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Statutory Requirements
Must Requirement of Works & Factory
(A) Contract Labour (Regulation
& Abolition) Act, 1970
The main objective of this act is to regulate the contract labour and abolish it in certain
cases.
Applicability
Every industry engaging 20 or more workers on contract basis.
Every contractor engaging 20 or more workers.
Obtaining registration & license
Apply in form I for registration in triplicate copy along with prescribed fees ( Rs.142/- ).
Apply in form IV for license in triplicate copy along with license & security fees ( Rs.370/- per worker Generally in all cases- Refundable) .
For license form V is given by Principal employer to contractor.
Provisions for temporary registration & license
For work of immediate nature Principal employer/ Contractor can apply for temporary registration/ license which is valid up to 15 days only.
Obligation of Principal employer
Register of contractors Form XII
Annual return Form XXV (on or before 15th Feb-
consolidated return)Notice of Commencement/ Form VI BCompletion
Obligation of Contractor
Renewal of license Form VII
Register of workman Form XIII
Employment Card Form XIV
Service Certificate Form XV
Muster Roll Form XVI
Wages register Form XVII
Wage slip Form XIX
Contd……Deduction for damage/loss Form XXRegister of fines Form XXIRegister of advances Form XXIIRegister of over-time Form XXIIIHalf yearly return Form XXIVNotice of Commencement Form VI A /Completion
Welfare Facilities
Canteen Section 16Rest rooms Section 17Urinals, LatrinesDrinking Facilities Section 18First Aid Facilities Section 19
Principal employer will have to provide these facilities if not provided by contractor.In annual return these facilities needs to be shown
Applicability of other Act
Persons cover under this act will be covered under:
I) Factory Act, 1948II) Employees’ Provident Fund & Miscellaneous Provisions Act, 1952III) Employees’ State Insurance Act, 1948 / Workmen Compensation Act, 1923
Contd…….
IV) Payment of Bonus Act, 1965
V) Minimum Wages Act, 1948
VI) Payment of Wages Act, 1936
Payment of Wages
Payment to the contract labour is disbursed in Contractor Yard.Payment to the contract labour is disbursed before the management representativeRepresentative stamps the register & signs on it.
Registers which are maintained
Gate Pass register
Attendance Register of Contract Labour
Daily entry of the contractor report
Register having no. of contract Labour
(B) The Employee's Provident
Fund Act, 1952
Nothing but Social Security to Employees
The Employee’s Provident Fund Act 1952
The Employee’s Provident Funds Act 1952
Employer role & responsibility
Employee role & responsibility
The Employees Pension Scheme 1995
The Employees Deposit-Linked Insurance
Scheme (EDLI) 1976
List of Forms
Introduction
Salary consists of two parts i.e. earnings &
deductions
Provident Fund is one of the statutory deduction done
by the employer at the time of salary payment
Provident Fund is governed by the Employee’s
Provident Fund Act 1952
….Statutory Contribution Rate
Account Number……Account Number Contribution Type Contribution Rate
1 Employees PF 12% + 3.67%
2 EPF Admin Charges 1.1%
10 Employee’s Pension Scheme
8.33% ( Maximum 6500/-)
21 Employee’s Deposit Linked Insurance Scheme
0.50% ( Maximum 6500/-)
22 EDLI Admin Charges 0.01%
TOTAL….. 25.61%
Employer Role & Responsibility
Monthly Returns
Filing monthly PF returns with the EPFO within 15 days of the close of each month
Provide list of new employees joined in the establishment during the preceding month & are qualified to become member in fund (Form-5)
Provide list of employees leaving service during the preceding month (Form-10)
Employer should file 'Nil' returns if there is no new employee or no employee leaving the service during the preceding month
Provide the total no. of members last month, new members joined and existing members resigned in the preceding month & total no. of present subscribers to be fund (Form-12A)
Compliances….
Annual Returns
Employer shall send to the Commissioner within one month of the close of the year, a consolidated Annual Contribution Statement (Form-6A) and individual employee sheet (Form-3A) showing the contributions made by the employees and employer during the year ( PF Year is March to Feb)
Employee Role & Responsibility
Provide details of self & nominees (Form-2) for PF & Pension Scheme at the time of joining the establishment
In case of already having PF A/c, apply for transfer of previous A/c to the present A/c
If willing to increase contribution, inform the same to the employer to deduct the amount from the salary (Voluntary Provident Fund).
