How is the Provident Fund (PF) contribution handled during the off-season for a seasonal factory? Specifically:
1. Is the PF contribution calculated during the PF season based on the retention allowance?
2. Is the Nile ECR filed during the off-season?
3. If employees leave the organization during the off-season and do not return, are they still entitled to the retention allowance?
4. How is the retention allowance paid to these employees who do not return?
From India, Mumbai
1. Is the PF contribution calculated during the PF season based on the retention allowance?
2. Is the Nile ECR filed during the off-season?
3. If employees leave the organization during the off-season and do not return, are they still entitled to the retention allowance?
4. How is the retention allowance paid to these employees who do not return?
From India, Mumbai
During off season, you may or may not engage workers. It is not necessary that all the workers will be off the work but you will employ some workers for work relating to maintenance etc. Obviously, you will be paying wages to them also, and PF will be deducted from that wages paid. At the same time you will be retaining some workers by paying retaining allowance. That will qualify for PF also. Therefore, like any other month, you have to generate ECR and remit the PF amounts.
In case there is no wages nor retaining allowance paid during a year you can file NIL return.
If any employee who is paid retaining allowance resigns, you can stop paying retaining allowance. Retaining allowance is an allowance paid so that when the operations resume, the employee should be available for employment. Naturally, if he leaves before that you should also stop paying retaining allowance.
Why should you pay retaining allowance if the employee is not expected to return to work when season comes? Paying retaining allowance is not a legal obligation but is an arrangement to retain certain skills which are required when the production is resumed. In a continuous industry or an industry which is not seasonal in nature, if there is disruption of operation due to shortage of raw materials, the company can declare lay off, and the workers affected shall be paid lay off wages at the rate of 50% of the wages. But the right to get lay off wages is restricted to 45 days only. At the same time, the provisions relating to lay off is not applicable to seasonal establishments or establishments in which work is performed only intermittently. Therefore, payment of any compensation like lay off compensation is out of question when the establishment is seasonal in nature. But if the employer thinks that certain employees must return to work when the season starts, they should be paid an amount so that they can be retained. Naturally, it is paid only if the employer satisfies himself that the employee will come to work with him when season starts, and if he thinks that despite paying retaining allowance the worker is not going to work for hi, no need to pay this allowance.
From India, Kannur
4248In case there is no wages nor retaining allowance paid during a year you can file NIL return.
If any employee who is paid retaining allowance resigns, you can stop paying retaining allowance. Retaining allowance is an allowance paid so that when the operations resume, the employee should be available for employment. Naturally, if he leaves before that you should also stop paying retaining allowance.
Why should you pay retaining allowance if the employee is not expected to return to work when season comes? Paying retaining allowance is not a legal obligation but is an arrangement to retain certain skills which are required when the production is resumed. In a continuous industry or an industry which is not seasonal in nature, if there is disruption of operation due to shortage of raw materials, the company can declare lay off, and the workers affected shall be paid lay off wages at the rate of 50% of the wages. But the right to get lay off wages is restricted to 45 days only. At the same time, the provisions relating to lay off is not applicable to seasonal establishments or establishments in which work is performed only intermittently. Therefore, payment of any compensation like lay off compensation is out of question when the establishment is seasonal in nature. But if the employer thinks that certain employees must return to work when the season starts, they should be paid an amount so that they can be retained. Naturally, it is paid only if the employer satisfies himself that the employee will come to work with him when season starts, and if he thinks that despite paying retaining allowance the worker is not going to work for hi, no need to pay this allowance.
From India, Kannur
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Provident fund.zip
PROVIDENT FUND.rar
PROVIDENT FUND.doc