Employees’ Provident Funds Act

1952
 Contents
• Employee’s Pension Scheme and Fund
• Employee’s Deposit Linked Insurance Scheme
• Administration of the Scheme
• Recovery of money from employer and
contractor
• Appellate Tribunal
• Penalties and Offences
 Objective
• Employees’ Provident Funds Act provides
social security to employees in factories and
other establishment against old age or
premature death.
• However, since 1971 & 1976 it also provided
pension scheme & deposit-linked insurance
respectively.
 Scope of the Act
• It includes to the whole of India excluding Jammu & Kashmir.
• Applies to all factories and establishments employing 20 or
more employees.
• However if any establishment has less than 20 employees,
than the appropriate government may apply the act to it after
notification in official gazette.
• Act does not apply to establishments
 under cooperative societies act, 1912
 Establishments under the direct control of central or state
government.
• Appropriate Government- Central government in case of
railways, ports, mines, oil fields, iron & steel or any other
under direct control of it. State government for other sectors
for particular state.
• Basic Wages [Sec 2b} It mean all emoluments which are
earned by an employee in accordance with the terms of the
contract of employment and which are paid, or payable in
cash to such employee. The basic wages, however, do not
include: (i) the cash value of any food concession; (ii) any
dearness allowance, house-rent allowance, overtime
allowance, bonus, commission, or any other similar allowance
payable to the employer in respect of his employment or of
work done in such employment; and (iii) any presents made
by the employer.
 Administration of the Scheme
 Central Board- The Central govt.may by notification in the official gazette constitute and
include members-
• Chairman and a vice chairman to be appointed
• the central provident fund commissioner ex officials
• not more than 15 persons representing govt.of such states as central govt.
• 10 persons representing employers of the establishments.
• 10 persons representing employees.
 Executive Committee [Sec 5AA]- Executive Committee is set up to assist the Central Board.
Constitution of the committee:
• A Chairman appointed from members of the central board.
• 2 persons appointed by central government from 5 persons appointed in central board.
• 3 persons appointed by central government from 15 persons representing state
government as in central board.
• 3 persons from employer’s side of 10 members elected by central board.
• 3 persons from employee’s side of 10 members elected by central board.
• Central provident fund commissioner ex-officio.
 State Board [Sec 5B]- Central government may form a state board of trustees in
consultation with the state government . This board may exercise powers and perform
duties as assigned to it.
 Appointment of Officers [Sec 5D]:
• Central government appoints a central provident fund commissioner as
CEO of central board but depending upon general control &
superintendence of the board.
• Central government appoints a financial advisor & chief accounts officer to
assist the central provident fund commissioner.
• Depending upon the maximum scale of pay, the central board may
appoint additional central provident fund commissioner, regional
provident fund commissioner, & others for necessary administration.
• No appointment to be made under central board of the scale equivalent
to central government scale without consultation with UPSC.
• Recruitment method, salary, allowances, discipline & other conditions of
service shall be specified.
• The central board may empower its chairman to sanction or limit the
expenditure of any item for efficient administration of the fund.
 Contributions [Sec 6]
• The fund of the scheme has to be provided through contribution from the employer’s &
employees.
• The employer’s contribution should be as per the rate prescribed by central government
depending upon basic wages and DA.
• Employees contribution paid by the employer as he is capable of.
• As per the Employees' Provident Funds Scheme, 1952 (Scheme), contributions payable by an
employee must be at the rate of 12% of the basic wages.
 Investment of Provident Fund Contribution- The board of trustees invest the fund accumulated
through contribution as approved by central government. They are entitled for the interest on
provident fund money they have invested.
 Advances/withdrawals- Non-refundable advances for paying insurance premium of any member.
• Withdrawals for purchasing, constructing, improvement of a house already commenced by the
spouse .
• Non-refundable advances to members due to temporary closure of an establishment for more
than 15 days or non-receipt of wages for more than 2 months. Refundable advances are allowed
for closure of more than 6 months.
• Non-refundable advance of the member and his family in case of hospitalization of 1 month,
major surgery, suffering from TB, Paralysis, Cancer etc.
• Non-refundable advance for self, son, daughter, brother or sister’s marriage or for post
matriculation education of son or daughter.
• Non-refundable advance in case of property damage due to calamity.
• Withdrawal for repayment of loans.
