The Industrial Disputes Act, 1947

The objective of the Industrial Disputes Act is to secure industrial peace and harmony by providing machinery and procedure for the investigation and settlement of industrial disputes by negotiations. Various studies indicate that Indian labour laws are highly protective of labour, and labour markets are relatively inflexible. These laws apply only to the organised sector. Consequently, these laws have restricted labour mobility, have led to capital-intensive methods in the organised sector and adversely affected the sector’s long-run demand for labour. Labour being a subject in the concurrent list, State-level labour regulations are also an important determinant of industrial performance. Evidence suggests that States, which have enacted more pro-worker regulations, have lost out on industrial production in general. -- (Ministry of Finance, 2006, p. 209 the Industrial Disputes Act (IDA) of 1947. Particular attention has been paid to its Chapter V-B, introduced by an amendment in 1976, which required firms employing 300 or more workers to obtain government permission for layoffs, retrenchments and closures. A further amendment in 1982 (which took effect in 1984) expanded its ambit by reducing the threshold to 100 workers. It is argued that since permission is difficult to obtain, employers are reluctant to hire workers whom they cannot easily get rid of. Job security laws thus protect a tiny minority of workers in the organized sector and prevent the expansion of industrial employment that could benefit the mass of workers outside. It is also argued that the restriction on retrenchment has adversely affected workplace discipline, while the threshold set at 100 has discouraged factories from expanding to economic scales of production, thereby harming productivity. Several other sections of the IDA allegedly have similar effects, because they increase workers’ bargaining strength and thereby raise labour costs either directly through wages or indirectly by inhibiting work reorganization in response to changes in demand and technology. The Act also lays down


The provision for payment of compensation to the workman on account of closure or lay off or retrenchment. 2. The procedure for prior permission of appropriate Government for laying off or retrenching the workers or closing down industrial establishments 3. Unfair labour practices on part of an employer or a trade union or workers.

The Industrial Disputes Act extends to whole of India and applies to every industrial establishment carrying on any business, trade, manufacture or distribution of goods and services irrespective of the number of workmen employed therein. Every person employed in an establishment for hire or reward including contract labour, apprentices and part time employees to do any manual, clerical, skilled, unskilled, technical, operational or supervisory work, is covered by the Act. This Act though does not apply to persons mainly in managerial or administrative capacity, persons engaged in a supervisory capacity and drawing > 1600 p.m. or executing managerial functions and persons subject to Army Act, Air Force and Navy Act or those in police service or officer or employee of a prison.

Calculation of Gratuity The gratuity shall be paid @ 15 days’ wages for every completed year of service. or were employed on any day of preceding 12 months and which is so notified by the Central Government. or on his retirement orresignation. gratuity is payable to the legal heirs or nominees of such employee. Applicability The Act applies to – • • • • • • • every factory. The condition of completing 5 years’ service is not applicablein case of disablement or death of an employee. and every other establishment wherein 10 or more persons are employed. or were employed on any day of the preceding 12 months. 1972 Objectives The Payment of Gratuity Act. mine. port. oilfield. and to all registered trusts and societies employing 10 or more persons.The maximum gratuity payable to an employee is Rs. similarly. or on his death or disablement due to accident or disease. but the wages for a month will be calculated as if the month comprises of 26 days. In case of death of the employee. The Central Government has made the Act applicable to all the educational institutions in the country having 10 or more employees. etc. clubs. etc. where the employees of such establishment.Payment of Gratuity Act. plantation. local bodies and solicitors offices employing 10 or more persons. The Act has been made applicable also to motor transport undertakings. The shop or establishment to which this Act has become applicable shall continue to be governed by this Act. .350. are in receipt of gratuity or pension benefits not less favorable than the benefits conferred under this Act.000. Exemption The appropriate government is empowered to exempt by notification any establishment. Eligibility Gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years: • • • • on his super annuation. every shop or establishment governed by the Shops and Establishments Act of that State in which 10 or more persons are employed. 1972 envisages to provide a retirement benefit to the workmen who have rendered long and meritorious services to the employer. irrespective of the fact that the number of employees working therein has subsequently fallen below 10. Chambers of Commerce & Industry. This Act is not applicable to apprentices and persons holding a post under the Central or State Government who are governed by any other Act or by any other rule providing for payment of gratuity. The appropriate government may also exempt any employee or class of employees. railway company.

