The High Court of Kerala has recently significant relief to employees. If the Employment Provident Fund (EPF) deductions from an employee’s salary exceed the prescribed salary limit (e.g., Rs. 15,000), then the employee may now be eligible for a higher amount of pension. During a recent hearing, the Kerala High Court said that if the EPFO has accepted the higher pension (EPS) amounts deposited by employees and employers, employees cannot be denied for a higher pension, regardless of procedural or timing flaws.
This case concerns employees in Kerala who chose to contribute to EPS in amounts exceeding the salary limit. However, the EPFO refused to grant them higher pensions. The EPFO argued that in many cases, these amounts were deposited in one lump sum, rather than monthly. The High Court stated that since the EPFO had accepted these amounts, employees’ rights cannot be denied merely for procedural reasons. The court also directed that the EPFO recalculate and pay the pension based on the correct salary in all such cases within three months.
Who will be affected by the decision?
Such employees can now demand the higher pension they are entitled to.
Who have retired after 1 September 2014.
On whose behalf the employer had contributed to EPS on their actual salary.
Whose pension claim was rejected by EPFO due to procedural reasons.
The Employees’ Pension Scheme (EPS) is part of the EPF, in which employees and employers contribute a fixed amount for pension. Typically, this contribution is limited to a limit of ₹15,000. However, many employees and employers jointly contribute their entire salary (up to ₹50,000-₹1 lakh) to receive a higher pension upon retirement. The EPFO often dismisses such cases citing procedural errors, but now the court has put a stay on this. What benefit does this offer to retirees? If you are about to retire and your company contributed to the EPS based on your actual salary, this decision secures your pension. This will also strengthen cases pending before the EPFO or the courts for higher pensions. However, this decision is from the Kerala High Court and will currently apply only within the jurisdiction of Kerala.
What can happen next?
However, if the EPFO does not challenge it in the Supreme Court, this decision could be a relief for pensioners across the country. Will this decision affect employers? If an employer fails to contribute properly, the EPFO can recover or take legal action against them. However, the court has clarified that this should not affect the employee’s pension. What should employees do now? Following this important decision, employees will need to take the following steps to claim their entitlements:
