Employees’ Provident Fund Scheme - Employees Provident Fund & Miscellaneous Provisions Act(1952) | Industrial Laws - B Com PDF Download

The Constitution of India under "Directive Principles of State Policy" provides that the State shall within the limits of its economic capacity make effective provision for securing  the right to work, to education and to public assistance in cases of unemployment, old-age, sickness & disablement and undeserved want.

The Employees' Provident Fund Organization (EPFO) is a statutory body of the Government of India under the Ministry of Labour and Employment. It administers a compulsory contributory Provident Fund Scheme, Pension Scheme and an Insurance Scheme. It is one of the largest provident fund institutions in the world in terms of members and volume of financial transactions that it has been carrying on.

Applicability Of The Employees' Provident Fund Scheme, 1952.

The Employees' Provident Fund and Miscellaneous Provisions Act 1952 applies to the whole India except Jammu & Kashmir. 

Employees' Provident Fund and Miscellaneous Provisions Act 1952 is applicable to:

• Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by Central Government in the Official Gazette. (List of Industries/Establishments)
• Employing 20 or more persons .
• Cinema Theatres employing 5 or more persons.

The Act does not apply to:

• The co-operative societies employing less than 50 persons and working without the aid of power. 16(1)(a)

• The establishment to which this Act applies shall continue to be governed by this Act , even if the number of employees falls below 20 at a later date. [ 1(5)].

• 16(1)(b) Establishments under the control of state/central Govt.& employees who are getting benefits in the nature of 16(1) (b) contributory P.F. or old age pension as per rules framed by the Govt.

• 16(1)(c) Establishment set up under any central, provincial or state act and the employees who are getting benefits in the nature of contributory P.F. or old age pension as per rules.

Employee Definition:
"Employee" as defined in Section 2(f) of the Act means any person who is employee for wages in any kind of work manual or otherwise, in or in connection with the work of an establishment and 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.

Basic Wages:
"Basic Wages" means all emoluments which are earned by employee while on duty or on leave or holiday with wages in either case in accordance with the terms of the contract of employment and witch are paid or payable in cash, but dose not include

1. The cash value of any food concession;
2. Any dearness allowance (that is to say, all cash payment by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other allowance payable to the employee in respect of employment or of work done in such employment.
3. Any present made by the employer.

Employee Provident Fund Scheme:
Employees' Provident Fund Scheme takes care of following needs of the members: 
(i)   Retirement
(ii) Medical Care 
(iii) Housing
(iv) Family obligation
(v) Education of Children 
(vi) Financing of Insurance Polices

CONTRIBUTION 

contribution payable by the employer [Sec 29]

In respect of establishments employing 20 or more persons and engaged in industry notified under Section 6 of Act ( other than the Establishments. declared as sick ) 12% of the basic pay DA , Cash value of food concession and retaining allowance , if any, subject to a maximum of Rs.6500/- per month. Voluntary higher contributions are also acceptable at the joint request of the member and the employer . However, the rate of contribution is 10% in respect of the following categories of establishments: 
Any establishment covered prior to 22.9.97 in which less than 20 persons are employed.

• Any sick industrial company as defined in Clause(0) of Sub-Section(1) of Section 3 of the sick industrial companies ( special provisions ) Act 1985 and which has been declared as such by the Board for Industrial and Financial Reconstruction.
• Any Establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth.
• Any Establishment engaged in manufacturing of (a) Jute , (b) Beedi , (c) Brick , (d) Coir (other than spinning sector), (e) Guar Gum Industries/Factories.

[Section 29]

(2) The contribution payable by the employee under the Scheme shall be equal to the contribution payable by the employer in respect of such employee: 

Provided that in respect of any employee to whom the Scheme applies, the contribution payable by him may, if he so desires, be an amount exceeding 10% or 12%, as the case may be, of his basic wages, dearness allowance and retaining allowance (if any) subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under the Act. 

(3) The contributions shall be calculated on the basis of basic wages, dearness allowance (including the cash value of any food concession) and retaining allowance (if any) actually drawn during the whole month whether paid on daily, weekly, fortnightly or monthly basis. 

(4) Each contribution shall be calculated to the nearest rupee, 50 paise or more to be counted as the next higher rupee and fraction of a rupee less than 50 paise to be ignored.


Circumstances in which accumulations in the Fund are payable to a member. [Sec 69]

A member of the provident fund can withdraw full amount at the credit in the fund on retirement from service after attaining the age of 55 year. Full amount in provident fund can also be withdraw by the member under the following circumstance: 

• A member who has not attained the age of 55 year at the time of termination of service.
• A member is retired on account of permanent and total disablement due to bodily or mental infirmity.
• On migration from India for permanent settlement abroad or for taking employment abroad.

In the case of mass or individual retrenchment. 