leave.per month as his last drawn salary and either he resigns/retires or his services are terminated after working for 20 years. To obtain an insurance in the prescribed manner for his liability for payment of gratuity under the Act or establish approved Gratuity Fund in the prescribed manner. o If the service of the employee is terminated for proven misconduct of riotous or disorderly conduct. Employees in a seasonal establishment shall be deemed to be in a continuous service if they have worked for not less than 75 per cent of the required attendance.500 per month and engaged in any kind of work whether skilled.000. . manual. layoff or strike. The Central/State Government can. or 190 days if the establishment works less than 6 days a week or the employee works below ground in a mine. 1965 aims at providing for the payment of bonus to the employees of certain establishments. at a later date. however. he will be entitled to receive gratuity ofRs. unskilled. Employers’ Obligations • • • To notify regarding opening of establishment to the controlling authority. accident. Applicability The Act applies to every factoryand every other establishment employing not less than 20 persons on any day during an accounting year.000 as under:10.120. Forfeiture of Gratuity An employee can forfeit his gratuity on two counts: • His service is terminated on account of misconduct and the charge is proved against him. Eligibility Every employee (other than an apprentice) receiving salary or wages up to Rs.120. managerial. The loss is deducted from the amount of gratuity payable to the employee. The establishments covered under the Act shall continue to pay bonus even if the number of employees falls below 10. extend its provisions to any establishment employing less than 20 but more than 10 persons. The misconduct has to result in the damage or loss or destruction of property of the employer. o any other act of violence committed by him/her. But any absence from duty because of sickness.For example. To correctly ascertain the amount of gratuity payable and pay the same accordingly. supervisory.400 (salary) x 15 (days) x 20 (years)/26 = Gratuity Amount Rs.400/. Continuous Service • • • Service without interruptions or breaks is continuous service. or o an offence involving moral turpitude committed by him/her during the course of employment. on the basis of profits or production or productivity and for matters connected therewith. the gratuity payable may be wholly or partially forfeited.10. if an employee is drawing Rs. technical. stoppage of work for which the employee is not at fault will not be considered to be an interruption or break in service. lockout. 1965 Objectives The payment of Bonus Act. PAYMENT OF BONUS ACT. Employee shall be deemed to be in continuous service for one year if he/she has put in 240 days' work in 12 calendar months preceding the date of calculation.3.

Reserve Bank of India.clerical. are not entitled to bonus under the Act. etc. subject to a maximum of 20% of such salary or wages. for purposes of calculating the salary or wage all the four allowances. house rent and tiffin allowances. Central/State Government establishments. Applicability The Act applies to all factories other than seasonal factories. the allocable surplus exceeds the amount of minimum bonus.through a contributory fund. sixty per cent of such available surplus. Local Bodies.is8. Hospitals. sixty-seven per cent of the available surplus in an accounting year. 1948 Objectives The Employees’ State Insurance Act. family.Social Welfare Institutions. Ad-hoc.Bonus is payable only annually. Chambers of Commerce. Allocable surplus ‘Allocable surplus’ means • In relation to an employer. Employees of the general insurance companies. What they are paid as bonus. Salary or Wage Salary or wage means basic pay plus dearness allowance. To maintain the prescribed registers and file annual returns of bonus paid. . However.33% of the salary or wages of the employee during the accounting year. maternity and employment injury including occupational diseases.Payment received by way of encashment of leave will not form salary or wages for the purpose of the Act. EMPLOYEES’ STATE INSURANCE ACT.etc. viz. the employer shall pay bonus in proportion to the salary or wages earned by the employee during that accounting year. Mode and Time for Payment of Bonus Bonus should be paid in cash and within 8 months from the close of the accounting year. In any other case. Indian Red Cross Society. • Minimum Bonus The minimum bonus which an employer is required to pay even if he suffers losses during the accounting year or there is no allocable surplus (except in case of new establishments). 1948 aims to provide certain benefits to the workers in case of sickness. Industrial Finance Corporation of India. is exgratia payment. if he has worked for at least 30 working days in that year. using power in the manufacturing process and employing 10 or more persons and factories not using power but employing 20 or more persons for wages. Universities and Educational Institutions. being a company other than a banking companywhich has not made the arrangements prescribed under the Income Tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of section 194 of that Act. Maximum Bonus iif in any accounting year. would be included. Unit Trust of India. LIC. is entitled to bonus for every accounting year. Employers’ Obligations • • To calculate and pay the annual bonus as required under the Act.

