The Industrial Disputes Act, 1947

Objectives
The objective of the Industrial Disputes Act is to secure industrial peace and harmony by providing machinery and procedure for the investigation and settlement of industrial disputes by negotiations. Various studies indicate that Indian labour laws are highly protective of labour, and labour markets are relatively inflexible. These laws apply only to the organised sector. Consequently, these laws have restricted labour mobility, have led to capital-intensive methods in the organised sector and adversely affected the sectors long-run demand for labour. Labour being a subject in the concurrent list, State-level labour regulations are also an important determinant of industrial performance. Evidence suggests that States, which have enacted more pro-worker regulations, have lost out on industrial production in general. -- (Ministry of Finance, 2006, p. 209 the Industrial Disputes Act (IDA) of 1947. Particular attention has been paid to its Chapter V-B, introduced by an amendment in 1976, which required firms employing 300 or more workers to obtain government permission for layoffs, retrenchments and closures. A further amendment in 1982 (which took effect in 1984) expanded its ambit by reducing the threshold to 100 workers. It is argued that since permission is difficult to obtain, employers are reluctant to hire workers whom they cannot easily get rid of. Job security laws thus protect a tiny minority of workers in the organized sector and prevent the expansion of industrial employment that could benefit the mass of workers outside. It is also argued that the restriction on retrenchment has adversely affected workplace discipline, while the threshold set at 100 has discouraged factories from expanding to economic scales of production, thereby harming productivity. Several other sections of the IDA allegedly have similar effects, because they increase workers bargaining strength and thereby raise labour costs either directly through wages or indirectly by inhibiting work reorganization in response to changes in demand and technology. The Act also lays down

1.

The provision for payment of compensation to the workman on account of closure or lay off or retrenchment. 2. The procedure for prior permission of appropriate Government for laying off or retrenching the workers or closing down industrial establishments 3. Unfair labour practices on part of an employer or a trade union or workers.

Applicability
The Industrial Disputes Act extends to whole of India and applies to every industrial establishment carrying on any business, trade, manufacture or distribution of goods and services irrespective of the number of workmen employed therein. Every person employed in an establishment for hire or reward including contract labour, apprentices and part time employees to do any manual, clerical, skilled, unskilled, technical, operational or supervisory work, is covered by the Act. This Act though does not apply to persons mainly in managerial or administrative capacity, persons engaged in a supervisory capacity and drawing > 1600 p.m. or executing managerial functions and persons subject to Army Act, Air Force and Navy Act or those in police service or officer or employee of a prison.

Payment of Gratuity Act, 1972 Objectives The Payment of Gratuity Act, 1972 envisages to provide a retirement benefit to the workmen who have rendered long and meritorious services to the employer. Applicability The Act applies to every factory, mine, oilfield, plantation, port, railway company; every shop or establishment governed by the Shops and Establishments Act of that State in which 10 or more persons are employed, or were employed on any day of the preceding 12 months; and every other establishment wherein 10 or more persons are employed, or were employed on any day of preceding 12 months and which is so notified by the Central Government. The Central Government has made the Act applicable to all the educational institutions in the country having 10 or more employees, and to all registered trusts and societies employing 10 or more persons. The Act has been made applicable also to motor transport undertakings, clubs, Chambers of Commerce & Industry, local bodies and solicitors offices employing 10 or more persons. The shop or establishment to which this Act has become applicable shall continue to be governed by this Act, irrespective of the fact that the number of employees working therein has subsequently fallen below 10. This Act is not applicable to apprentices and persons holding a post under the Central or State Government who are governed by any other Act or by any other rule providing for payment of gratuity.

Exemption The appropriate government is empowered to exempt by notification any establishment, etc. where the employees of such establishment, etc. are in receipt of gratuity or pension benefits not less favorable than the benefits conferred under this Act. The appropriate government may also exempt any employee or class of employees, similarly.

Eligibility Gratuity shall be payable to an employee on termination of his employment after he has rendered continuous service for not less than 5 years:
on his super annuation, or on his retirement orresignation, or on his death or disablement due to accident or disease. The condition of completing 5 years service is not applicablein case of disablement or death of an employee. In case of death of the employee, gratuity is payable to the legal heirs or nominees of such employee.