• Non-refundable advance to physically handicapped members to purchase any necessary
equipment.
 EPF Account Withdrawal: Procedure
 If salaried persons wish to withdraw their EPF accounts, they have to submit form
19 to their ex-employers, who in turn, have to sign and attest it. To complete the
withdrawal procedure, members have to submit various other documents, namely,
resignation letter and a cancelled cheque in addition to form 19 to the EPFO.
 Mode of recovery- Any amount due from employer of any establishment to which
scheme applies can be recovered.
• Any amount payable to any fund
• Any damages recoverable
• Any accumulation required to transfer.
Types of Schemes
 Employees Provident Fund Scheme [Sec 5]- Central government by notification
may form a scheme. The scheme would comprise a fund for provident applicable
to employees under the scope of this act. The fund shall be administered by
Central Board.
 Matters for which provisions made in Provident Fund Scheme:
• The employee who shall join the fund or the conditions under which employees be
exempted from making any contribution would be mentioned.
• The time & manner in which contributions be made to the fund.
• The manner in which recovery of contributions to be made from employees.
• The payment by the employer of such sums of money as necessary to meet the
cost of administering the fund & the rate at which contribution to be made.
• The constitution of the Board of Trustees.
• The opening of regional office of the trustee.
• The conditions of withdrawal from the fund, any deductions & its amount.
• The fixation of rates of interest payable to members of the trustee.
• The manner in which the employee shall furnish details about himself & family.
• The nomination of a person to receive the amount after his death.
 Employees Pension Scheme [Sec 6A]:
• This scheme started by Labour Provident Fund Law. However a new scheme called
Employees’ Pension Scheme came into effect from 1995.
• The act provides employees to be paid pension from the fund contribution.
• Eligibility for pension- A minimum of 10 years continuous service is required.
Superannuation pension is payable on attaining the age of 58 years. There is a
provision for pension @ discounted rate after 50 years.
• In case continuous service is less than 10 years and he can reached
superannuation age in that case he can claim return of the contribution.
• Entitled membership for pension- Superannuation age, Retirement, Permanent
total disability, death during service, Death after Superannuation age, Retirement,
Permanent total disability, children pension, orphan pension.
 Employee’s Deposit Linked Insurance Scheme [Sec 6C]:
 This scheme is provided for the purpose of life insurance benefit to the employees
of any establishment.
 The employees does not pay any contribution to the fund. Employers pay
contribution @ 0.5% of total i.e. basic+ DA+ Other allowances
• Central government also contributes to the insurance fund @ 0.25% of the total.
• The maximum amount of benefit is Rs 10,000.
• Administrative charges @ 0.01% of the pay of the employee members a
minimum of Rs 2 p.m. per employee.
 Appointment of Inspectors-
• The appropriate government may appoint inspectors for the purpose of this act.
• The government may define the area to which authority of an inspector can
extend.
• Inspectors are appointed to allocate work in that area.
• Every inspector should be a considered as a public servant.
 Powers:
• Require an employer to give information necessary.
• Enter & inspect any point of time in the premises of the establishment to
examine the register, record or document necessary.
• Examine any matter relevant to this act.
• Make copies or take extracts from the register or records for further investigation
in order to find out any offence been conducted by the employer.
• Inspector is also legally-bound to provide any required information.
• Employees Provident Fund Appellate Tribunal
The Central Government may, by notification in the official Gazette,
constitute one or more Appellate Tribunals to be known as the Employees’
provident Funds. Appellate Tribunal to exercise the powers and discharge
the functions conferred on such Tribunal by this Act and every such Tribunal
shall have jurisdiction.

Rules are as follows-

 Languages of the Tribunal-English
 Procedure for Filing Appeals
 Presentation and scrutiny of appeals
 Place of filing appeals
 Fee, time for filing appeal, deposit of amount due on filing appeal
 Content of the Appeal- concisely
 Documents to accompany the appeal
 Plural Remedies
 Penalties
• Whoever, for the purpose of avoiding any payment to be made shall be
punishable with imprisonment for a term which may extend to one year,
or with fine of five thousand rupees ,or with both.

• An employer who contravenes ,or makes default in complying with ,the

provisions of section 6 or clause a of sub-section 3 of section 17,shall be
punishable with imprisonment for a term which may extend to 3 years.

• An employer who contravenes ,or makes default in complying with ,the

provisions of section 6C or clause a of sub-section 3A of section 17 shall be
punishable with imprisonment for a term which may extend to one year
and shall also be liable to fine which may extend to five thousand rupees.