The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952: Notes | Corporate & Other Laws for CA Intermediate PDF Download

 Page 1


4 
The Employees’ Provident Funds and 
Miscellaneous Provisions Act, 1952   
Learning Objectives 
In this Chapter, the students come to know the 
? Operations of Employees’ Provident Fund Scheme 
? Operations of the Employee’s Pension Scheme 
? Operations of the Deposit-Linked Insurance Scheme 
? Obligations of the employer and employee towards PF accounts 
? Other provisions of the Act such as powers of the Central Government, determinations of 
moneys due from employers etc. 
Every worker wants security and maintenance for old age. The Provident Fund Act, 1925 
deals with the provident funds relating to only Government, Railways and local authorities. So 
it was considered desirable to introduce a Provident Fund Scheme for the industrial workers. 
The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 is a beneficial piece 
of legislation, described as social security statute to ensure the employers better future on his 
retirement and of his dependents on his death. This statutory obligation under the Act, cannot 
possibly be deferred in the event of an untimely death of a worker/ an employee [Balbir Kaur 
Vs. Steel Authority of India, AIR 2000 SC 1596].  
4.1 Introduction 
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred 
to as ‘the Act’) extends to the whole of India except the State of Jammu & Kashmir. It seeks to 
provide for the institution of provident funds, pension funds and deposit linked insurance funds 
for employees in factories and other establishments.  
Subject to the exceptions contained in Section 16 (Act not to apply to certain 
establishments), this Act applies to the following entities, namely : 
(a) every establishment which is a factory engaged in any industry specified in Schedule I 
and in which 20 or more persons are employed ; and 
(b) any other establishment which employs 20 or more persons or class of such 
establishments which the Central Government may, by notification in Official Gazette 
specify in the behalf. 
Page 2


4 
The Employees’ Provident Funds and 
Miscellaneous Provisions Act, 1952   
Learning Objectives 
In this Chapter, the students come to know the 
? Operations of Employees’ Provident Fund Scheme 
? Operations of the Employee’s Pension Scheme 
? Operations of the Deposit-Linked Insurance Scheme 
? Obligations of the employer and employee towards PF accounts 
? Other provisions of the Act such as powers of the Central Government, determinations of 
moneys due from employers etc. 
Every worker wants security and maintenance for old age. The Provident Fund Act, 1925 
deals with the provident funds relating to only Government, Railways and local authorities. So 
it was considered desirable to introduce a Provident Fund Scheme for the industrial workers. 
The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 is a beneficial piece 
of legislation, described as social security statute to ensure the employers better future on his 
retirement and of his dependents on his death. This statutory obligation under the Act, cannot 
possibly be deferred in the event of an untimely death of a worker/ an employee [Balbir Kaur 
Vs. Steel Authority of India, AIR 2000 SC 1596].  
4.1 Introduction 
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred 
to as ‘the Act’) extends to the whole of India except the State of Jammu & Kashmir. It seeks to 
provide for the institution of provident funds, pension funds and deposit linked insurance funds 
for employees in factories and other establishments.  
Subject to the exceptions contained in Section 16 (Act not to apply to certain 
establishments), this Act applies to the following entities, namely : 
(a) every establishment which is a factory engaged in any industry specified in Schedule I 
and in which 20 or more persons are employed ; and 
(b) any other establishment which employs 20 or more persons or class of such 
establishments which the Central Government may, by notification in Official Gazette 
specify in the behalf. 
4.2 Business Law, Ethics and Communication 
(c) The Central Government may, after giving not less than 2 months’ notice of its intention 
to do so, apply the provisions of this Act to any establishment with less than 20 persons 
in the employment. 
(d) Notwithstanding anything mentioned above or in Sub-section (1) of Section 16, where it 
appears to the Central Provident Fund Commissioner, whether on an application made to 
him in this behalf or otherwise, that the employer and the majority of employees in 
relation to any establishment, have agreed that the provisions of this Act should be made 
applicable to the establishment, he may, by notification in the Official Gazette, apply the 
provision of this Act to the establishment on and from the date of such agreement or from 
any subsequent date specified in such agreement. 
