Employees’ Provident Funds & Miscellaneous Provisions Act, 1952

This article is written by Anushka Bagri of B.A.LL. B 3^rd year from Jamnalal Bajaj School of Legal Studies, Banasthali Vidyapith

Abstract

This article deals with the basic provisions contained in Employees’ Provident Fund & Miscellaneous Provisions Act, 1952, firstly it goes with the historical background of the Act moving further with the objective of the Act and its application to various industries and with the various kinds of boards constituted under this Act. It also deals with the various schemes and scale of contribution to those schemes. As this Act is a welfare legislation for the benefit of workers working in various factories prescribed under the said Act. So, it is important to have good knowledge of it. It has been tried to touch every important point in this article.

1. Introduction

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is a welfare legislation enacted for the purpose instituting provident funds, pension fund and deposit linked insurance fund for employees working in factories and other establishments. The Act aims to protect industrial workers and their families in old age, disability, early death of the breadwinner, and in some other contingencies by providing social security and timely financial assistance when they are in need and/or unable to meet family and social obligations.

• Historical Background

The Employees’ Provident Fund was established on November 15, 1951, by the Employees’ Provident Funds Ordinance. In 1952, the Employees’ Provident Funds Act took its place. In order to establish provident funds for workers in factories and other institutions, the Employees’ Provident Funds Bill, also known as Bill Number 15, was introduced in Parliament in 1952. The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, is the name given to the legislation today. Act No. 19 of 1952 received the president’s approval on March 4, 1952.

3. Objective of Employees’ Provident Funds & Miscellaneous Provisions Act, 1952

 The objective of the Employee’s’ Provident Funds and Miscellaneous Provisions Act, 1952 is

“An Act to Establish Deposit-Linked Insurance Funds, Pension Funds, and Provident Funds for Employees of Factories and Other Establishments.”

4. Extent and Application of this Act

This Act extends to whole of India and it applies to every establishment which is a factory specified in Schedule I of this Act, in which twenty or more persons are employed and to any other establishment or class of such establishments specified by central government by notification in official gazette.

            If in any establishment employees are less than twenty then also central government wants to apply this Act then it can apply by notifying it in official gazette at least prior to two months of its application. Apart from these if the employer and majority of the employees make an application to the Central provident fund Commissioner for the application of this Act to that establishment than this Act can be applied from the date of such agreement or from any future date.

          Also, an important point here to note is that if an establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any times fall below twenty. And where an establishment consists of different departments or branches all such departments and branches shall be treated as parts of the same establishment whether they are situated at same place or at any other place.

This act shall not apply to:

1. Any establishment employing less than 50 people that operates without the assistance of the authority and is registered under the Co-operative Societies Act of 1912 or any state law.
2. Any establishment owned or controlled by the Central Government or a State Government, or any establishment established under the Central, Provincial, or State Government, whose employees are entitled to the benefit of a contributory provident fund or an old age pension under any scheme or rule framed by the Central Government or the State Government.

5. Boards Under Provident Fund Act

5.1 Central Board

 Central Board (Board of trustees) is constituted by the Central Government by notification in an official gazette   and it consists of the following members:

(i) a Chairman and a Vice-Chairman appointed by Central Government.

(ii) the central Provident Fund Commissioner, ex-officio

(iii) Not more than five persons amongst the officials of central government.

(iv) not more than fifteen persons representing governments of such states as specified by the Central Government.

(v) ten persons representing the employers of an establishment to which the Scheme applies, after consultation with the organisations of employers recognised by the Central Government.

(vi) ten persons representing the employees in the establishment to which the schemes applies, after consultation with the organisations of employees recognised by the Central Government.

All the matters related to Central Board shall be managed by the Central Government and the accounts of Central Boards shall be audited by the Comptroller and Auditor-General of India, or any other person appointed on its place shall have right to demand the production of books, accounts, connected vouchers, documents and papers and inspect any of the offices of the Central Board.

              It shall be the duty of the Central Board to submit annual report of its work and activities to the Central Government, then these audited accounts along with report shall be laid down before both the Lok Sabha and the Rajya Sabha.

5.2 Executive Committee

An executive committee shall be constituted by the Central Government to assist the Central Board in performance of its functions and the executive committee shall consists of the following persons as members, namely:

(i) a chairman appointed by the central government from amongst the members of central board.

(ii) two persons from the officials of central government appointed in central board.

(iii) three persons from the representatives of state governments appointed as members of central board.

(iv) three persons from the representatives of employer representing in the central board.

(v) three persons from the representatives of employee’s representing in the central board.

(vi) the Central provident Fund Commissioner, ex officio.

5.3 State Board

The Central Government after consulting with the state government may constitute for that state a board of trustees (state board) by notification in official gazette. Additionally, a state board will carry out any tasks and responsibilities that the federal government delegated to it in the past. And the terms and conditions of the members of state board shall be as such provided in the scheme.

Furthermore, it should be noted that any board of trustees established in accordance with this Act must be a body corporate with perpetual succession, a common seal, and the authority to sue and be sued under the name provided in the notification creating it.

5.4 Appointment of Officers

As the CEO of the Central Board, the central government shall choose a Central Provident Fund Commissioner.

A financial advisor and chief accounts officers may also be appointed by the central government to assist the Central Provident Fund Commissioner in carrying out his duties.

