200

The Employees
Provident Fund
and
Miscellaneous
Provisions Act
Relevant Excerpts thereof
An attempt to bring out the salient features of the Employees
Provident Fund and Miscellaneous Provisions Act which is meant
to serve the common good of millions of workforce in the
Country.

Ajay Justin Odathekal

Roll No: 319
Semester VII
9/7/2009
 The Employees Provident Fund and Miscellaneous
2
Provisions Act

Table of Contents
Table of Contents...................................................................................................2
Extent of the Statute............................................................................................. 3
Definitions to be taken note of..............................................................................4
Central Board.........................................................................................................5
Executive Committee.........................................................................................5
State Board............................................................................................................ 6
Officers of the Boards.........................................................................................6
Contributions to be made into the Provident Fund................................................7
Employees’ Pension Scheme..............................................................................7
Employees’ Deposit Linked Insurance Scheme...................................................8
Determination of moneys due from the employers............................................9
Review of Orders passed....................................................................................9
Appellate Tribunal................................................................................................10
Appeals and Orders of the Tribunals.................................................................10
Recovery of Moneys due......................................................................................11
Recovery of moneys by employers...................................................................11
Recovery of moneys by contractors.................................................................12
Issuance of Recovery Certificate......................................................................12
Forwarding of certificate owing to want of jurisdiction.....................................12
Effect of Insolvency .........................................................................................13
Inspectors and their powers.................................................................................14
Penalties under the Act........................................................................................15
Repeating Offenders.........................................................................................16
Cognizance and trial............................................................................................16
Recovery of Damages..........................................................................................17
Industries Exempted............................................................................................17
Power to Exempt..................................................................................................18
Exemption from Pension Scheme.....................................................................19
Exemption from Pension Scheme.....................................................................19
Effect of Cancellation of Exemption..................................................................20
Transfer of Accounts............................................................................................20
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Effect of Transfer of Establishment......................................................................21

Actions done in good faith...................................................................................21
Concluding remark...............................................................................................21

Extent of the Statute

The Act is meant to apply to every establishment which is a factory

engaged in any industry specified in Schedule I of the Act, provided that
twenty or more persons are employed therein. The Act can also be made
applicable to any other establishment employing twenty or more persons
or to class of such establishments which the Central Government may so
notify in the Official Gazette. The Statute also provides that the
application of the Statute may be extended to an establishment
employing less than twenty persons, provided that the Central
Government shall give not less than two months’ notice of its intention so
to do, vide a Gazette notification. Initially, the minimum number of
employees required to bring the establishment under the purview of the
Act was fifty, but taking into account the welfare nature of the Statute, the
number was subsequently brought down to twenty by an Amendment
made in the year 1960.1

Apart from these modalities, there is another way in which an industry can
be brought under the purview of the Act as the statute provides that
where it appears to the Central Provident Fund Commissioner, on an
application made to him or even without such application, that the
employer and the majority of employees in an industry have agreed that
the provisions of the Act should be made applicable to the establishment,
the provisions of the Act can be made applicable to such establishment
vide a Gazette notification. In such cases, the provisions of the statute
shall be deemed to have taken effect from the date on which the
employer and the employees had come to an agreement to implement
the Act or from any subsequent date stipulated by such agreement.
1
Sec.2 of Act 46 of 1960, w.e.f. 31.12.1960.
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It is interesting to note that once the Act is made applicable to an

establishment, it shall continue to be governed by the Statute irrespective
of the fact that the number of persons employed therein falls below the
magical figure of twenty at any subsequent time.

Definitions to be taken note of

Section 2(b) of the Act defines ‘basic wages’ to mean all emoluments
which are earned by an employee while on duty or on leave with wages or
on holidays with wages, in accordance with the terms of the contract of
employment and which are paid or payable in cash to him. However, the
Section excludes the following categories of payments from the purview of
basic wages: (i) the cash value of any food concession; (ii) any dearness
allowance, house-rent allowance, overtime allowance, bonus, commission
or any other similar allowance payable to the employee in respect of his
employment or of work done in such employment; and (iii) any presents
made by the employer. Dearness allowance here is meant to be
understood as all cash payments by whatever name called, paid to an
employee on account of a rise in the cost of living.

