The government said that even after the implementation of the new labor code, EPFO rules will not change immediately. PF, pension and social security schemes will continue. Employees will have the opportunity to understand the change with adequate time and information.
EPFO Rules: The Central Government has made it clear that even after the implementation of the New Labor Code, there will be no sudden or major changes in the rules of EPFO i.e. Employees Provident Fund. In a written reply in the Rajya Sabha, Minister of State for Labor and Employment Shobha Karandlaje said that at present the government does not intend to make any immediate changes in the existing EPFO rules.
This information is a big relief for crores of salaried employees, because for some time there was doubt regarding the rules of their PF, pension and retirement fund after the implementation of Social Security Code 2020.
New Labor Code and future of EPFO
The Government of India has prepared four new labor codes by consolidating the old and complex labor laws. These include Code on Wages (2019), Industrial Relations Code (2020), Occupational Safety Code (2020) and Social Security Code (2020). Of these, the Social Security Code directly affects the provident fund and other benefits of employees.
The government has clarified that even after the implementation of the new code, the existing EPFO schemes will not end immediately. According to Section 164(2)(B) of the Social Security Code, the old EPFO schemes will continue as before for at least one year after the implementation of the new law, provided they do not conflict with the new rules.
The government wants to implement the change from the old system to the new system gradually, so that the employees can understand it and be prepared for it. At present the rules of all four labor codes are being finalized. For this, suggestions are also being taken from common people, experts and concerned parties.
Increasing scope of social security
The biggest change in the new Labor Code is that social security will no longer be limited to the organized sector only. Facilities like PF, pension and insurance will now extend to gig workers and platform workers also. For example, delivery partners of Zomato-Swiggy and drivers of Ola-Uber will now also come under the ambit of social security.
Apart from this, there has also been a change in the rules of gratuity for fixed-term employees. Earlier, five years of continuous service was required to get gratuity, but under the new rules, employees who have worked continuously for only one year will also be eligible for gratuity. The aim of the government is that workers in the unorganized sector can also get life insurance, health facilities and financial security after retirement.
How is interest determined in PF?
Employees often have a question as to how the interest rate on the money deposited in the PF account is decided. In response to the question of MP P. Sandosh Kumar in Rajya Sabha, the Ministry clarified that the interest rate on EPF deposits is decided under Para 60(1) of the Employees’ Provident Fund Scheme, 1952.
The center of this process is the ‘Central Board of Trustees’ (CBT). It is the highest decision-making body of EPFO, which includes representatives of the government as well as owners and employees of companies. CBT sends its recommendations to the government and the government decides the final interest rate.
EPFO also has a rule that the account should not go into loss while paying interest. In simple words, interest is paid to the members based on the income that EPFO earns from its investments, so that the financial stability of the organization is maintained.
relief for employees
The government’s statement is a sign of relief for the employees. This made it clear that PF and other social security benefits are not going to change suddenly. Employees will be given adequate time and information when the new rules are implemented. With this, they will be able to easily understand the changes and keep their savings and retirement plans safe.
Comments are closed.