An establishment to which this Act applies must continue to be governed by this Act, 
even if the number of persons employed therein falls at any time below 20. 
(e) The Ministry of Labour & Employment through Notification No. S.O. 30 (E),dated 8th 
January, 2011 specifies that the Employees’ Provident Funds and Miscellaneous 
Provisions Act, 1952 shall also apply to “Municipal Councils and Municipal Corporations 
constituted under sub-clauses (b) & (c) of clause (1) of Article 243Q of the Constitution of 
India. 
4.2 Definitions (Section 2) 
In this Act, unless the context otherwise requires : 
(a) “Appropriate Government” means : 
(i) in relation to an establishment belonging to, or under the control of Central Government 
or in relation to an establishment connected with ‘a railway’ company, a major port, a 
mine or an oilfield or a controlled industry, or in relation to an establishment having 
departments or branches in more than one State, the Central Government ; and  
(ii)  in relation to any other establishment, the State Government. 
(b) “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 to him, but does not include: 
(i) the cash value of any food concessions ; 
(ii)  any dearness allowance (that is to say all cash payments, by whatever name called, paid 
to an employee on account of rise in the cost of living), house rent allowance, overtime 
allowance, bonus, commission or pay and other similar allowance payable to the 
employee in respect of his employment or of work done in such employment ; or 
(iii)  any presents made by the employer. 
Emoluments which are paid to all the employees of a concern while on duty shall constitute 
basic wages, whereas such emoluments which are paid to some of the employees of a 
concern, they do not form part of the basic wages. [Burmah Shell Oil Storage &Distributing 
Co. of India Ltd. V. R.P.F.Commr.(1981)2 LLJ 86 Del]. 
Page 3


4 
The Employees’ Provident Funds and 
Miscellaneous Provisions Act, 1952   
Learning Objectives 
In this Chapter, the students come to know the 
? Operations of Employees’ Provident Fund Scheme 
? Operations of the Employee’s Pension Scheme 
? Operations of the Deposit-Linked Insurance Scheme 
? Obligations of the employer and employee towards PF accounts 
? Other provisions of the Act such as powers of the Central Government, determinations of 
moneys due from employers etc. 
Every worker wants security and maintenance for old age. The Provident Fund Act, 1925 
deals with the provident funds relating to only Government, Railways and local authorities. So 
it was considered desirable to introduce a Provident Fund Scheme for the industrial workers. 
The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 is a beneficial piece 
of legislation, described as social security statute to ensure the employers better future on his 
retirement and of his dependents on his death. This statutory obligation under the Act, cannot 
possibly be deferred in the event of an untimely death of a worker/ an employee [Balbir Kaur 
Vs. Steel Authority of India, AIR 2000 SC 1596].  
4.1 Introduction 
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred 
to as ‘the Act’) extends to the whole of India except the State of Jammu & Kashmir. It seeks to 
provide for the institution of provident funds, pension funds and deposit linked insurance funds 
for employees in factories and other establishments.  
Subject to the exceptions contained in Section 16 (Act not to apply to certain 
establishments), this Act applies to the following entities, namely : 
(a) every establishment which is a factory engaged in any industry specified in Schedule I 
and in which 20 or more persons are employed ; and 
(b) any other establishment which employs 20 or more persons or class of such 
establishments which the Central Government may, by notification in Official Gazette 
specify in the behalf. 
4.2 Business Law, Ethics and Communication 
(c) The Central Government may, after giving not less than 2 months’ notice of its intention 
to do so, apply the provisions of this Act to any establishment with less than 20 persons 
in the employment. 
(d) Notwithstanding anything mentioned above or in Sub-section (1) of Section 16, where it 
appears to the Central Provident Fund Commissioner, whether on an application made to 
him in this behalf or otherwise, that the employer and the majority of employees in 
relation to any establishment, have agreed that the provisions of this Act should be made 
applicable to the establishment, he may, by notification in the Official Gazette, apply the 
provision of this Act to the establishment on and from the date of such agreement or from 
any subsequent date specified in such agreement. 
An establishment to which this Act applies must continue to be governed by this Act, 
even if the number of persons employed therein falls at any time below 20. 