but excludes• • • • employer’s contribution to any pension. who is in receipt of wages up to Rs.Lay off Compensation.. Gas & Dust Allowance. What is included in wages and what is not.House Rent Allowance. Act. any Travelling Allowance or value of any Travelling Allowance. Encashment of Leave. gratuitypayable on discharge. Contributions The rates of contribution payable by employees and employers are as under:• • Employees’ Contribution 1. newspapers establishments etc.75 per cent of the wages Employees in receipt of an average daily wage of up to Rs. 1948 derive the following benefits from the applicability of the Act: . agricultural or otherwise. paid at intervals not exceedingtwomonths. Payment forun substituted holidays. funds.Under this provision.I. Act. any sum paid to defray special expenses entailed by the nature of employment. 6.I.500/. However. Not to be deemed as wages: • Contribution paid by employer to any Pension/Provident Fund or under ESI Act.S. restaurants. if any.Meal/Food Allowance. Night Shift Allowance. provident or E. City Compensatory Allowance. most of the State Governments have extended the provisions of the Act to the following classes of establishmentsShops. Conveyance allowance. any travelling allowance/ concession.Pay in lieu of notice of retrenchment compensation.The Act contains enabling provision under which the ‘appropriate government’ is empowered to extend the provisions of the Act to other classes of establishments – industrial. strike which is not illegal. reimbursement of any special expenses. is important for the purpose of calculating ESI contribution.Overtime Wages. apprentices engaged under the Apprentices Act are not entitled to the E.per month is entitledto be insured under the E. Advantages to Employers Employees who come under the purview of the E. hotels.Suspension Allowance.S. benefits. Eligibility Every employee (including casual and temporary employees). Benefits paid under the ESI Scheme. Payment of Inam (gift money) which does not form part of the terms of employment.employing 20or more persons. Production incentive. Wages Wages’ means all remuneration paid or payable in cash to an employee including any payment for the periodof authorized leave.S. road motor transport agencies. cinemas including preview theatres.Dearness Allowance. Gratuity payable on discharge. Payment for day of rest. Children Education Allowance. whether employed directly or through a contractor. lock-out or lay-off and other additional remuneration.I.I.Heat.Bonus.Production incentive (when paid at intervals of less than 2 months).75 per cent of the wages Employers’ Contribution4. the position is as under: • Deemed to be wages: Basic Pay.According to the official public claim Employers Guide to Employees’ State Insurance Act. commercial. Washing allowance for liveries.S. 25 are exempt from payment of contribution.

