Wish You A Very Happy New Year

Challenges to Employees - New EPFO Standards

Greetings from PI Manpower at this very last day of the year 2012..!! People around the world are in mood of celebrations and so are we. However, for the employees in India, there are more challenges to come.

As per the latest circular from Employees Provident Fund Organization (EPFO), several types of allowances applicable to employees will now onwards be added to their basic salary. However, it’s yet to be mentioned which allowances are to be included. This will certainly lead to an increase in the value of PF contributions and consequently, all salaried employees would have a lower-in-hand salary.  At present Provident Fund of an employee is calculated based on Dearness Allowance (DA) and basic wages @12% from employee as well as employer.

It was observed by the EPFO officials that most of the organizations often break-up basic salary into a variety of allowances to decrease their PF burden. The Madhya Pradesh High Court and the Madras High Court recently pronounced that while computing PF contributions, different kinds of employee allowances paid by the employer shall be considered. Based on this, EPFO undertook a series of audits on Indian companies to facilitate recovery of several PF contributions.

R.C. Mishra, the central PF commissioner directed in the new circular that going forward compliance actions and probes against erring employers shall not go beyond preceding seven financial years because such inquiries often do not lead to the identification of the rightful recipients. Although organizations may welcome this move towards time bound queries, which protects them from needless harassment, it essentially seems to be anti-worker in its structure. Firstly, not many employees check their PF deposits regularly as the EPF statement rarely reaches them on time. Secondly, they consider it best not to complain against their respective employers when they are in active service, fearing the loss of their jobs. In virtue of this, a number of trade unions and labour boards have denounced the provision that limits the scope of inquiry period against the defaulter companies.

The six-page circular also specified that workers will have to file specific returns regarding statutory PF deductions, thereby benefitting the companies submitting their records for assessment. However, the circular states clearly, “There shall be no assessment without identifying individual members in whose account the fund is to be credited.”

The consequences of new circular are far reaching affecting approximately six crores workers all across India. The release of this new circular was defended in terms of “bringing transparency in the system”, however, the labour ministry doesn’t seem much convinced in such politically sensitive times. Some of its officials have indicated that the ministry would possibly ask for the withdrawal of the new circular. According to one of its unnamed officials, “The labour ministry is setting up a committee comprising legal experts to evaluate the circular, (on) whether it is complying with the EPF Act, 1952.”

Meanwhile, on December 18, 2012, Ravi Mathur, the new Central PF Commissioner released a new circular specifying that the earlier circular be kept in abeyance till further orders.

Wish You A Very Merry Christmas

Revolutions in HR India 2012 - ESI Challans

Hi All..!! I just cannot express how happy I am to see all of us alive at the doomsday. News these days are quite funny huh. Funny to an extent that even NASA has to give explanations that earth would survive for a lot more billion years.

Coming out from the doom’s day story, I would like to thank you all for your appreciation for my last article on EPF Challans. A lot of you asked if employees could also check their PF Status through the portal and here’s the answer. Yes, if you’re an employee in any organization where your provident fund is being deducted, you’d be able to check the status of the same. A couple of days before, I read an article about the same which I’m very pleased to share with you. Please go through it and share your views with us.

As we were discussing about the revolutionary activities in HR this year, today I’m, going to enlighten you about the online filing of ESI Monthly Contributions. Many of you may already be aware of this concept but there are still a lot of employers/organizations who are not friendly of this brilliant system upgrading by the Government. From this year itself, employers have been provided with the facility of filing monthly ESI Challans via ESI Portal.

So, how do we utilize this benefit of filling the Monthly Contributions (MC) online? Let's move ahead one by one.

Understanding the User Panel

1. Collect the User-Id and Password from ESIC Officials. After receiving the User-Id and Password, please open ESIC portal www.esic.in.

2. Hit the “Click here to Login” button and enter your username and password.

3. On successful login, the application displays hyperlinks under each of the modules as shown in following figure.

4. Monthly contribution and Challan Generation is a two step process –

a. Purify/Update Data – Make sure the employee/IP details are correct in the computer system. For this you need to add new employees and/or add existing IPs if anyone is missing as well as remove any incorrect IPs.

b. File Monthly Contribution and Generate Challans.

5. Before registering new IP (Insured Person) of Filling Challans, make sure employer details are filled correctly. Click on “Update Employer Details” for this purpose and submit your details as per the system requirements.

