New Delhi: The Centre may soon raise the wage ceiling and lower the headcount threshold under the Employees’ Provident Fund Organisation (EPFO) as it aims to enhance and widen coverage for bolstering social security for workers.
The current wage ceiling under the EPFO is ₹15,000 per month, which could be raised to up to ₹21,000 in line with the wage ceiling under the Employees’ State Insurance Corporation. Further, the mandatory threshold in an organisation for joining the EPFO may be lowered to 10-15 employees from 20 currently. The ministry of labour and employment is currently discussing the matter with stakeholders, said people aware of the deliberations. They added that the government is keen to push the welfare measures as it prepares the ground for rollout of the Social Security Code.
Also Read: How EPFO wage ceiling hike to Rs 21,000 impacts you
The talks follow strong recommendations by a steering committee set up to explore widening and deepening social security measures for workers.
Last Wage Ceiling Revision in 2014
“The minister is evaluating all pending proposals, and the government feels the wage ceiling and the threshold revision under EPFO is long overdue,” a senior government official said.
The last wage ceiling revision took place in 2014 when it was raised to Rs 15,000 from Rs 6,500.
A higher wage ceiling of Rs 21,000 would increase provident fund and bolster the pension kitty of employees. It would also increase the financial outgo of employers.
Under EPFO, both the employee and employer are required to contribute 12% each to the EPF account. The entire 12% of the employee’s contribution goes into the provident fund account, while 8.33% of the employer’s contribution is allocated to the Employees’ Pension Scheme (EPS), with the remaining 3.67% flowing into the provident fund account.
Another person, familiar with the proposal, said micro and small establishments were resisting lowering of the threshold from 20 employees as it could enhance their compliance burden and cost. However, the government is keen to move ahead with the proposal to ensure social security for the workforce.