(e) The Ministry of Labour & Employment through Notification No. S.O. 30 (E),dated 8th 
January, 2011 specifies that the Employees’ Provident Funds and Miscellaneous 
Provisions Act, 1952 shall also apply to “Municipal Councils and Municipal Corporations 
constituted under sub-clauses (b) & (c) of clause (1) of Article 243Q of the Constitution of 
India. 
4.2 Definitions (Section 2) 
In this Act, unless the context otherwise requires : 
(a) “Appropriate Government” means : 
(i) in relation to an establishment belonging to, or under the control of Central Government 
or in relation to an establishment connected with ‘a railway’ company, a major port, a 
mine or an oilfield or a controlled industry, or in relation to an establishment having 
departments or branches in more than one State, the Central Government ; and  
(ii)  in relation to any other establishment, the State Government. 
(b) “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 to him, but does not include: 
(i) the cash value of any food concessions ; 
(ii)  any dearness allowance (that is to say all cash payments, by whatever name called, paid 
to an employee on account of rise in the cost of living), house rent allowance, overtime 
allowance, bonus, commission or pay and other similar allowance payable to the 
employee in respect of his employment or of work done in such employment ; or 
(iii)  any presents made by the employer. 
Emoluments which are paid to all the employees of a concern while on duty shall constitute 
basic wages, whereas such emoluments which are paid to some of the employees of a 
concern, they do not form part of the basic wages. [Burmah Shell Oil Storage &Distributing 
Co. of India Ltd. V. R.P.F.Commr.(1981)2 LLJ 86 Del]. 
  The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 4.3 
Production bonus and incentives wage is not the part of the basic wage.[Bridge and Roof Co. 
v. U.o.I,AIR(1963) SC 1474], whereas adhoc payments are like presents made by the 
employer, it cannot be included in basic wages but where adhoc payments are paid under a 
settlement for period during which employees were deemed to be on duty, there it will form the 
part of basic wages[Shree Changdeo Sugar Mills Vs.UoI,(2001)1 LLJ 698SC]. 
(e)  “Employer” means : 
(i)   in relation to an establishment which is a factory- The owner or occupier of the factory 
including the agent of such owner or occupier, the legal representative of a deceased 
owner or occupier and where a person has been named as manager of the factory under 
clause (f) of Sub-section (I) of Section 7 of the Factories Act, 1948 the person so named 
is the employer ; and 
(ii)  in relation to any other establishmen-, The person who, or the authority which, has 
ultimate control over the affairs of the establishment, and where the said affairs are 
entrusted to a manager or managing director, such manager, managing director or 
managing agent is the employer. 
(f) “Employee” means any person-(i) who is employed for wages in any kind of work, 
manual or otherwise, in or in connection with work of an establishment, and (ii) who gets his 
wages directly or indirectly from the employer.  
Whereas term employee includes following person- (i) Any person employed by or through a 
contractor in or in connection with the work of the establishment ; (ii) Any person engaged as 
an apprentice, not being an apprentice engaged under the Apprentice Act, 1961 (52 of 1961), 
or under the standing orders of the establishment. 
Whether a person is an employee or not, it rest on the relationship of master and servant 
[Mysore State Coop.Printing Works v. R.P.F.Commr.(1976)Lab IC 1307 Ker]. A partner is not 
considered as an employee of the firm as the partner cannot be an employer and employee at 
the same time.  
(ff) “Exempted employee” means an employee to whom a Scheme/ the insurance scheme 
as the case may be would, but for the exemption granted under Section 17, have applied. 
(fff ) “Exempted establishment” means an establishment in respect of which an exemption 
has been granted under Section 17 from the operation of all or any of the provisions of any 
Scheme or the insurance scheme as the case may be, whether such exemption has been 
granted to the establishment as such or to any person or class of persons employed therein. 
(g) “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 of 
power or without the aid of power. 
(i) “Industry” means an industry specified in Schedule I, and includes any other industry 
added to the Schedule by notification under Section 4. 
(ic) “Manufacture” or “Manufacturing process” means any process for making, altering, 
repairing, ornamenting, finishing, packing, washing, cleaning, breaking up, demolishing, 
otherwise treating or adapting any, article or substance with a view to its use, sale, transport, 
delivery or disposal. 
