Employees' Provident Fund and Miscellaneous Provisions Act, 1952 The umbrella legislation relating to provident fund is the

Employees' Provident Funds & Miscellaneous Provisions Act, 1952 (EPF & MP Act). The Act was enacted with the main objective of making some provisions for the future of industrial workers after their retirement and for their dependents in case of death. It provides insurance to workers and their dependents against risks of old age, retirement, discharge, retrenchment or death of the workers. It 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 and employing 20 or more persons. However, the Act shall not apply to any 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 Belonging to or under the control of the Central Government or a State Government and whose employees are entitled to the benefits of contributory provident fund or old age person in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits; or Set up under any Central Provincial or State Act and whose employees are entitled to the benefits of contributory provident fund or old age person in accordance with any scheme or rule framed under that Act governing such benefits; or Newly set up until the expiry of a period of three years from the date on which such establishment has been set up.

The Act is administered by the Government of India through the Employees' Provident Fund Organisation (EPFO). EPFO 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. It is an autonomous tripartite body under the control of Ministry of Labour with its head office in New Delhi. It aims to extend the reach and quality of publicly managed old-age income security programs through its consistent efforts and ever-improving standards of compliance and benefit delivery system to its members. This way it seeks to contribute to the economic and social well-being of the country. EPFO functions under the overall superintendence of the policies framed by the Central Board of Trustees, headed by Union Minister for Labour as Chairman. The main functions of the Board are : Administering the funds created and vested in the Board and performing other works incidental thereto.

Maintaining accounts of income and expenditure in prescribed form and manner. Delegation of powers for administration of the schemes. Submitting audited accounts with comments and annual report on performance of the Organisation to Government.

The main provisions of the Act are: The Act aims to provide for institution of provident funds, family pension funds and deposit linked insurance funds for the employees in the factories and other establishments. Accordingly, three schemes are in operation under the Act. These schemes taken together provide to the employees an old age and survivorship benefits, a long term protection and security to the employee and after his death to his family members, and timely advances including advances during sickness and for the purchase/ construction of a dwelling house during the period of membership. These three schemes are as follows: Employees' Provident Fund Scheme, 1952 , 1976

, 1995 ( , 1971)

The Central Government may by notification in the Official Gazette constitute a Central Board of Trustees for the territories to which this Act extends. Also, the Government may constitute an Executive Committee to assist the Board in the performance of its functions. The contribution which shall be paid by the employer to the fund shall be eight and one-third per cent of the basic wages, dearness allowances and retaining allowance (if any) for the time being payable to each of the employees. While, the employees' contribution shall be equal to the contribution payable by the employer in respect of him and may if any employee so desires and if the Scheme

makes provision therefore be an amount not exceeding eight and one-third per cent of his basic wages, dearness allowances 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. The Central Government may by notification in the Official Gazette constitute one or more Employees' Provident Funds Appellate Tribunal to exercise the powers and discharge the functions conferred on such Tribunal by this Act and every such Tribunal shall have jurisdiction in respect of establishments situated in such area as may be specified in the notification constituting the Tribunal. No employer in relation to an establishment to which any scheme applies, shall by reason only of his liability for the payment of any contribution to the fund, or any charges under this Act or the scheme, reduce whether directly or indirectly, the wages of any employee to whom the scheme applies or the total quantum of benefits in the nature of old age pension gratuity provident fund or life insurance to which the employee is entitled. Whoever for the purpose of avoiding any payment to be made by himself under this Act or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation, shall be punishable with imprisonment or with fine or with both.

Eligibility Any person who is employed for work of an establishment or employed through contractor in or in connection with the work of an establishment.

Applicability

Establishment which is factory engaged in any industry specified in Schedule 1 and in which 20 or more persons are employed. Any other establishment employing 20 or more persons which Central Government may, by notification, specify in this behalf. Any establishment employing even less than 20 persons can be covered voluntarily under section 1(4) of the Act.

Payment of Contribution

The employer shall pay the contribution payable to the EPF, EDLI and Employees' Pension Fund in respect of the member of the Employees' Pension Fund employed by him directly by or through a contractor. It shall be the responsibility of the principal employer to pay the contributions payable to the EPF, EDLI and Employees' Pension Fund by himself in respect

of the employees directly employed by him and also in respect of the employees employed by or through a contractor.

Benefits
Employees covered enjoy a benefit of Social Security in the form of an unattachable and unwithdrawable (except in severely restricted circumstances like buying house, marriage/education, etc.) financial nest egg to which employees and employers contribute equally throughout the covered persons employment. This sum is payable normally on retirement or death. Other Benefits include Employees Pension Scheme and Employees Deposit Linked Insurance Scheme. Clarification about Contribution After revision in wage ceiling from Rs.5000 to Rs.6500 w.e.f. 1.6.2001 per month, the government will continue to contribute 1.16% upto the actual wage of maximum Rs.6500 per month towards Employees Pension Scheme. The employers share in the Pension Scheme will be Rs.541 w.e.f. 1.6.2001. Under Employees Deposit-Linked Insurance Scheme the contribution @ 0.50% is required to be paid upto a maximum limit of Rs.6500. The employer also will pay administrative charges @ 0.01% on maximum limit of Rs.6500 whereas an exempted establishment will pay inspection charges @ 0.005% on the total wages paid. Notes: The above clarification is given by taking wages upto a maximum of Rs.6500 towards wage (basic+DA). Since an excluded employee i.e. drawing wages more than Rs.6500 can also become member of the Fund and the Schemes on joint request and if, for instance, such an employee is getting Rs.10, 000 per month, his share towards provident fund contribution will be Rs.1200 e.g. 12% and employers share towards provident fund contribution will be Rs.659 and Rs.541 towards Employees Pension Fund.

Rate of Contribution Scheme Employee's Employer's Central Govt. Provident Fund Scheme 12% Amount>8.33% (in case where contribution is 12% of 10%) 10% (in case of certain Establishments as per details given earlier) NIL Insurance Scheme NIL 0.5% NIL Pension Scheme NIL 8.33%(Diverted out of Provident Fund 1.16%

Damages

Less than 2 months @ 17% p.a. Two months and above but less than upto four months @ 22% p.a.

Four months and above but less than upto six months @ 27% p.a. Six months and above

Penal Provision

Liable to be arrested without warrants being a cognizable offence. Defaults by employer in paying contributions or inspection/administrative charges attract imprisonment upto 3 years and fines upto Rs. 10,000.00 {Section 14} For any retrospective application, all dues have to be paid by employer with damages upto 100% of arrears.