 Good evening friends and we have with us Mr. PS Raja Gopal, senior advocate from Karnataka and we have seen his passion for hammering the points not only in the court but also while hammering the legal nuances for a common man including the lawyers who have a passion to understand various aspects. Though we have started a series with Mr. PS Raja Gopal on the service aspects, the various parts we have taken we will continue with that part. Be that as it may since the cutoff date as imposed by the Honourable Supreme Court in the Employees Pension Scheme is coming closer. People actually wanted to understand firstly as to what is the employee's fund scheme as such then what is the impact of the judgment, what is the impact of the earlier judgment of R.C. Gopal who all could be benefited because after the judgment was rendered we had just seen YouTube and social media gaga to the effect that the employees would benefit substantially their lives will have a drastic change. What we said that pension would be a deferred payment they would have a windfall in their rise in the pension and why not if in the end of their life they have of the evening of the life they have served prior to that with the employer they should get the benefits. But what is the actual trappings, understandings, all these aspects we can only say that the only mind clicks and links the right music that we have to understand if at all it has to be through PS Raja Gopal once it has the nuances of any deeper subjects. I request sir thank you for taking the session forward and thank you for accepting our invite. We always look upon you and we'll continue to look upon that. What do you say? Thank you because friends today I can assure you at the threshold that I will be relieving you at least I will try to relieve you in half the normal time because when Vikas wanted me to share my thoughts on this subject that is pension under the EPS scheme post-judgment rendered on 4-11-2022. I told Bhaiya this will be over within half an hour then he said no no it will still come to 45 minutes therefore let me try to complete in 30 minutes is my thinking. Friends in post-independent period when welfare of the labor was one of the priority agenda of the government of independent India provident fund was given a statutory framework by the employees provident fund and miscellaneous provision scheme 1952. The act was notified on 4th March 1952. It would be necessary to go by experience to understand how beneficial this provident fund act has been or whether it has been beneficial at all some of the employees who come to me and also the radians that come to me they are quite in number this is sir when we join some ways we have no choice but to become members of the provident fund it is a legal compulsion and when we contribute to the provident fund we contribute with the hope that at the time of our supra-annuation some of the provident fund accumulations that is employees contribution and employers contribution with the interest occurred there on we would be able to buy a decent accommodation but when we retire we find that it is not enough even to purchase furniture and I share their opinion as much as the interest that is given as compensation for investment in provident fund has been during most of the years less than the annual inflation corrosion therefore in reality what has been happening under the provident fund is the interest that accumulates being less than the reduction in value of our contributions going to inflation at the end of our service we get something less than what we have contributed in real value let us for a minute for a moment keep this reality aside because today's endeavor would be to see what are the changes that have come about percent the judgment of the supreme court rendered in EPFO versus Sunil Kumar it has been reported also in AIR 2022 SC 5634 in SCC online it has been reported but in SCC it is yet to be reported if you look at the 1952 act in the objects and reasons the act clearly states that admits that the EP employees provident fund is really an inadequate measure to ameliorate the hardship faced by the employees in fact in the objectives it is clearly stated I quote the ideal they would have been provisions through voltage and survivors pension as as has been done in the industrially advanced countries but in the providing conditions in India the institution of a pension scheme cannot be visualized in the near future so it was parliament was keenly aware that provisions to the EP effect by providing for compulsory contribution to the provident fund by the employer at eight and one third percent of the wages and the employee an equal contribution of eight and one third is inadequate to care to take care of the voltage needs of the retired worker and his family sometimes I'm using the phrase sometimes not because families not with a view to say that family sometimes but needs of the family sometimes when children are not a template don't say that family sometimes means some of them may not have families everybody will have a family and in a society like covers I expect everybody will have a family then the United Pacific was felt by the parliament was sought to be met by introducing section six capital A of the in the provident in the EP effect with effect from 16th November 1995 16th November 1995 the employees pension scheme that is a clause six capital A was introduced into the EP effect providing for establishment of employees pension scheme and look at the glorious provision that they made in 1965 the provision stipulated the the scheme that was envisaged in 1965 was that maximum salary ranking for contribution to employees pension scheme would be 5000 per month if you take that 5000 or even the present wage limit of 15000 rupees per month it is less than the salary paid to a unskilled a unskilled worker in most of the states under the minimum wages act the subsequent amendments to that first it was 5000 then in the year 90 thereafter it was from 28 to 1996 notification it was enhanced to it was the the wage limit which was 5000 was enhanced to 6500 in the year 2001 and then in the year 2004 it has been enhanced to 6500 and this 2014 amendment for the first time envisage that the central government will contribute to the pension fund an amount equal to 1.16 percent of the wages up to a maximum of rupees 15000 rupees per month that means the welfare state which goes which goes by the constitution which amongst its direct principles of state policy