Calculation of Gratuity The gratuity shall be paid @ 15 days wages for every completed year of service, but the wages for a month will be calculated as if the month comprises of 26 days.The maximum gratuity payable to an employee is Rs.350,000.

For example, if an employee is drawing Rs.10,400/- per month as his last drawn salary and either he resigns/retires or his services are terminated after working for 20 years, he will be entitled to receive gratuity ofRs.120,000 as under:10,400 (salary) x 15 (days) x 20 (years)/26 = Gratuity Amount Rs.120,000. Continuous Service Service without interruptions or breaks is continuous service. But any absence from duty because of sickness, accident, leave, layoff or strike, lockout, stoppage of work for which the employee is not at fault will not be considered to be an interruption or break in service. Employee shall be deemed to be in continuous service for one year if he/she has put in 240 days' work in 12 calendar months preceding the date of calculation, or 190 days if the establishment works less than 6 days a week or the employee works below ground in a mine. Employees in a seasonal establishment shall be deemed to be in a continuous service if they have worked for not less than 75 per cent of the required attendance.

Forfeiture of Gratuity An employee can forfeit his gratuity on two counts: His service is terminated on account of misconduct and the charge is proved against him. The misconduct has to result in the damage or loss or destruction of property of the employer. The loss is deducted from the amount of gratuity payable to the employee. o If the service of the employee is terminated for proven misconduct of riotous or disorderly conduct, o any other act of violence committed by him/her, or o an offence involving moral turpitude committed by him/her during the course of employment, the gratuity payable may be wholly or partially forfeited.

Employers Obligations To notify regarding opening of establishment to the controlling authority. To correctly ascertain the amount of gratuity payable and pay the same accordingly. To obtain an insurance in the prescribed manner for his liability for payment of gratuity under the Act or establish approved Gratuity Fund in the prescribed manner.

PAYMENT OF BONUS ACT, 1965 Objectives The payment of Bonus Act, 1965 aims at providing for the payment of bonus to the employees of certain establishments, on the basis of profits or production or productivity and for matters connected therewith. Applicability The Act applies to every factoryand every other establishment employing not less than 20 persons on any day during an accounting year. The Central/State Government can, however, extend its provisions to any establishment employing less than 20 but more than 10 persons. The establishments covered under the Act shall continue to pay bonus even if the number of employees falls below 10, at a later date. Eligibility Every employee (other than an apprentice) receiving salary or wages up to Rs.3,500 per month and engaged in any kind of work whether skilled, unskilled, manual, managerial, supervisory, technical,

clerical,etc. is entitled to bonus for every accounting year, if he has worked for at least 30 working days in that year. Employees of the general insurance companies, LIC, Central/State Government establishments, Indian Red Cross Society, Universities and Educational Institutions, Hospitals, Chambers of Commerce, Reserve Bank of India, Industrial Finance Corporation of India, Unit Trust of India,Social Welfare Institutions, Local Bodies, etc. are not entitled to bonus under the Act. What they are paid as bonus, is exgratia payment. Salary or Wage Salary or wage means basic pay plus dearness allowance.Payment received by way of encashment of leave will not form salary or wages for the purpose of the Act. However, for purposes of calculating the salary or wage all the four allowances, viz. Ad-hoc, family, house rent and tiffin allowances, would be included. Allocable surplus Allocable surplus means In relation to an employer, being a company other than a banking companywhich has not made the arrangements prescribed under the Income Tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of section 194 of that Act, sixty-seven per cent of the available surplus in an accounting year. In any other case, sixty per cent of such available surplus.

Minimum Bonus The minimum bonus which an employer is required to pay even if he suffers losses during the accounting year or there is no allocable surplus (except in case of new establishments),is8.33% of the salary or wages of the employee during the accounting year. Maximum Bonus iif in any accounting year, the allocable surplus exceeds the amount of minimum bonus, the employer shall pay bonus in proportion to the salary or wages earned by the employee during that accounting year, subject to a maximum of 20% of such salary or wages. Mode and Time for Payment of Bonus Bonus should be paid in cash and within 8 months from the close of the accounting year.Bonus is payable only annually. Employers Obligations To calculate and pay the annual bonus as required under the Act. To maintain the prescribed registers and file annual returns of bonus paid.