The Central Government may appoint as many Additional Central Provident Fund Commissioners, Deputy Provident Fund Commissioners, Regional Provident Fund Commissioners, Assistant Provident fund Commissioners and such other officers and employees as it may consider necessary for the efficient administration of the scheme (the Pension and the Insurance Scheme) provided that their appointment shall made with the consultation with the Union Public Service Commission. Further provided that, no such consultation is necessary when appointment is for period less than one year or at the time of appointment person to be appointed is a member of Indian Administrative Service or in the service of the central Government or a state government or the central government   in a Group A or Group B post.

A State Board may with the approval of the State Government appoint such staff as it may consider necessary.

5.6 Delegation of Power

A State Board may delegate to its chairman or to any of its officers those of the Central Board’s powers and functions under this Act that the State Board deems necessary for the effective administration of the Scheme, the Pension Scheme, and the Insurance Scheme, subject to the conditions and limitations, if any, that the State Board may specify.

6. Schemes Under Provident Fund Act

6.1 Employee’s’ Provident Fund Schemes

The Central Government may frame a scheme to be known as Employees’ Provident Fund Schemes by notifying in official gazette, for employees or category of employees and specify the establishments or category of establishments to which this scheme shall apply. After framing of the scheme, a fund shall be created as soon as possible which will be administered by the Central Board constituted by Central Government.

      This scheme may have retrospective or prospective effect.

6.2 Employees’ Pension scheme

The Central Government may frame a scheme to be known as Employees’ Pension Scheme by notifying in official gazette for the purpose of:

(a) superannuation, retirement, or permanent total disability benefits to employees of any business or class of establishments to whom this Act applies; and

(b) widow or widower’s pension, children’s pension, orphan pension payable to beneficiaries

6.3 Employee’s’ Deposit Linked Insurance Scheme

The Central Government may frame a scheme to be known as Employees’ Deposit Linked Insurance Scheme by notifying in official gazette for the purpose of providing life insurance benefits to the workers of any establishment or class of establishments to which EPF & Miscellaneous Act applies.

7. Contributions in Provident Fund

Contribution of Provident Fund paid by employer & employee is 12% (basic pay + dearness allowance + retaining allowance) Equal contribution is paid by the employer & employee. The establishment which employees less than 20 person shall be restricted to contribute 10% for both employee & employer contribution. Employees who receive a monthly salary of less than 15,000 are not required to join the Employees Provident Fund (EPF). The employee is not obligated to contribute to the provident fund if their pay was more than 15,000 per month at the time of their hiring. If they desire to join the Employees Provident Fund, they can only do so with the employer’s and the assistant PF commissioner’s approval. The full 12% of your contribution, along with 3.67% (out of 12%) from your employer, goes into your Employees Provident Fund account. The remaining 8.33% from your company’s side is redirected to your Employee’s Pension Scheme, and the remaining amount goes into your account.

7.1 Breakup of EPF Contribution.

When we observe the contribution provisions then we found that 12 % salary of Employees is contributed into Employee Provident Fund.

Contribution from employer is also 12 % but Unser these propositions

   (a)  3.67% of the pay is allocated to EPS.

    (b) 8.33% of the pay is allocated to the EPF.

    (c) For EDLI, 0.5% of the pay is allocated.

    (d) Charges for EPF administration cost 1.1% of the wage.

    (e) Charges for EDLI administration cost 0.1% of the wage.

7.2. Universal Account Number (UAN)

A 12-digit number is given to each employee who makes EPF contributions. It stays the same for the duration of the employee’s employment. With each new job, nothing changes in it. It will facilitate simple claim transfer and withdrawal. Along with the service of Online Passbook, SMS Service on each deposit of contribution & online KYC update can be provided based on UAN. However, UAN must first be activated on the EPFO portal. If a member is unable to withdraw PF for whatever reason, they may do so without the employer’s permission. They can deliver FORM 19 for EPF (Employees Provident Fund) and FORM 10C for EPS (Employees’ Pension Scheme) to the EPFO office where their EPF account is kept, together with the official attestation of any of the following:

• Any gazetted officer
• The Magistrate
• The Post/ Sub Post master
• President of the Village Union
• The head of the village panchayat in places where there is no union board;
• The chairman, secretary, or a member of the municipal or district local board
• A member of the legislative assembly of a state or the parliament
• The manager of the bank where your savings account is currently held
• The head of an educational institution recognised by the government or
• Any other authorised official as the commissioner may approve.

Conclusion
This Act is a welfare legislation created for the benefits of employees it has various provisions, most important of those have been discussed in this article and from those it can be concluded that it plays an important role the history of welfare legislations and it has contribution from both employees and the employer. As nothing is perfect in this world then how can we think about this Act it also has various loopholes like problem in its implementation. So, it is the duty of government to solve its problems to make this Act very effective and provide benefit to workers. Also, it is duty of workers and employer as well to keep knowledge of their rights and duties respectively.

REFERENCES

1. Advantages and Disadvantages of Employee Provident Fund (EPF), Enterslice, https://enterslice.com/learning/advantages-disadvantages-employee-provident-fund-epf/ last seen on 05/06/2023.
2.  Employees’ Provident Funds & Miscellaneous Provisions Act, 1952
3. The Employee Provident Funds, 1952: A guide, ipleaders, https://blog.ipleaders.in/the-employee-provident-funds-1952/, last seen on 03/06/2023
4. All about Employees Provident Fund Act, 1952, Taxguru, https://taxguru.in/corporate-law/employees-provident-fund-act-1952.html, last seen on 04/06/2023