Page 4


4 
The Employees’ Provident Funds and 
Miscellaneous Provisions Act, 1952   
Learning Objectives 
In this Chapter, the students come to know the 
? Operations of Employees’ Provident Fund Scheme 
? Operations of the Employee’s Pension Scheme 
? Operations of the Deposit-Linked Insurance Scheme 
? Obligations of the employer and employee towards PF accounts 
? Other provisions of the Act such as powers of the Central Government, determinations of 
moneys due from employers etc. 
Every worker wants security and maintenance for old age. The Provident Fund Act, 1925 
deals with the provident funds relating to only Government, Railways and local authorities. So 
it was considered desirable to introduce a Provident Fund Scheme for the industrial workers. 
The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 is a beneficial piece 
of legislation, described as social security statute to ensure the employers better future on his 
retirement and of his dependents on his death. This statutory obligation under the Act, cannot 
possibly be deferred in the event of an untimely death of a worker/ an employee [Balbir Kaur 
Vs. Steel Authority of India, AIR 2000 SC 1596].  
4.1 Introduction 
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred 
to as ‘the Act’) extends to the whole of India except the State of Jammu & Kashmir. It seeks to 
provide for the institution of provident funds, pension funds and deposit linked insurance funds 
for employees in factories and other establishments.  
Subject to the exceptions contained in Section 16 (Act not to apply to certain 
establishments), this Act applies to the following entities, namely : 
(a) every establishment which is a factory engaged in any industry specified in Schedule I 
and in which 20 or more persons are employed ; and 
(b) any other establishment which employs 20 or more persons or class of such 
establishments which the Central Government may, by notification in Official Gazette 
specify in the behalf. 
4.2 Business Law, Ethics and Communication 
(c) The Central Government may, after giving not less than 2 months’ notice of its intention 
to do so, apply the provisions of this Act to any establishment with less than 20 persons 
in the employment. 
(d) Notwithstanding anything mentioned above or in Sub-section (1) of Section 16, where it 
appears to the Central Provident Fund Commissioner, whether on an application made to 
him in this behalf or otherwise, that the employer and the majority of employees in 
relation to any establishment, have agreed that the provisions of this Act should be made 
applicable to the establishment, he may, by notification in the Official Gazette, apply the 
provision of this Act to the establishment on and from the date of such agreement or from 
any subsequent date specified in such agreement. 
An establishment to which this Act applies must continue to be governed by this Act, 
even if the number of persons employed therein falls at any time below 20. 
(e) The Ministry of Labour & Employment through Notification No. S.O. 30 (E),dated 8th 
January, 2011 specifies that the Employees’ Provident Funds and Miscellaneous 
Provisions Act, 1952 shall also apply to “Municipal Councils and Municipal Corporations 
constituted under sub-clauses (b) & (c) of clause (1) of Article 243Q of the Constitution of 
India. 
4.2 Definitions (Section 2) 
In this Act, unless the context otherwise requires : 
(a) “Appropriate Government” means : 
(i) in relation to an establishment belonging to, or under the control of Central Government 
or in relation to an establishment connected with ‘a railway’ company, a major port, a 
mine or an oilfield or a controlled industry, or in relation to an establishment having 
departments or branches in more than one State, the Central Government ; and  
(ii)  in relation to any other establishment, the State Government. 
(b) “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 to him, but does not include: 
(i) the cash value of any food concessions ; 
(ii)  any dearness allowance (that is to say all cash payments, by whatever name called, paid 
to an employee on account of rise in the cost of living), house rent allowance, overtime 
allowance, bonus, commission or pay and other similar allowance payable to the 
employee in respect of his employment or of work done in such employment ; or 
(iii)  any presents made by the employer. 
Emoluments which are paid to all the employees of a concern while on duty shall constitute 
basic wages, whereas such emoluments which are paid to some of the employees of a 
concern, they do not form part of the basic wages. [Burmah Shell Oil Storage &Distributing 
Co. of India Ltd. V. R.P.F.Commr.(1981)2 LLJ 86 Del]. 