Section 2(g) defines ‘Factory’ as any premises, including the precincts

thereof, in any part of which a manufacturing processes is being carried
on or is ordinarily so carried on, whether with the aid of power or without
the aid of power. An ‘Occupier of a factory’ is defined as 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.2

Central Board

Section 5.A provides that the Central Government may constitute a

Central Board for all such territories as to where the Act applies. Such a
Board is to be created by a notification in the Official Gazette. The Board

2
Section 2(k).
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shall constitute of (i) a Chairman and a Vice-Chairman, who are to be

appointed by the Central Government; (ii) The Central Provident Fund
Commissioner who shall be an ex-officio member of the Board; (iii) not
more than fifteen persons appointed by the Central Government from
amongst its officials; (iv) not more than fifteen persons representing the
Governments of the States, who are to be appointed by the respective
States; (v) ten persons representing employers of the establishments to
which the scheme applies, to be appointed by the Central Government
after consultations with the recognised organizations of such employers;
and (vi) ten persons representing employees in the establishments to
which the scheme applies, to be appointed by the Central Government
after consultations with the recognized organizations of such employees.

The Board is expected to administer the funds vested in it by means of

contributions, maintain proper accounts of its income and expenditure in
such form and in such manner as prescribed by the Central Government,
and also perform such other functions as it may be required to perform by
or under any provisions of the Employees Provident Fund Scheme and the
Insurance Scheme under the Act.

Executive Committee

Section 5(AA) provides that the Central Government may, by means of a

Gazette Notification, constitute an Executive Committee to assist the
Central Board in the performance of its functions. Such Executive
Committee shall consist of (i) a Chairman appointed by the Central
Government from amongst the members of the Central Board; (ii) two
persons appointed by the Central Government from amongst its officials
nominated into the Central Board; (iii) persons appointed by the Central
Government from amongst the State nominees in the Central Board; (iv)
three persons representing the employers elected by the Central Board
from amongst the fifteen representatives of employers in the Central
Board; (v) three persons representing the employees elected by the

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Central Board from amongst the fifteen representative of the employees

in the Central Board; and (vi) The Central Provident Fund Commissioner as
the ex-officio member.

State Board

Section 5.B provides that the Central Government may, after consultation
with the Government of any State, by means of a Gazette Notification,
create a State Board for such State. Such a State Board shall exercise
such powers and perform such duties as the Central Government may
assign to it from time to time.

Both the Central Board and the State Board shall be a body corporate
under the name specified in the notification constituting it, having
perpetual succession and a common seal and shall sue and be sued by
the same name.3

Officers of the Boards

The Central Government is to appoint a Central Provident Fund

Commissioner who is to serve as the Chief Executive Officer of the Central
Board. Such Commissioner is to be under the general control and
superintendence of the Board. The Central Government may also appoint
a Financial Adviser and Chief Accounts Officer to assist the Central
Provident Fund Commissioner in the discharge of his duties.

Apart from these, the Central Board has been given the power to appoint
as many Additional 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 schemes under the Act.

3
Section 5.C
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Contributions to be made into the Provident Fund

Each employer shall, in respect of an employee employed by him either

directly or through a contractor, pay ten percent of the basic wages,
dearness allowance and retaining allowance (only in cases where
retaining allowance is being paid) payable to such employee, to the
Provident Fund. Each employee shall contribute to the Provident Fund an
amount equalling the contribution made by the employer, but shall be
free to make a contribution over and above the sum made by the
employer, but in such a case, there shall be no obligation on the employer
to match such excessive contribution made by the employee. However,
the Central Government shall be free, after making due inquiry, to issue a
Gazette Notification fixing the quantum of contribution of both employers
and employees at twelve percent in any establishment or class of
establishments.

Here, the term ‘dearness allowance’ is meant to include even the cash
value of any food concession allowed to the employee. ‘Retaining
allowance’ is the allowance paid to the employee of a factory or any other
establishment during the time when such factory or establishment is not
working, for the purpose of retaining his services.

