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Here is the raw breakdown of the Minister’s reply in the Lok Sabha:

EPS-95 Pension Hike Unlikely: Fund Under ‘Actuarial Deficit’ Stress

The government just shut down the pensioners’ long-standing demand for raising the minimum pension from ₹1,000 to ₹7,500—at least for the near future. MP Balya Mama Suresh Gopinath Mhatre asked the question. The Minister gave the answer.

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The Financial Reality (Why No Hike)

• Actuarial Deficit: Minister Karandlaje confirmed the fund is under “actuarial stress.” The valuation as of March 31, 2019, shows an actual deficit. It happened. And because of that deficit, the government cannot enhance pension benefits right now.

• The Structure: She clarified the EPS-95 is a “defined contribution-defined benefit” scheme. All benefits are paid only from two sources:

  1. Employer contribution (8.33% of wages).

  2. Central Government contribution (1.16% of wages, capped at ₹15,000 wage ceiling).

• The Stagnation: This structure, combined with the deficit, explains why the minimum pension is stuck at ₹1,000 and why Dearness Allowance (DA) is not extended, even though inflation keeps rising. The pension amount is officially considered insufficient for a dignified life, but the fund status restricts revision.

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The Higher Pension Processing (The Good News)

On a separate, but related, note, the massive job of processing applications for higher pensions (following the Supreme Court’s 2022 order) is virtually complete. The EPFO had to deliver, and they did.

• Completion Rate: Nearly 99% of all applications received from pensioners and members have been disposed of by the EPFO. A time-bound job.

• The PPO Tally: Of the eligible retirees, 1,24,457 revised Pension Payment Orders (PPOs) have been issued. Another 12,572 PPOs are in the final stages of approval.

• The Ineligible: About 34,060 cases were deemed ineligible, mostly because the applicants failed to remit the required contribution amount.

The government maintains it is committed to ensuring benefits, taking the fund’s “health” into account. But with the deficit now officially confirmed in Parliament, a major minimum pension hike remains a distant, ongoing demand.

End . . .

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Regarding this, the Ministry of Labor and Employment is considering all the options under which more benefits can be provided to the employees. In talks with stakeholders (e-commerce) companies, the Ministry of Labor has proposed to take a grant from them every month in the interest of employees. This grant will be deposited in equal proportion in the Employees Provident Fund (EPFO) and State Employees Insurance Corporation (ESIC).

The Ministry of Labor wants that temporary employees and their families should get medical and other benefits along with pension. The amount deposited in ESIC will work to secure their future. This amount will go to their pension fund, through which employees will be able to get a fixed pension after the age of 58 years. At the same time, they will also get the benefit of accident coverage through the amount deposited in the ESIC fund. For example, in case of disability or death, the family will get a fixed financial benefit.

Review of other schemes is also underway

Sources say that the ministry is also reviewing the pension schemes operating across the country. It is being seen what is special about which pension scheme and which scheme is being liked the most. In such a situation, the good experiences of the already operating pension schemes will also be included in the social and health facilities provided to gig workers.

Ministry is in favour of monthly grants, not profit

Gig workers will not have to pay any kind of grant to avail the benefits of social and health facilities. This grant will be taken from e-commerce companies or those organizations which are employing temporary employees. Under the provisions of the Social Security Code-2020, companies will have to contribute to the Corporate Social Responsibility Fund. This grant will be one to two percent of their profit or turnover.

Now the ministry says that we are not in favor of taking grants as profit, because the profit will be estimated after one year, which will be verified by the CA. In such a situation, the ministry does not want to look at the accounts of any company. Then deposit money on the basis of profit. Therefore, it has proposed that companies should deposit the grant in the accounts of gig workers in a fixed ratio every month.

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It is not the constitution of the establishment as to whether it is a public limited company, private limited company, cooperative society, partnership or proprietory form that decides the working hours, leaves and other service conditions of the employees but it is the labour laws applicable to the kind of business being transacted that decides these matters.

Different Acts have set out different rules pertaining to hours of work and the spread over of work with slight changes as applicable to the respective state. Shops and Establishments Act being a state Act is confined only to that state whereas the other Acts are central Acts and will be similar in many respect subject to state rules attached thereto.

