New Delhi3 minutes ago
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The Supreme Court has directed the Central Government to consider increasing the salary limit (wage ceiling) of the Employee Provident Fund Organization (EPFO). The court has said that there has been no change in this limit for the last 11 years, hence the government should take a decision on this within the next 4 months.
At present, employees receiving monthly salary of more than ₹ 15,000 are out of the mandatory scope of this social security scheme. The bench of Justice JK Maheshwari and Justice AS Chandurkar gave this order on the petition of activist Naveen Prakash Nautiyal.
The court has directed the petitioner to submit his presentation to the Central Government within two weeks, on which the government will have to take a decision within the time limit.
Salary limit stable at ₹15,000 for last 11 years
Advocates Pranav Sachdeva and Neha Rathi, appearing for the petitioner, argued that the salary limit of EPFO was last changed in 2014. Then it was increased from ₹6,500 to ₹15,000.
There has been a huge increase in inflation and minimum wages in the last decade, but the EPFO limit is stuck there. Due to this, crores of employees are deprived of the benefits of this social security.
EPFO limit is less than the minimum salary
The petition states that the minimum wage fixed by the Center and many states has now exceeded this limit of ₹ 15,000. In such a situation, the employees who are getting minimum wages are also falling out of the purview of EPFO.
Advocate Sachdeva said that this is a welfare scheme, but due to its old limit, most of the workers are not able to get its benefits.
EPFO sub-committee had recommended in 2022
According to the report, EPFO’s own sub-committee had recommended in 2022 that the salary limit should be increased to increase the coverage.
The Central Board of Trustees (CBT) also approved this proposal in July 2022. The petition alleged that despite the approval of the Board, the Central Government has not yet taken any final decision on this.
70 years of history: Earlier it was inclusive, now it is exclusionary
Citing a statistical analysis in the petition, it was said that in the last 70 years, the revision of the salary limit has not been based on any fixed formula.
- First 30 years: This scheme was going to take everyone along. Its scope was so large that almost every small and big employee was included in it and they got benefits.
- Last 3 decades: Now this plan has become one that excludes many employees. Due to low salary limit, people are falling out of its scope.
- Ignoring Parameters: At the time of revision, parameters like retail inflation i.e. Consumer Price Index (CPI), per capita income and inflation rate have been ignored.
What will be the effect of the change?
If the central government increases the salary limit from ₹15,000 to ₹21,000 or more, lakhs of new employees in the organized sector will come under the ambit of EPFO.
This will increase their retirement savings and they will also be able to get the benefit of pension and insurance (EDLI). However, this will also increase the financial burden on companies and the government, as they will also have to contribute to EPF.
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