The Ministry of Labour and Employment has notified revised wage ceiling of ₹25,000 per month for the purposes of Chapter III (Provident Fund) of the Code on Social Security, 2020 (“COSS”), replacing the earlier wage ceiling of ₹15,000 per month with effect from 17 September 2026. The change is intended to align the social security framework with prevailing wage levels and expand access to Provident Fund savings, pension benefit and insurance protection.
The increase in wage ceiling has implications for employers and employees on various aspects, including mandatory coverage under Provident Fund and Pension Schemes, higher contributions, enhanced pension entitlements and an increase in administrative / inspection charges. The change may also result in a reduction in employee take-home pay in certain cases.
Thus, employers may need to assess the population of employees becoming mandatorily coverable, quantify the impact on employer costs and employee take-home pay, and undertake corresponding changes to payroll systems, provident fund compliance, onboarding processes and employee communication.
Organisations should also assess the implications of the revised wage ceiling on their contract labour workforce.
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