Employees of the organised sector can increase their take-home salary by reducing their provident fund contribution, which is currently at 12% of basic salary. The cabinet has approved this provision and will soon put it forward in the Parliament as it is a part of the Social Security Code Bill, 2019. Although the employer contribution will remain 12%, employees may be allowed to pay less than 12%.
As per the Payment of Gratuity Act, 1972, workers cannot obtain gratuity before completing five years of service, whereas the Social Security Code Bill, 2019, gives fixed-term contract workers the eligibility for gratuity on pro-rata basis. Depending on the sectors, the employee's EPFO contribution may vary between 9-12%, which will help workers to take home a better salary.
The central government has taken this call as the plan has been in talks for the last five years, and the social security bill is about to be implemented.