To inform E. One time payment of Rs. or miscarriage or sickness from pregnancy etcleave for 12 weeks. 1961. Periodical payments to the insured employeefor the period of sickness at specified standard benefit rate. arrange for first-aid and transportation of employee to the hospital.S. 1923 Objectives It aims to provide workmen and/or their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen. WORKMEN’S COMPENSATION ACT. Benefits to Employees • • • • • • • Free medical treatment is offered to insured employees at hospital and dispensaries run by the E. To obtain declaration from the employees covered and submit same to E.ty benefits to the covere Periodical payments towoman employee in case of confinement.I. Not to reduce the wages of an employee on account of contribution made by him. Not to put to work any sick employee and allow him leave if he has been issued the prescribed certificate. Death due to injury sustained in the course of employment or due to an occupational disease entitles the employee’s dependents to a benefit in the form of pension.S. To furnish Returns of Contributions. Not to dismiss or discharge any employee during the period he/she is in receipt of sickness/maternity/ temporary disablement benefit.S.reimbursement of actual expenses. . office. Employers are exempted from the applicability of the: o o Maternity Benefit Act. 1923. To maintain prescribed records/registers. Death inthe course of employment entitles specified dependent of the deceased employee to a cash benefit payable up tothe day of his death. dispensary/hospital in case of death of an employee immediately. Injury in the course of employment resulting in temporary/permanent disablement entitles the covered employee to a regular payment to substitute his lost wages.I.I.I.1500 to help meet funeral expenses of the covered employee. office and obtain employees’ Insurance Number and Identity Cards.S. or is under medical treatment or is absent from work as result of illness duly certified or due to pregnancy or confinement. To deposit employees’ and his own contributions.I. Employers’ Obligations • • • • • • • • • • To get his factory or establishment registered with E. Workmen’s Compensation Act. authorities of any accident. lump sum grant or opting for any health insurance policy. of which not more than 6 weeks should be preceding confinement. To report to the E. Corporation and obtain employer’s Code Number.• • Employers are absolved of all liability of providing medicare facilities to employees.S. Corporation.

who is engaged for the purposes of employer’s business and who suffers an injury in any accident arising out of and in the course of his employment. or a widowed mother. fire-brigade.Total Disablement is considered to be permanent if a workman. shall be entitled for compensation under the Act. horticultural operations and doing other mechanical jobs. (c) a minor illegitimate son. The Workmen’s Compensation (Amendment) Act.Applicability The Act applies to railways and other transport establishments. (g) a minor child of a pre-deceased daughter where no parent of the child is alive. Every injury specified in Part II of Schedule I is deemed to result in permanent partial disablement. (d) a minor brother or an unmarried sister or a widowed sister if a minor. 1995has extended the scope of the Act to cover workers of newspaper establishments. oilfields and other employments listed in Schedule II of the Act. plantations. Disablement. mechanized harvesting and thrashing. factories. a minor legitimate or adopted son. Dependent The following relations of a deceased workman shall be his dependents: • • • a widow. Disablement can by classified as Total orPartial. whether permanent or temporary is said to be total when it incapacitates a worker for all work he was capable of doing at the time of the accident resulting in such disablement. (e) a widowed daughter-in-law. Where the disablement is of a temporary nature and reduces the earning capacity of a workman in the employment in which he was engaged at the time of the accident. the earning capacity of a workman in every employment which he was capable of undertaking at the time of the accident.Establishments which are covered by the Employees State Insurance Act.suffers from the injury specified in Part I of Schedule I or suffers from such combination of injuries specified in Part II of Schedule I as would be the loss of earning capacity which amountsto one hundred per cent or more. establishments engaged in constructions. Eligibility Every employee (including those employed through a contractor but excluding casual employees). mines. and any of the following persons wholly or partly dependent on the workman at the time of his death:(a) a widower. docks. establishments engaged in making. as result of an accident. or (h) a paternal grandparent if no parent of the workman is alive. cleaners. it is temporary partial disablement.whether or not dependent on the workman. persons engaged in spraying or dusting of insecticides or pesticides in agricultural operations. an unmarried legitimate daughter. (f) a minor child of a pre-deceased son. adapting. and a son or a daughter. are outside the purview of this Act. Disablement Injury caused to a workman by an accident may result in the loss of the earning capacity of the workman and this loss of earning capacity is called ‘disablement’.It can further be classified into Permanent or Temporary. transport or sale of any article. altering repairing. etc working in connection with a motor vehicle. drivers. an unmarried illegitimate daughter or adaughter legitimate or illegitimate or adopted if married and a minor or if widowed and a minor. Disablement is said to be permanent partial when it reduces for all times. aged 18 years or more who is infirm and wholly dependent on the workman at the time of his death. . workers employed by Indian companies abroad. (b) a parent other than a widowed mother.