Employees’ Pension Scheme

Section 6.A provides that the Central Government may frame an

Employees’ Pension Scheme for the following purposes:

(a) superannuation pension, retiring pension or permanent total

disablement pension to the employees of any establishment or class
of establishments to which this Act applies; and
(b)Widow or widower's pension, children pension or orphan pension
payable to the beneficiaries of such employees.

There shall be established a Pension Fund as soon as possible after

framing the pension scheme, into which the Employer shall contribute, in
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respect of every employee, an amount not exceeding eight and one third
percent of the contribution already made by him into the provident fund in
respect of such employee.

When such a Pension Fund is established, the Family Pension Scheme

which was earlier existent ceases to operate and all the assets and
liabilities of the old scheme vests upon the new scheme, in so far as all
the beneficiaries under the ceased scheme shall be entitled to draw the
benefits under the new scheme, not less than the benefits they were
entitled to under the old scheme.

Employees’ Deposit Linked Insurance Scheme

The Central Government is empowered under the Act to formulate an

Employees’ Deposit-linked Insurance scheme for the purpose of providing
life insurance benefits to the employees of any establishment or class of
establishments to which the Act applies. As and when such an insurance
scheme is formed, a Deposit-Linked Insurance fund is to be formed.
Contributions shall be made to the fund in such a way that the employer
shall pay, in relation to each employee employed by him, not more than
one percent of the aggregate of the basic wages, dearness allowance and
retaining allowances (only in cases where such retaining allowance is
payable) payable to such employee. Apart from these, the employer shall
pay into the Insurance Fund such sums not exceeding one-fourth of the
contribution which he is normally required to make under the scheme, for
the purpose of meeting all the expenses in connection with the
administration of the Insurance Scheme. However such expenses shall not
include the money required to extend any benefits provided by or under
the scheme.

Determination of moneys due from the employers

Section 7.A provides that the Central Provident Fund Commissioner, any
Additional Central Provident Fund Commissioner, any Deputy Provident

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Fund Commissioner, any Regional Provident Fund Commissioner or any

Assistant Provident Fund Commissioner may, (a) in a case where a dispute
arises regarding the applicability of this Act to an establishment, decide
such dispute; and (b) determine the amount due from any employer under
any provision of this Act, the Scheme or the Pension Scheme or the
Insurance Scheme, as the case may be, and for the aforesaid purposes
conduct such inquiry as he may deem necessary. Where such an order is
passed against an employer ex parte, he shall be entitled to apply to the
officer for setting aside such order at any time within three months from
the date of communication of such order, provided that he satisfies the
Officer that the show cause notice was not duly served on him or that he
was prevented from appearing for the inquiry owing to some valid reason.
The Officer shall, if he is satisfied that there is sufficient reasons for so
doing, make an order setting aside his earlier order and appoint a date for
proceeding with the inquiry. However, if the Officer has sufficient reasons
to believe that the employer had otherwise come to know of the date of
hearing and had sufficient time to appear before the officer, he shall not
set aside the order on the ground that the notice was not duly served on
the employer.

Review of Orders passed

Any person who is aggrieved by an order passed under the Section above
mentioned, but from which no appeal has been preferred under the Act,
and who, from the discovery of new and important matter of evidence,
which, after the exercise of due diligence was not within his knowledge or
could not be produced by him at the time when the order was made,
owing to some mistake or error apparent on the face of the record of for
any other sufficient reason, desires to have the order made reviewed,
may apply for a review of that order to the officer who made the order.

If the Officer is of the opinion that the application should be granted, he

may so do but not without granting sufficient opportunity to all interested

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parties to be heard. Such power of review can be exercised suo moto by

the officer who made the order if he feels that there are sufficient reasons
for so doing.

