Lockdown Dilemma: Should We File a Nil Return for April 2020 in PF & ESI?

Dear sir,

If no employee has worked in April 2020 due to the lockdown and no employee receives a salary for the month of April 2020, should we file a Nil Return (Nil Contribution) for that particular month (i.e., April 2020) in PF & ESI until the lockdown is lifted?

Please advise, sir.

Yes, we have to submit NIL returns both under PF and ESI.

Employers have to pay wages and salary as per the government guidelines for payment during the lockdown period. When there is a wage component, PF contribution would be zero. If you are not paying any salary for the lockdown period, then PF and ESI contributions would be zero.

Please let me know if you need any further assistance.

Employer's Obligation to Pay Salary During Lockdown

It is true that the employer has to pay the full salary during the lockdown period. But if the employer fails to generate revenue, how can he pay the salary? The instruction given by the government, following the provisions of the Disaster Management Act, has been challenged in the Supreme Court. The court has asked the government why the direction asking private employers to pay full wages should not be stayed. In effect, the court is convinced that the government cannot direct the employers to pay full wages during the lockdown period. True, if the employers don't pay, the very objective of the lockdown, i.e., making the people stay at home, would be defeated.

Please follow the link: http://madhu-t-k.blogspot.com/2020/0...ay-salary.html

What should be written in NCP days in PF and the number of days in ESI during the lockdown period when no employees came to the office, but salary was given to the employees?

Jai Hind

Days Worked and Salary Payment in ESI and PF Records

The number of days for which salary has been paid is the days worked to be shown in ESI. If you have paid salary for the entire month, i.e., 31 days, put that. In the PF records, the NCP refers to non-contributory days, and if you have paid full salary, obviously, it should be zero.

The lockdown period salary shall be taken as salary paid during any leave days. Naturally, if a person is on leave with pay, what you will do in the ESI and PF records shall apply in lockdown cases also. ESI or PF authorities are not concerned about your leave policies, but they are concerned only about days for which wages have been paid. If paid, take it as days worked or paid leave days, and if not paid, take it as unpaid leave days.

Sir, what should be written in NCP days in PF and the number of days in ESI for the lockdown period? We have paid 40% and 50% of the salary. Should it be 0 days or calculate the number of days according to the salary paid?

Jai Hind

Attendance and Salary During Lockdown

Even if you have paid 40% or 50%, you can mark it as full attendance with 40% or 50%, as the case may be, as salary paid. Neither ESI nor EPF can object to why you have paid lesser pay. Putting full attendance will make the employees qualify for various other benefits based on attendance.

Special Leave During Lockdown

The lockdown period is allowed as a special leave other than regular CL or PL. The value of the leave days can be decided by the employer. It can be 100%, 40%, or 50%. The EPF authorities cannot enforce Section 12 of the EPF & MP Act, which states that employers should not reduce the salary of employees. This issue is known to everyone, and even the Supreme Court has stated that the salary part during the lockdown period should be decided by the employer. If you have decided to pay only 40%, that is final.

I would like to add the following:

Memorandum of Settlement During Lockdown

Whatever you decide to pay during the lockdown, I suggest you have it in writing in the form of a memorandum of settlement, get it registered, and submit a copy of it to the Honorable Supreme Court. This is in accordance with the guidelines/directives given by the Honorable Supreme Court in its interim order in Ficus Pax and others.

When you decide to pay for the days not worked by employees during the lockdown, it should not be treated as wages or salary. Wages or salary are due for working days or paid leave days. In the present circumstances, you are paying the amount against no work done by the employees as per the MHA directives. When it is not treated as wages or salary and is considered as Covid Ex-gratia pay, PF will not be attracted to it, but ESI will be attracted if you pay it on a monthly or bi-monthly basis.

Wage/Salary Adjustments During and After Lockdown

In the case of wage/salary against work done during the lockdown and thereafter, if you decide to reduce the amount, I also advise you to have a memorandum of settlement duly registered as per the guidelines/directives given by the Honorable Supreme Court. Whatever amount you decide here will be treated as wage/salary, and both PF and ESI will be attracted to it, if applicable. No authority can object to the reduced salary since it is in line with the guidelines/directives given by the Honorable Supreme Court. In this case, you will show the actual days of work or actual days paid. So in the working of PF and ESI, there won't be any questions regarding days worked or NCD.

Opportunity to Settle Payment Disputes

In my opinion, it is a golden opportunity to settle the dispute of payment during the lockdown as per the guidelines/directives given by the Honorable Supreme Court. Tomorrow, whatever the final decision is in the matters before the Honorable Supreme Court, you are protected by the memorandum of settlement as stated above, and there will be no impact of the judgment on you, as I see it at this moment.

These are my views based on my study. Seniors and experts can comment on it.

Sir, can the lockdown days be considered as paid leave for previous years when full salary is paid? (Since the lockdown was for almost 60 days.)

Should the companies (both Shop & Estb. and Factory Act-related companies) need any document for granting this as paid leave?

MHA Notification on Salary Payment During Lockdown

The MHA notification mandates the payment of salary for the lockdown period, so there is no question of non-payment of salary. According to the latest Supreme Court judgment, the only option the employer has is to negotiate.

Eligibility for Paid Leave (PL)

If the eligibility of 240 days is not served, does the employee get Paid Leave (PL)?

Accumulated Paid Leave During Lockdown

If I have accumulated 15 PL each for the past 4 years, totaling 60 PL, will my company count the lockdown period as me utilizing all my PL and having a PL balance of 0?

Requesting Use of Accumulated PL

If I want to use any accumulated PL, how should I ask the company regarding it? For example, if an employee takes a 10-day leave for some personal issue without asking for any written permission and later asks management to deduct only 5 days' salary from these 10 days of leave, will the other 5 days be considered as PL? Should the company need any document from me to ask for these 5 days as PL, or can it just enter it as PL in its attendance register?

Employer's Obligation for Leave and Benefits

Which leaves does the employer have to pay for to the employee (considering both Shop & Establishment and Factory Act related companies)? Can the employer give me all PL instead of any Casual Leave (CL)? Should PL start only after the exhaustion of CL?

Payment of PF/ESI for Daily Wage Workers

Should the employer pay PF/ESI to daily wage workers who come randomly when required, where the daily wages range from 700 to 1000?

Sir, I hope I am not troubling you with too many doubts. Your help is very much appreciated, sir.