PF, ESI, Gratuity and Bonus Act

Employees Provident Fund Act, 1952

Submission:  FORM 2: Declaration & Nomination Form (to be sent to the PF office within 25 days of the close of the month.

Monthly: 15th EVERY MONTH) to BANK

  • Remittance of Contribution through Challans to Bank.
  • 25th (EVERY MONTH) to REGIONAL PF OFFICE (consolidated Monthly statement) (FORM 2, 5, 10, and 12 A)

Note:

  • FORM 5: Return of EMPLOYEES QUALIFYING FOR MEMBERSHIP
  • FORM 10: Return of EMPLOYEES LEAVING THE SERVICE
  • FORM 12 A: Consolidated Statement of Dues & Remittance

Annually: 30th APRIL to REGIONAL PF OFFICE (Consolidated ANNUAL CONTRIBUTION STATEMENT through FORM 3 A & 6 A

Register to be maintained: PF contribution register

FORMS:

  • FORM 2 : Nomination & Declaration
  • FORM 13 : Transfer
  • FORM 19 & 10 C: Withdrawal
  • FORM 5: Return of EMPLOYEES QUALIFYING FOR MEMBERSHIP
  • FORM 10: Return of EMPLOYEES LEAVING THE SERVICE
  • FORM 12 A : Consolidated Statement of Dues & Remittance
  • FORM 3A, 6 A : Consolidated ANNUAL CONTRIBUTION STATEMENT

Benefits

The Employee’s Provident Fund Scheme takes care of the following needs of it’s members:

  • Retirement
  • Medical Care
  • Housing
  • Family obligations
  • Education of children
  • Financing of Insurance Policy
  • A member of the provident fund can withdraw the full amount to his credit, in the fund on his retirement from service, after attaining the age of 58 years.
  • If the membership is less than 10 years the member is eligible to withdraw the full pension amount, if it is more than 10 years the member will be eligible for a monthly pension.
  • The member can avail of partial withdrawals or advances by submitting an application in Form 31, for the following purposes:
  • For the purpose of acquiring immovable property.
  • In special cases such as a lock out in the factory/establishment; where the member has challenged the retrenchment/dismissal by the employer in a Court of Law.
  • For treatment of illness.
  • For marriages
  • For post matriculation education of children.
  • Under abnormal conditions such as damage to moveable or immovable property, by calamity of exceptional nature.
  • Financing of the member’s Life Insurance Policy.
  • The accumulations to the credit of a deceased member, is payable to the member’s nominees or legal heirs.
  • The member can transfer his Provident Fund account from one company to another in case of leaving the company
  • If any employee / PF Member leave the Company and wishes to withdraw the PF accumulations in his account can apply for the same after 60 days from the date of leaving by submitting an application

Employees State Insurance Act, 1948

 Coverage of employees: Drawing wages up to Rs.15000/- per month engaged either directly or through contractor

Rate of Contribution of the wages: 6.5 % of Gross salary  ; Employers’ 4.75% and Employees’ 1.75%

Register to be maintained: Form 6 (register of Employees)

Applicability of the Act: It is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establishments employing 20 or more person. It has also been extended upon shops, hotels, restaurants, roads motor transport undertakings, equipment maintenance staff in the hospitals.

Manner and Time Limit for making Payment of contribution: The total amount of contribution (employee’s share and employer’s share) is to be deposited with the authorized bank through a challan in the prescribed form in quadruplicate on before 21st of month following the calendar month in which the wages fall due.

Submission: Monthly: Remittance of Monthly contribution to the BANK through CHALLANS within 21st Of EVERY MONTH.

Annually TWICE: (Before 11th May & 11th Nov)

Summary of Contribution in Quadruplicate to ESI LOCAL OFFICE

Registration: With 15 days of Commencement through FORM 01 to ESI office

Appointment: Nomination & Declaration (Form 1 & Form 3) has be submitted to the Local ESI OFFICE within 10 days of Appointment.