EMPLOYEES STATE INSURANCE ACT, 1948 Objectives The Employees State Insurance Act, 1948 aims to provide certain benefits to the workers in case of sickness, maternity and employment injury including occupational diseases,through a contributory fund. Applicability The Act applies to all factories other than seasonal factories, using power in the manufacturing process and employing 10 or more persons and factories not using power but employing 20 or more persons for wages.

The Act contains enabling provision under which the appropriate government is empowered to extend the provisions of the Act to other classes of establishments industrial, commercial, agricultural or otherwise.Under this provision, most of the State Governments have extended the provisions of the Act to the following classes of establishmentsShops, hotels, restaurants, cinemas including preview theatres, road motor transport agencies, newspapers establishments etc.employing 20or more persons. Eligibility Every employee (including casual and temporary employees), whether employed directly or through a contractor, who is in receipt of wages up to Rs. 6,500/- per month is entitledto be insured under the E.S.I. Act. However, apprentices engaged under the Apprentices Act are not entitled to the E.S.I. benefits. Wages Wages means all remuneration paid or payable in cash to an employee including any payment for the periodof authorized leave, strike which is not illegal, lock-out or lay-off and other additional remuneration, if any, paid at intervals not exceedingtwomonths, but excludes employers contribution to any pension, provident or E.S.I. funds, any travelling allowance/ concession, reimbursement of any special expenses, gratuitypayable on discharge.

What is included in wages and what is not, is important for the purpose of calculating ESI contribution.According to the official public claim Employers Guide to Employees State Insurance Act, the position is as under: Deemed to be wages: Basic Pay;Dearness Allowance;;House Rent Allowance, City Compensatory Allowance;Overtime Wages; Payment for day of rest;Production incentive (when paid at intervals of less than 2 months);Bonus; Night Shift Allowance;Heat, Gas & Dust Allowance; Payment forun substituted holidays;Meal/Food Allowance;Suspension Allowance;Lay off Compensation; Children Education Allowance. Not to be deemed as wages:

Contribution paid by employer to any Pension/Provident Fund or under ESI Act; any Travelling Allowance or value of any Travelling Allowance; any sum paid to defray special expenses entailed by the nature of employment; Gratuity payable on discharge;Pay in lieu of notice of retrenchment compensation; Benefits paid under the ESI Scheme; Encashment of Leave; Payment of Inam (gift money) which does not form part of the terms of employment; Washing allowance for liveries; Conveyance allowance; Production incentive. Contributions The rates of contribution payable by employees and employers are as under: Employees Contribution 1.75 per cent of the wages Employers Contribution4.75 per cent of the wages

Employees in receipt of an average daily wage of up to Rs. 25 are exempt from payment of contribution. Advantages to Employers Employees who come under the purview of the E.S.I. Act, 1948 derive the following benefits from the applicability of the Act:

Employers are absolved of all liability of providing medicare facilities to employees,reimbursement of actual expenses, lump sum grant or opting for any health insurance policy. Employers are exempted from the applicability of the: o o Maternity Benefit Act, 1961. Workmens Compensation Act, 1923.

Benefits to Employees Free medical treatment is offered to insured employees at hospital and dispensaries run by the E.S.I. Corporation. Periodical payments to the insured employeefor the period of sickness at specified standard benefit rate.ty benefits to the covere Periodical payments towoman employee in case of confinement, or miscarriage or sickness from pregnancy etcleave for 12 weeks, of which not more than 6 weeks should be preceding confinement. Injury in the course of employment resulting in temporary/permanent disablement entitles the covered employee to a regular payment to substitute his lost wages. Death inthe course of employment entitles specified dependent of the deceased employee to a cash benefit payable up tothe day of his death. Death due to injury sustained in the course of employment or due to an occupational disease entitles the employees dependents to a benefit in the form of pension. One time payment of Rs.1500 to help meet funeral expenses of the covered employee.