In the case of the following contingencies, the payment of provident fund be made after complementing a continuous period of not less than two months immediately preceding the date on which the application for withdrawal is made by the member:

• Where employees of close establishment are transferred to other establishment, which is not covered under the Act:

• Where a member is discharged and is given retrenchment compensation under the Industrial Dispute Act, 1947. Withdrawal within one year before the retirement [Sec 68NN] A member can withdraw upto 90% of the amount of provident fund at credit after attaining the age of 54 years or within one year before actual retirement on superannuation whichever is later. Claim application in form 19 may be submitted to the concerned Provident Fund Office.

Accumulations of a deceased member. [Sec 70] Amount of Provident Fund at the credit of the deceased member is payable to nominees/ legal heirs. Claim application in form 20 may be submitted to the concerned Provident Fund Office.
 

Duties of employers. [Sec 36]

(1) Every employer shall send to the Commissioner, within fifteen days of the commencement of this Scheme, a consolidated return in such form as the Commissioner may specify, of the employees required or entitled to become members of the Fund showing the basic wage, retaining allowance (if any) and dearness allowance including the cash value of any food concession paid to each of such employees:

Provided that if there is no employee who is required or entitled to become a member of the Fund, the employer shall send a ‘NIL’ return.

(2) Every employer shall send to the Commissioner within fifteen days of the close of each month a return—

(a) in Form 5, of the employees qualifying to become members of the Fund for the first time during the preceding month together with the declarations in Form 2 furnished by such qualifying employees, and

(b) in such form as the Commissioner may specify, of the employees leaving service of the employer during the preceding month:

Provided that if there is no employee qualifying to become a member of the Fund for the first time or there is no employee leaving service of the employer during the preceding month, the employer shall send a ‘NIL’ return.

(4) Every employer shall maintain an inspection note book in such form as the Commissioner may specify, for an Inspector to record his observation on his visit to the establishment.

(5) Every employer shall maintain such accounts in relation to the amounts contributed to the Fund by him and by his employees as the Central Board may, from time to time, direct, and it shall be the duty of every employer to assist the Central Board in making such payments from the Fund to his employees as are sanctioned by or under the authority of the Central Board.

(6) Notwithstanding anything herein-before contained in this paragraph, the Central Board may issue such directions to employer generally as it may consider necessary or proper for the purpose of implementing the Scheme, and it shall be the duty of every employer to carry out such directions.

 Nomination.[Sec 61] 

(1) Each member shall make in his declaration in Form 2, a nomination conferring the right to receive the amount that may stand to his credit in the Fund in the event of his death before the amount standing to his credit has become payable, or where the amount has become payable before payment has been made.

(2) A member may in his nomination distribute the amount that may stand to his credit in the Fund amongst his nominees at his own discretion.

(3) If a member has a family at the time of making a nomination, the nomination shall be in favour of one or more persons belonging to his family. Any nomination made by such member in favour of a person not belonging to his family shall be invalid :

Provided that a fresh nomination shall be made by the member on his marriage and any nomination made before such marriage shall be deemed to be invalid.

(4) If at the time of making a nomination the member has no family, the nomination may be in favour of any person or persons but if the member subsequently acquires a family, such nomination shall forthwith be deemed to be invalid and the member shall make a fresh nomination in favour of one or more persons belonging to his family.

(4A) Where the nomination is wholly or partly in favour of a minor, the member may, for the purposes of this Scheme appoint a major person of his family, as defined in clause (g) of paragraph 2, to be the guardian of the minor nominee in the event of the member predeceasing the nominee and the guardian so appointed:

Provided that where there is no major person in the family, the member may, at his discretion, appoint any other person to be a guardian of the minor nominee.

(5) A nomination made under sub-paragraph (1) may at any time be modified by a member after giving a written notice of his intention of doing so in Form 2 annexed hereto. If the nominee predeceases the member, the interest of the nominee shall revert to the member who may make a fresh nomination in respect of such interest.

(6) A nomination or its modification shall take effect to the extent that it is valid on the date on which it is received by the Commissioner.

Grant of advances in special cases.- [Sec 68H]

(1) In case a factory or other establishment has been locked up or closed down for more than fifteen days and its employees are rendered unemployed without any compensation or in case an employee does not receive his wages for a continuous period of two months or more, these being for reasons other than a strike, the Commissioner or where so authorised by the Commis¬sioner, any officer subordinate to him may on an application from an employee, who is a member of the Fund, in such form as may be prescribed, authorise payment to him, of one or more non-recoverable advances from his provident fund account not exceed¬ing his own total contribution including interest thereon up to the date the payment has been authorised.