When the employee has contacted a disease which is not directly attributable to a specific injury caused by the accident or to that occupation. Compensation. workman must have been engaged in the business of the employer and must not be doing something for his personal benefit. To submit a statement to the Commissioner (within 30 days of receiving notice) in the prescribed form. A worker contracting an occupational disease is deemed to have suffered an accident out of and in the course of employment and the employer is liable to pay compensation for the same. or inherent in the nature or condition of employment. To submit accident report to the Commissioner in the prescribed form within 7 days of the accident which results in death of a workman or a serious bodily injury to a workman. or who has contracted an occupational disease. When injury. is required to compensate an employee: • • who has suffered an accident arising out of and in the course of his employment resulting into death. That accident occurred at the place where he was performing his duties. Accident Compensation. or temporary disablement whether total or partial. Accident arising out of and in the course of employment An accident arising out of employment implies a casual connection between the injury and the accident and the work done in the course of employment. when not payable The employer is not liable to pay compensation for the injury to an employee under any of the following circumstances: • • • • When injury does not cause total/partial disablement for more than 3 days. Occupational diseases have been categorised in Parts A. B. or When the employee has filed a suit for damages against the employer or any other person. The three tests are: • • • At the time of injury. when payable The employer of any establishment covered under this Act. permanent total disablement. or disregard of the safety devices. and C of Schedule III of the Act. . in accordance with the Act. To maintain a notice book in the prescribed form at a place where it is readily accessible to the workman. permanent partial disablement. in a Civil Court. giving the circumstances attending the death of a workman as result of an accident and indicating whether he is liable to deposit any compensation for the same. Employers’ Obligations • • • • To pay compensation for an accident suffered by anemployee. and Injury must have resulted from some risk incidental to the duties of the service.Occupational Disease Workers employed in certain types of occupations are exposed to the risk of contracting certain diseases which are peculiar and inherent to those occupations. not resulting in death or permanent total disablement is directly attributable to employee’s willful disobedience of the safety rules. or the employee having been under the influence of drink or drugs.

transmission and distribution of electricity/power and any other establishment notified by the Central or a State Government. roads. establishments engaged in construction. therefore. oilfield. deposits in any Post Office Savings Bank. If the number of employees is less than 1000. contribution to any pension or provident fund. but in no case it should exceed one month. 1936 was introduced with the object of (a) regulating payment of wages. navigation. The employer should not make any unauthorized deductions from wages. the amount of such compensation and other prescribed particulars. all payments of wages should be made only on a working day. after obtaining his written consent.. Wages ‘Wages’ means allemoluments expressible in terms of money and payable to an employee including any sum payable for termination of service. Eligibility The Act is applicable to the employees receiving wages below Rs.• To submit an annual return of accidents specifying the number of injuries for which compensation has been paid during the year. are also covered under the Act. and (b) eliminating all malpractices by laying downwage periods and time and mode of payment of wages. contributions to any labor welfare fund and fees for membership of any trade union. 1936 Objectives The payment of Wages Act. either directly or through a contractor. 1. inland vessel. wharf. and with his written consent for payment of life insurance premium. etc. wages in lieu of holidays or leave. air transport service. imposition of fines and deductions from wages. developmentand maintenance of buildings. any railway establishment and any industrial or other establishment like tramway service. adapting or manufacturing any article. travelling allowance. plantation. Every employer should fix the wage-period. dock. motor transport service. reimbursement of any special expense and gratuity. Applicability The Act applies to any factory.However. overtime wages and bonus payable under the Bonus Act or under the terms of employment. then wages must be paid within 7 days of the expiry of the wage period.600/. ‘wages’ does not include value of any house accommodation. • • . Nor does it include suspension/subsistence allowance given during suspension period of an employee. quarry. etc. employee’s subscription to provident fund. bridges or canals. Employer should make timely payment of wages.The Act. which may be per day. PAYMENT OF WAGES ACT.Persons employed in a railway establishment. mine. ensures payment of wages in a particular form at regular intervals without unauthorized deductions.Employer can make permissible deductions such as for income tax. etc. and in other case within 10 days of the expiry of the wage period. Besides. purchase of Government securities. water.per month. per week or per month. workshop or other establishment producing. jetty. Wages should be paid in cashor by cheque or by crediting in employee’s bank account. generation. medical attendance or any other amenity. recovery of loans and advances. Obligations of Employers • • • Every employer is primarily responsible for payment of wages to his employees. irrigation or supply of water. supply of light.