Appellate Tribunal

The Central Government is, under the provisions of the Statute,

empowered to constitute one or more Appellate Tribunals, which are to be
christened as Employees’ Provident Fund Appellate Tribunal. Each such
Tribunal is to exercise such powers and discharge such functions as
conferred upon them by the Statute and shall have jurisdiction over the
establishments of such areas for which it has been created, unless
otherwise specified.4 Each such Tribunal shall be single member Tribunals
and the presiding officer of such Tribunal shall be a person who is, or has
been, or is qualified to be a Judge of a High Court or a District Judge. Such
officer shall hold the office for a period of five years or until he attains the
age of sixty-two years, whichever is earlier.

Appeals and Orders of the Tribunals

Any person who is aggrieved by an order fixing the moneys due from the
employer5, or an order either allowing or denying the review
contemplated under the Statute6, or an order determining the escaped
amounts7, can prefer an appeal to the Appellate Tribunal, and the Tribunal
may, after giving sufficient opportunities to all those concerned, pass such
orders as it thinks fit, either confirming or altering the order appealed
against. It may also send the case back to the authority which passed the
order appealed against, with such directions for disposing of the case, as
it may think fit, or even direct a fresh adjudication upon the issue.

The Tribunal shall be entitled, at any time within five years of its passing
the order, amend any order passed by it, and shall make such
4
Section 7.D
5
Section 7.A.
6
Section 7.B.
7
Section 7.C.
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amendment in the order if the mistake is brought to its notice by the

parties to the appeal, provided, such an alteration is made for the purpose
of correcting an error apparent from the record. However, when such an
order has the effect of enhancing the amount due from, or otherwise
increasing the liability of the employer, it shall not be made effective
unless and until such employer is given notice thereof and is giving
reasonable opportunity of being heard. It is interesting to note that the
Legislature has sought to give a finality to the orders rendered by the
Appellate tribunal in so far as Section 7.L(4) provides that any order made
by a Tribunal finally disposing of an appeal shall not be questioned in any
Court of Law.

Recovery of Moneys due

If any money is due from the employer to any schemes under this Act, it
could be recovered by the Central Provident Fund Commissioner or such
other officer as may be authorised by the Provident Fund Commissioner,
in the same manner as an arrear of land revenue, but only after making a
Gazette Notification to that effect.

Recovery of moneys by employers

In the case of an employee employed through a contractor, the employer

would be entitled to recover from the contractor all the moneys he has
paid towards the schemes under this Act in respect of each such
employed through the contractor. He may recover the money either by
deductions from any payment payable to the contractor under any
contract or as a debt payable by the contractor.

Recovery of moneys by contractors

A contractor, from whom money has been recovered by the employer in

respect of an employee employed through him, may recover from such
employee the employee’s contribution under any scheme. Such a
recovery can be made either through deductions from basic wages,
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dearness allowances and retaining allowances (whenever payable)

payable to such employee. However, no contactor would be entitled to
recover from the employee the employer’s contributions stipulated under
the Act.

Issuance of Recovery Certificate

Where any amount is in arrear from the establishment or the employer

under any of the schemes under the Act, the authorised officer may issue
to the Recovery Officer, a certificate bearing his signature, specifying the
amount in arrears. The Recovery Officer, as and when he receives the
certificate above mentioned, shall proceed to recover the amount
specified therein from the establishment, or as the case may be, from the
employer. For this purpose, he may adopt any of the stipulated modes of
recovery which include attachment and sale of the movable or immovable
property of the establishment/employer, arrest of the employer and his
detention in civil prison, appointment of a receiver for the management of
the movable or immovable properties of the establishment/employer, etc.

Forwarding of certificate owing to want of jurisdiction

The authorised officer may forward the certificate above mentioned to the
Recovery Officer within whose jurisdiction the employer either carries on
his business or profession or where the principal place of his
establishment is situated or he permanently resides or any movable or
immovable property of the establishment is located.

Where an establishment or the employer against whom the recovery

proceedings has been initiated has property within the jurisdiction off
more than one Recovery Officer and the Recovery Officer to whom the
certificate has been sent is either unable to recover the entire amount or
is of the opinion that he alone would not be able to secure the recovery of
the arrears, he may either send the certificate to the other Recovery
Officer within whose jurisdiction the other part of the property is located

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requesting him to recover the whole of the arrears or may send a copy of
the certificate to such Recovery Officer, if only a part of the recovery is to
be made by him the other part being recoverable by the Recovery Officer
to whom the certificate was originally addressed. When a Recovery Officer
receives such a forwarded certificate, he shall proceed to make the
recovery as if the certificate had originally been sent to him by the
authorised officer.