command the government or the command the state to take care of the world and then inform from unmerited wants and to create an economic system in which means of production are not farmed by a few in which workers are directed to be provided a fair working environment and workers are to be given living wages a welfare state having such a huge social responsibility towards the workers particularly in their old age now what is its contribution to the pension fund under the EPA scheme is 1.16 percent 13000 rupees per month that is about 165 or 168 rupees per month and we have a huge employees pension scheme to manage this 168 rupees contribution of the central government and this 168 rupees is not even equal to a fraction of the administrative expenses that are meant from workers contribution to the provided first therefore the entire the so-called pension scheme under the EPA fact is notional and nominal but we should be happy that welfare state has made a beginning by contributing say 116 rupees or whatever it is per month towards the and towards the pension scheme now wherever the scheme is amended there will be litigation litigation about the either the interpretation or the constitutionality the 1996 amendment that is where two things happen that is maximum salary recognizable for pension was enhanced from rupees 5000 per month to 6500 but with an important provision that is an option was provided for the first time under section under clause 11 3 that is subclass 3 of clause 11 of the employees pension scheme that with the consent of the employer and employee the contribution to the employers pension scheme may be made on actual salary of the employee where it is in excess of 6500 and in which case pension will be payable on actual salary of course subject to the definition of calculation of pensionable salary and under the 1996 amendment the pensionable salary was to be calculated as average of salary drawn during the last 12 months that became subject matter of litigation because the EPFO while applying the scheme felt that this cutoff date namely that is the cutoff date was the the cutoff date under clause 11 3 of the EPS scheme provisor said provided that if the option of the employer and employee contribution paid on salary exceeding between 6500 per month from the date of commencement of the scheme or from the date of salary exceeds 6500 whichever is later this was interpreted in some quarters saying that to the to the determinant of the workers holding that this this gives the date of commencement of the scheme or date of exercise of option and contribution in excess of 5000 whether that is the cutoff date for eligibility of the employee from which day this revise the ceiling limits would apply or whether the date is only for the purpose of calculation of the pensionable salary ultimately the Supreme Court settled the dispute in RC Gupta that is 2018 14 SSC 809 where it said we find that the reference to the date of commencement of the scheme or the date on with the salary exceed the ceiling limit or dates from which the option exercise or to be reckoned with for calculation of pensionable salary it cannot be treated as a cutoff date for eligibility therefore under the 1996 amendment the moment a person exercises option and and the and the contribution is paid an actual salary instead of ceiling limit of 5000 or 6 or 6500 as the case may be the employee becomes eligible for higher pension of course if the actual contribution on actual salary is for a period less than 12 months then is pensionable salary will be not full revise the full salary above 6500 but it will be a fraction thereof therefore the Supreme Court said this cutoff date is for calculation of pensionable salary and from the date of the revision in the scheme or from the date the employer employee agreed to contribute they make the contribution to pension scheme on the revised salary on the full on the whole salary in full from that date the scheme would be applicable to him and this date that is date of amendment or the date of option will be relevant only to determine pensionable suffers pensionable salary for the purpose of calculation of pension and it has nothing to do with eligibility itself and Supreme Court laid down one important principle while doing so that is a beneficial scheme or not to be allowed to be defeated with reference to a cutoff date particularly in a situation where as in the present case the employer had deposited 12 percent of the actual salary and not 12 percent of the ceiling limit of rupees 5000 or 6500 now at this moment let me pause and say what is this 12 percent of the actual salary 12 percent of the actual salary is the contribution to provident fund out of that what goes into the pension fund is eight and one third percent of the actual salary rest will remain as management's contribution to pf which which has with which we have nothing to do in today's discussion i'm not saying that if any question comes on that i am going to say no only today i am ready only with the pension scheme not that but let us be focused on the subject of today's topic which is pensions then they then came this 2014 amendment in the 2014 amendment two important changes came about or three important changes came about i should say one is as i was submitting the maximum salary ranking for pension was enhanced from 6500 to 15000 simultaneously central government was oblige to contribute under the summit 1.66 percent of the salary of the worker up to a maximum salary of 1.16 percent of 15000 and third important change that came about was the pensionable salary which was earlier average of last 12 months salary it was made average of last 60 months that means during the last five years of an employee service the if there are additions to his salary and additions will be there because even if let us say employee has stagnated and is not getting any annual interest but then the dearness allowance has increased will be there because dearness allowance is not something that is under the control of the either the employer or the employee because the cost of living index goes on rising and therefore the as a compensation which unmistakingly is inadequate dearness allowance is granted therefore during the last five months of service increase in salary will not be commensurately reflected in pensionable salary these aspects came to be challenged one is the validity of the what happened was about this 1.16 percent contribution of that the scheme mentioned that employer