The Employees Provident Funds and Miscellaneous Provisions Act, 1953 | Labour and Industrial Law - CLAT PG PDF Download

Objectives

• The Central Board of Trustees manages a contributory provident fund, pension scheme,and an insurance scheme for the organized workforce in India, supported by the Employees' PF Organization (EPFO).
• The EPFO operates under the Ministry of Labour and Employment and oversees the EPF Scheme 1952, Pension Scheme 1995 (EPS), and Insurance Scheme 1976 (EDLI).

• Established by the Employees Provident Funds and Miscellaneous Provisions Act, 1952, the EPFO provides social security benefits such as retirement funds, pensions, and insurance to industrial workers.
• It covers various contingencies like retrenchment, closure, and incapacity to work, ensuring every employee in covered establishments becomes a fund member from the date of joining.

Applicability

• Every employee employed in or in connection with the work of a factory or other establishment covered by the schemes, other than an 

Contribution and Matters Which May Be Provided for in Schemes

• Both the employer and employee contribute equally.
• 12% of the basic salary is contributed by the employee, and the same amount is contributed by the employer.

Dispute Arises Regarding the Applicability of the Act

• Determine the amount due from any employer under any provisions of this Act.
• The officer conducting the inquiry has the authority to:
• Enforce the attendance of any person or examine them on oath.
• Require the discovery and production of documents.
• Receive evidence on affidavit.
• Issue commissions for the examination of witnesses.

Judicial Proceedings

• Any such inquiry is considered a judicial proceeding under sections 193, 228, and for the purpose of section 196 of the IPC.
• Sec 193 of IPC: Intentionally giving false evidence in a judicial proceeding or fabricating false evidence for use in any stage of judicial proceeding is punishable with imprisonment for up to seven years.
• Sec 196 of IPC: Fabricated evidence is punishable.
• Sec 228 of IPC: Intentionally interrupting a public servant during a judicial proceeding is punishable with simple imprisonment for up to six months or a fine of one thousand rupees, or both.

Inquiries and Determinations

• If the parties fail to attend the inquiry, the court decides the matter in favor of the ex parte party.
• Determination of escaped amount: If any amount is due from the employer, a notice is issued to the employer within five years from the order for re-determining the amount due.

Tribunal

• The industrial tribunal constituted by the Central Government (CG) is responsible for the adjudication of issues under this Act.

Case: State Bank of Travancore v. Recovery Officer, Employees Provident Fund Organization (2003) Lab L.J. 88 (Karn)

1. Issues:
2. Inadequacy of price in the time public auction would be set aside.
3. It was held that in a public auction, the price may vary, hence it will not be set aside.

Case: Regional PF Commissioner v. Shiv Kumar Joshi AIR 2000 SC 331

1. Issue:
2. Whether the provisions of the Consumer Protection Act can be invoked against the PF Commissioner.
3. Whether the PF Schemes fall under the purview of 'Service' as per section 2 (1) (d) of the Consumer Protection Act.
4. Judgment:
5. The Consumer Protection Act is applicable to the PF Act.

Central Board

• Through notification, the Central Government (CG) can constitute a Board of Trustees.
• The Chairman and Vice Chairman are appointed by the CG.
• The Central PF Commissioner is also a member.
• Five officials are appointed by the CG.
• Fifteen representatives from different states are included.
• Ten representatives from employers and ten from employees are also part of the Board.

Administering Funds

• The Board administers schemes like Pension and Insurance.
• The accounts are audited by the Central Board through the Auditor General of India.
• Auditors can request books of accounts, connected vouchers, documents, and papers.
• The accounts are certified by the auditors and sent to the CG.
• An annual report is submitted to the CG.

Executive Committee

• The CG constitutes this committee through notification in the official Gazette.
• A chairman is appointed by the CG from among the Central Board members.
• Two persons are appointed by the CG from among the officials.
• Three persons are appointed by different states from among the officials.
• Three employer representatives are elected by the Central Board.
• Three employee representatives are elected by the Central Board.
• The Central PF Commissioner is an ex officio member.

State Board

• The CG may, after consultation with the Board, constitute a State Board.
• The State Government may constitute the State Board under section 5-C.