  The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 4.3 
Production bonus and incentives wage is not the part of the basic wage.[Bridge and Roof Co. 
v. U.o.I,AIR(1963) SC 1474], whereas adhoc payments are like presents made by the 
employer, it cannot be included in basic wages but where adhoc payments are paid under a 
settlement for period during which employees were deemed to be on duty, there it will form the 
part of basic wages[Shree Changdeo Sugar Mills Vs.UoI,(2001)1 LLJ 698SC]. 
(e)  “Employer” means : 
(i)   in relation to an establishment which is a factory- The owner or occupier of the factory 
including the agent of such owner or occupier, the legal representative of a deceased 
owner or occupier and where a person has been named as manager of the factory under 
clause (f) of Sub-section (I) of Section 7 of the Factories Act, 1948 the person so named 
is the employer ; and 
(ii)  in relation to any other establishmen-, The person who, or the authority which, has 
ultimate control over the affairs of the establishment, and where the said affairs are 
entrusted to a manager or managing director, such manager, managing director or 
managing agent is the employer. 
(f) “Employee” means any person-(i) who is employed for wages in any kind of work, 
manual or otherwise, in or in connection with work of an establishment, and (ii) who gets his 
wages directly or indirectly from the employer.  
Whereas term employee includes following person- (i) Any person employed by or through a 
contractor in or in connection with the work of the establishment ; (ii) Any person engaged as 
an apprentice, not being an apprentice engaged under the Apprentice Act, 1961 (52 of 1961), 
or under the standing orders of the establishment. 
Whether a person is an employee or not, it rest on the relationship of master and servant 
[Mysore State Coop.Printing Works v. R.P.F.Commr.(1976)Lab IC 1307 Ker]. A partner is not 
considered as an employee of the firm as the partner cannot be an employer and employee at 
the same time.  
(ff) “Exempted employee” means an employee to whom a Scheme/ the insurance scheme 
as the case may be would, but for the exemption granted under Section 17, have applied. 
(fff ) “Exempted establishment” means an establishment in respect of which an exemption 
has been granted under Section 17 from the operation of all or any of the provisions of any 
Scheme or the insurance scheme as the case may be, whether such exemption has been 
granted to the establishment as such or to any person or class of persons employed therein. 
(g) “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 of 
power or without the aid of power. 
(i) “Industry” means an industry specified in Schedule I, and includes any other industry 
added to the Schedule by notification under Section 4. 
(ic) “Manufacture” or “Manufacturing process” means any process for making, altering, 
repairing, ornamenting, finishing, packing, washing, cleaning, breaking up, demolishing, 
otherwise treating or adapting any, article or substance with a view to its use, sale, transport, 
delivery or disposal. 
4.4 Business Law, Ethics and Communication 
(k) “Occupier of a factory” means the person who has ultimate control over the affairs of 
the factory and where the said affairs are entrusted to a managing agent, such agent shall be 
deemed to be the occupier of the factory. 
Establishment to include all departments and branches (Section 2A): If an establishment 
consists of different departments or has branches whether situated in the same place or in 
different places, all such departments or branches shall be treated as parts of the same 
establishment. 
Power to apply the Act to an establishment which has a common Provident Fund with 
another establishment (Section 3): When an establishment covered by this Act has a 
common Provident Fund with another establishment immediately before the Act came into 
force, the Central Government has the power to direct through a notification in the Official 
Gazette, that the provisions of this Act shall also apply to that another establishment. 
The Central Government has also the power, by virtue of Section 4, to add to Schedule I any 
other industry in respect of the employees whereof it is of the opinion that a provident fund 
scheme should be framed under this Act. Thereupon, the industry so added must be deemed 
to be an industry specified in Schedule I for the purposes of this Act. The addition is to be 
made through a notification in the Official Gazette and the notification is required to be laid 
before Parliament as soon as possible after issue. 
Key Points 
? The EPF & Miscellaeous Provisions Act,1952 provides for institution of provident fund, 
pension fund and deposit linked insurance fund for an employee in the establishments 
covered by it.This Act extends to the whole of India except Jammu & Kashmir. This Act 
applies to every establishment which is a factory engaged in any industry laid in schedule 
I and in which 20 or more persons are employed. 