Steps to do before filing MC –Data Purification

1. Main unit –Main Unit can file contribution for Employees who are with the main-unit only.

2. Sub-unit –Sub-unit can file contribution for Employees who are assigned with sub-unit.

3. Main-unit if desires to file contribution for sub-unit then main-unit should login with sub-unit user-id and password.

4. Ensure the current IPs available with Employer are mapped in the System. To check this, do the following.

a. Data Migration/Insert IP Details Download Existing IPs & Find out Missing IPs. Explained in subsequent pages.

b. Data Migration/Insert IP Details Insert missing IPs (This is valid for only those IPs who already have „Insurance Number‟ but the data is missing against the employer)

            i. Use online screen to insert (if only very few IPs are missing).

            ii. Use excel upload to upload missing IPs in bulk

c. Make sure all the new Employees (Those who doesn’t have Insurance Number) are registered for the Employer -Register New IP .

Note: The 10 digit IP number given to an IP is valid for life time and same number can be used anywhere in India. i,e., if a person changes job from one state to another or one region to another the IP number does not change. 

Checking IPs associated with the Employer in the system

1. Click on Insert IP Details Link.

2. You will get another window with list of IPs from where you can download details of Insured Persons (IPs).

3. Employer may find everything correct or some IP missing or some incorrect IPs present in the list.

4. In case IP is missing, employer can Insert the IPs which is explained later.

5. Incorrect IPs can be removed from the list while filing contribution.

Insert IP into the Employer list (IPs already have IP number)

1. Employers can Insert IP using “Insert IP” link if the IP is not in the computer system or the IP is/was working with another Employer. IP can be inserted in two ways .

a. Employer can insert IPs one by one using the screen.

b. Excel / bulk upload (to add many IPs together) -Download the template. Provide the details and upload up to 500 Employees at a time.

Registering New Employee into ESIC –Generate Insurance Number Figure

1. Click on Register New IP link.

2. You will get another window to register new Employees.

3. Employer Code will populate by default. Employers should select continue to load “IP Registration Page‟.

Filing Monthly Contribution

1. Once Data Purification is complete / Employee records are cleaned up, MC can be filed.

2. Click File Monthly Contributions link to file the contribution of the employer for a particular month.

3. You’ll be redirected to “Monthly Contribution Page” where you’d be asked to fill in contribution month and year and details.

4. There are two ways to file contribution: Excel Upload (see following image) and Online Entry of Contribution.

Note: Kindly turn OFF ‘POP UP BLOCKER’ if it is ON in your browser. Follow the steps given to turn off pop up blocker. This is required to upload MC excel, modify or print Challan/ TIC.

After Submitting the Monthly Contribution

Generate and Print Challans

Modify Challans

View Contribution History

I assume this information would be beneficial to you and help you manage your payroll in a more organized manner. Should you need any more information, I'm here to assist you on the same. 

See you this Monday.. Till then, enjoy the doomsday. Happy Living..!!

Revolutions in HR India 2012 - EPF Challans

The year 2012 is ending soon and I’m pretty sure, all of us are prepared to welcome the New Year, 2013. Before we welcome the fresh year, let’s look back and enjoy the flashbacks of 2012 and analyze the happenings so as to get ready for 2013.

A lot of ups and downs were seen this very year. Politics in India was probably the hottest topic, Bollywood star’s demise being the next. Not to forget the London Olympics, and Arvind Kejriwal’s fight against corruption campaign. On a light note, I would also count PSY’s Gangnam Style as one of the hottest trends this year.

Moving further to the Human Resources News in 2012, we read about the improved position of women in the industry, decrease in salaries in banking sector, differentiated strategies of hiring in Microsoft and Google and much other. Here, I’m going to discuss one of the biggest revolutions made in the EPF Sector that simplified filing of EPF Challans and saved employers from errors that used to occur due to conventional paper work methods.

With effect from April 2012, EPFO Launched online receipt of Electronic Challan cum Return (ECR). Any remittance to be made by the employer was to be done only after generating Challan from the Employer Portal of EPFO. Though every organization’s Challans are filed this way now, a lot of employers who leave this headache on other companies might not still be aware of this new system.

For those who still don’t know the process, I’m explaining below all the steps required to file Challans online through the EPF portal and those who know the procedures already can review if they are doing everything correct.

PROCESS FLOW OF ECR

Preconditions:

1. The employer has registered his/her establishment on the employer e-sewa portal.

2. The employer has downloaded the ECR file format and prepared the ECR text file. (For details click here)

So, how do we file monthly Challans through EPF Portal? 