and employee both of them can jointly opt for contribution on actual salary down instead of limiting it to 15000 rupees cap under the scheme but in such a case central governments obligation to contribute to the pension fund would be limited to 15000 rupees 1.16 percent of 15000 rupees and on the remaining salary amount 1.16 percent will have to be paid by the employer there is one condition that came about the employer it is not not sorry not by the employer but by the employee to get benefit of pension on full salary employee was required to contribute for 1.16 percent of the difference between 15000 rupees and that result government would continue to contribute up to 1.16 percent of 15000 rupees this was one subject matter of challenge secondly and more importantly the under such clause 26 of the pension scheme the amendments were made in such a way that the pensioners were divided into four categories what are those categories employees who have exercised option under paragraph 113 and continue to be in service as on 192 those who have exercised option and retired as on 192 2014 the employees who have retired prior to 194 2014 after exercising the option under paragraph 113 of the 1995 scheme these four classifications that is one is persons who have opted prior to 192 2014 and continuing in service persons who have opted but have retired persons who have not opted but continuing in service these four classifications were made this classification was also subject matter of challenge the supreme court in Krishna Kumar's case that is the judgment rendered on 22nd November 2020 fourth November 2022 with which we are concerned today made one two three declarations of first declaration it made was the four categories of employees of the pensioners you have created now under this new amendment four categories of pensioners namely those who have exercised option before 192 2014 and continuing in service second those who adopted but had retired those who have not exercised option but continuing in service third is those who have not exercised option and retired fourth is those who have not opted but are continuing in service supreme court said that this categorization of pensioners into four categories is illegal pensioners form a homogeneous class and therefore the question of classifying them into mini groups or micro classification within the protest classification of pensioners is impermissible in law that was following the famous classic DS Nakhara where it said that pensioners form a homogeneous class and you cannot micro classify them based on date of retirement of course it added one important caveat that is where it is an existing pension scheme you cannot discriminate amongst the pensioners on the basis of retirement date that was that was applied in the instant case the consequence of that was that every pensioner provided they have made contribution on actual salary by an actual salary they will be entitled for getting salary getting pension on pensionable salary calculated in terms of the scheme even if they have retired of their continuing in service secondly the option under the contribution made under 26 by the employer and the employee that itself has to be treated as option for the revised scheme no further option is required strictos and so however if any option is to be obtained there was a genuine difficulty in not opting because some of the high court said stuck down the scheme and there was total confusion about the scheme itself therefore as a one-time measure you give option for another six months or four months or whatever times to put it one most important declaration that was made is about 1.16 percent contribution from the central government by the recovery there it said there it gave a very interesting direction it said that there is no provision in the act to make the central government contribute to the the requirement of members to contribute at the rate of 1.16 percent of the salary to the extent such salary exceeds rupees 10,000 per month as an additional contribution under the amended scheme is held to be ultra worth the provisions of the 1952 act that is recovery of 1.16 percent from the employee was held to be ultra worth the provision for the EPF act holding that there is no provision for that insisting on recovery of 1.16 percent for the salary in excess of 15,000 rupees from the employee but at the same time the ground reality of the corpus that is available was taken into consideration Supreme God said that we suspend this part of our judgment that is holding that there is no provision in law therefore you cannot recover 1.16 percent from the employee for the salary in excess of 15,000 we suspend the operation of this part of the judgment for a period of six months so that in the meantime the legislature if it wants to subtract this lacuna it can intervene therefore today's position under the 22nd November 2014 judgment is that every employee in respect of whom contribution has been made by the employer and the employer on the actual salary and the employee at the rate of 1.16 percent of the actual salary in excess of 15,000 rupees if these two conditions have been fulfilled that is exercise of option either under 20 under the contribution under the clause 26 of the employee's pension scheme contribution of 1.16 percent by the employee and then exercise the exercise of option in the extended period no granted if these three conditions are fulfilled employee will be entitled for pension on actual pensionable salary these one out second outcome is the supreme court upheld the validity of calculation of pensionable salary as average of last 60 months therefore the method of determination of pensionable salary under the employee's pension scheme has been upheld currently the for future a direction has been issued in the judgment itself that is for future the option under clause 26 and option under clause 11 3 provisional 11 3 shall be measured into one option that is in future if employer and employee both exercise their option and start contributions of 1.16 percent by the employee and the 8.8 and 1.3 percent on the actual salary by the employer that itself will have to be treated as option in future role but as on today to overcome that they have said you can collect the options and I have told the provident fund organization has already issued a circular frankly I do not understand why this option is required when you have not made the contribution after all your entitlement to the pension should