EPF act Notes PDF

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THE EMPLOYEES’ PROVIDENT FUNDS & MISCELLANEOUS PROVISIONS ACT,1952 INTRODUCTION The Employees’ Provident Fund is a social welfare legislation intended to protect the interest of the workers employed in factories and other establishments. It is implemented by the Employees’ Provident Fund Organisation (EPFO) of India. The Employees’ Provident Fund Bill was passed by both the Houses of the Parliament and it received the assent of the President on 4th March, 1952. The nomenclature of the Act was changed as “The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952” (w.e.f 1st August, 1976). Now it stands as THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 [EPF AND MP ACT, 1952]

OBJECTIVE OF THE EPF AND MP ACT, 1952 The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 aims to provide a kind of social security to the industrial workers. The Act mainly provides retirement or old age benefits, such as Provident Fund, Superannuation Pension, Invalidation Pension, Family Pension and Deposit-Linked Insurance. The Act provides for payment of terminal benefits on the happening of various contingencies such as retirement, closure, retirement on attainment of the age of superannuation, voluntary retirement and retirement due to factors which result in incapacity of the employee to work

4.1 APPLICABILITY OF PF ACT Q. State the establishment to which the Employees Provident Fund Miscellaneous Provisions Act 1952, applies. Q. What kind of entities fall within the purview of the Employees Provident Fund Miscellaneous Provisions Act 1952. Factories

Any other establishment

The Act applies to every establishment fulfilling the following conditions a) The establishment is a factory b) The establishment is engaged in any industry specified in Schedule I c) The establishment employs 20 or more persons. The Act applies to every establishment fulfilling the following conditions a) The establishment employs 20 or more persons. b) The Act has been made applicable to such establishment (or to the class of establishment s in which such establishment falls) by the CG by notification in the Official Gazette.

Establishment employing less than 20 persons

Applicability on request

Applicability to departments and branches (Sec. 2A) Continued applicability

The Act applies to every establishment employing less than 20 persons if the following conditions are satisfied : a) The Act has been made applicable to such establishment by CG by notification in official gazette. b) Before issue of such notification, the CG shall give 2 months ‘notice to the establishment. An establishment to which the provisions of the act do not apply ,shall also be covered under the Act if the following conditions are satisfied : a) An application for the purpose is made to the Central provident Fund commissioner. b) The application is made by the employer and majority of employees of the establishment. c) The central Provident Fund Commissioner issues a notification in the Official Gazette making the provisions of the Act applicable to such establishment If the provisions of the Act become applicable to an establishment , all the departments and branches of the establishment (Wherever they are situated) shall also be covered under the Act . If the provisions of the Act become applicable to an establishment Once, the Act shall continue to apply to such establishment even if the number of employees falls below 20.

Q. Explain the concept of Basic wages under the provision of the Employees Provident funds and Miscellaneous Provision act 1952. Q. State the emoluments paid to employees which do not come within the purview of basic wages under the Employees Provident Fund Miscellaneous Provisions Act 1952. Q. Explain the meaning of the term “basic wages” under the Employees Provident Fund Miscellaneous Provisions Act 1952. Q. Define the term “Employer” under the Provident Fund and Miscellaneous Provisions Act, 1952.

Factory [Sec. 2(g)]

Manufacture or manufacturing

Factory means - Any premises, including the precincts thereof, - In any part of which a manufacturing process is being carried on or is ordinarily so carried on, - Whether with the aid or without the aid of power. Manufacture or manufacturing process means any process for making, altering, repairing, ornamenting, finishing, packing, washing, cleaning,

process [Sec. 2(ic) ] Employer [Sec. 2(e)]

breaking up, demolishing, otherwise treating or adapting any, article or substance with a view of its use, sale, transport, delivery or disposal. In relation to an establishment which is factory ,employer means (a) The owner or occupier of the factory, (Occupier means the person who has ultimate control over the factory ; (b) The agent of such agent owner or occupier, (c) The legal representative of a deceased owner or occupier (d) Person named as a manager of the factory: under the Factories Act. In relation to any other establishment , employer means , (a) The person having the ultimate control over the affairs of the establishment , (b) The manager or managing director to whom the affairs of the establishment are entrusted. Employee[Sec.2 Employee means any person (f)] - who is employed on wages, - In any kind of work, whether manual or otherwise. - in or in connection with the work of an establishment , - who gets his wages directly or indirectly from the employer .

