The contractor provides work to contract-based employees. They earn while learning different skills and principles. Therefore, there are a number of employees that are ready to work on contract-bases to learn that extra mile. But most of the time, the interest of these employees is compromised. This is especially when it comes to their salary. They often get lower pay than the individuals working in similar fields with similar job descriptions compared to full- time employees. But when it comes to EPF and EPS benefits, the benefits are the same for all. So, in this article, you would get your queries related to it answered. Are the persons employed by or through a contractor covered under the Scheme? Are the benefits of EPF subjected to full-time employees differ from that of a contract- based employee?
EPF Benefits For Contract-Based Employees
Provident fund is a retirement security scheme for salaried employees implemented by the government of India. EPFO has been set by the government of India to look in for the interest of salaried employees, especially when they achieve the age of 58 years. As these lines suggest, any individual working on a salaried basis is subjected to EPF benefits.
Moreover, under the Provident act established in 1952, a contract employee is covered under the definition of employee. This has been set by the EPFO organization. Hence, this certifies that even if you are a contract based employee, you have an equal share of EPF benefits. But sometimes the contractor might keep you in the dark about the same. As he/she might try to save on the contributions from his/her side. This would save the contactor a good sum of money. The contractor might also allure you to give up your EPF contribution. He/she might do so by providing you with a more excellent in-hand salary. But remember that it is upon you to look after your present and future.
The benefits that this scheme offers are far better than the schemes offered by various banks. Due to this reason, EPF contributions have been made necessary for employees.
Especially for employees having basic pay of less than Rs. 15000. Both you and your employer contribute to your EPF account. The contribution that you make is a part of your basic pay and dearness allowances. You and your employer both pay in 12 % of the basic pay to your EPF account.
Out of 12% of the employer contribution, 3.67% of the 12% goes into your EPF account directly. Rest is then contributed to the EPS scheme, which is 8.33% of 1250Rs whichever is higher. This accumulates to a good sum of money as you continue to work as salaried employees.
The amount that you receive at the maturity is a lump sum amount. This is completely tax-free, which is an added advantage. Furthermore, the interest that you earn through this scheme is unmatchable. An employee is subjected to earn 8.55% interest rate on the contributions. These are the employee’s contribution towards his/her EPF account.
Since the EPFO organization manages the services through their online portal. All the actions and facilities provided by the organization are quite transparent. Also, the feedback that you receive with each of your queries is quite commendable. You can view your contribution online while being at home with just a few clicks. This has lead individuals to cut through the long waiting lines. To which they were subjected to when the online services we’re not in place. Moreover, you can perform various actions like updating KYC details, filling in the transfer and withdrawal forms etc.
To get the details straight with a proof of the above-mentioned employee definition of EPFO is in EPF guidelines. This is mentioned under section 2(f) in para number 30 of the Provident fund Act. It states that any individual who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer and includes any person employed by or through a contractor or in connection with the work of the establishment are subjected to EPF benefits.
As you would go further, you will also come to know about a fact. That is the principal employee who has hired the contractor has to be liable for the contribution of EPF benefits. The employer may get it cleared with the contractor. The employer settles the contributions in the final payment. But it is crucial to note that if the contractor has less 20 employees working for him/her. Then the employees are not liable for the EPF benefits.
If you as a contact-based employee sees that your contractor has more than 20 employees under his/her belt. Then you can write a petition to the EPFO office regarding the same. But for this, you need to attach supporting documents. So that your request stands to genuine and your request is kept on the priority list. This can be done by writing the application. This has to be sent by post to the head office. Moreover, you can also try to email the same at their official email id.
Also, the contractor has to ensure that the employees are provided with a safe environment to work in. This is because in order to earn some extra bucks. The contractor would prompt himself/herself to compromise on the safety of employees. Moreover, if you force the employer to provide EPF contribution, he/she might try to fire back at you with upgrade working conditions. If these things are below the requirements and conditions mentioned by the government, then the employees can complain about the same in court. Under these situations, the contractor is liable to pay in the contributions to your EPF account.
As and when you get your contract completed, you can switch to a new job. If you are able to secure a job in a company having more than 20 employees or the same has enrolled its employees for the EPF benefits. Then, you can transfer you earlier contributions. This can help you to pile up your EPF contributions. But with this, you need to keep safe your UAN number and PF account number. This can be used to continue your EPF contributions. The same is important if you want to keep a check or get updates regarding your EPF contribution. You are required to enter your UAN number as your username in the EPFO portal.
Final Talk :
The inclusion of the contract-based employees in EPF benefits was in jeopardy for an extended period of time. There were several cases filled for the same. Since the definition of employee under the EPFO guidelines does not differentiate between the permanent and contractual employees. So the benefits should be provided to all of them. So, it is a major ruling satisfying and verifying for the stake of contractual employees. For the EPF contributions in 2017 has to lead toa final order by the Supreme Court. This is one of the major work done within the field when it comes to employees union.
So as an employee it becomes your duty to look into your interest. And help fellow employees working under the same title. The contractor might force you to pin your challenge. This can be in the form of EPF benefits. But you need to stand strong against it.