Voluntary PF can be upto 100% of wages
Understand that the employer is not liable to pay any contribution on voluntary PF
Employees Pension Scheme 1995
Introduction To give long term protection / financial security to employee upon retirement and
his family in case of his pre-mature death, family pension scheme has come into force by diverting 8.33% contribution made by employer towards PF scheme
Application Scheme is compulsory for all the existing members who become members of the
Employees Provident Fund Scheme
Eligible Monthly pension to employees on retirement Widows on death of the member Children of the member below 25 years age Monthly pension to members upon permanent total disablement during service
The Employees Deposit-Linked Insurance Scheme 1976 (EDLI)
Application
EDLI scheme is compulsory for all the existing members who become members of the PF Scheme
Life insurance benefit (death coverage) of the employee is available under this scheme while in service
Calculation
EDLI is calculated on EDLI slab – Rs. 6500/-
0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and transferred to EDLI fund
0.01% EDLI Administration charges calculated on total EDLI wages
EDLI / administration charges are payable by the employer
The Employees Deposit-Linked Insurance Scheme 1976 (EDLI)
Eligible
Person who is eligible to receive PF dues of deceased member who died while in service is only eligible to receive EDLI fund
Exemption
Employer can seek exemption from the Scheme if similar / better benefits are provided other than the Scheme with the consent of majority of employees
Forms For Claiming Benefits Under PF Scheme
25
List of Forms
Form Purpose
13(revised)
For transferring the PF A/c of a member from one establishment to another establishment covered under the Act / Scheme
14 Application for financing a life insurance policy out of PF A/c
19To be submitted by a member to withdraw his PF dues on leaving service / retirement / termination
20In the event of death of member, this form is to be used by a nominee / family member to claim the member's PF accumulation
31For the use of PF members to avail advances / withdrawals as provided in the scheme
Forms For Claiming Benefits Under Pension Scheme
26
List of Forms
Form Purpose
10 C To be submitted by a member to withdraw his EPS fund
10 D
To be submitted by the first claimant i.e.- member - widow / widower
- Orphan- nominee
Forms For Claiming Benefits Under EDLI Scheme
27
List of Forms
Form Purpose
5 (I.F.)To be submitted by the person eligible to receive the PF A/c dues of the deceased member who died while in services
Summary
28
Form Purpose
2 Nomination Form
5Return of Employees qualifying for membership to the Employees' Provident Fund for the first time during every month. Within 15 Days of the following month.
10 Return of members leaving service during the month.
12AConsolidated Statement of dues and remittance By 25th of the following month to which the dues relate.
3A Member's annual Contribution card
6A Consolidated annual contribution statement
29
Month wise Statutory Deposits & Returns
January
•Before 15th P.F., P.F. Challan
•Before 25th P.F Form 5, 10 & 12A(P.F)
•Monthly statutory register daily/end of the month
(Monthly statutory register should be maintained)
February
•Same as January month
March
•Before 15th P.F., P.F. Challan
•Before 25th P.F Form 5, 10 & 12A(P.F)
•P.F, P.F. Annual Returns form 6A & 3A
Accounting of PF ContributionSuppose total gross salary payable for the month of January 2010 is Rs. 3,00,000
Out of above, basic salary which is eligible for Provident Fund contribution is Rs. 2,00,000
Hence, the Employee Provident Fund contribution will be calculated @12% of basic salary i.e. Rs. 24,000.00
Net salary payable to Employee is Rs. 3,00,000 – Rs.24,000 = Rs. 2,76,000.00
The entry for above transaction will be made accordingly
Employee’s PF share Entry
Staff salary Expenses Dr. Rs. 3,00,000
(This is the cost which the company has to bear )
Staff Salary payable Account Cr.2,76,000
Employee’s PF payable Cr. 24,000
(it is your liability to pay to govt.)