Basic wages [Sec. 2(b) ]

* Employee includes any person- Employed by or through a contractor in or in connection with the work of the establishment ; - Engaged as an apprentice, not being an apprentice engaged under the Apprentice Act, 1961 or under the standing orders of the establishment. * ‘Basic wages ‘ means: - All emoluments - which are earned by an employee - In accordance with the terms of the contract of employment - Which are paid or payable in cash to him. - while (a) on duty ;or (b) While on leave with wages ; or (c) while on holidays with wages . * ‘Basic wages’ does not include (a) The cash value of any food concessions; (b) Any dearness allowance,(i.e. all cash payments by whatever name called ,paid to an employee on account of a rise in the cost of living ) (c) House rent allowance, overtime allowance (d) Bonus, commission or any other similar allowance payable to the employee in respect of his employment; (e) Any presents made by the employer.

Authorised officer [Sec. 2(aa)

Appropriate Government [Sec. 2(a)]

Exempted Employee [Sec. 2(ff)] Exempted establishment [Sec. 2(fff)

Authorized officer means: a. Central Provident Fund Commissioner b. Additional Provident Fund Commissioner c. Deputy Provident Fund Commissioner d. Regional Provident Fund Commissioner e. Such other officer as authorized by Central Government by notification in Official Gazette. * AG means CG in the following cases : (i) In relation to an establishment belonging to, or under the control of CG. (ii) In relation to an establishment connected with a railway company, a major port, a mine, an oilfield, a or a controlled industry (iii) In relation an establishment having departments or branches in more than one State In relation to any other establishment ,AG means SG Exempted employee means an employee To whole the schedule doest not apply By reason of an exemption granted u/s 17 Exempted establishment means an establishment In respect of which an exemption has been granted u/s 17 From the operation of all any of the provisions of the Scheme

4.3 –NON- APPLICABILITY PF ACT (Sec. 16) Q. State the kind of establishments which are not covered under the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952. Q. Point out the classes of those establishments upon which the provisions of Employees Provident fund and Miscellaneous Provisions Act,1952 does not apply . Co.-operative An establishment fulfilling the following conditions : Society (a) The establishment has been registered under the Co-operative Societies Act. (b) It employs less than 50 persons (c) It is working without the aid of power Government An establishment fulfilling the following conditions : Undertaking (a) It belongs to the CG or SG,or is under the control of CG or SG . (b) The employees of the establishment are entitled to benefit of contributory provident fund or old are pesion Undertaking An establishment fulfilling the following conditions : constituted (a) it has been setup under any Central or state Act . under an Act (b) The employees of the establishment are entitled to benefit of contributory provident fund or old are pension Any class of establishment s may be given exemption from the provisions Exemption by Notification of the Act if the following conditions are satisfied :

(a) The exemption can be given by the CG only by way of issue of a notification in the Official Gazette. (b) The exemption shall be given for such period and on such terms and conditions as may be specified in the notification .The exemption may be prospectively or retrospectively. (c) CG shall consider the financial position of such class of establishment and other relevant circumstances before granting the exemption. 4.4 AUTHORIZING CERTAIN EMPLOYERS TO MAINTAIN PROVIDENT FUND ACCOUNTS (SEC 16A) Q. state the powers of the Central Government to authorize certain employers to maintain provident fund accounts under Employees Provident Fund Miscellaneous Provisions Act 1952 1. Conditions for authorisation