Accident case: FORM 16 within 48 hours (2 Copies) to ESI office.

Death: FORM 16 immediately 2 copies to ESI

– Benefits

  • Sickness Benefit: The maximum duration of availing sickness benefit is 91 days in two consecutive periods.
  • Maternity Benefit: It is payable for a maximum period of 12 weeks in case of confinement, 6 weeks in case of mis-carriage and additional one month in case of sickness.
  • Employment Injury Benefit: The benefit is not subject to any contributory condition and is payable at a rate equivalent to about 70% of the average wages, however it is not payable if it does not exceed 3 days excluding the date of accident. Both temporary disablement and permanent disablement is included under the act.
  • Dependent’s Benefit: Periodical pension is paid to dependants of an insured person who dies as a result of an employment injury.
  • Funeral expanse upto a maximum of Rs.1500/- is made for the funeral of a deceased insured person.
  • Medical Benefit will be given to parents, spouse and children’s.
  • Rehabilitation Allowance.

Payment of Gratuity Act, 1972

Gratuity is a lump sum payment to employee when he retires or leaves service. It is basically a retirement benefit to an employee so that he can live life comfortably after retirement. However, under Gratuity Act, gratuity is payable even to an employee who resigns after completing at least 5 years of service.

This act is applicable to every factory, mine, oil field, plantation, port, railways, company, shop, establishment or educational institutions employing 10 or more employees

  • Qualifying period – On rendering of 5 years’ service, termination, resignation or retirement (Note: 1 year = 240 days of working)
  • Employee – All employees irrespective of status or salary
  • Display of Form U in the office/factory premises.
  • Entitlement – On completion of five years’ service except in case of death or disablement. Gratuity is payable within 30 days of due
  • Display of Notice – On noticeable place at the main entrance in English language or the language understood by majority of employees of the factory, etc
  • Maximum Ceiling – Rs.10,00,000
  • Calculation of Gratuity: 4.81% of basic OR
    15 days of Wages * Number of Years Worked.

Note: 15 days of wages = (Last monthly wage * 15) / 26 days.

Wages shall consist of basic plus D.A, as per last drawn salary. However, allowances like bonus, commission, HRA, overtime etc. are not to be considered for calculations

  • Submission: Employer: Every Employer should fill FORM A when it becomes eligible (i.e) 5 years to pay gratuity to its employees.

More over Within 30 days of commencement of business also employer should submit the FORM with the concerned authority.

Employee: Fill up FORM F (Nomination) and FORM H (for changing Nomination)

Payment of Bonus Act, 1965

Applicability of Act: Every factory where in 10 or more persons are employed with the aid of power or an establishment in which 20 or more persons are employed without the aid of power on any day during an accounting year

Payment of Minimum Bonus: 8.33% of the salary or Rs.100 (after 1st Accounting year of making profit or on completion of 5 years even if there is no profit)

Note: MINIMUM Bonus payable: 8.33 % of BASIC + DA

MAXIMUM Bonus payable: 20 % of BASIC + DA

Eligibility of Bonus: An employee will be entitled only when he has worked for 30 working days in that year

Time Limit for Payment of Bonus: Bonus is payable within 8 months from the close of the accounting year.

Submission: Annual Return before 30th DEC through FORM D

Disqualification & Deduction of Bonus: On dismissal of an employee for fraud or violent behaviour while on the premises of the establishment, or theft, misappropriation or sabotage of any property of the establishment or Misconduct of causing financial loss to the Employer to the extent that bonus can be deducted for that year.

This act not applicable to certain employees of LIC, General Insurance, Dock Yards, Red Cross, Universities & Educational Institutions, Chambers of Commerce, Social Welfare Institutions, Building Contractors, etc

4 thoughts on “PF, ESI, Gratuity and Bonus Act

  1. The mentioned details are very helpful for a new learner. I am quiet confident that it will help me a lot in my job profile as an HR executive.

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