EMPLOYEE PROVIDENT FUND & MISCELLANEOUS PROVISIONS ACT 1952

1.1 INTRODUCTION
▪ The Act aims at providing social security & timely monetary assistance to industrial employees
& their families when they are in distress.

▪ Following three schemes have been framed under the Act by CG:
1. The Employees’ Provident Fund Schemes, 1952;
2. The Employees’ Pension Scheme, 1995; &
3. The Employees’ Deposit-Linked Insurance Scheme; 1976.

▪ The Act is now applicable to employees drawing a pay not exceeding Rs. 15,000 per month.
▪ The Act extends to whole of India except Jammu & Kashmir.
▪ Pay = Basic wages + Dearness Allowance + Retaining Allowance + Cash value of food concession.

1.2 APPLICABILITY [SECTION 1(3) - (subject to Section 16)]

This Act applies to:
✓ Every establishment in which 20 or more persons are employed & which is a factory engaged
in any industry specified in Schedule I &
✓ Any other establishment or class of such establishments:
- employing 20 or more persons which CG may by notification in OG specify in this behalf.
✓ CG may apply the provisions of this Act to any establishment employing such number of persons
less than 20 as may be specified in the notification.
PC Note: Notice of not less than 2 months shall be given by CG to such establishments;
Once the Act applies, it shall continue to apply even if number of employees falls below 20.
✓ Where it appears to Central PF Commissioner that employer & majority of employees have
agreed that provisions of this Act should be made applicable to their establishment, he may,
by notification, apply the provisions of this Act to that establishment on & from the date of
such agreement or from any subsequent date specified in such agreement;

Case Laws ▪ School rightly covered under PF when principal has affirmed about employment of 20 employees.

1.3 NON-APPLICABILITY OF THE ACT [Section 16(1)]

1. A Co-operative Society employing < 50 Persons & working without the aid of the power; or
2. A Newly set up establishments for an initial period of 5 years.
3. Other establishment belonging to/under control of CG/SG & whose employees are entitled to
benefit of contributory PF/old age pension in accordance with any scheme framed by CG/SG;
4. Any other establishment set up under Central, Provincial or State Act & whose employees are
entitled to benefit of contributory PF/old age pension in accordance with any scheme framed;
1.4 IMPORTANT DEFINITIONS
Appropriate Government [Section 2(a)]
▪ in relation to an establishment belonging to/under control of CG - Appropriate Government
▪ in relation to an establishment connected with - is ‘CG’
- a railway company;
- a major port;
- a mine or an oil field; or
- a controlled industry; or
- establishment having departments/branches in more than 1 state

▪ in relation to any other establishment - AG = State Government.

Authorized Officer [Section 2(aa)]

- Central PF Commissioner;
- Additional Central PF Commissioner;
- Deputy PF Commissioner;
- Regional PF Commissioner; or
- Such other officer as may be authorized by CG, by Notification in Official Gazette

Employer [Section 2(e)]

▪ For Factory → Owner or occupier of the factory, including their agent, legal representative of
deceased owner or occupier & if there is a manager appointed, such manager.
▪ For any other establishment → Person who has ultimate control over affairs of establishment.
If said affairs are entrusted to a manager/MD → Such manager/MD.

Employee [Section 2(f)]

Any person who is employed for wages in any kind of work (manual or otherwise) in or in connection
with the work of establishment & who gets his wages (directly/indirectly) from the employer &
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 Apprentices Act, 1961
or under the Standing orders of the establishment).
Factory [Section 2(g)]
Any premises (including precincts) in any part of which a manufacturing process is being carried
(Whether with or without the aid or power).

Occupier of a factory [Section 2(k)]

Person who has ultimate control over the affairs of a factory, and, where the said affairs are
entrusted to a managing agent, such agent shall be deemed to be the occupier of the factory.

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 VARIOUS SCHEMES UNDER THIS ACT
The Act provides 3 types of schemes for the benefit of the employees as detailed below-
1. Section 5: Employees’ Provident Fund Schemes;
2. Section 6A: Employees’ Pension Scheme;
3. Section 6C: Employees’ Deposit Linked Insurance Scheme.
PC Note: Section 7 gives powers to CG to amend or vary schemes (prospectively/retrospectively)

SCHEME 1 EMPLOYEES’ PROVIDENT FUND SCHEMES [Section 5]

▪ CG framed ‘Employees’ PF Fund Scheme, 1952 which came into effect from 2nd September, 1952.
▪ Fund shall vest in & be administered by Central Board constituted under Section 5A of the Act.
▪ Scheme framed may provide for all or any of the matters specified in Schedule II.

Central Board [Section 5A]

▪ CG shall establish a Central Board.
▪ Board consists of a chairman & a Vice Chairman to be appointed by the CG.
▪ Central PF Commissioner is ex officio.
▪ Members of this Board are being appointed by CG as per the provisions contained in Sec. 5A.
▪ Section 5AA provides for the appointment of Executive Committee by CG to assist Central Board
in the performance of its functions. Members of Executive Committee are appointed by CG.