Terms and conditions of authorisaction

Cancellation of authorisation

Generally ,the account of every employee is maintained in the Provident Fund office However ,an establishment may be permitted to maintain the PF accounts of its employees , if the following conditions are satisfied : (a) An application is made to CG for seeking permission to maintain the PF accounts. (b) The application must be made by the employer and the majority of employees (c) The establishment employs 100 or more persons . (d) The establishment has not committed any default in the payment of provident fund contribution or any other officence under this Act during 3 years immediately preceeding the date of application . (e) The CG has authorized the employer by an order in writing to maintain the provident fund accounts . The authorization may contain the following terms and conditions to be complied with by the employer :  manner of maintainance of provident fund accounts .  submission of returns  Manner of depositing the contribution (i.e. the PF money shall be deposited with the PF Authorities )  Facilitates to provided for inspection  Payment of administrative charges  Other terms and conditions . Grounds of The authorization given by CG may be cancelled by cancellation CG , if the employer a) Fails to comply with any of the terms and conditions of the authorization. Or b) Commits any offence under any provision of this Act.

Conditions for cancellation

4.5 EXEMPTED ESTABLISHMENT

- Before cancellation of the authorization, CG shall give the employer a reasonable opportunity of being heard. - The order of cancellation shall be in writing (SEC 17)

Exemption from Provident Fund Scheme 1. Exemption by whom? The exemption may be given by AG 2. Manager of giving exemption 3. Terms of exemption

4.

5.

6. 7.

The exemption can be given only by way of notification in the Official Gazette  The exemption shall be subject to such conditions as may be specified in the notification.  The exemption may be given prospectively or retrospectively .  The exemption may be given from the operation of all or any of the provisions of the scheme. Conditions for giving (a) AG must from an opinion that exemption - The rules of provident fund with respect to the rates of contribution are not less favourable than those specified in the Scheme ;and - The Employees also in enjoyment of other provident fund benefits which on the whole are not less favorable to employees than the benefits provided under this Act or scheme. (a) Before giving the exemption, AG shall consult the Central Board .The central Board shall forward its views within such time limit as may be specified in the Scheme. Applicability of (a) The terms and conditions as may be specified in the provisions on exempte notification granting exemption shall apply to the establishment exempted establishment. (b) If the employer contravenes, or makes default in complying with any of the said provisions or conditions or any other provisions of this Act, he shall be punishable u/s 14 as if the said establishment had not been exempted. Duties of employer The employer shall establish a Board Trustees for the administration of the Provident Fund. Duties of Board of (a) The Board of Trustees shall: trustees (i) Maintain detailed accounts to show the contributions credited, withdrawals made and interest accrued in respect of each employee; (ii) Submit such returns as may be directed from time to time; (iii) Transfer the PF account of any employee;

(iv)

Invest the PF money in accordance with the directions issued by the Government; (v) Perform such other duties as may be specified (b) If the trustees contravene, or make default in complying with any of the duties entrusted to them, they shall be deemed to have committed an offence under sec 14 and shall be punishable accordingly. B. Exemption from Pension Scheme: 1. Exemption by The exemption may be given by the Appropriate whom Government. 2. Manager of giving The exemption can be given by way of a notification in exemption Official Gazette 3. Terms of  The exemption shall be subject to such conditions as exemption may specify in the notification.  The notification may also specify the pattern of investment of pension fund.  The exemption may be retrospectively or prospectively.  The exemption may be from all or any of the provisions of the scheme. 4. Conditions for AG must form an opinion that the pensionary benefits giving exemption available to the employees are at par or more favorable than the Pension Scheme framed under this Act. C. Exemption from Insurance Scheme: 1. Exemption by The exemption by given by the Central Provident Fund Commissioner whom 2. Manager of The exemption can be given by way of a notification in Official Gazette giving exemption 3. Terms of  The exemption shall be subject to such conditions as may specified exemption in the notification.  The exemption may be retrospectively or prospectively.  The exemption may be from all or any of the provisions of the scheme. 4. Conditions for giving exemption

The Central Provident Fund Commissioner must be satisfied that the employees of such establishment are, without making any separate contribution, in enjoyment of benefits in the nature of life insurance, and such benefits are more favorable than the benefits admissible under the Insurance Scheme.