Employers Obligations To get his factory or establishment registered with E.S.I. Corporation and obtain employers Code Number. To obtain declaration from the employees covered and submit same to E.S.I. office and obtain employees Insurance Number and Identity Cards. To deposit employees and his own contributions. To furnish Returns of Contributions. Not to reduce the wages of an employee on account of contribution made by him. To maintain prescribed records/registers. To report to the E.S.I. authorities of any accident, arrange for first-aid and transportation of employee to the hospital. To inform E.S.I. office, dispensary/hospital in case of death of an employee immediately. Not to put to work any sick employee and allow him leave if he has been issued the prescribed certificate. Not to dismiss or discharge any employee during the period he/she is in receipt of sickness/maternity/ temporary disablement benefit, or is under medical treatment or is absent from work as result of illness duly certified or due to pregnancy or confinement.

WORKMENS COMPENSATION ACT, 1923 Objectives It aims to provide workmen and/or their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen.

Applicability The Act applies to railways and other transport establishments, factories, establishments engaged in making, altering repairing, adapting, transport or sale of any article, mines, docks, establishments engaged in constructions, fire-brigade, plantations, oilfields and other employments listed in Schedule II of the Act. The Workmens Compensation (Amendment) Act, 1995has extended the scope of the Act to cover workers of newspaper establishments, drivers, cleaners, etc working in connection with a motor vehicle, workers employed by Indian companies abroad, persons engaged in spraying or dusting of insecticides or pesticides in agricultural operations, mechanized harvesting and thrashing, horticultural operations and doing other mechanical jobs.Establishments which are covered by the Employees State Insurance Act, are outside the purview of this Act. Eligibility Every employee (including those employed through a contractor but excluding casual employees), who is engaged for the purposes of employers business and who suffers an injury in any accident arising out of and in the course of his employment, shall be entitled for compensation under the Act. Dependent The following relations of a deceased workman shall be his dependents: a widow, a minor legitimate or adopted son, an unmarried legitimate daughter, or a widowed mother,whether or not dependent on the workman; and a son or a daughter, aged 18 years or more who is infirm and wholly dependent on the workman at the time of his death; and any of the following persons wholly or partly dependent on the workman at the time of his death:(a) a widower, (b) a parent other than a widowed mother, (c) a minor illegitimate son, an unmarried illegitimate daughter or adaughter legitimate or illegitimate or adopted if married and a minor or if widowed and a minor, (d) a minor brother or an unmarried sister or a widowed sister if a minor, (e) a widowed daughter-in-law, (f) a minor child of a pre-deceased son, (g) a minor child of a pre-deceased daughter where no parent of the child is alive, or (h) a paternal grandparent if no parent of the workman is alive.

Disablement Injury caused to a workman by an accident may result in the loss of the earning capacity of the workman and this loss of earning capacity is called disablement. Disablement can by classified as Total orPartial.It can further be classified into Permanent or Temporary. Disablement, whether permanent or temporary is said to be total when it incapacitates a worker for all work he was capable of doing at the time of the accident resulting in such disablement.Total Disablement is considered to be permanent if a workman, as result of an accident,suffers from the injury specified in Part I of Schedule I or suffers from such combination of injuries specified in Part II of Schedule I as would be the loss of earning capacity which amountsto one hundred per cent or more. Disablement is said to be permanent partial when it reduces for all times, the earning capacity of a workman in every employment which he was capable of undertaking at the time of the accident. Every injury specified in Part II of Schedule I is deemed to result in permanent partial disablement. Where the disablement is of a temporary nature and reduces the earning capacity of a workman in the employment in which he was engaged at the time of the accident, it is temporary partial disablement.