Effect of Insolvency

If an employer from whom some money is due under any scheme under
the Act is declared insolvent or a Company from similar sums is due is
wound up, the amount due in either case, in so far as they accrued before
the order of insolvency or winding up, as the case may be, is made, would
be deemed to be included among the debts which are to be paid in
priority to all other debts, in the distribution of the property of the
insolvent or the assets of the company being wound up, as the case may
be.

Similarly, when an amount is due from the employer, the amount so due
shall be deemed to be the first charge on the assets of the establishment
and shall be paid in priority to all other debts.

The Statute in unequivocal terms stipulate that no employer can reduce,

whether directly or indirectly, the wages or any other benefits to which
the employees are entitled to, either by reason of his liability for the
payment of any contribution to the Funds under the Act or due to any
charges under the Act or any scheme there under.8

8
Section 12.
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Inspectors and their powers

The Act provides that the appropriate government may, by notification in

the Official Gazette; appoint such persons as it thinks fit to be Inspectors
for the purposes of the Act and schemes framed there under. When the
Government appoints such inspectors, it shall also define their jurisdiction.
Any Inspector so appointed may, for the purpose of inquiring into the
correctness of any information furnished in connection with this Act:
a) Require an employer or any contractor from whom any amount is
recoverable under section 8A to furnish such information as he may
consider necessary;
b) At any reasonable time and with such assistance, if any, as he may
think fit, enter and search any establishment, or any premises
connected therewith and require any one found in charge thereof to
produce before him for examination any accounts, books, registers
and other documents relating to the employment of persons or the
payment of wages in the establishment;
c) Examine, with respect to any matter relevant to any of the purposes
aforesaid, the employer or any contractor from whom any amount is
recoverable under sections 8A, his agent or servant or any other
person found in charge of the establishment, or any premises
connected there with or whom the Inspector has reasonable cause
to believe to be or to have been, an employee in the establishment;
d) makes copies of, or take extracts from, any book, register or other
document maintained in relation to the establishment and, where
he has reason to believe that any offence under this Act has been
committed by an employer, seize with such assistance as he may
think fit, such book, register or other document or portions thereof
as he may consider relevant in respect of that offence;
e) Exercise such other powers as the Schemes under the Act may
provide.

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Penalties under the Act

Any person who, for the purpose of avoiding any payment of money due
from him under the Act or any Scheme there under, or for the purpose of
enabling any other person so liable to avoid such payment, knowingly
makes or causes to be made any false statement or false representation,
is liable to be punished with imprisonment for a term which may extend to
one year or with fine of five thousand rupee or with both.

Similarly, an employer who contravenes the provision of the Act in relation

to the payments to be made into the Pension Scheme or makes default in
payment of inspection charges stipulated under the Act shall be
punishable with imprisonment which may extend to three years. Such
punishment shall not be less than one year and a fine of ten thousand
rupees when the matter relates to default in payment of the employees’
contributions which have already been deducted by the employer from
the employees’ wages. In all other cases, the punishment shall not be less
than imprisonment for a period of six months and a fine of five thousand
rupees. However, the Court has been given adequate powers to impose a
lesser sentence, provided there are sufficient reasons for so doing, which
has been noted in the judgement.

An employer who contravenes the provisions of the Act relating to the

payments to be made into the Employees’ Deposit Linked Insurance
Scheme shall be punishable with imprisonment for a term which may
extend to one year, but shall not be less than six months, and shall also
be liable for a fine which may extend to five thousand rupees. In this case
also, the Court may impose a lesser penalty, provided there are sufficient
reasons for so doing, which are to be noted in the judgement.

Subject to the provisions of the Act and any Scheme formed there under,
any person who contravenes, or makes default in complying with any of
the provisions thereof shall be punishable with imprisonment for a term

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which may extend to one year, or with fine which may extend to four
thousand rupees, or with both.