Applicability of the scheme

▪ This scheme shall apply to all factories and other establishments to which the Act applies.
▪ Note: This scheme shall not applicable to the tea factories in the State of Assam.

Eligible Employees to join PF

▪ Employee whose pay is not more than Rs. 15,000 is eligible to join PF.
▪ Contribution is paid upto a maximum of Rs. 15,000 by employer & employee.
▪ However, employee drawing salary > Rs. 15,000 can become member of PF with permission of
Assistant PF Commisioner & his employer. In such case, PF contribution will be as per Rs. 6,500.
▪ Note: Employee ceases to be a member of PF on attaining age of 60 years.
▪ For international worker, ceiling of Rs. 15,000 is not applicable.

Amount of Contribution [Section 6]

▪ Contribution = 12% of basic wages + DA + RA which shall be paid by the employer & employee.
▪ Employees can (if they want) make contribution above 12%.
▪ but employer shall not be under any obligation to contribute over and above 12%.
Note Dearness allowance shall include the cash value of any food concession allowed to an employee.
Retaining allowance → Allowance payable to employee for retaining his services, when the
establishment is not working.
 Withdrawal from the fund
Withdrawal from the fund is allowed for the following purposes -
- For purchase of a house/flat or for construction of house including acquisition of a suitable site;
- For repayment of loans in special cases;
- Withdrawal within one year before the retirement;
- Withdrawal upto 75% of the balance, if not employed from one month or more, subject to
approval of P.F. Commissioner or any officer authorised by him.
PC Note: Such withdrawals are not required to be repaid.

Advances from the fund

Advances from the fund are paid for the following purposes -
- For illness in certain cases;
- For marriages or post matriculation education of children;
- In abnormal conditions (Ex: Calamity, flood, earthquakes or riots) [Non-refundable]
- Granted to members affected by cut in the supply of electricity [Non-refundable]
- Grant of advance to members who are physically handicapped [Non-refundable]

SCHEME 2 EMPLOYEES’ PENSION SCHEME [SECTION 6A]

CG framed Employees’ Pension Scheme for the purpose of providing for -
- Superannuation pension;
- Retiring pension or permanent total disablement pension to the employees of any establishment
or class of establishments to which this Act applies; and
- Widow or widower’s pension;
- Children pension or orphan pension payable to the beneficiaries of such employees.

Contribution
▪ Employer is to contribute 8.33% of the basic wages, dearness allowance & retaining allowance,
if any of the concerned employees as may be specified in the pension scheme.
▪ There is no contribution from the employee.
▪ Contribution is not payable by the employer when employee crosses 58 years of age since the
scheme ceases on completion of 58 years.

Pension Fund
▪ A pension fund has been created for the purpose of this scheme.
▪ Pension Fund shall vest in and administered by the Central Board.
▪ Pension scheme may provide for all or any of the matters in Schedule II, as detailed below -
- Employees or class of employees to whom the Pension scheme shall apply;
- Portion of employers’ contribution to PF which shall be entitled to Pension Fund & its manner;
- Minimum qualifying service for being eligible for pension & manner in which the employees
may be granted the benefits of their past service;

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 - Regulation of the manner in which & period of service, for which no contribution is received;
- Manner in which the employees’ interest will be protected against default in payment of
contribution by the employer;
- Manner in which accounts of Pension fund shall be kept and investment of moneys belonging
to Pension Fund to be made subject to such pattern of investment as determined by CG;
- Form in which an employee shall furnish particulars about himself & members of his family
- Forms, registers & records to be maintained i.r.o. employees, required for administration;
- Scale of pension & pensionary benefits & conditions relating to the grant of such benefits;
- Manner in which the exempted establishments have to pay contribution towards the pension
scheme and the submission of returns relating thereto;
- Mode of disbursement of pension and arrangements to be entered into with such disbursing
agencies as may be specified for the purpose;
- Manner in which expenses for administering the Pension Scheme will be met from income
income of the Pension Fund;
- Any other matter which is to be provided for in the Pension Scheme or which may be
necessary for the purpose of implementation of the Pension Scheme.

3 EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME [SECTION 6C]

▪ CG made Employees Deposit Linked Insurance Scheme, 1976 which came into effect from 1.9.1976.
▪ It applies to all factories & establishments to which Act applies except tea factories in Assam.
▪ Wage ceiling limit under Employees Deposit linked Insurance Scheme = Rs. 15,000.
▪ The insurance benefit under the scheme shall be an amount between Rs. 2.5 lacs & 6 lacs.

Contribution
▪ Deposit Linked Insurance Fund has been created for this purpose.
▪ Employer shall pay amount not being more than 1% of basic wages + DA + Retaining allowance.
▪ Employer shall pay such further amount not exceeding 1/4th of contribution which is required to
made as determined by CG to meet all expenses in connection with administration of the scheme
other than the expenses towards the cost of any benefits provided by or under that scheme.
PC Note: If monthly pay > Rs. 15,000, contribution payable is restricted Rs. 15,000.

