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Statutory benefits for employees in FM companies

Housekeeping services form an integral part of facility management services and hence is governed by the same work rules applicable to the latter. In India, the business of Facility Management has grown considerably in last decade. Considering variety of services provided by the companies in this industry in a large scale, there is a tremendous demand for employees at shop floor level.

These employees are not well educated and underprivileged who come to become the face for the facility management company they work for. It therefore becomes the priority of the company to ensure their career & social growth and provide them maximum benefits under the schemes formulated by government authorities through various legislations. Also, it is important to take care of the interest of the client company since it is equally responsible for any noncompliance by the FM company. A proper compliance to the various employee benefits in combination of healthy practices by the FM company and the client could, to a large extent, curb the crucial problem of attrition in this industry.

Here’s an overview of the different statutory benefits applicable to the employees of any organisation, which is also mandatory to Facility Management companies.

Payment of Minimum Wages

First and foremost all the companies in this business should ensure the payment as per Minimum Wages Act, 1948, to their employees and should not deprive them of this benefit. The same gets revised either after every six months or as per the rules of every State and the amendments should be included in the wage structure accordingly from time to time.

The classification of employees as Skilled Employees, Semiskilled Employees and Unskilled employees under Minimum Wages Act is based on the nature of skill sets they have in different industries. Minimum wages differ for all above categories and further differ from place to place as defined by the Government of each State.

Provident Fund

Provident Fund scheme is applicable to all companies engaging more than 10 employees. Companies should deduct the contribution towards PF @12% and deposit the same in respective PF accounts as per provision of PF Act and also should add the company’s contribution to it which is equivalent to the employee contribution. Any lapses in this will attract legal action, including prosecution from the PF commissioner and the company will be black listed. The company will be penalised for lapse in payment of PF.

The base of calculation for Provident Fund is 12% of Basic salary and Dearness Allowance paid to the employee for the respective month based on the days present (earned wages).

Benefits provided under PF Scheme

Compulsory Savings: Provident Fund is a social enactment and compulsory savings for future. Also the Government pays an additional interest of 8.5% per annum on the accumulated PF amount.

Withdrawal Benefit: A member can withdraw the accumulated PF amount from the funds under following conditions:

  • Retirement after attaining the age of 55 years
  • Due to incapacity to work
  • Voluntary retirement
  • In case of resignation (After two months from the date of resignation)

Non-refundable Advance

A member of Provident Fund can avail benefit of non refundable advances from accumulated funds for following reasons:

  • Purchase of a house,
  • Repayment of loan for housing,
  • Unemployment due to illness,
  • Marriage of self,
  • Marriage of daughter,
  • Education of son or daughter

General Forms

Listed below are the Forms for various applications:

Form 2 PF Declaration and Nomination

Form 19 &10C PF withdrawal

Form 13 PF Transfer

Form 31- Loan Form

Form 10D Pension Form

Form 20 PF withdrawal in case of death

Form 5(IF) – PF withdrawal in case of death

Employee State Insurance Scheme

Employee State Insurance scheme is another beneficial social enactment formulated by the Government for employees having gross wages less than 10,000/- per month. The deduction defined in the Act is 1.75% of the gross wages on part of employees and 4.75% on part of the company as contribution towards the fund under this scheme gross wages. The employees along with their dependents get insured and also get protection against risks by way of free treatment against disablements, sickness and accidental injuries at lesser cost and also the hospitalisation at comparatively cheaper rates.

Various aspects involved for ESI registration

  • Fill up the declaration form ensuring all particulars are properly filled in as per the requirements of each column.
  • Two postcard size family photographs of every individual employee should be furnished along with the declaration form.
  • On Receipt of ESIC card the employees should put their signature/thumb impression on the card in the space provided.
  • After receiving the card the employee should register himself with the local panel doctor or dispensary.

Benefits under the scheme

  • Free Medical treatment at ESI Hospitals and dispensaries
  • Part payment of wages from ESI during absence due to sickness.
  • Maternity benefit 12 weeks
  • Benefit for partial/permanent disablement
  • Death during course of employment
  • Funeral benefits one time payment of 2500/-

Gratuity Act

The Payment of Gratuity Act is applicable to all FM companies having 10 or more employees. All employees putting in minimum five years of services in the same company are entitled to receive gratuity. Gratuity is payable at the time of resignation as well as retirement and in case of death case or permanent disablement. Calculation for gratuity: Last drawn Basic + DA multiplied by 15 days of the year multiplied by number of years worked divided by 26.

Bonus Act

All employees should be paid minimum bonus of 8.33% of Basic wages and Dearness allowance for every financial year ending in March. The bonus is to be calculated on – earned wages of employee during the financial year and declared & disbursed latest by 30th November of each financial year. Any employee who has not worked for 30 days in a financial year is not eligible for the payment of bonus. The maximum limit for payment of Bonus is 20% of Basic and Dearness allowance.

Eligibility: All Employees whose Basic salary or Basic and Dearness allowance together is 10,000/- or less, are covered under Payment of Bonus Act. For calculation purpose the higher limit to be considered is 3500/- or actual amount less than 3500/-

The above benefits have been formulated by the Government for the employee welfare. In today’s scenario employee retention is very important aspect to survive in critical economy and effective implementation of above labour laws will definitely help the industry and the employee to sustain and grow together.

Nikhil Govekar
Senior Manager – Corporate Human Resource,
ISS Integrated Facility Services Pvt. Ltd

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