employed in any Scheduled employment and to review and revise the same from time to time. then it would constitute part of the wages even under the Minimum Wages Act. wages at not less than the minimum rate in force in respect of each such class. contribution to any pension or provident fund. Fixation of Working Hours. Applicability The Act applies to all establishments employing one or more persons and engaged in any Scheduled employment.Rates fixed under Minimum Wages Act prevail over the rates fixed under award/agreement. . the interval between two revisions not to exceedfive each of which a different minimum rate of wages is applicable. considering the change in price index and dearness allowance.However. weekly rest day and overtime. etc. If the commission on turnover is being paid as per terms and conditions of employment. medical attendance or any other amenity. all amounts payable to him as wages should be paid to his nominee or legal heir. MINIMUM WAGES ACT. The Act also provides for the maximum daily working hours. 1948 envisages to provide minimum statutory wages for scheduled employments with a view to obviate the chances of exploitation of labor through payment of very low and sweating wages. provide for a rest day with wages. which are less than the prescribed minimum wages. unskilled. without making any deduction therefrom except those permitted under the Payment of Wages Act. supervisory.• In case of death of an employee. clerical. an employee should not be paid wages including the commission. In regard to any scheduled employment in respect of which minimum rates of wages have been fixed. in every period of 7 days. Wages for two or more classes of work Where an employee does two or more classes of work. travelling allowance. water. and provide for payment for work on a rest day at a rate not less than the overtime rate. Fixation of Minimum Rates of Wages The State Governments have been empowered to fix rates of wages for different classes of employees -skilled. Employers’ Obligations • The employer is bound to pay to every employee engaged in a Scheduled employment under him wages at a rate fixed for that class of employees in that employment. Wages ‘Wages’ means all remuneration expressible in money terms and payable to an employee including house rent allowance but excluding value of any house accommodation. inclusive of one or more intervals. 1948 Objectives The Minimum Wages Act. the Government may• • • fix the number of working hours constituting a normal working day. etc. reimbursement of any special expense and gratuity. supply of light. the employer shall pay to such employee in respect of the time respectively occupied in each such class of work.