Similarly, whoever contravenes or makes default in complying with any

provision of the Act or of any condition subject to which exemption was
granted under the provisions of the Act shall, if no other penalty is
elsewhere provided by or under this Act for such contravention or non-
compliance, be punishable with imprisonment which may extend to six
months, but shall not be less than one month, and shall also be liable to
fine which may extend to five thousand rupees.

When the offences above mentioned is committed by a Company, then

every person who was in charge of the Company at the time of
commission of the offence, or who was responsible to the Company for
the conduct of the business of the company, shall be proceeded against,
along with the company and shall be punished accordingly. However, if
the person so proceeded against is able to prove that the offence was
committed without him having known about it, or that he took reasonable
care to prevent the commission of the offence, then he shall not be
proceeded against.

Repeating Offenders

A person who has previously been convicted for the commission of any of
the offences above mentioned is found to have committed the same
offence again shall be subject for every such subsequent offence to
imprisonment for a term which may extend to five years, but shall not be
less than two years, and shall also be liable to a fine of twenty five
thousand rupees.

Cognizance and trial

The Act provides that no court shall take cognizance of any offence
punishable under the Act, except on a report in writing of the facts
constituting such offence made with the previous sanction of the Central
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Provident Fund Commissioner or such other officer as may be authorised

by the Central Government. Section 14.AC further provides that no court
inferior to that of a Presidency Magistrate or a Magistrate of the first class
shall try any offence under this Act or any scheme framed there under.

Recovery of Damages

Where an employer makes default in the payment of any contribution to

the Funds formed under the Act, or in the transfer of accumulations
required to be transferred by him; the Central Provident Fund
Commissioner or such other officer as may be authorised by the Central
Government in this behalf may recover from the employer by way of
penalty such damages, not exceeding the amount of arrears, as may be
specified in the Scheme. However, before levying and recovering such
damages, the employer shall be given a reasonable opportunity of being
heard. Further, the Central Board has been given the power to reduce or
waive the damages so levied, if the establishment from which the money
is to be recovered has been declared a sick industrial company and a
scheme for its rehabilitation has been sanctioned by the Board for
Industrial and Financial Reconstruction.

Industries Exempted

Section 16 provides that the Act shall not apply to the following categories
of establishments:
a. Establishment registered under the Co-operative Societies Act,
1912, or under any other law for the time being in force in any State
relating to co-operative societies, employing less than fifty persons
and working without the aid of power, or
b. Any other establishment belonging to or under the control of the
Central Government or a State Government and whose employees
are entitled to the benefit of Contributory provident fund or old age
pension in accordance with any scheme or rule framed by the

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Central Government or the State Government governing such

benefits, or
c. Any other establishment set up under any Central, Provincial or
State Act and whose employees are entitled to the benefits of
contributory provident fund or old age pension in accordance with
any scheme or rule framed under that Act governing such benefits.

Power to Exempt

Section 17 provides that the Government may, by a Gazette notification,

provide either prospective or retrospective exemption to:

1. any establishment to which this Act applies if, in the opinion of the
appropriate government, the rules of its provident fund with respect
to the rates of contribution are not less favourable than those
provided for under the Act and the employees are also in enjoyment
of other provident fund benefits which on the whole are not less
favourable to the employees than the benefits provided under the
Act or any Scheme in relation to the employees in any other
establishment of similar character.

2. any establishment if the employees of such establishment are in

enjoyment of benefits in the nature of provident fund, pension or
gratuity and the appropriate government is of opinion that such
benefits, separately or jointly, are on the whole not less favourable
to such employees than the benefits provided under the Act or any
Scheme in relation the employees in any other establishment of a
similar character.

However, the Government cannot grant such an exemption without the

concurrence of the Central Board. Similarly, when such an exemption has
been granted, the employer shall establish a Board of trustees for the
administration of the provident fund consisting of such number of
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members as may be specified in the scheme. Such a Board of Trustees

constituted shall: (i) maintain detailed accounts to show the contributions
credited, withdrawals made and interest accrued in respect of each
employee; (ii) submit such returns to the Regional Provident Fund
Commissioner or any other officer as the Central Government may direct
from time to time; (iii) invest the provident fund monies in accordance
with the directions issued by the Central Government from time to time;
(iv) transfer, where necessary, the provident fund account of any
employee; and (v) perform such other duties as may be specified in the
Scheme.