flow from three things one is a contribution as required under clause sub clause 3 of clause 11 2nd is your pensionable service and third is pensionable service when you have made the contribution is it humanly possible to invest that you did not want to off yet you have contributed this is something very strange conclusion this is something very strange that emerges from the judgment and I think if the EPFO has not already done it it should do so now that the contributions made on actual salary by the employer and employee that itself should be taken as option I cannot but sign off with a not very smiling proposition but you calculate the pension under the formula that is available in the pension scheme that is monthly pension is equal to pensionable salary into pensionable service divided by service what a person would get as pension it would be a pittance if you look at the pension that government pays to its own employees under the non-contributory pension scheme or the which is now popularly acquiring the name old pension scheme now we have old pension scheme new pension scheme and pension scheme under the EPS that is the employee's pension scheme under the EPFO I think the in comparison of the three EPS under the Employees Providence Fund Act what word I should use is least beneficial for the working class of course the employee's Providence Fund Act does not use the word worker it uses the word the employee throughout but still it is no social security at all the quantum of pension you give under the EPS is such a pittance that it is no security at all I look forward to some improvement somewhere in the in future where a return on retirement an employee should get at least anywhere between 33 and 132 40 percent of this last salary drawn if not 50 percent as is available to the government thank you very much now because yes any questions we can move on to yes one is that we normally see and we always understand what is the difference between a pensionable job and which is a non-pensionable job in the sense that they would like to understand like in a pension there's a pension scheme by the employer itself and there's an an EPS scheme like we did one of the sessions as to whether disciplinary proceedings can be initiated after the superannuation so once who is getting the pension scheme under the EPF does he continue to remain that his good conduct which is the prerequisite in a government employee's case continue or this EPF can be stopped in that particular case or not let's see the scheme itself does not provide for withholding of or or recovery from pension under the EPS because if you see it is in effect a contributory pension scheme contributory pension to the extent that employer contributes on contributes the makes a contribution of 8 and 1.3 percent an actual salary and and therefore the question of good conduct under the future good conduct would recede into background because 8 and 12 percent is the total contribution to EPF out of that 8 and 1.3 percent you will be contributing towards the pension scheme and luckily neither under the pension scheme nor under the act is there a provision for withholding or withdrawal of pension or recovery from the pension as you find in the non-contributory schemes of pension either in the government or in the public sector banks or in state bank of India there of course there are the different provisions in law of the in the rules applicable which are statutory rules that it can be recovered or not for a fitted but here there is no such requirement the next question we have received is what is the difference between the employee's problem fund scheme contributory problem fund scheme and the normal pension I could not quite get it because difference between EPF CPF and pension scheme what are the subtle differences between this week see EPF is where the contribution is there both from the employer and the employee except where in respect of the voluntary contribution in excess of 4 percent of our salary there there is no matching contribution from the employer rest that is the normal contribution up to 12 percent employer and employee contribute equally towards the employee's provident fund then in the general provident fund there is nothing called as employer's provident contribution general provident fund is only a long term saving scheme which was with an added sweet in the sense contribution to general provident fund deposits made in the general provident fund account were getting some rebate in the income tax otherwise rates of interest maybe marginally a percent or half a percent advantage was also there but that was not the real driving force for people to go to GPF then in the over a period of time what happened in the employment sector was that some employers mostly in public sector they moved from contributory provident fund to a pension system where pension was in the same as a return benefit in lieu of provident fund ideally what should happen in a area like this where they are parking of voltage voltage and social security measure to protect or support persons in voltage according to me what would happen is there must be a lump sum payment as we are getting under the Graduate Act additionally because this lump sum payment is required to take care of accumulated liabilities maybe or the when we are settling down after demitting office certain capital expenses become inevitable to meet that type of capital expenses a lump sum payment by the graduate is needed and maybe certain amount of provident fund also without contribution from including the contribution contribution to the employer but most important medically and monthly pension so that pensioner and his spouse forget about the family and all at least pensioner and his or her spouse should be able to lead a life comparable to the life they had standard of life they led during their say last five or six years ago this can be said only by a non-contributory respectable amount of country what I'm suggesting is not an idealist view because judiciary pension has been recognized as a deferred weight if it is deferred weight by whatever mechanism you mobilize the corpus for the pension fund ultimately the retired employee should get at least somewhere near 50 percent of the last pay drawn because that is the subsistence element you pay to an employee who is facing discipline proceedings in the respect of grim misconduct and you call it as subsistence if a working employee cannot sustain subsistence at a rate less than 50 