specify in this behalf. Provident Fund : The Employees’ Provident Funds and miscellaneous provisions Act. and anyother establishment employing 20 or more persons or class of such establishments which the Central Government may. Exemption The Act. As per Factories Act. remains undisbursed on account of death or his whereabouts not being known. any establishment the employees of which are not in enjoyment of provident fund. permit the payment of wages wholly or partly in kind.• • • As a rule. and o the employees are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employee than the benefits provided under the Act or the schemes. by notification. or has been set up. keeping in view the prevailing custom. the wages payable under the Act should be paid in cash. even if the number of employees therein at any time falls below 20. 1952 aims to provide for the institution of provident funds. separately or jointly. overtime wages are to be paid at twice the normal rate of wages. a newly set-up establishment for an initial period of 3 years from the date on which such establishment is. 1952 Objectives The Employees’ Provident Funds and Miscellaneous Provisions Act. Applicability The Act applies to: • • every establishment which is a factory engaged in any industry specified in Schedule I and in which 20 or more persons are employed. If any amount payable to an employee as wages or otherwise under this Act. by notification. so worked in excess. at the rate prescribed under this Act or under any other law. If an employee works on any day in excess of the normal working hours. apply the provisions of this Act to any establishment employing such number of persons less than 20 as may be specified in the notification. • . whichever is higher. and any Central/State Government establishment having its own scheme of provident fund or pension. pension or gratuity benefits that are. the employer shall pay to him overtime wages for every hour or part of an hour. The Central Government may. and also allow the supply of essential commodities at concessional rates. The appropriate Government is empowered to exempt from the operation of all or any of the provisions of any Scheme: • any establishment to which this Act applies ifo the rules of its provident fund with respect to the rates of contribution are not less favourable than those specified in section. not favourable than the benefits provided under the Act or the schemes. An establishment to which this Act applies shall continue to be governed by the Act. does not apply to: • • • a co-operative society employing less than 50 persons and working without the aid of power.The appropriate Government may. however. however. family pension fund and deposit linked insurance fund for employees in factories and other establishments. then the same shall be deposited by the employer with the prescribed authority.

for providing life insurance benefit to employees. The then existing Employees’ Family Pension Scheme has been merged under the new scheme. If the pay of a member-employee increases beyond Rs. appoints the necessary staff. Deputy/Regional Provident Fund Commissioners and other officers.6. The Schemes The Central Government has framed three schemes under the Act: • • • The Employees’ Provident Fund Scheme. monthly pension for children of the subscribers. etc. The Central Government constitutes a Central Board of Trustees and in consultation with the State Government. marriages. for providing family pension and life assurance benefit to the employees.6. who may by notification. with the approval of the State Government.m. It is applicable to all the members of the Employees’ Provident Fund Scheme.Voluntary Coverage The employer and majority of employees of an establishment may agree for the voluntary application of the provisions of the Act in relation to that establishment. . Administrative Authority The Act is administeredboth by the Central Government and the State Governments in their respective spheres. For this purpose. monthly pension to members on account of permanent total disablement during service. 1976. financing of insurance policy. 1995 The Government introduced the Employees’ Pension Scheme. shall be eligible to becoming a member of the funds. he shall continue to be a member but the contribution payable in respect of him shall be limited to the amount payable on monthly pay of Rs. extend the provisions of the Act to that establishment with effect from the date of such agreement or any subsequent date specified in such agreement. The establishment covered on voluntary basis is required to comply with the provisions of the Act at par with other covered establishments and cannot opt out of coverage on a subsequent date. they should make an application to the Central Provident Fund Commissioner. education of children. Eligibility Every employee. for enforcement of the provisions of the Act. 1995.500 p. 1976 The scheme is for providing life insurance benefit to employees.The State Board. pension to widows on death after superannuation. Employees’ Pension Scheme. 1995 with effect from 16.m. Employees’ Deposit Linked Scheme.500.1995.11. for establishment of provident funds for the employees.500 p. after his having become a member. The Employee’s Deposit Linked Insurance Scheme. Employees’ Provident Fund Scheme. The Employees’ Family Pension Scheme. including the one employed through a contractor who is in receipt of wages up to Rs. 1971 which has now been merged into the Employees’ Pension Scheme.An employee ceases to be a member of the Employees’ Family Pension Fund at the age of 60 years. 1952 The Employees’ Provident Fund Scheme takes care of the following needs of the members: retirement.The new scheme envisages to provide monthly pension to employees on superannuation. a State Board of Trustees. housing. etc. The Central Government appointsa Central Provident Fund Commissioner. 6. medical care. 1952.