Occupational Disease Workers employed in certain types of occupations are exposed to the risk of contracting certain diseases which are peculiar and inherent to those occupations. A worker contracting an occupational disease is deemed to have suffered an accident out of and in the course of employment and the employer is liable to pay compensation for the same. Occupational diseases have been categorised in Parts A, B, and C of Schedule III of the Act. Accident arising out of and in the course of employment An accident arising out of employment implies a casual connection between the injury and the accident and the work done in the course of employment. The three tests are: At the time of injury, workman must have been engaged in the business of the employer and must not be doing something for his personal benefit. That accident occurred at the place where he was performing his duties; and Injury must have resulted from some risk incidental to the duties of the service, or inherent in the nature or condition of employment.

Accident Compensation, when payable The employer of any establishment covered under this Act, is required to compensate an employee: who has suffered an accident arising out of and in the course of his employment resulting into death, permanent total disablement, permanent partial disablement, or temporary disablement whether total or partial, or who has contracted an occupational disease.

Compensation, when not payable The employer is not liable to pay compensation for the injury to an employee under any of the following circumstances: When injury does not cause total/partial disablement for more than 3 days; When injury, not resulting in death or permanent total disablement is directly attributable to employees willful disobedience of the safety rules, or disregard of the safety devices, or the employee having been under the influence of drink or drugs; When the employee has contacted a disease which is not directly attributable to a specific injury caused by the accident or to that occupation; or When the employee has filed a suit for damages against the employer or any other person, in a Civil Court.

Employers Obligations To pay compensation for an accident suffered by anemployee, in accordance with the Act. To submit a statement to the Commissioner (within 30 days of receiving notice) in the prescribed form, giving the circumstances attending the death of a workman as result of an accident and indicating whether he is liable to deposit any compensation for the same. To submit accident report to the Commissioner in the prescribed form within 7 days of the accident which results in death of a workman or a serious bodily injury to a workman. To maintain a notice book in the prescribed form at a place where it is readily accessible to the workman.

To submit an annual return of accidents specifying the number of injuries for which compensation has been paid during the year, the amount of such compensation and other prescribed particulars.

PAYMENT OF WAGES ACT, 1936 Objectives The payment of Wages Act, 1936 was introduced with the object of (a) regulating payment of wages, imposition of fines and deductions from wages, and (b) eliminating all malpractices by laying downwage periods and time and mode of payment of wages.The Act, therefore, ensures payment of wages in a particular form at regular intervals without unauthorized deductions. Applicability The Act applies to any factory, any railway establishment and any industrial or other establishment like tramway service, motor transport service, air transport service, dock, wharf, jetty, inland vessel, mine, quarry, oilfield, plantation, workshop or other establishment producing, adapting or manufacturing any article, establishments engaged in construction, developmentand maintenance of buildings, roads, bridges or canals, navigation, irrigation or supply of water, generation, transmission and distribution of electricity/power and any other establishment notified by the Central or a State Government. Eligibility The Act is applicable to the employees receiving wages below Rs. 1,600/- per month.Persons employed in a railway establishment, either directly or through a contractor, are also covered under the Act. Wages Wages means allemoluments expressible in terms of money and payable to an employee including any sum payable for termination of service, wages in lieu of holidays or leave, overtime wages and bonus payable under the Bonus Act or under the terms of employment.However, wages does not include value of any house accommodation, supply of light, water, medical attendance or any other amenity, contribution to any pension or provident fund, travelling allowance, reimbursement of any special expense and gratuity. Nor does it include suspension/subsistence allowance given during suspension period of an employee. Obligations of Employers Every employer is primarily responsible for payment of wages to his employees. Every employer should fix the wage-period, which may be per day, per week or per month, etc., but in no case it should exceed one month. Employer should make timely payment of wages. If the number of employees is less than 1000, then wages must be paid within 7 days of the expiry of the wage period, and in other case within 10 days of the expiry of the wage period. Besides, all payments of wages should be made only on a working day. Wages should be paid in cashor by cheque or by crediting in employees bank account, after obtaining his written consent. The employer should not make any unauthorized deductions from wages.Employer can make permissible deductions such as for income tax, recovery of loans and advances, employees subscription to provident fund, and with his written consent for payment of life insurance premium, purchase of Government securities, deposits in any Post Office Savings Bank, contributions to any labor welfare fund and fees for membership of any trade union, etc. etc.