Sec 5-D. Appointment of Officers

• The CG shall appoint a Central Provident Fund Commissioner who will be the Chief Executive Officer of the Central Board.
• The CG may also appoint a Financial Officer and a Chief Accounts Officer to assist the CPF Commissioner.
• The Central Board may appoint other officers such as Additional Central Provident Fund Commissioner,Deputy PF Commissioner,Assistant PF Commissioner,Regional PF Commissioner, and any other officers for these schemes.

A Contribution

• A Contribution means a contribution payable in respect of a member under a scheme or a contribution payable in respect of an employee to whom the insurance scheme applies.

Sec 6 Contribution and Matters Which May Be Provided for in Schemes

• Employer contribution is 10% of basic wages, including DA and Retaining Allowance (as per sec 6).
• Employee contribution is equal to the employer's contribution.
• If any establishment makes an application to the CG, they can contribute 12%.
• Dearness allowance includes the cash value of any food concession.
• Retaining allowance is an allowance payable to an employee during any period when the establishment is not working to retain their service.

Dispute (Employer and Employee)

Authorized officer:

• CPC (Chief Provident Fund Commissioner)
• APC (Additional Provident Fund Commissioner)
• DPC (Deputy Provident Fund Commissioner)
• RPC (Regional Provident Fund Commissioner)

Inquiry Process

• The inquiry starts with the Employer and Employee presenting their cases to the authorized officer.
• The decision is made by the authorized officer based on the evidence presented.
• If the employer is satisfied with the decision, they are liable to pay the due amount.
• If either party is not satisfied, they can file a review application to the authorized officer within 45 days

Review Application

• If the review application is accepted by the authorized officer, a new decision will be made, binding on both parties.
• If the decision is satisfied by the parties, the employer is liable to pay the due payments.
• If not satisfied, an appeal can be made to the Appellate Tribunal.

Ex Parte Order

• If one party is not present during the inquiry, an ex parte order may be made by the authorized officer under section 7A.
• The affected party can file an application to set aside the ex parte order within 3 months (90 days) with sufficient cause.
• The authorized officer will hear the case with opportunities given to both parties, and a new decision will be made.
• If the decision is satisfied, the employer has to pay due payments; if not, an appeal can be made to the Appellate Tribunal.

Employee Provident Fund (EPF)

• The EPF is the main scheme under the EPFMPA 1952. However, an employee drawing a salary above the prescribed limit of ₹15,000 can become a member with the permission of the Assistant PF Commissioner, if both the employee and employer agree.
• The EPF covers every establishment where 20 or more persons are working. Exemptions may apply even if they employ less than 20 persons.
• According to the rules, in the EPF, an employee whose pay is more than ₹15,000 per month at the time of joining is not eligible and is referred to as a non-eligible employee. Employees earning less than ₹15,000 per month are required to become members of the EPF mandatorily.

Contribution by Employer and Employee

• The contribution made by the employer is 12% of basic wages plus dearness allowance and retaining allowance. An equal contribution is payable by the employee as well.

EPF Withdrawal Due to Coronavirus

• Members of the Employees Provident Fund Organization (EPFO) have been allowed to take non-refundable advances from their EPF accounts to address financial emergencies caused by the coronavirus-induced lockdown.
• As per the EPF withdrawal rules, a member can withdraw an amount equal to three months of basic salary and dearness allowance (DA) or 75% of the credit balance in the account, whichever is lower.

Reduction in EPF Contributions

• The government has reduced both employer and employee contributions to the EPF account from 12% of employees' salary to 10% for the next three months as part of its coronavirus relief measures. This reduction means that employers will save money due to the 2% decrease in their contribution to the EPF.
• According to the finance ministry announcement, businesses need support to ramp up production over the next quarter. It is essential to provide more take-home salary to employees and also to alleviate the burden on employers regarding Provident Fund dues. This indicates that the reduction in EPF contributions by the employer is not intended to be transferred or added to the take-home salaries of the employees. If this were the case, there would be no net relief for employer organizations.
• The government has implemented a cut in the Employees Provident Fund contribution by both employers and employees for the next three months, specifically in May, June, and July 2020.