EPF-Supreme Court Recalls Its Order Upholding Kerala HC Ruling That Employee's Pension Should Be Proportional To Salary

The Supreme Court has recalled its order dismissing the Special Leave Petition filed against the Kerala High Court Judgment that set aside Employee's Pension (Amendment) Scheme, 2014 that capped maximum pensionable salary to Rs.15, 000 per month.

The bench comprising Justices Uday Umesh Lalit, S. Hemant Gupta and Ravindra Bhat posted the SLPs filed against the High Court judgment by Union of India and Employees Provident Fund Organisation for preliminary hearing on 25.02.2021.

The Central Government's contention is that as a result of the directions issued by the High Court, benefit would get conferred upon employees retrospectively which, in turn, would create great imbalance.

Background

1. Employees' Pension (Amendment) Scheme, 2014 had brought the following changes-
2. Limits the maximum pensionable salary to Rs.15,000 per month. Prior to the amendment, though the maximum pensionable salary was only Rs.6,500 per month, the proviso to the said paragraph permitted an employee to be paid pension on the basis of the actual salary drawn by him provided, contribution was remitted by him on the basis of the actual salary drawn by him preceded by a joint request made for such purpose jointly with his employer. The said proviso has been omitted by the amendment thereby capping the maximum pensionable salary at Rs.15,000. The Scheme has been amended further by a subsequent notification, the Employee's Pension (Fifth Amendment) Scheme, 2016 to provide that the pensionable salary for the existing members who prefer a fresh option, shall be based on the higher salary.
   
3. Confers an option on the existing members as on 1.9.2014 to submit a fresh option jointly with their employer to continue to contribute on salary exceeding Rs.15,000 per month. Upon such an option, the employee would have to make a further contribution at the rate of 1.16% on the salary exceeding Rs.15,000/-, additionally. Such a fresh option would have to be exercised within a period of six months from 1.9.2014. A power to condone the omission to exercise the fresh option within the said period of six months by a further period of six months is conferred on the Regional Provident Fund Commissioner. If no such option is made, the contribution already made in excess of the wage ceiling limit would be diverted to the Provident Fund Account, along with interest.
4. Provides that monthly pension shall be determined on pro-rata basis for pensionable service up to 1st of September, 2014 at the maximum pensionable salary of Rs.6,500 and for the period thereafter at the maximum pensionable salary of Rs.15,000 per month.
5. Provides for withdrawal of the benefits where a member has not rendered the eligible service as required.

Kerala HC 2018 judgment

The Kerala High Court, in October 2018, allowed the writ petitions filed by employees of various establishments covered by the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Their grievance was with the changes brought about by the Employees' Pension (Amendment) Scheme, 2014, which drastically reduces the pension payable to them.

SLP filed by EPFO dismissed in limine

On 1st April 2019, the bench comprising the CJI Ranjan Gogoi, Justice Deepak Gupta and Justice Sanjiv Khanna in limine dismissed the SLP filed by Employees Provident Fund Organisation observing that it does not find any merit in it.

EPFO Filed Review Petition and Centre filed SLP

After this dismissal, the Centre filed SLP against the same High Court judgment and EPFO filed review petitions. When these cases were taken up last week, the Centre brought to the notice of the Court an order dated 21.12.2020 passed by another Division Bench of the High Court of Kerala by which the correctness of the earlier decision dated 12.10.2018 was doubted and the matter was referred to Full Bench of the High Court. It was submitted that the effect of impugned order of the High Court is that the benefit would get conferred upon employees retrospectively which, in turn, would create great imbalance. 

Click here to Read/Download Order

Read Order