In case of death of an employee, all amounts payable to him as wages should be paid to his nominee or legal heir.

MINIMUM WAGES ACT, 1948 Objectives The Minimum Wages Act, 1948 envisages to provide minimum statutory wages for scheduled employments with a view to obviate the chances of exploitation of labor through payment of very low and sweating wages. The Act also provides for the maximum daily working hours, weekly rest day and overtime.Rates fixed under Minimum Wages Act prevail over the rates fixed under award/agreement. Applicability The Act applies to all establishments employing one or more persons and engaged in any Scheduled employment. Wages Wages means all remuneration expressible in money terms and payable to an employee including house rent allowance but excluding value of any house accommodation, supply of light, water, medical attendance or any other amenity, contribution to any pension or provident fund, travelling allowance, reimbursement of any special expense and gratuity. If the commission on turnover is being paid as per terms and conditions of employment, then it would constitute part of the wages even under the Minimum Wages Act.However, an employee should not be paid wages including the commission, which are less than the prescribed minimum wages. Fixation of Minimum Rates of Wages The State Governments have been empowered to fix rates of wages for different classes of employees -skilled, unskilled, clerical, supervisory, etc. employed in any Scheduled employment and to review and revise the same from time to time, the interval between two revisions not to exceedfive years, considering the change in price index and dearness allowance. Fixation of Working Hours, etc. In regard to any scheduled employment in respect of which minimum rates of wages have been fixed, the Government may fix the number of working hours constituting a normal working day, inclusive of one or more intervals; provide for a rest day with wages, in every period of 7 days; and provide for payment for work on a rest day at a rate not less than the overtime rate.

Wages for two or more classes of work Where an employee does two or more classes of work,to each of which a different minimum rate of wages is applicable, the employer shall pay to such employee in respect of the time respectively occupied in each such class of work, wages at not less than the minimum rate in force in respect of each such class. Employers Obligations The employer is bound to pay to every employee engaged in a Scheduled employment under him wages at a rate fixed for that class of employees in that employment, without making any deduction therefrom except those permitted under the Payment of Wages Act.

As a rule, the wages payable under the Act should be paid in cash.The appropriate Government may, however, permit the payment of wages wholly or partly in kind, keeping in view the prevailing custom, and also allow the supply of essential commodities at concessional rates. If an employee works on any day in excess of the normal working hours, the employer shall pay to him overtime wages for every hour or part of an hour, so worked in excess, at the rate prescribed under this Act or under any other law, whichever is higher. As per Factories Act, overtime wages are to be paid at twice the normal rate of wages. If any amount payable to an employee as wages or otherwise under this Act, remains undisbursed on account of death or his whereabouts not being known, then the same shall be deposited by the employer with the prescribed authority.

Provident Fund : The Employees Provident Funds and miscellaneous provisions Act, 1952 Objectives The Employees Provident Funds and Miscellaneous Provisions Act, 1952 aims to provide for the institution of provident funds, family pension fund and deposit linked insurance fund for employees in factories and other establishments. Applicability The Act applies to: every establishment which is a factory engaged in any industry specified in Schedule I and in which 20 or more persons are employed, and anyother establishment employing 20 or more persons or class of such establishments which the Central Government may, by notification, specify in this behalf.

The Central Government may, by notification, apply the provisions of this Act to any establishment employing such number of persons less than 20 as may be specified in the notification. An establishment to which this Act applies shall continue to be governed by the Act, even if the number of employees therein at any time falls below 20. Exemption The Act, however, does not apply to: a co-operative society employing less than 50 persons and working without the aid of power; a newly set-up establishment for an initial period of 3 years from the date on which such establishment is, or has been set up, and any Central/State Government establishment having its own scheme of provident fund or pension.

The appropriate Government is empowered to exempt from the operation of all or any of the provisions of any Scheme: any establishment to which this Act applies ifo the rules of its provident fund with respect to the rates of contribution are not less favourable than those specified in section, and o the employees are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employee than the benefits provided under the Act or the schemes. any establishment the employees of which are not in enjoyment of provident fund, pension or gratuity benefits that are, separately or jointly, not favourable than the benefits provided under the Act or the schemes.

