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PRGF – An Employer’s Cheat Sheet (Updated – JAN 2022) – Employee Benefits & Compensation



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What is the PRGF?

The Portable Retirement Gratuity Fund (PRGF) is a fund
established under the Workers’ Rights Act 2019. Where an
employee is eligible to join the PRGF, the employer is required to
make certain contributions to the PRGF in respect of that employee
from 1 January 2020. When the employee retires at/after the age of
60 (or in case of earlier retirement in circumstances provided in
the law), the administrator of the PRGF pays a retirement gratuity
to that employee. The employer is not required to pay any
retirement gratuity to the employee.

When does the PRGF come into operation?

The PRGF provisions initially came into operation on 1 January
2020. Thereafter, following changes brought through the COVID-19
(Miscellaneous Provisions) Act 2020, certain payment obligations
have been suspended until January 2022 as explained below.

In respect of what employees should employers contribute to the
PRGF?

All employees except:

– public officers, local government officers and those who
derive retirement benefits under the Statutory Bodies Pension Funds
Act

– those whose retirement benefits are payable in
accordance with a private pension scheme licensed by the Financial
Services Commission

– non-citizens

– those earning more than MUR 200,000 in monthly basic
salary

Employees who are not eligible to join the PRGF remain entitled
to a retirement gratuity paid by their employer, subject to having
been in the continuous employment of that employer for at least 12
months (as under the previous legislation). The gratuity is
computed based on 15 days’ remuneration per year of employment
with that employer, subject to certain deductions which can be made
in case the employer contributed to a private pension scheme for
the benefit of that employee or granted other gratuity or
retirement benefit to the employee.

Monthly contributions

Monthly contributions based on an employee’s monthly
remuneration (i.e. basic wages + productivity bonus + attendance
bonus + overtime). They are paid to the MRA.

Monthly contributions for the period starting 01 January 2020
and ending 31 December 2021 were suspended.

The applicable rate of contribution varies from 2.1% to 4.5%
depending on an employer’s annual turnover and categories of
employees (see summary table below). Where the employer’s rate
of contribution is less than 4.5%, the government funds the
difference between that rate and 4.5%.

1212232a.jpg

Contributions for past services

Where an employer started to contribute to the PRGF in or after
January 2020 in respect of an employee and continues to do so, the
employer may pay to the MRA at any time before the employee’s
termination/retirement/death, the contributions relating to the
period during which that employee worked for that employer before 1
January 2020.

Alternatively, if the employer does not pay the contribution for
past services before an employee’s
termination/retirement/death, the employer will be required to make
that payment to the MRA (in case of termination), to the employee
(in case of retirement) or to the employee’s heirs (in case of
death) within 1 month after the date of the
termination/retirement/death. The employer will also have to pay
any monthly contributions that it had not paid to the MRA for the
period 01 January 2020 to 31 December 2021.

The contributions are computed on the basis of 4.5% of the
employee’s last monthly remuneration.

Adjust for shortfall/surplus

After an employee’s exit, the employer may be required to
fund any shortfall that may exist between the amount standing in
the employee’s individual account within the PRGF and 15
days’ final remuneration per year of employment with that
employer.

If there is a surplus in the employee’s account within the
PRGF, it can be used to make up for unpaid contribution or credited
to the employer’s account to pay contributions for past
services of other employees.

Reporting obligations

– Submit monthly report to MRA by the 20th of
every month setting out the remuneration paid to employees and the
amount of contribution made on behalf of the employees

– Submit annual return to MRA by 15 July of every year
with an updated list of names and date of birth of employees in an
employer’s employment as at 30 June of that year

– Within 1 month of termination or death of employee,
submit to the Ministry of Social Security a return setting out
certain prescribed details

– Notify MRA within 1 month of an employee’s cessation
or termination, change of employment, retirement or death

Summary – process timeline

1212232b.jpg

What happens if an employee exits before 1 January 2022?

Where an employee retires or dies between 1 January 2020 and 31
December 2021 and the employer did not pay contributions to the
PRGF in respect of that employee, the employer is required to pay
to the employee or his legal heirs a gratuity computed on the basis
of 15 days’ final remuneration per year of employment.

Where an employee’s employment is terminated between 1
January 2020 and 31 December 2021 and the employer did not pay
contributions to the PRGF in respect of that employee, the employer
is required to pay to the MRA a total contribution equivalent to 15
days’ final remuneration per year of employment from the date
the employee started employment with that employer.

Where an employee resigns between 1 January 2020 and 31 December
2021 and the employer did not pay contributions to the PRGF in
respect of that employee, the employer is required to pay to the
MRA a total contribution equivalent to 15 days’ final
remuneration per year of employment starting on 1 January 2020.

If the employer started but ceased to pay contributions to the
PRGF in respect of an employee before his exit, the employer should
pay the required gratuity or contributions upon the employee’s
exit as set out above, but deduct the contributions already paid to
the MRA from such amount to be paid on the employee’s exit.

Originally published 20 January 2022

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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