1. Login to the employer e-sewa portal here.

2. After login, you’ll see the following screen

3. Click on the ECR at the top Menu Bar. You will find the various options. Click ECR UPLOAD. 

Following screen will appear.

4. Select the text file you have to upload from the location where you have saved it. Check the Wage Month and year for which you are going to upload the ECR. Select the correct WAGE MONTH/YEAR and click SUBMIT button.

5. If your text file has been prepared correctly, the Summary sheet as follows will appear.

6. Enter the additional details regarding EDLI and EPF/EDLI Administrative and Inspection charges. Check the Contribution rate also. By default it is 12%. If applicable for your establishment, you can change it to 10%. Click SUBMIT ECR button.

7. An alert will appear to confirm the Contribution rate. Click OK and again click SUBMIT ECR button.

8. A digitally signed PDF file with date and time of upload will appear on the screen.  

Note: In case the number of members in the ECR file is more than 200, please wait till you get an SMS alert to view/download the digitally signed PDF file.  

Click on the PDF FILE icon to download the file and verify the data with the data of the ECR text file uploaded by you.

Note: The PDF file that is displayed is digitally signed by EPFO for security purpose and no signature is required.

This step is also available at the following link (ECR PENDING FOR APPROVAL)

9. The digitally signed PDF will look like the following screen.

10. After you have satisfied yourself with the correctness of the data, click APPROVE button. An alert will come on Approval. Click OK.

11. On approval of the ECR file, a Temporary Return Reference Number (TRRN) for the uploaded ECR file will be generated and the next screen that will appear will display the Challan and Acknowledgement slip for uploaded file. 

Click CHALLAN RECEIPT File for downloading and printing the Challan. 

This step is also available at the following link (REQUEST ECR REJECTION)

12. The Challan will look as follows: After Printing, manually fill in the details under “For establishment use only”.

13. The ECR Acknowledge slip will be as follows. 

The challan generated on approval of ECR will lapse after 15 days if remittance is not made. 

Till this stage the employer can request for rejection of the approved ECR. However if remittance is made against the ECR, it cannot be rejected.

14. For Remittance there are two options:

a. If the employer is a CINB (Corporate Internet Banking) customer of SBI, then he/she can make online payment through the online SBI portal of SBI.

b. Otherwise the remittance can be made through demand draft/local cheque in any designated branch of SBI.

15. Once the cheque against the Challan is realized, you will get SMS alert. With this the ECR filing process for the month will be complete.

Should you have any queries regarding the above process, please let us know. You can also share your feedback with us. We’d continue with other remarkable events in HR Industry this Friday.

Best Practices for Payroll Management

Payroll has been one of the most significant processes in any organization mainly due to:

• Extensive chances of fraud with several real-life situations that can be seen in several organizations on how weak payroll processes have led to compromising the control environments
• It deals with highly sensitive personal data
• Payroll costs are usually the most significant expenditures, especially in service industries.

We are happy to share with you some of the best practices of payroll management which an organization could implement resulting in both a stronger, more controlled payroll processing as well as increased efficiency, and limiting manual intervention:

1. Centralized payroll processing – Can result in non-duplication as well as higher standardization and improved policy compliance/ monitoring
2. Combine Travel and other reimbursements with the payroll functions there being several synergies in both these functions
3. Direct Credit to Bank Accounts rather than issuing manual checks (Cheques), including direct credits for full and final settlements
4. Establish performance measures and track them. Some minimal performance measures should include a. number of pay-periods where final credit of salaries was done within target date, number of errors noted, Cost of owning a payroll function, number of cases delays in receiving inputs etc.
5. Integrate time and attendance system, with the leave system, HR Management system and payroll. Automatic reconciliation between attendance and leave to ensure accurate days are considered for payroll processing as well as reducing inconsistencies between HR Data and Payroll data
6. Introduce payroll reconciliation at the end of the payroll processing. Payroll reconciliation should cover both head counts and value of gross/ net pay with reasons for variations month on month. Head count variation would be as a result of additions and terminations while value based reconciliations could be due to increments, bonuses, reimbursements, attendance shortfalls etc.
7. Ensure a maker-checker on all non-recurring payroll expenses such as reimbursements, retirement benefits, final settlements, advances etc.

We hope you found the above tips useful for your organization. We would be happy to receive your valuable feedback on the same.

Click here if you are looking to outsource your payroll.