Employer’s Share of Contri…Now, make one another entry for employer’s contributions for the above salary
An employer is also required to pay a sum @12% from the basic salary before the same is disbursed to employee. Apart of this, Employer is also require to pay @1.61% (of basic pay )additional amount as per below
@1.10% towards PF administration fees
@0.50% towards Employees Deposit linked insurance scheme
@0.1% towards EDLI administration charges
Journal Entry
Dr. Employer PF Contribution Rs.24,000
Dr. PF administration Fees Rs. 2200
Dr. Employee EDLI Rs. 1,000
Cr. Employer’s PF payable Rs. 27,200
Now total PF payable will be Rs. 24,000+ Rs. 27,200 =Rs, 51,200 which you should pay to PF department through its challan
(C ) Employees’ State Insurance Corporation
Employees - Benefits
Under ESI Scheme, the comprehensive and need based package of Social Security Benefits in Cash and kind include the following:
1) Medical Benefit
2) Sickness Benefit
3) Maternity Benefit
4) Disablement Benefit
5) Dependent Benefit
6) Funeral Benefit ( Upto Rs.10000/-)
ESIC Rates……
Employers - Obligations (ESIC)
Get ESIC code with In 15 days from the date on which establishment is covered under ESIC ( 15000)
Obtain Insurance Number for Employee
Pay ESI contributions (Employers' share @ 4.75% of the wages and the employees' share @ 1.75% of the wages) within 21 days of the month following, in which the wages fall due.
Maintain an 'Accident Book' as prescribed under the Factory Act/ESI Act
Submit Accident Report within 24 hrs from the date of event
Furnish annual information on continued coveragae of factory/establishment by submitting a return in Form no. 01A on or before 31st January every year
Employers - Record Maintanance
Register of Employees in Form -6 (under Regulation 32)
Accident Book in Form - 11 (under Regulation 66)
Inspection Book (under Regulation 102A)
File for copies of return of declaration forms
File for copies of Return of Contribution, Challans, etc.
File for general correspondence with the Regional Office regarding coverage, inspection etc. and other important circulars.
File for copies of Accident Reports and correspondence in connection herewith.
MINIMUM WAGES ACT,1948Section 4 of the Act mentions that Minimum wages are based on basic wages and cost of living index. The yardsticks on which minimum wage is revised are:
(a) Three consumption units per earner, (b) Minimum food requirement of 2700 calories per average Indian adult, ( c ) Cloth requirement of 72 yards per annum per family, (d) Rent corresponding to the minimum area provided under the Government's Industrial Housing Scheme (e) Fuel, lighting and other miscellaneous items of expenditure to constitute 20 % of the total Minimum Wages (f) Children education, medical requirement, minimum recreation including festivals/ceremonies and provision for old age, marriage etc. should further constitute 25% of the total Minimum Wage.
MINIMUM WAGES ACT,1948
Minimum Wages rates in Gujarat at present…….Annexure 1
Kerala State Govt. has declared Minimum Wages for CA office also ….. Annexure 2
The Maternity Benefit Act, 1961
Applicability to every factory or establishment in which 10 or more persons are or were employed on any day of the preceding twelve months.
Eligibility for Maternity Benefit: Has to work for 80 days in the preceding 12 months immediately preceding the date of her expected delivery.
Eligible for 12 weeks maternity benefit of which not more than six weeks shall precede the date of her expected delivery.
Maternity benefit is paid at the rate of the average daily wage for the period of her actual absence. The average daily wage means the average of the woman’s wages payable to her for the days on which she has worked during the period of three calendar months immediately preceding the date from which she absents herself.
The Maternity Benefit Act, 1961
Where a woman has delivered a child and dies during her delivery or during the period immediately following the date of her delivery for which she is entitled for the maternity benefit, leaving behind in either case the child, the employer shall be liable for the maternity benefit for that entire period but if the child also dies during the said period, then for the days upto and including the date of the death of the Child.
6 weeks leave with wages for tubectomy and two weks immediately following the day of an tubectomy.
Nursing breaks – Two times in the course of daily work till the child attains 15 months.
Prohibition from dismissal for absence during pregnancy. However, for Misconducts, forfeiting of Maternity Benefit and Medical bonus permissible.
PROFESSIONAL TAX…..Employer carrying out any business/Profession
No limit on No. of Employees (Even employer employing only 1 employee then also he is liable)
Due date of payment is 15th of Next Month for Employee’s share
Due date of payment for Employer’s share is 30th September ( For F.Y.2011-12 due date was 30/09/2011)
Salary Register ,Salary Slip, Appointment Letter to be maintained
Rates on which PT is deductible:-
Sr.No. Salary Slab PT Rate
1 0-2999 Nil
2 3000-5999 20
3 6000-8999 80
4 9000-11999 150
5 12000 & Above 200
Employer’s Share of PT…
Sr.No. Type of Person Rate (Rs.)