? Basic wages constitutes all emoluments which are earned by an employee as per the 
terms of the contract and which are paid /payable in cash to him. However ,it doesnot 
include- (i) Cash value of any food concession(ii) D.A (iii) HRA (iv) overtime allowance. 
? Employer  means-(i) in relation to an establishment which is a factory, the owner or 
occupier of the factory or the legal representative, and (ii) in relation to any other 
establishment, the person who, or the authority which, has ultimate control over the affairs 
of the establishment . 
? Employee includes any person –(i) who is employed for wages in any kind of work, 
manual or otherwise, in or in connection with work of an establishment, and (ii) who gets 
his wages directly or indirectly from the employer.  
 
4.3  Employees’ Provident Funds Scheme,1952 (Section 5) 
The Central Government may, by notification in the Official Gazette, frame a scheme to be 
called Employees’ Provident Funds Scheme,1952 for the employees or class of employees of 
establishments to which the Act  applies. It may also specify the establishments or class of 
establishments to which the said scheme is to apply. As soon as may be after the framing of 
Page 5


4 
The Employees’ Provident Funds and 
Miscellaneous Provisions Act, 1952   
Learning Objectives 
In this Chapter, the students come to know the 
? Operations of Employees’ Provident Fund Scheme 
? Operations of the Employee’s Pension Scheme 
? Operations of the Deposit-Linked Insurance Scheme 
? Obligations of the employer and employee towards PF accounts 
? Other provisions of the Act such as powers of the Central Government, determinations of 
moneys due from employers etc. 
Every worker wants security and maintenance for old age. The Provident Fund Act, 1925 
deals with the provident funds relating to only Government, Railways and local authorities. So 
it was considered desirable to introduce a Provident Fund Scheme for the industrial workers. 
The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 is a beneficial piece 
of legislation, described as social security statute to ensure the employers better future on his 
retirement and of his dependents on his death. This statutory obligation under the Act, cannot 
possibly be deferred in the event of an untimely death of a worker/ an employee [Balbir Kaur 
Vs. Steel Authority of India, AIR 2000 SC 1596].  
4.1 Introduction 
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred 
to as ‘the Act’) extends to the whole of India except the State of Jammu & Kashmir. It seeks to 
provide for the institution of provident funds, pension funds and deposit linked insurance funds 
for employees in factories and other establishments.  
Subject to the exceptions contained in Section 16 (Act not to apply to certain 
establishments), this Act applies to the following entities, namely : 
(a) every establishment which is a factory engaged in any industry specified in Schedule I 
and in which 20 or more persons are employed ; and 
(b) any other establishment which employs 20 or more persons or class of such 
establishments which the Central Government may, by notification in Official Gazette 
specify in the behalf. 
4.2 Business Law, Ethics and Communication 
(c) The Central Government may, after giving not less than 2 months’ notice of its intention 
to do so, apply the provisions of this Act to any establishment with less than 20 persons 
in the employment. 
(d) Notwithstanding anything mentioned above or in Sub-section (1) of Section 16, where it 
appears to the Central Provident Fund Commissioner, whether on an application made to 
him in this behalf or otherwise, that the employer and the majority of employees in 
relation to any establishment, have agreed that the provisions of this Act should be made 
applicable to the establishment, he may, by notification in the Official Gazette, apply the 
provision of this Act to the establishment on and from the date of such agreement or from 
any subsequent date specified in such agreement. 
An establishment to which this Act applies must continue to be governed by this Act, 
even if the number of persons employed therein falls at any time below 20. 
(e) The Ministry of Labour & Employment through Notification No. S.O. 30 (E),dated 8th 
January, 2011 specifies that the Employees’ Provident Funds and Miscellaneous 
Provisions Act, 1952 shall also apply to “Municipal Councils and Municipal Corporations 
constituted under sub-clauses (b) & (c) of clause (1) of Article 243Q of the Constitution of 
India. 
