30% Superannuation Benefits to Direct Recruits of BSNL
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1. Pay revision (compensation package) of board and below board level Employees working in CPSEs are done by government of India through Department of Public Enterprises in every 10 years and CPSEs are bound to implement in letter and spirit.
2. 2nd pay revision of board and below board level Employees working in CPSEs was due on 01.01.2007, hence pay revision committee headed by Justice Rao was constituted. After 18 months of extensive study, committee recommended the total compensation package of Employees working in CPSEs based on category, affordability and profitability. The said recommendations of the 2nd PRC were put up before Committee of secretaries (CoS) for consideration and getting final approval of the Government. CoS has considered the recommendations a 2nd PRC and the same got approved by the government with some changes as suggested by CoS .
3. CoS has recommended that all the recommendations of 2nd PRC with suggested modifications by CoS will be implemented as a package which includes fitment benefit, DA, HRA, leased accommodation, CCA, other allowances/perks, Variable Pay/PRP, MoU, PMS, Remuneration Committee, Long Term Incentives, Cost to the Company, Retirement Age, Non Unionized Supervisory staff, Pay of Employees moving from holding CPSEs to subsidiaries or vice-versa on deputation /transfer, pay of government officers on deputation to CPSEs and superannuation benefits etc.
4. Consequent to the acceptance of the recommendations of 2nd Pay Revision Committee for CPSEs and suggestions of CoS, Government of India through the Department of Public Enterprise has issued various orders on employee’s benefits. These orders perspicuously states that all the employee’s benefits will be on IDA pattern and inter-alia provides for the following benefits to the employees of CPSEs.
i. Basic or serving Benefits (Basic + IDA + HRA);
ii. Retiral Benefits (EPF + Gratuity + Post Retirement Medical + Pension) with the ceiling of 30% of Basic + IDA;
iii. Perks & Allowances with the ceiling 50% of Basic
iv. PRP/Variable Pay up to 40 to 200% of Basic
All the above four benefits are uniform for all category of CPSEs except pay scale of board level Employees which is based on category of CPSEs. Out of above 4 benefits to the Employees first 3 are fixed benefit based on affordability, capacity to pay and sustainability of CPSE but completely independent of profit and loss of the CPSEs. Fourth benefit i.e. PRP/Variable pay (40 to 200% of basic) is based on profit of the CPSEs and makes substantive part of total package of the Employees.
5. DPE has clearly defined the affordability of CPSEs. As per the para-3 of DPE OM dated 26/11/2008 in respect of implementation of 2nd PRC, CPSEs shall implement all these benefits subjected to the condition that additional outgo by such revision for a period of 12 months should not result in more than 20% dip in profit before tax for the financial year 2007-2008 in respect of Employees as well as non-unionized supervisory staff taken together. CPSE that cannot afford to pay full package can implement with either part PRP or no PRP.
6. Apart from above facts, Sequence to implement the above benefits, If additional outgo on implementation of above benefits is more than 20% of profit before tax for the financial year 2007-2008, is clearly illustrated in page number 127 to 129 of chapter-6 of 2nd PRC recommendations which clearly states that First, company has to pay serving benefits (Basic + DA + HRA) in totality and then Retiral benefits and then only other benefits like perks & allowances and PRP.
7. PBT (profit before tax) of BSNL during the financial year 2007-2008 was about 4,500 Cr and additional outgo on implementation of full package of pay revision in respect of Employees for a period of 12 months is much less than 20% of PBT. BSNL must implement all the 4 benefits in totality including perks & Allowance and PRP up to year 2008-09, till BSNL was in profit.
8. DPE has clearly defined the affordability of the company which is based on profit before tax for the financial year 2007-2008 and not to the subsequent years till the next pay revision. PRC has also clarified that CPSEs can enter into loss from profit during span of 10 years but first 3 benefits of Employees cannot be withdrawn. It is only PRP which makes substantive part of package can be withdrawn.
9. DPE has proposed a uniform fitment benefit of 30% on basic plus DA @78.2% as on 01.01.2007, 10 standard pay scales from E0 to E9 and four different standard pay scales for board of director based on the category of CPSE. DPE has denied any intermediate pay scale but given full liberty to board of directors to fit the direct recruits at any initial pay without changing the lower and upper limit of particular pay scale.
10. Implementation of all the four components of pay revision benefit as mentioned in Para 4 above One of the recommendations of the 2nd PRC approved by GOI is superannuation benefit for CPSE Employees with the ceiling of 30% of Basic+DA through defined contribution scheme which includes (EPF, Gratuity, Pension and post retirement medical benefit).
11. Unlike private companies there is fixed age of retirement in CPSEs hence Superannuation benefit is nothing but emoluments to the Employees after superannuation from the company or attaining the age of retirements which also help in attracting the talent and loyalty to the CPSEs. Government of India has derived this figure of 30% of Basic+DA to be contributed as superannuation benefit so that CPSE Employees can get minimum emoluments after their superannuation to ensure post retirement survival of their family. Superannuation benefit is directly proportional to the serving benefit (Basic+IDA) of the Employees so that that they can maintain their social and family status after retirement.