percent of the last year lost long days how do you expect an honest employee to retire for rent to lead a comfortable life without that 50 percent lost long days these some I would say that we pay lip sympathy to old age of course advocates would never understand this aspect of the matter because advocates feel happy as they grow older because larger the gray hair they have higher they will be their feet but a workman would understand he's suffering in a world age because what is the pension he gets under the employee's pension scheme it is nowhere comparable to his last answer and look at the other thing now for pension a government employee gets full pension on completion of I think now it is 20 years of service or something whereas for the pensioner under the EPS scheme for a person to get full pension he has to be he has to be have been employed for 35 years only then under that form of monthly pension is equal to some something into something divided by 70 for you to get full pension you require to work for 35 years yes sir yes sir again that particular question where you get the EPF scheme benefit does it bring the severance with the main master because a lot of cases are there where you say that there is a severance of relationship now no discipline proceeding will be done that scheme is also not there in the employer's pension employer's pension scheme that on dismissal he will lose the benefit and all that it is not there so we can see there is a severance of relationship severance of relationship with the employer it is definitely severe because once you cease to be an employee this pension fund is managed under the EPS by the EPF organization itself maybe within the organization they create a board of trustees or whatever it is ultimately it has nothing to do with the employer the the moment the the the the the umbilical cord is cut and on the date of retirement it is not where under a scheme floated by under a scheme floated floated by the EPF organization only monetary contributions are made once those contributions enter the EPF organization the employer loses control over them see for example if they under the EPF act balance in the EPF account is carried over to the new employment it is not that I work under an employer for five years I resign then I join a new employer but for the purpose of the employer's provision fund benefits that employment is treated as continuous in as much as the EPF balance itself will be carried over to the to the new to the new employment therefore luckily the as of now I don't see any provision under the employer's provision fund scheme to curtail the pension on the ground of misconduct well employers may create some problems in signing and forwarding the forms which which is a common feature because that is what I see in day-to-day operation of law but that is not a legal there is a it is such an act such actions are not bad back up by any provision in law this is by SP saying where and how does an employee exercise his option if the present employer is neglecting his responsibility option is to be exercised through the employer and quoting your account number and there is the one I where I saw a query that option forums have not had been uploaded by the EPF organization option forums particular percent the judgment I think the center course would be whether they are contemplating the center course of treating the content making of the contribution itself as an option joint option form for the post 2014 retired employees uploaded by the EPF hotel date yes think what it directed to upload within four months now what okay the way out is that the inadequacy of time or non-implementation can always be taken up again before the supreme court wherever such options the people are finding it difficult to opt they have to make a representation not out to the EPF if there is no response action in contempt is the only remedy article 149 this is MK Sagar I am in job and I have already provided joint options in the year 2018 right now should I be re-semitting my options if you have already opted and there has been and if you have already contributed I don't think the new new option is required to be exercised because there is nothing in the judgment to say that the earlier options are treated as invalid or they are of no consequence if you have already opted option you have given and you are entitled to demand new pension according to the new dispensation so thank you sir for sharing your knowledge I think one question has come what is the base here when the pensionable service starts what if one completes 34 years of service should one opt that is from the date of joining service you are paid counts that is the entire service should not need not be after 96 amendment or after 2014 amendment past service counts only for the purpose of calculation of the pensionable salary the dates of amendment and dates from which of the contribution is made they become lower otherwise the service starts from day one even the latest judgment of Prem Singh says even daily wage etc has to be counted towards pension spare 3d roller workers who work from home they are also employees for the purpose of provident for workers engage through a contractor they are also employees for the purpose of EPF act therefore the nature of service is not important there is nothing called as permanent service regular service or approved service if you have drawn salary from a particular day that is the date of commencement of service for the purpose of EPF act our EPS contribution is 8.33% of 15,000 at the moment we are 1% 14 2008 now we wish to take option but our employer CPF would be diminished and transferred to EPS what's the best formula if he has the employer says he has transferred the fund to the EPS but the question is if it has that contribution has been made an actual salary that would be the deciding factor because if the earlier employer and employee had jointly opted they would have made contribution on the higher salary and if the employer does not cooperate in now giving the details of signing the form you can always take it up through the employer EPF organization saying that this was the account number of my old employer this is my continued number under the EPF account therefore reconcile and pay it is only a question of reconciliation of the account so thank you sir for sharing your knowledge we are grateful to you as usual and we will continue with our service law series with you thank you everyone stay safe stay blessed