4.2 Definitions (Section 2) 
In this Act, unless the context otherwise requires : 
(a) “Appropriate Government” means : 
(i) in relation to an establishment belonging to, or under the control of Central Government 
or in relation to an establishment connected with ‘a railway’ company, a major port, a 
mine or an oilfield or a controlled industry, or in relation to an establishment having 
departments or branches in more than one State, the Central Government ; and  
(ii)  in relation to any other establishment, the State Government. 
(b) “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 to him, but does not include: 
(i) the cash value of any food concessions ; 
(ii)  any dearness allowance (that is to say all cash payments, by whatever name called, paid 
to an employee on account of rise in the cost of living), house rent allowance, overtime 
allowance, bonus, commission or pay and other similar allowance payable to the 
employee in respect of his employment or of work done in such employment ; or 
(iii)  any presents made by the employer. 
Emoluments which are paid to all the employees of a concern while on duty shall constitute 
basic wages, whereas such emoluments which are paid to some of the employees of a 
concern, they do not form part of the basic wages. [Burmah Shell Oil Storage &Distributing 
Co. of India Ltd. V. R.P.F.Commr.(1981)2 LLJ 86 Del]. 
  The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 4.3 
Production bonus and incentives wage is not the part of the basic wage.[Bridge and Roof Co. 
v. U.o.I,AIR(1963) SC 1474], whereas adhoc payments are like presents made by the 
employer, it cannot be included in basic wages but where adhoc payments are paid under a 
settlement for period during which employees were deemed to be on duty, there it will form the 
part of basic wages[Shree Changdeo Sugar Mills Vs.UoI,(2001)1 LLJ 698SC]. 
(e)  “Employer” means : 
(i)   in relation to an establishment which is a factory- The owner or occupier of the factory 
including the agent of such owner or occupier, the legal representative of a deceased 
owner or occupier and where a person has been named as manager of the factory under 
clause (f) of Sub-section (I) of Section 7 of the Factories Act, 1948 the person so named 
is the employer ; and 
(ii)  in relation to any other establishmen-, The person who, or the authority which, has 
ultimate control over the affairs of the establishment, and where the said affairs are 
entrusted to a manager or managing director, such manager, managing director or 
managing agent is the employer. 
(f) “Employee” means any person-(i) who is employed for wages in any kind of work, 
manual or otherwise, in or in connection with work of an establishment, and (ii) who gets his 
wages directly or indirectly from the employer.  
Whereas term employee includes following person- (i) Any person employed by or through a 
contractor in or in connection with the work of the establishment ; (ii) Any person engaged as 
an apprentice, not being an apprentice engaged under the Apprentice Act, 1961 (52 of 1961), 
or under the standing orders of the establishment. 
Whether a person is an employee or not, it rest on the relationship of master and servant 
[Mysore State Coop.Printing Works v. R.P.F.Commr.(1976)Lab IC 1307 Ker]. A partner is not 
considered as an employee of the firm as the partner cannot be an employer and employee at 
the same time.  
(ff) “Exempted employee” means an employee to whom a Scheme/ the insurance scheme 
as the case may be would, but for the exemption granted under Section 17, have applied. 
(fff ) “Exempted establishment” means an establishment in respect of which an exemption 
has been granted under Section 17 from the operation of all or any of the provisions of any 
Scheme or the insurance scheme as the case may be, whether such exemption has been 
granted to the establishment as such or to any person or class of persons employed therein. 
(g) “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 of 
power or without the aid of power. 
(i) “Industry” means an industry specified in Schedule I, and includes any other industry 
added to the Schedule by notification under Section 4. 
(ic) “Manufacture” or “Manufacturing process” means any process for making, altering, 
repairing, ornamenting, finishing, packing, washing, cleaning, breaking up, demolishing, 
otherwise treating or adapting any, article or substance with a view to its use, sale, transport, 
delivery or disposal. 
4.4 Business Law, Ethics and Communication 
(k) “Occupier of a factory” means the person who has ultimate control over the affairs of 
the factory and where the said affairs are entrusted to a managing agent, such agent shall be 
deemed to be the occupier of the factory. 
Establishment to include all departments and branches (Section 2A): If an establishment 
consists of different departments or has branches whether situated in the same place or in 
different places, all such departments or branches shall be treated as parts of the same 
establishment. 
