CSR Activities Benefiting Employees

CSR is a ‘social’ responsibility and not an ‘employer’ responsibility. Every Companies or Corporations which is taking benefits from the society for achieving its objectives should also give something in return to the society.

As per Rule 2(1)(d)(iv) of CSR Rules, 2014, activities benefitting employees of the Company as defined in clause (k) of Section 2 of the Code on Wages, 2019 shall not be considered as CSR.

 Any CSR activity or Programmes which is exclusively for the benefit of Company’s employees shall not be considered as an eligible CSR expenditure, however, if a Company undertake any CSR activity or programme which is for the benefit of general public (including Company’s employees), then such activities or programmes shall be eligible to be considered as CSR expenditure. 

 ICAI FAQs on CSR further clarifies that projects or programmes or activities that benefit only the employees of the company and their families shall not be considered as CSR. However, programme or activities that are for the benefit of all, but, which also includes some employees or their families will still be considered as CSR as long as such benefits are not exclusively for the benefit of such employees.

 For example, Temporary Covid Care facilities which is exclusively available for Company’s employees shall not considered as an eligible CSR, however, if such facility is also available for the benefit of general public including Company’s employees then such activity shall be eligible to be considered as CSR expenditure.

 The MCA vide circular dated 10th April, 2020 issued FAQs for clarification for spending being done by Company for COVID-19 related activities. The FAQs clarified that payment made to employees or contract workers (temporary or permanent) during the time of COVID-19 pandemic is moral or contractual obligation rather CSR expenditure. However, any ex-gratia payment made to any temporary/daily or casual workers shall qualify as CSR if following conditions are fulfilled:

 i)     Payment is made for the purpose of COVID-19;

ii)    Payment is over and above the wages of the worker;

iii)  Board declaration for disbursement of such wages have to be obtained; and

iv)  Certificate from Auditor for such payment.