In view of the impending implementation of the Portable Gratuity Retirement Fund (“PRGF”), the Minister of Labour, Human Resource Development and Training has issued The Workers’ Rights (Portable Retirement Gratuity Fund) Regulations 2020 (the “PRGF Regulations”), deemed effective as from January 1, 2020.
The implementation of the PRGF was, by a decision of Cabinet on December 13, 2019, postponed from 1 January 2020 to 1 April 2020. Monthly contributions to the PGRF have to be paid as from April 2020 in respect of all employees except in the following circumstances:
- in respect of employees whose salaries is more than MUR200 000 per month;
- in respect of employees for whom equivalent contribution is paid to a private pension scheme;
- migrant or expatriate workers;
- public and local government officers;
- workers whose retirement benefits are provided for under the Statutory Bodies Pension Funds Act.
Therefore, a private sector employer who has not set up any private pension scheme for its employees, is required to make, in respect of every employee who earns less than MUR200 000 per month (except migrant workers or non-citizens):
- monthly contributions as per the rate specified under the PRGF Regulations, as from 1 April 2020, with back payments due for January to March 2020 as well;
- in respect of all workers in its employment as at 1 January 2020, contribution for past services as follows:
- to the Mauritius Revenue Authority in case the employment is terminated;
- to the worker in case he or she retires;
- to the worker’s legal heirs in case he or she passes away.
At the time of their retirement, workers in respect of whom contributions have been made to the PRGF will be entitled to a gratuity payable from the PRGF itself. Should there be a shortfall in the individual account of a worker, the employer will be required to make further contributions.
For private sector employees for whom no contributions to the PRGF were required to be made, gratuity upon retirement is still payable under section 109 of the Workers’ Rights Act. The quantum of the gratuity is set at 15 days’ remuneration for each period of 12 months of continuous employment. If the employer has been making contributions to a private pension scheme or any other fund, it will be entitled to make the appropriate level of deductions from the gratuity payable by having regard to the contributions it made.
We have however been made aware of a letter dated 5 March 2020 emanating from the Ministry of Labour, Human Resource Development and Training to the effect that administrative arrangements have been made at the level of the Mauritius Revenue Authority for payments which may have been made in terms of a settlement agreement and/or in respect of severance allowance to be deducted from amounts payable as gratuity under the PRGF.
Rate of contribution and transitional period for SMEs
The rate of monthly contribution of an employer to the PRGF has been set at 4.5% of an employee’s salary. However, the PRGF Regulations provide a transitional phase for SMEs which are divided into three categories, depending on their annual turnover:
- MUR2-million or less;
- more than MUR2-million but less than MUR10-million;
- more than MUR10-million but less than MUR50-million.
Where the annual turnover of the SMEs fall within one of the three categories in respect of their turnover for the previous year (January to December 2019 for contributions payable from January to December 2020 for instance), part of the contribution will be paid from the seed capital of the Wage Guarantee Fund between January 2020 and December 2022. SMEs shall only start contributing the whole 4.5% of their employees’ salary only as from January 2023. Their transitional rates of contribution for year 2020 are as follows:
- for SMEs having a turnover of up to MUR2-million, 2.1%;
- for SMEs having a turnover of between MUR2-million and MUR10-million, 3.5%;
- for SMEs having a turnover of between MUR10-million and MUR50-million, 3.5%.
Mode of Payment for Employers
The PRGF Regulations provide for payment into the PRGF whether for monthly contributions as from January 2020 or for past services to be made electronically through such computer system as approved by the Director General of the Mauritius Revenue Authority or the administrator of the PRGF.
Provisions for the period 24 October 2019 and 1 January 2020
The PRGF Regulations provide that in case of retirement or termination of employment of an employee or his demise between 24 October 2019 and 1 January 2019, the sums payable as gratuity on retirement, severance allowance or gratuity at death shall be as prescribed under the Employment Rights Act 2008, as if those provisions had not been repealed. These provisions are deemed to be effective from October 24, 2019.
Reviewed by Maxime Sauzier, Senior Counsel and Director at ENSafrica in Mauritius.