4.6 THE CENTRAL BOARD

(SEC. 5A):

Q. How is the Central Board of Trustees constituted under the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952? Explain its composition. Q. Who is to constitute the Central Board of Trustees? How many persons shall be there in the Central Board ? Answer the question with reference to Employees Provident Fund and Miscellaneous Provisions Act, 1952? Meaning of ‘fund’

Administration of fund

Board is a body coroprate Composition of Board

The contributions to Provident fund Scheme, Employee’s Pension Scheme and Employee's Deposit Linked Insurance Scheme are credited to a fund.  The fund vests in and is administered by Central Board of Trustees i.e. as Board of trustees orsimply the Board  The Central Board is formed by CG by notification, in the official gazette.  In other words ,Central Board shall administer the following funds : (a) The Employees Provident Fund (b) The Employees Pension Fund (c) The Employees Deposit Linked Insurance Fund . The Board of Trustees is a body coroprate having perpetual succession and common seal . 1 Chairman - Appopinted by CG 1 1

Maximum officials Maximum officials 10 persons 10 persons

Function of Central Board

Voice Chairman Central Provident Fund Commissioner 5 Representing CG 15 Representing SG Representing employers Representing employees

- appointed by CG in consultation wioth association of employees - appointed by CG in consultation with organization of employees

 The Central Board shall administer Employee’s Provident fund, Pension Fund, Employee's Deposit Linked Insurance fund vested in it in such manner as may be specified in the schemes.  The Central Board shall take policy decisions.

Accounts ,Audit and annual report

Accounts

 

Audit

Annual Report Delegation of powers by Central Board

The Central Board shall maintain proper accounts relating to income and expenditure. The accounts shall be maintained in such form and in such manner as the specified by CG in consultation with CAG

The accounts of the Central Board shall be audited annually.  The audit shall be conducted by CAG. The audited accounts and annual report on the working of the Central Board shall be forward to CG . 

(a) The Central Board may delegate authority subject to such conditions and limitations as it may deem fit. The (b) The powers may be delegated too Executive committee or o State Board or o Chairman or any other officer of the Board

4.7 EXECUTIVE COMMITTEE (SEC. 5AA) Q. Explain the manner in which the “ Executive committee “ under the provisions of the Employees Provident Fund Miscellaneous Provisions Act 1952 is constituted state its composition Q. An Executive Committee is to assist the Central Board under the provisions of the employees’ Provident Fund and Miscellaneous Act, 1952 State the composition. of such Executive Committee Composition of  Executive Committee is constituted by CG notification in the Official the committee Gazette .  Executive Committee shall consist of 13 members.  The members of Executive Committee are selected out of the members of the Central Board. Chairman - From amongst the members of the - appointed by CG Central Board 2 persons -From amongst the representative of CG selected to the Central Board. 3 persons - From amongst the representative of SG selected to the Central Board. 3 persons - From amongst the representative of Selected to the employees selected to the Central Central Board. Board. 3 persons From amongst the representative of employers selected to the Central Board.

Central Provident Fund Commissioner –AS a member Purpose of constitution of excuctive committee

 The purpose of Executive Committee is to assist the Central Board in the

performance of its functions.  The Scheme shall provide for

(a) terms and conditions subject to which a member of the Central Board may be appointed or elected to the Executive Committee (b) The time, place and procedure of the meetings of the Executive Committee .

4.8 DETERMINATION OF APPLICATION OF THE ACT AND MONEYS DUE FROM THE EMPLOYER (Sec. 7 A) Nature of disputes (a) Dispute regarding applicability of the Act to an establishment . (b) Amount due from any employer under any provision of the Act and the scheme .The amount due may be in respect of  Contribution  Administration charges  Damages payable by employer for delayed payment  Any other amount payable by employer . Who is empowered to  Central Provident Fund commissioner determine disputes?  Additional Provident Fund commissioner  Deputy Provident Fund commissioner  Regional Provident Fund commissioner Powers of officers  He may make such enquiry as deemed fit .The enquiry shall be judicial proceeding.  He shall follow the principles of natural justice he may pass an order, in accordance with the provisions of the Act and the Scheme as he deems fit .  He shal...