Exemption from Pension Scheme

Similarly, the Appropriate Government may, by a Gazette Notification

exempt any establishment or class of establishments from the operation
of the Pension Scheme under the PF Act, if the employees of such
establishment or class of establishments are either members of any other
pension scheme or propose to be members of such pension scheme,
where the pension benefits are at par or more favourable than the
Pension Scheme under the Act. However, such a scheme may make
provision for exemption of any person or class of persons employed in any
establishment to which the Scheme applies from the operation of all or
any of the provisions of the Scheme, if such person or class of persons is
entitled to benefits which are on the whole not less favourable than the
benefits provided under this Act or the Schemes framed hereunder.

Exemption from Pension Scheme

The Central Provident Fund Commissioner may, if requested so to do by

the employer, by a Gazette notification exempt, whether prospectively or
retrospectively, any establishment from the operation of all or any of the
provisions of the Insurance Scheme, if he is satisfied that the employees
of such establishment are in enjoyment of benefits in the nature of life
insurance, whether linked to their deposits in provident fund or not, and
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such benefits are more favourable to such employees than the benefits
admissible under the Insurance Scheme. However, such an Insurance
Scheme may provide for the exemption of any person or class of persons
employed in any establishment and covered by that Scheme from the
operation of all or any of the provisions thereof, if the benefits in the
nature of life insurance admissible to such person or class of persons are
more favourable than the benefits provided under the Insurance Scheme
of the Act.

Effect of Cancellation of Exemption

When any such exemption granted under the forgoing provisions is

revoked, the amount of accumulations to the credit of every employee to
whom such exemption applied, in the Provident Fund, or the Pension Fund
or the Insurance Fund, as the case may be, of the establishment in which
he is employed shall be transferred to the credit of his account in the
Provident Fund, or the Pension Fund or the Insurance Fund, as the case
may be, under the Act.
Transfer of Accounts

When an employee employed in an establishment to which the Act applies

leaves his employment and obtains re-employment in another
establishment to which the Act does not apply, the amount of
accumulations to the credit of such employee in the Fund, or as the case
may be, in the provident fund of the establishment left by him shall be
transferred to the credit of his account in the provident fund of the
establishment in which he is re-employed, provided that the employee so
desires and also the rules in relation to that provident fund permit such a
transfer.

Similarly, when an employee employed in an establishment to which this

Act does not apply leaves his employment and obtains re-employment in
another establishment to which this Act applies, the amount of
accumulations to the credit of such employee in the provident fund of the
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Provisions Act

establishment left by him may, if the employee so desires and the rules in
relation to such provident fund permit, be transferred to the credit of his
account in the Fund or as the case may be, in the provident fund of the
establishment in which he is re-employed.
Effect of Transfer of Establishment

Where an employer transfers his establishment either in whole or in part,

the employer and the person to whom the establishment is transferred
shall jointly and severally be liable to pay the contribution and other sums
due from the employer under any provision of the Act or any scheme
framed hereunder, as the case may be, in respect of the period up to the
date of such transfer, provided that the liability of the transferee shall be
limited to the value of the assets obtained by him by such transfer.

Actions done in good faith

Section 18 declares that no suit of civil or criminal nature would lie against
the Central Government, any State Government, the Presiding Officer of
the Tribunals constituted under the Act, any Inspectors or any other
person for any act which is done in good faith or is intended to be done in
pursuance of the Act or any scheme framed there under.

Concluding remark

Though the Employees Provident Fund and Miscellaneous Provisions Act is

a much more comprehensive Statute incorporating much more details,
the above discussed could very well be identified as the crux of the
Statute as they reflect the heart and soul of the Act and brings out its
welfare nature.

Ajay Justin Odathekal Roll No:319 Semester VII |

Labour Law Project