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BY REGD. ~:>STWITH ACK. DUE

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~. ~ I Emall: ro.chennai@epfindia.gov.in
NVebsite: www.epfochennai.tn.nic.in

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EMPLOYEES'PROVIDENT FUND ORGANISATION
(~"Qcj"~~, m«r~ I MINISTRY
OFLABOUR
ANDEMPLOYMENT,
G(IVf. OF INDIA)
~ q,1.qrl('t.q /
Regional Office
37. ~ ~ ~ . ~ - 600014/ 37, Royapettah High Road, Chennm - 600 014

CC-II!TN/RO/CHN / 50452/Reg1/2010 ['ate: 01.09.2010

BEFORETHE REGIONALPROVIDENTFUND COMMISSIONER,

EMPLOYEES'PROVIDENTFUNDORGANISATION
REGIONALOFFICE,CHENNAI:
600 014

PRESENT: SHRI RAMAN DHANASEKAR,

Regional Provident Fund Commissioner

In the matter of deciding under Para 26B of the Employees' Provident Fund
Scheme,1952, the date from which Shri.N.J.P.Shilohu Rao, Junior Telecom Officer working in
M/s.ChennaiTelephones (BSNL) ~aving Code'No.TN/S0452,is entitled or required to become a
member .under the Employees' Provident Fund Scheme,1952.

The above establishment has been covered under the Employees' Provident FUnds
and Miscellaneous ProvisionsAct, 1952 and the Schemes framed thereunder.

ORDER

a grievance had been registered under' Bhavishya NidhiAdalat conducted

WHEREAS
during January 2010 from Shri.NJ.P.Shiiohu Rao, Junior Telecom Officer and others about non -
extension of membership from- their...pre-induction training 'period among other grievances.
Accordingly, an Enforcement Officer was directed vide. letter No.CCII/23!TN/50452/Enf/10 dated
22/01/10 to visit the establishment and submit a report. T Accordinglythe EnforcementOfficer
submitted a report duly enclosing a copy of letter dated 27.01.2010 from Deputy General
Manager(Corporate Accounts), Chennai Telephones stating that the officials on recruitment from
open market based on qualifications were paid stipend for the pre-induction training and the wages as
per the definition under EPFAct 1952 does not include any stipend and further 'wages' is defined as
the payment 'earned' for the 'duty' performed as per the work assigned during the period under
considerationand as suchthese officialsdo not come under the categoryof apprentices.

AND WHEREASthe enforcement qfficer was further directed to inspect the issue of
back period membership in detail among other issues and submit a report before 12/2/2010.
Accordingly the enforcement officer v!sited the establishment on 09/2/2010 and reported that the
employer stated that appointment order is issued only after completion of the training and hence they
will have to get orders from their Head Office if deductions are to be made for training period also.
Therefore the enforcement officer had recorded his observations on the visit note and further also
issued an Inspection Report Part IIvide letter no. TN/PF/50452/EO/2010 dated 09/02/2010 addressed
to The General Manager (Finance), BSNL, Chennai Telephones, 78, Purasawalkam High Road,
Chennai.10 intimating the defects noticed on inspection for rectification duly including the above non
 .
deduction of contributions for the training period among other issues. The above communications was'
received by one Shri.G.Muthukumarasamy Accol,mts Officer (CA-II).

AND WHEREASthe Deputy General, Manager (Corporate Accounts) BSNL Chennai

Telephones had vide letter No.BSNLjCHTD/CAII/EPF/2008-09 dated 16.02.2010 had replied to the
observations communicated vide the above inspection report part II. On the issue of non-recovery of
contribution for the pre-induction training it was stated therein that '7he direct recruit employees
mostly JTOs had undergone induction training prior to their appointment, During the period of training
they were paid stipend; They were not performing any duty during the training period; rather they
were shaped up to perform the duty which they were expected to do on their appointment to the post
after successful completion of their training. Salary or wages are emoluments paid to an employee to
recompense for his labour whereas the stipend is paid to the trainee to get him trained for the job. In
view of the above, the contributions recovered and remitted by BSNLChennai Telephones is in order.
We have apprised the BSNL Corporate Office of the developments in the matter".

AND WHEREASfor the purpose of resolving the doubt as to from which date
Shri:N.J.P.Shiiohu Rao, Junior Telecom Officer and others are entitled or required to become
members of the Employees' Provident Fu'ndScheme, 1952 as to whether from the date of joining the
establishment for pre-induction training or from the date of joining the place of posting,
both employer and employee including the office bearers of the concerned Union were advised to
appear on 01.07.2010 either in person or through an authorised representative to provide them
with an opportunity as stipulated under Section 26B of the Act before resolving the above doubt.