12. If any CPSE is not able to afford the cost of pay revision, PRC has recommended the different stages of extending benefits of pay revision as mentioned in Para 6 above which clearly states that First, company has to pay serving benefits (Basic + DA + HRA) in totality and then Retiral benefits and then only other benefits like perks & allowances and PRP. BSNL has extended serving benefit and retiral benefit in totality in respect of about 3 lakhs employees including non-executives and also extended some part of the perks and allowances to all but so far retiral benefit of hardly 32000 direct recruits Employees has not been implemented in totality.
13. As mentioned in Para 3 above, all the benefits of the pay revision will be implemented as package and as mentioned in Para 2.7 to 2.10 above BSNL fulfils all the conditions of affordability to implement these benefits. BSNL must have implemented all the benefits as approved by government followed by 2nd PRC in totality. At least BSNL should have maintained the balance in implementation of serving and retiral benefit of Employees.
14. BSNL board should have approved the 30% superannuation benefit at the time of seeking presidential order from administrative ministry in year 2009 itself in respect of implementation of pay revision benefits but we believe that BSNL management has ignored this benefit as majority consisting of absorbed Employees were not benefited out of this implementation and only the direct recruits Employees working at lower rung of Employees were the beneficiaries of implementation of superannuation benefit. One of the Executive Association took up this issue in year 2009 itself before BSNL management but management put forth wrong data (stating BSNL is already contributing 39% of Basic+IDA as superannuation benefit for direct recruits) in the agenda meeting held in Feb-2010 under the chairmanship of then CMD BSNL which resulted in formation of committee to verify the data However, after persuasions at all levels, management finally agreed that the contribution is limited to 18%. But even then, the implementation of superannuation benefit has been delayed on one or other pretext for reasons best known to management.
15. Now, after passing of more than 9 years from date of effect i.e. 01.01.2007 just due lack of interest on management part, denying the implementation of superannuation benefit in totality to the direct recruits citing today’s financial and or any other grounds is highly unjustified and unfair on the part of management.
16. It is also learnt that, contribution towards superannuation benefit of direct recruits is being compared with the contribution towards superannuation benefit of absorbed Employees. It is worth mentioning here that benefit of pay revision for CPSEs Employees is finalized by government of India and before finalization of quantum of superannuation benefit, inference have already been taken from the benefit available to government employees under rule 37 of CCS pension rule. There is no scope for the CPSE to further compare and modify the superannuation benefits. Pensionary benefits of absorbed Employees are defined benefit and have no relation with contribution paid by BSNL as far as return is concerned. Pensionary benefit of absorbed Employees is highly secured and will increase with inflation and subsequent pay revisions even after their retirement. Contribution for defined benefit cannot be fixed by BSNL and will have to be paid in totality as and when decided by government of India. On the other hand superannuation benefit for direct recruits in CPSEs is under defined contribution scheme and return is directly proportional to contribution paid by BSNL. This benefit is not secured and return is highly uncertain. Absorbed Employees of BSNL have opted their retirement benefit under defined benefit scheme as available for employees working in government department but same option is not available for the direct recruits of BSNL. BSNL is bound to pay the contribution in totality in respect of absorbed Employees as and when decided by government. Similarly BSNL must pay the contribution towards superannuation benefit in totality for CPSE Employees under the defined contribution scheme as decided by the government of India through DPE. Absorbed Employees may be allowed to opt superannuation benefit of CPSE but there is no justification to compare contribution in respect of two sets of retirement benefit.
17. DPE has already decided the date of effect of various benefits followed by 2nd PRC , CPSE have no scope to decide the date of effect of pay revision benefit. Administrative ministry vide para-8 of the presidential order issued on 27th Feb-2009 have already extended the covering approval in respect of implementation of superannuation benefit in accordance with the guidelines and instructions issued by DPE.
18. Despite, the above facts submitted to the management of BSNL several times, till date after much persuasion, BSNL Board has send the proposal to DoT for contributing 3% which is not at all justified considering the above facts. Despite of clarity in implementation stages of various types of benefits, BSNL board has denied the right of getting 30 percent Superannuation Benefit scheme to the employees recruited by BSNL though it is extending other perks to the employees which should not have been given before extending the retiral benefits in totality to the BSNL recruited employees as per the stages defined by 2nd PRC in its recommendations.
19. Considering the above facts and submissions, it is my humble request to Direct BSNL Board and Department of Telecom to consider the implementation of 30% of Basic+IDA as superannuation benefits in totality in respect of direct recruit’s Employees of BSNL w.e.f. 01.01.2007 in accordance with the guidelines and instructions issued by DPE.
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