Laws Lined Up for 2018                   

Enhancement of the gratuity ceiling: The Payment of Gratuity Act, 1972 (“Gratuity Act”) entitles employees who have been in continuous employment for a period of 5 years to gratuity at the rate of 15 days wages for every year of continuous service, capped at INR 10,00,000. The Payment of Gratuity (Amendment) Bill, 2017 (“Gratuity Bill”) was introduced in the Lower house of Parliament (Lok Sabha) on December 18, 2017 with a view to allow the Government the discretion to (i) prescribe the gratuity ceiling, and (ii) the period of maternity leave that would deemed to constitute continuous service.  It is anticipated that the Gratuity Bill will be passed by the Lower house in the next session of Parliament and that the ceiling is likely to be enhanced from INR 10,00,000 to INR 20,00,000.

Consolidation of Labour Laws: As part of its election manifesto, the current Government had promised to review the Indian employment laws to reduce the multiplicity of employment legislations and keep the legislations in sync with the requirements of the evolving labour market. In furtherance of the same, the Government has sought to consolidate 44 central employment laws into 4 labour codes:

1. Labour Code on Industrial Relations — Consolidating the Industrial Disputes Act, 1947, the Industrial Employment (Standing Orders) Act, 1946 and the Trade Unions Act, 1926;
2. Labour Code on Social Security and Welfare — Consolidating social security laws such as the Employees Provident Funds and Miscellaneous Provisions Act, 1952, the Employees State Insurance Act, 1948, Maternity Benefit Act, 1961, the Employees Compensation Act, 1923, etc.;
3. Code on Wages — Consolidating the Minimum Wages Act, 1949, the Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976; and
4. Labour Code on Occupational Safety, Health & Working Conditions.

The code that is likely to come into effect soon is the Code of Wages, 2017 (“Wage Code”). It is anticipated that the Government was working towards having the Wage Code passed in the lower house (Lok Sabha) of Parliament in the budget session and this might be taken up in the next session of Parliament.

National Employment Policy: The Government of India has proposed the introduction of a National Employment Policy to address the growing rate of unemployment in India. The proposed aim of the National Employment Policy is to create a comprehensive action plan to ensure that quality jobs are created across various sectors. It appears that this would be done by incentivizing employers to hire, by allowing relaxations in employment law compliances or bearing a part of the cost for social security payments.

LGBTIQ Rights: The Supreme Court of India, in its landmark judgment in August 2017, observed that the right to privacy and the protection of sexual orientation lie at the core of the fundamental rights guaranteed by Articles 14, 15 and 21 of the Indian Constitution. Further, the Supreme Court on January 8, 2018, stated that it would review its position on Section 377 of the Indian Penal Code, 1860, i.e., the criminalization of sexual intercourse between consenting adults of the same sex. With respect to transgender persons, the Transgender Persons (Protection of Rights) Bill, 2016, inter alia, seeks to prohibit the discrimination of transgender persons in terms of employment, healthcare services and access to facilities.

Law Governing Factories: Amendments to the Factories Act, 1948, has been in the pipeline for the past two years. The amendments are primarily aimed at allowing the state government to increase the number of overtime hours that employees can work and prescribe rules in relation to exemptions that could be given to various categories of employees. These measures would allow flexibility to State Governments to undertake initiatives to encourage the development of industries.

Changes to the Law on Contract Labour: The Government has released a draft bill for the amendment of the law governing the engagement of contract labour in India – the Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”). The bill primarily intends to exclude workers who are regularly employed in the establishment of the contractor from the definition of the term ‘contract labour’ for the purposes of the CLRA.

2018 Budget Proposals to Provident Fund Contributions: The Finance Minister in his 2018 Budget speech has proposed that the Government will make provident fund contributions of 12 percent of wages for new employees for a period of three years and reduce the mandatory contribution limit from 12 percent to 8 percent for women employees for the first three years of employment. We would, however, have to wait for amendments to be made to the Employees Provident Funds and Miscellaneous Provisions Act, 1952, and allied schemes, to understand the manner in which these proposals will be implemented.

Most Indian employment laws were drafted primarily for traditional models of workforce engagement in sectors such as manufacturing and infrastructure. These laws are failing to keep pace with the needs of new and emerging sectors that are driven by cutting edge technology, increased automation and creative forms of workforce engagement, including gig/on-call working. While the above reforms are much needed, standing at the threshold of the artificial intelligence revolution, India needs to relook at its employment laws to ensure that businesses are not constrained, innovation and entrepreneurship are encouraged and employee rights are not compromised.

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