1 Registered under VAT & T.O. < 250000 0
2 Registered under VAT & T.O. > 250000 < 500000 500
3 Registered under VAT & T.O. > 500000 < 1000000 1250
4 Registered under VAT & T.O. > 1000000 2400
5 All other Professionals/Businessman 2000
Annual Return under Labour Acts……
The Payment of Wages Act, 1936 and Gujarat Payment of Wages rules 1963
(ii) The Minimum Wages Act, 1948 and Gujarat rule 21(4) 1961, there under
(iii) The Contract Labour (Regulation and Abolition) Act, 1970 and Gujarat rules 82 (1), 82 (2), 1972 there under
(iv) The Factories Act, 1948 and Gujarat Factories Rules 1963 (GFR)
(v) The Maternity Benefit Act 1961 and Gujarat Maternity Benefit Rules 1964.
(vi) The Payment of Bonus Act, 1965 and Rule 5 there under
(vii) The Payment of Gratuity Act, 1972 and Gujarat rules, 1973 there under
(viii) The Equal Remuneration Act, 1976 and Gujarat rules, 1976 there under
(ix) The Industrial Employment (Standing Orders) Act, 1946 and Gujarat rules there under 1982
(x) The Physically Handicapped persons (Employment in Factories) Act,1982 and Gujarat Physically Handicapped Persons (Employment in Factories) Rules, 1982.
(xi) The Indian Boilers Act, 1923.
Annual Return under Labour Acts……
Due date 31st January for Yearly Return
For Half yearly returns it is 31st July & 31st January.
Consolidated return is required to be filed. ( Annexure 3)
January to December Calendar Year
-:SUMMARY OF REGSITERS & RECORDS TO BE MAINTAINED:-Sr.No.
Act Documents to be maintained
1 Factories Act a. Accident Register with Formsb. Inspection Bookc. Muster Roll & Wage Registerd. Muster Roll for Exempted workerse. Register of Adult Workersf. Register of Compensatory holidays &
Overtimeg. Register of Leaves with wages
2 EPF & MP Act, 1952 a. Register of Contributionb. Inspection book
3 ESI Act a. Accident Registerb. Register of Contributionc. Inspection Book
4 Payment of Wages Act,1936 a. Register of Fines, Deduction & Advances
5 Minimum Wages Act,1948 a. Wage Slip
6 Payment of bonus Act,1965 a. Register A,B & C
7 Equal Remuneration Act,1976 a. Register in Form D
8 Contract Labour (R&A) Act,1970 a. Register in Form 13
Accountant’s Role
Maintain Records in good condition ( As there is no provision for how many years books should be maintained)
Adhere to Statutory Due dates ( As missing payment due dates will lead to penalty/interest on unpaid amount & will lead to chances of disallowance under Income Tax Provisions)
Provide data to consultant well before time
Reconcile statutory deductions employee wise & total monthly salary wise.
Get salary records audited from PF/ESIC Department once every five years
If company has its own PF trust then get trust accounts audited with Chartered Accountant & submit it to PF department( Rotation of CA with every 3 years)
Accountant’s Role
Do’s if company employing Labour Contractor:-
a. Work Order should be issued to the Contractor (
Before issuing work order copy of all statutory
licenses like PF/ESIC should be kept on record)
b. Take Copy of Labour License before start working
with contract labour
Accountant’s Role
c. Ensure Attendance register & Salary Register with
salary slip of Contract labourer available with the
company (Minimum wages to be paid )
d. Take copies of PF/ESIC paid challans from
Contractor & preserve them for future
departmental Audit ( As a principle employer if
contractor does not pay then company will be
liable)
e. Maintain Labour License Expiry register of all
contractor working in the company to avoid legal
obligations on organization
Accountant’s Role
Do’s Before Finalization of Accounts at periodic interval:-
a) Salary as per Financial Statement = salary as per PF/ESIC
records
b) Match all statutory payments made with financial records
c) Ensure Year end outstanding payment is matching with contribution paid in April
d) Ensure proper deduction of TDS of employees.
…..THANK YOU…..
Vishal Joshi
+91-9099089387
Ahmedabad