Power to apply the Act to an establishment which has a common Provident Fund with 
another establishment (Section 3): When an establishment covered by this Act has a 
common Provident Fund with another establishment immediately before the Act came into 
force, the Central Government has the power to direct through a notification in the Official 
Gazette, that the provisions of this Act shall also apply to that another establishment. 
The Central Government has also the power, by virtue of Section 4, to add to Schedule I any 
other industry in respect of the employees whereof it is of the opinion that a provident fund 
scheme should be framed under this Act. Thereupon, the industry so added must be deemed 
to be an industry specified in Schedule I for the purposes of this Act. The addition is to be 
made through a notification in the Official Gazette and the notification is required to be laid 
before Parliament as soon as possible after issue. 
Key Points 
? The EPF & Miscellaeous Provisions Act,1952 provides for institution of provident fund, 
pension fund and deposit linked insurance fund for an employee in the establishments 
covered by it.This Act extends to the whole of India except Jammu & Kashmir. This Act 
applies to every establishment which is a factory engaged in any industry laid in schedule 
I and in which 20 or more persons are employed. 
? Basic wages constitutes all emoluments which are earned by an employee as per the 
terms of the contract and which are paid /payable in cash to him. However ,it doesnot 
include- (i) Cash value of any food concession(ii) D.A (iii) HRA (iv) overtime allowance. 
? Employer  means-(i) in relation to an establishment which is a factory, the owner or 
occupier of the factory or the legal representative, and (ii) in relation to any other 
establishment, the person who, or the authority which, has ultimate control over the affairs 
of the establishment . 
? Employee includes any person –(i) who is employed for wages in any kind of work, 
manual or otherwise, in or in connection with work of an establishment, and (ii) who gets 
his wages directly or indirectly from the employer.  
 
4.3  Employees’ Provident Funds Scheme,1952 (Section 5) 
The Central Government may, by notification in the Official Gazette, frame a scheme to be 
called Employees’ Provident Funds Scheme,1952 for the employees or class of employees of 
establishments to which the Act  applies. It may also specify the establishments or class of 
establishments to which the said scheme is to apply. As soon as may be after the framing of 
  The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 4.5 
scheme, a Fund must be established in accordance with provisions of this Act and the 
Scheme. 
The fund shall vest in and be administered by Central Board of trustees constituted under 
Section 5A by the Central Government [Section 5(I A)]. 
Subject to the provisions of the Act, the Scheme framed under Section 5(1) may provide for all 
or any of the matters specified in Schedule II [Section 5 (I B)]. 
Schedule II [See Section 5(IB)] 
Matters for which provision may be made in a Scheme 
1. The employees or class of employees who shall join the Fund and the conditions under 
which employees may be exempted from joining the Fund or from making any 
contribution. 
2. The time and manner in which contribution shall be made to the fund by employers and 
by, or on behalf of employees (whether employed by him directly or by or through a 
contractor) the contribution which an employee may, if he so desires, make under 
Section 6, and the manner in which such contributions may be recovered. 
2-A The manner in which employees’ contributions may be recovered by contractors 
from employees employed by or through such contractors.  
3. The payment by the employer of such sums of money as may be necessary to meet the 
cost of administering the Fund and the rate at which and the manner in which the 
payment shall be made. 
4. The constitution of any Committee for assisting any Board of Trustees. 
5. The opening of regional and other offices of any Board of Trustees. 
6. The manner in which accounts shall be kept, the investment of moneys belonging to the 
fund in accordance with any directions issued or conditions specified by the Central 
Government, the preparation of the budget, the audit of accounts and the submission of 
reports to the Central Government or to any specified State Government. 
7. The conditions under which withdrawal from the Fund may be permitted and any 
deduction or forfeiture may be made and the maximum amount of such deduction or 
forfeiture. 
8. The fixation, by the Central Government in consultation with the Board of Trustees 
concerned, of the rate of interest payable to members. 
9. The form in which an employee shall furnish particulars about himself and his family 
whenever required. 
10. The nomination of person to receive the amount standing to the credit of member after 
his death and the cancellation or variation of such nomination. 
11. The registers and records to be maintained with respect to employees and the returns to 
be furnished by employees (or contractors).