AND WHEREAS Shri.G.Rajasekhar, CAO(Corporate Accounts), BSNL and

Shri.G.Muthukumaraswamy Accounts Officer (Corporate Accounts),BSNL Shri.NJ.P.Shiiohu Rao, JTO,
ShrLK.SenthilKumar, Secretary, AIGETOA, Shri.V.S.Chockalingam, JTO, Shri.SJayakumar, JTO had
appeared.

AND WHEREASShri.G.Rajasekhar,CAOand Shri.G.Muthukumaraswamy AO

(Corporate Accounts) had stated that after the recruitment process an offer of training would be
given to selected candidates. There will be an acceptance of the offer of training and after that they
will undergo a pre-induction training for 14 weeks -comprising of Phase I theoretical training for 10
weeks followed by phase II field training for 4 we,eks. At the end of training there will be a test at a
stretch. On successful completion of the test, an offE!f"of appointment would be given. On
acceptance of such offer of appointment; the trained candidates will be posted. As per Fundamental
Rule (FR) this Pre-inductiontrainingperiodwould count as qualifyingserviceand taken for increment
also: However, they contended that it i$ not termed a1 duty vide DOPTOm NO.16/6/89-estt (pay-I)
dated 22/10/19990 and OM NO.16/16/92-estt(pay-lI} dated 31/3/1992. They further stated that the
issue need to be decided on a central level, rather than locally, as the implications are on an AllIndia
basis. They also requested to take up the issue through EPFO'sHead Officeto BSNL'sHead Quarters.

AND WHEREAS Shri.NJ.P.Shilohu Rao, JTO was represented by Shri.Surinder

Kumar, JAO,who stated that there will be an offer of appointment initially before the training and on
acceptance through execution of security bond the training will commence. On successful training
completion, the candidates are posted to their respective offices. Hefurther added that there is a link
for the stipend and the basic, (i.e.) stipend is 70% of the basic and Dearness Allowance is paid on such
stipend. The period of training is considered as qualifying service under the Gratuity Act, 1972
and that their Membership under EPF& MPAct need to commence from the date of entering into the
training institute or first date of reporting at the institute. The above stand was also accepted by
Shri.K.Senthilkumar,Shri.V.S.Chockalingam,Shri.SJayakumar and Shri.K.Sandeep,JTOsalso.
 ANDWHEREASThe representatives from BSNLhad further stated that they are
not in a position to say that the trainees are engaged under the Apprentices Act, 1961 or under ~ny
standing orders of the establishment.

AND WHEREAS The JTOspresent during the enquiry had further stated that the
trainees are not covered by the Apprentices Act or the under the standing orders of the
establishment.

ANDWHEREAS Shri.Sashi,EnforcementOfficerhad deposedthat the abovetraining

period would be considered for membership under the schemes and that the trainees would required
to be covered from the date of joining the training as they are an employee as per the definition under
section 2(f) of the EPF& MP Act, as they are not engaged as an apprentice, under Apprentices Act
1961or underthe standingOrders. '

As per Section 2(f) of the EPF& MP Act, 1952 "employee" means any person who is
employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an
establishment and who gets his wages directly or indirectly from the employer,' and includes any
person, -
i. Employed by or through a contractor in or in connection with the work of the establishment;
ii. Engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961
(52 of 1961) or under the standing orders of the establishment;

From the above definition it is very clear that even apprentices, subject to the above
exclusions, are employees for the purposes of this Act. Further, the representatives of the MIs. BSNL
had not provided any proof that these trainees are apprentices covered under the Apprentices Act,
1961 or the MIs. BSNLhas any standing or~ers. It is clear from the depositions made by the
representatives of the MIs.BSNLthat they consitfer the training pedod tor the purposes of qualifying
service as well as for the purpose of annual increment. M9fe'o\(er~!suc~'peQodis also considered as
qualifying service for the purposes of the Gratuity Act, 1972. Bein"gso, itis'tlearthat M/s.BSNLfor the
purpose of commencement of PF contributions, has inadVertently considered these newly recruited
JTDs similar to their earlier employees (recruited while M/s.BSNL was. un,der Department of
TeJec9mmunications and accordingly were governed by,the riJlesbf FR&SR,DoPT instructions and
I()~r' rules ~pplR:abfefor Government Employees) and ac:cor:dinglyhad so far commenced the PF
c.ootributions only from the date dn which they were actu~IIy posted i,ntheir regular place of duty.
Whereas, these JTDsare g<>;vemelbythe EPF& MP Act, 1952 and as ~er the definition of employee
under Section.2'(f)ofrth'E!l:A.ct,
their membership would need to commence from their date of joining in
the pre-induction training itself, which incidentally is considered as their date of joining service for the
purposes of determining their qualifying service as well as"forthe increment calculations.