(1A) In case a provident fund member is discharged or dis¬missed or retrenched by the employer and such discharge or dis¬missal or retrenchment is challenged by the member and the cases are pending in a court of law, an officer not below the rank of Assistant Provident Fund Commissioner may, on an application from the member in such form as may be prescribed, authorise payment to him of one or more non-recoverable advance from this Provident Fund Account not exceeding 50% of his own share of contribution with interest thereon standing to his credit in the fund on the date of such authorisation. 

(2) (a) In case the factory or other establishment contin¬ues to remain locked up or closed down for more than six months, the Commissioner, or where so authorised by the Commissioner any officer subordinate to him, on being satisfied that a member who has already been granted one or more non-recoverable advances from his provident fund account under sub-paragraph (1) still continues to be unemployed and no compensation is likely to be paid to him at an early date, may, on receipt of an application therefor in such form as may be prescribed in this behalf, authorise payment to the member of one or more recoverable ad¬vances from his provident fund account up to the extent of 100% of the employers’ total contribution including interest thereon up to the date on which the payment has been authorised:

Provided that if the factory or establishment in which the member is employed remains closed for more than five years for reasons other than strike, recoverable advance may be converted into non-recoverable advance on receipt of a request in writing from the member concerned.

(b) The advance granted under clause (a) shall be interest-free.

(c) The advance granted under clause (a) shall be recovered by deductions from the wages of the member in such instalments subject to a maximum of thirty-six instalments as may be determined by the Commissioner or where so authorised by the Commissioner, any officer subordinate to him. The recovery shall commence from the first wages paid to the member immediately after the re-start of the factory or establishment.

(d) The employer shall remit the amount so deducted to the Fund within such time and in such manner as may be specified by the Commissioner or where so authorised by the Commissioner, any officer subordinate to him. The amount on receipt shall be credited to the member’s account in the Fund.

Explanation: For the purpose of grant of advance under this paragraph, the establishment may be closed legally, illegally, with permission or without permission, so long as the establish¬ment is closed
 

Advance from the Fund for illness in certain cases. [Sec 68J]

(1) A member may be allowed non-refundable advance from his account in the Fund in cases of

(a) hospitalisation lasting for one month or more, or

(b) major surgical operation in a hospital, or

(c) suffering from T.B., leprosy, paralysis, cancer, mental derangement or heart ailment and having been granted leave by his employer for treatment of the said illness.

(2) The advance shall be granted if—

(a) the employer certifies that the Employees’ State Insur¬ance Scheme facility and benefits thereunder are not actually available to the member or the member produces a certificate from the Employees’ State Insurance Corporation to the effect that he has ceased to be eligible for cash benefits under the Employees’ State Insurance Scheme; and

(b) a doctor of the hospital certifies that a surgical operation or, as the case may be, hospitalisation for one month or more had or has become necessary or a registered medical practitioner, or in the case of a mental derangement or heart ailment, a specialist certifies that the member is suffering from T.B., leprosy, paralysis, cancer, mental derangement or heart ailment.

(3) A member may be allowed non-refundable advance from his account in the Fund for the treatment of a member of his family who has been hospitalised, or requires hospitalisation, for one month or more.

(a) for a major surgical operation, or

(b) for the treatment of T.B., Leprosy, paralysis, cancer, mental derangement or heart ailment:

Provided that no such advance shall be granted to a member unless he has produced—

(i) a certificate from a doctor of the hospital that the patient has been hospitalised or requires hospitalisation for one month or more, or that a major surgical operation had or has become necessary, and

(ii) a certificate from his employer that the Employees’ State Insurance Scheme facility and benefits are not available to him for the treatment of the patient.

(4) The amount advanced under this paragraph shall not exceed the member’s basic wages and dearness allowance for six months or his own share of contribution with interest in the Fund, whichever is less.

(5) Where the Commissioner or, where so authorised by the Commissioner any officer subordinate to him is not satisfied with a medical certificate furnished by the member under this paragraph, he may, before granting an advance under this para¬graph, demand from the member another medical certificate to his satisfaction.

Advance from the Fund for marriages or post-matriculation education of children. [Sec 68K]

(1) The Commissioner or where so authorised by the Com¬missioner, an officer subordinate to him may on an application from a member, authorise payment to him or her of a non-refundable advance from his or her provident fund account not exceeding fifty per cent of his or her own share of contribution with interest thereon, standing to his or her credit in the Fund, on the date of such authorisation, for his or her own marriage, the marriage of his or her daughter, son, sister or brother or for the post-matriculation education of his or her son or daugh¬ter.

(2) No advance under this paragraph shall be sanctioned to a member unless—

(a) he has completed seven years’ membership of the Fund; and

(b) the amount of his own share of contributions with inter¬est thereon standing to his credit in the Fund is rupees one thousand or more.

(3) Not more than three advances shall be admissible to a member under this paragraph.