Determination of moneys due from employers [Section 7A]

▪ In case where dispute arises regarding applicability of this Act, authority may conduct such
enquiry & determine the amount due from any employer under the provision of this Act.
▪ Before passing such order, employer concerned shall be given a reasonable OOBH.
▪ For conducting inquiry, Authority shall have same powers as are vested in a court under CPC
for trying a suit in respect of the following matters -
- enforcing the attendance of any person or examining him on oath;
- requiring the discovery and production of documents;
 - receiving evidence on affidavit;
- Issuing commissions for the examination of witnesses.
▪ Where employer, employee or any other person required to attend inquiry, fails to attend such
inquiry, Authority shall decide the case ex-parte & pass orders based on available documents.
▪ Employer within 3 months from date of communication of such order, may apply to the authority
to set aside ex-parte order showing that there are sufficient causes for not attending hearing.
▪ If Authority is satisfied, he may set aside ex-parte order & shall appoint a date for proceeding
with the inquiry.

Review of order u/s 7A [Section 7B]

▪ Person aggrieved by order u/s 7A may apply for its review to officer passing order if he -
- discovered new & important matter of evidence which after exercise of due diligence was
not within his knowledge;
- could not be produced by him at the time when the order was made;
- on account of some mistake;
- error apparent on the face of the record;
- for any other sufficient reason.
▪ Such officer may on his own motion review his order if he is satisfied that it is necessary
▪ Where it appears to the officer receiving an application for review that there is no sufficient
ground for a review, he shall reject the application.
Note Review is a statutory remedy. A review petitioner should also be disposed of by a speaking order.

Determination of escaped amount [Section 7C]

▪ Officer can re-open the case within 5 years from the date of order passed u/s 7A or u/s 7B if
he has reason to believe that by reason of omission or failure by employer -
- to make any document or report available, or
- to disclose fully & truly all material facts;
any amount so due from such employer for any period has escaped his notice.
▪ Officer may pass appropriate orders re-determining the amount due from the employer in
accordance with the provisions of this Act.

EPF Appellate Tribunal [Section 7D]

▪ Section 7D provides for the appointment of EPF Appellate Tribunal to hear the appeal against
the order passed by the CG or any authority under Section 7A or 7B or 7C.
▪ Appellate Tribunal may, after giving reasonable opportunities to the parties decide the appeal
either confirming, modifying or annulling the order appealed against or may refer the case back
to the authority which passed such order with such directions as the Tribunal may think fit.
▪ Tribunal may rectify any mistake apparent from record within 5 years from the date of its
appeal order.
▪ No appeal by the employer shall be entertained unless he has deposited with it 75% of the

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 amount due from him.
▪ Tribunal may (after recording reasons in writing) waive or reduce the amount to be deposited

Protection against attachment [Section 10]

Amount standing to the credit of any member shall not be capable of being assigned or charged
shall not be liable to attachment under any decree or any court.

Employer not to reduce wages [Section 12]

No employer shall reduce wages of any employee by reason only of his liability for the payment of
any contribution to the fund or any charges or scheme or insurance scheme.

Transfer of Accounts [Section 17A]

Where an employee employed in establishment to which the Act applies, leaves his employment &
obtains re-employment in other establishment to which this Act does not apply, amount of
accumulations to the credit of such employee shall be transferred to the credit of his account
in PF of the establishment in which he is re-employed, if employee so desires & rules permit.

Penalties
14(1) False statement for avoiding any payment → Imprisonment: Upto 1 year & Fine: Rs. 5,000 or both.
14(1A) Employer defaults in complying with sec. 6 related to payment of inspection/administration charges
Default in payment of Employees’ contribution: Imprisonment: 1 yr - 3 years; Fine: Rs. 10,000.
Any Other Default → Imprisonment: Min. 3 Months; Fine: Rs. 5,000.
14(1B) Employer who contravenes or makes default in complying with section 6C related to payment of
inspection charges → Imprisonment: 6 M - 1 year & Fine: Rs. 5,000.
14(2) Any person who contravenes or does not comply any of the provisions of these schemes
Imprisonment → Upto 1 Year; Fine: Rs. 4,000 or with both.
14(3) If no other penalty is provided; Imprisonment → 1 Month to 6 Months; & Fine: Rs. 5,000.

Offences by companies [Section 14A(1)]

14A(1) ▪ Company & Every person who was in charge of conduct of the business of the company
shall be liable to be proceeded against and punished accordingly.
▪ Nothing contained in this section shall render any such person liable to any punishment,
if he proves that the offence was committed without his knowledge or that he exercised all due
diligence to prevent the commission of the offence.
14A(2) ▪ Offence has been committed with the consent/connivance/is attributable to any neglect on
part of any director or manager, secretary or other officer of the company; such director,
manager, secretary or other officer shall be deemed to be guilty of that offence and shall be
liable to be proceeded against and punished accordingly.