Moreover, as per Nazeena Traders (Private) Umited V. The Regional Provident Fund
Commissioner - 1966 (1) LU.334: AIR .1965 AP.200:1965(2)An.W.R.326it was held that the
Employees Provident Funds and Miscellaneous ProvisionsAct of 1952 is a beneficial legislation
enacted as a measure of socialjustice and should be construed liberallyso as to confer benefit on
the employeesto the maximumextent. Asper BalbirKaurand another v. SteelAuthorityof India.,
and others; T.K.Meenakshi(Smt)and another v.SteelAuthorityof IndiaUmited.,and others - 2000 (6)
SCe.493: AIR.2000S.C.1596 it was held that The EmployeesProvident Funds and Miscellaneous
ProvisionsAct of 1952 is a beneficial piece of legislation and can amply be described as a social
security Statute. The object of the Act is to ensure better future of the employee concerned on his
retirement and for the b~nefitof the dependantS In case of his earlier death and as per the Regional
Provident Fund Commissioner,Punjab v. Shibu Metal Works- 1965(1)LU.473it was held that in
construingthe provisionsof the Act, if two views are reasonably possible,the courts should prefer
the view which helps the achievement of the object though for such purpose the straining of the
words to an unreasonable degree is not proper. Further, as per Otis ElevatorEmployes'Union,
Southern Regionand others v. Unionof Indiaand others - 2003(99)FLR.1179: 2004 (1) lU.217: 2004
 ...J

(1) LLN.450:2004 LLR.63:2004 AIR.SC.3264 it was held by the two members bench of the Supreme
Court that this scheme is for the welfare of the employees, and the same cannot be held to be
violativeof the Constitution.

. Now therefore, I, RAMANDHANASEKAR, Regional PFCommissioner, in exercise of the

powers conferred on me under para 26Bof the Employees' Provident Fund Scheme,1952, and keeping
in view the submissions made by both the parties read with the above broad principles held by various
judicial forums resolve that Shri.NJ.P.Shilohu Rao, Junior Telecom Officer and other similarly placed
employees working in M/s.ChennaiTelephones (BSNL) having Code No.TN/S0452,are entitled to
become members under the Employees' Provident Fund Scheme,1952 & other schemes from their
individual date of joining or reporting for their pre-induction training and accordingly their
contributions are to be regulated. The contributions in respect of both the employee and employer
due for this period need to be worked out and remitted forthwith.

Please note that all belated remittances will attract levy of damages under Section 14B
of the Act, on a graded scale depending upon the period of delay besides levy of simple interest at the
rate of 12% per annum as per Section 7Q of the Act.

In case if you fail to remit the above balance amount as per the above. order within 15
days of receipt of this order, action will be initiated to determine the said dues under Section 7A of the
EPF& MP Act, 1952 without any further notice. Besides, action will also be initiated to file complaints
in the Court of Lawas per Section 14 of the Act. These actions will be without prejudice to any other
action that may be initiated under the provisions of law for which the Establishment has rendered
itself liable.

P-~Q..
(RAMAN DHANASEKAR)
REGIONALPROVIDENTFUND COMMISSIONER
,""RAMAN DHANASE~R"'
To Regl<;mal
ProvidentFundCommissloner-n
.Employ~es'ProvidentFundOrganis~tlon
Shri. A. Subramanian ,; . HighRoad,
~7,Royapettqh
".~.;. 'CbennaI'!.600014. .
Chief General Manager, Chennai Telephones,BSNl,
No.78, Purasawalkam HighRoad,
Chennai.600 010.

COpy to:

Shri. NJ.P. Shllohu Rao, JTO, No.36, IInd Street;,Kamaraj Nagar, Vlllivakkam (Behind SIDCONagar)
Chennai.600 049.
~hri. P.Kannan,President, AIGETOA,No.9,Siva Sankaran Street,Kamarajapuram, Ambattur,
-
Chennai 600 053. .
Shri. K.Senthil Kumar,Secretary,AIGETOA,DoorNo.2171, l-Block,6thStreet, 12thMain Road,
Anna Nagar,Chennai. 600 040.
Shri.V.S.Chockkalingam,JTO,No.42, Jeyabalan Street, Vasudevan Nagar,Jaffarkhanpet,
Chennai 600 083.
Shri.SJaikumar, HO, Flat A,Yokesh Park,21/9, Mariamrilan KoilStreet,K.K.Nagar West,
Chennai 600 078.
Shri.K.Sandeep,JTO,B-6,AnandhiApartment, No.23, Zakaria Colony Main Road, Choolaimedu,
Chennai. 600 094.