in domestically manufactured goods or articles for export, they are exempt from using the standard mark. Non-compliance with the provisions may result in a penalty of up to INR 500,000 for the defaulting enterprise.