6. in respect of any period during which the establishment is not working. dearness allowance and retaining allowance if any.Allotment of Account Number Every employee who becomes a member of the Provident Fund/Pension Fund. o (b)12% of the wages. commission or any other similar allowance. D.e. manual or otherwise. bonus.A. o Out of the contributions payable by the employer each month. Basic Wages ‘Basic Wages’ means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash. any presents made by the employer. o Where the pay of an employee exceeds Rs.500 only. etc. any dearness allowance.. a part of the contribution representing 8. Dearness Allowance ‘Dearness Allowance’ shall include the cash value of any food concession allowed to the employee. • Employee ‘Employee’means any person who is employed for wages in any kind of work. overtime allowance. D. house rent allowance.m.A.The employee is not required to contribute towards Deposit Linked Insurance Fund. Employees’ Contribution The employee’s contribution shall be equal to the contribution payable by the employer in respect of him.5% of the wages. underan obligation to contribute at such higher rate. in case of establishments employing less than 20 persons or a sick industrial (BIFR) company orsick establishments. Employer’s Contributions The employer is required to contribute the following amounts: • Towards Employees Provident Fund and Pension Fund: o (a)10% of the basic wages. however. The employer is required to deduct the employee’s contribution from his wages and deposit the same into the provident fund account along with his own contribution. the contribution payable to Pension Fund shall be limited to the amount payable on his pay of Rs. etc.If an employee so desires. or any establishment in the jute. . in case of all other establishments employing 20 or more persons. brick. Towards Deposit-Linked Insurance Fund: o 0.33 per cent of the Employee’s pay shall be remitted to the Employees’ Pension Fund and the balancepartshallcontinue to remain in the Provident Fund account.The employer shall not be.6. in or in connection with the work of an establishmentand who gets wages directly or indirectly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment. coir or gaur gum industry. he may opt to make contribution to the fund at a higher rate also. i. beedi. shall be allotted an account number by the employer. 10% or12% as the case may be. but does not include• • • the cash value of any food concession. for retaining his services. Retaining Allowance ‘Retaining Allowance’ means an allowance payable to an employee.500 p.

01% of the employees’ wages subject to a minimum of Rs.Separate cheques should be used for contributions and administrative charges. life insurance benefit. Eligibility Register. of employees leaving the service during the month. however. monthly and annual returns of contributions made by employer and employees. Inspection Book. such as returns of ownership/management.F. Investment of Funds and Interest The amounts deposited into the Provident Fund Account are invested in specified securities and under Special Deposits Scheme.Interest is also earned on the Pension Fund and Deposit Linked Fund Accounts. the pay of the member exceeds Rs.5 every month. To allow the employees to avail of temporary/permanent withdraws out of their contributions.The rate of interest notified for the year 2001-02 is 9.Central Government’s Contribution The Central Government shall also contribute @ 1. returns in the prescribed forms. 6. permissible under the schemes.The Commissioner shall credit to the provident fund account of each member. the contribution payable shall be limited to the amount payable on his pay of Rs. of membership of employees. To transfer within the specified time. Provident Fund Ledger. 0. Protection of Provident Fund The amount standing to the credit of any member of the fund cannot be in any way assigned or charged. on the balance standing to his credit on first day of April each year. Time and Mode of Deposit The employer shall within 15 days of the close of every month deposit the total amount of the employer’s and employee’ contributions and administrative charges with P. interest at such rate as the Central Government may determine.m. pension. the accumulated balance in the account of an employee leaving the service and obtaining re-employment in another establishment . To furnish to the Provident Fund Commissioner. for administration of Deposit Linked Insurance Fund. insurance benefit.500 p..5%.500 only. Administrative Charges An employer is required to pay the following administrative charges also: • • 1.2 every month. for administration of Provident Fund. Commissioner into the respective accounts maintained at the State Bank of India. Employers’ Obligations The obligations of the employers under the three schemes have been summarised below: • • • • • To pay the employer’s and employees’ contributions and administrative charges as required under the Act/schemes. etc. etc. To maintain records/registers such as: Contribution Cards. 6. nor it is liable to attachment under any decree order of the court in respect of any debt or liability incurred by the member.16% of the pay of the members of the Employees’ Pension Scheme to the Pension Fund.Where. Provident Fund Register.10% of the employees’ wages subject to a minimum of Rs.

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