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Ministry of Labour & Employment complies with Supreme Court Judgement

Ministry of Labour & Employment issues notifications in compliance with Supreme Court Judgement on amendments to Employees’ Pension Scheme,1995.

The Ministry of Labour & Employment has recently issued notifications in compliance with the Hon’ble Supreme Court’s judgement on the amendments to the Employees’ Pension Scheme,1995. This article discusses the directions given by the Supreme Court and the actions taken by the Ministry to comply with the same.

1. Background

The Hon’ble Supreme Court has given its judgement dated 04.11.2022 in Civil Appeal No. 8143-8144 of 2022 titled the Employees Provident Fund Organisation & Anr. etc. Vs. Sunil Kumar B. and Ors. etc., while upholding the validity of the amendments made to the Employees’ Pension Scheme,1995 (EPS,1995) vide G.S.R 609 (E) dated 22.08.2014(effective from 01.09.2014) had also given certain directions along with deadlines for complying with the same.

2. First direction of the Hon’ble Supreme Court

The first direction of the Hon’ble Supreme Court of the said judgement was in respect of giving an opportunity to pensioners who had retired before 1.9.2014 after exercising joint options under paragraph 11(3) of the EPS,1995 but the joint options were rejected by the Employees’ Provident Fund Organisation (EPFO) (on account of cut-off date). In compliance with this direction, the EPFO issued a circular on 29.12.2022 for filing online applications for validation of joint options by the above pensioners. The last date for submission of applications was 03.03.2023. However, the last date was extended up to 03.05.2023 which has been further extended up to 26.06.23.

3. Second direction of the Hon’ble Supreme Court

The Hon’ble Supreme Court held that all members who were in service prior to 01.09.2014 and continued to be in service on or after 01.09.2014 and who did not exercise joint option due to interpretation on cut-off date, but were entitled to do so ought to be given a further chance to exercise their option and the time for giving options was to be extended by a further period of four months. To comply with these directions, EPFO issued instructions on 20.02.2023 for online joint options to be filed by the above employees/pensioners. Joint options were to be filed on or before 03.05.2023. However, the date has been extended to 26.06.2023.

4. Third direction of the Hon’ble Supreme Court

The Hon’ble Supreme Court held the requirement of the members to contribute at the rate of 1.16% of their salary to the extent such salary exceeds Rs.15000/- per month as an additional contribution under the amended scheme to be ultra vires of the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act,1952 (EPF & MP Act). The Hon’ble Court directed the authorities to make necessary adjustments in the Scheme within a period of six months.

5. Ministry of Labour & Employment actions

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. Accordingly, certain provisions of the EPF & MP Act get repealed while giving effect to the relevant provisions of the Code. The spirit of the EPF & MP Act as well as the Code do not envisage contribution from the employees into the pension fund.

Accordingly, keeping in mind the letter and spirit of the EPF & MP Act and the Code, it has been decided to draw 1.16 % additional contribution from within the overall 12% of the contribution of the employers into the Provident Fund account of the employees, without any impact on the earning of the members. The Ministry of Labour & Employment has issued notifications in this regard on 30.04.2023, and the same shall come into force from 01.07.2023.

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