Voluntary Coverage The employer and majority of employees of an establishment may agree for the voluntary application of the provisions of the Act in relation to that establishment. For this purpose, they should make an application to the Central Provident Fund Commissioner, who may by notification, extend the provisions of the Act to that establishment with effect from the date of such agreement or any subsequent date specified in such agreement. The establishment covered on voluntary basis is required to comply with the provisions of the Act at par with other covered establishments and cannot opt out of coverage on a subsequent date. Eligibility Every employee, including the one employed through a contractor who is in receipt of wages up to Rs.6,500 p.m. shall be eligible to becoming a member of the funds. If the pay of a member-employee increases beyond Rs. 6,500 p.m. after his having become a member, he shall continue to be a member but the contribution payable in respect of him shall be limited to the amount payable on monthly pay of Rs.6,500.An employee ceases to be a member of the Employees Family Pension Fund at the age of 60 years. Administrative Authority The Act is administeredboth by the Central Government and the State Governments in their respective spheres. The Central Government constitutes a Central Board of Trustees and in consultation with the State Government, a State Board of Trustees. The Central Government appointsa Central Provident Fund Commissioner, Deputy/Regional Provident Fund Commissioners and other officers.The State Board, with the approval of the State Government, appoints the necessary staff, for enforcement of the provisions of the Act. The Schemes The Central Government has framed three schemes under the Act: The Employees Provident Fund Scheme, 1952, for establishment of provident funds for the employees. The Employees Family Pension Scheme, 1971 which has now been merged into the Employees Pension Scheme, 1995, for providing family pension and life assurance benefit to the employees. The Employees Deposit Linked Insurance Scheme, 1976, for providing life insurance benefit to employees.

Employees Provident Fund Scheme, 1952 The Employees Provident Fund Scheme takes care of the following needs of the members: retirement, medical care, housing, marriages, education of children, financing of insurance policy, etc. Employees Pension Scheme, 1995 The Government introduced the Employees Pension Scheme, 1995 with effect from 16.11.1995. The then existing Employees Family Pension Scheme has been merged under the new scheme.The new scheme envisages to provide monthly pension to employees on superannuation, pension to widows on death after superannuation, monthly pension for children of the subscribers, monthly pension to members on account of permanent total disablement during service, etc. Employees Deposit Linked Scheme, 1976 The scheme is for providing life insurance benefit to employees. It is applicable to all the members of the Employees Provident Fund Scheme.

Allotment of Account Number Every employee who becomes a member of the Provident Fund/Pension Fund, shall be allotted an account number by the employer. Employers Contributions The employer is required to contribute the following amounts: Towards Employees Provident Fund and Pension Fund: o (a)10% of the basic wages, dearness allowance and retaining allowance if any, in case of establishments employing less than 20 persons or a sick industrial (BIFR) company orsick establishments, or any establishment in the jute, beedi, brick, coir or gaur gum industry; o (b)12% of the wages, D.A. etc. in case of all other establishments employing 20 or more persons. o Out of the contributions payable by the employer each month, a part of the contribution representing 8.33 per cent of the Employees pay shall be remitted to the Employees Pension Fund and the balancepartshallcontinue to remain in the Provident Fund account. o Where the pay of an employee exceeds Rs.6,500 p.m., the contribution payable to Pension Fund shall be limited to the amount payable on his pay of Rs. 6,500 only. Towards Deposit-Linked Insurance Fund: o 0.5% of the wages, D.A. etc.

Employee Employeemeans any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishmentand 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 an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash, but does not include the cash value of any food concession; any dearness allowance; house rent allowance, overtime allowance, bonus, commission or any other similar allowance; any presents made by the employer.

Dearness Allowance Dearness Allowance shall include the cash value of any food concession allowed to the employee. Retaining Allowance Retaining Allowance means an allowance payable to an employee, in respect of any period during which the establishment is not working, for retaining his services. Employees Contribution The employees contribution shall be equal to the contribution payable by the employer in respect of him, i.e. 10% or12% as the case may be.The employee is not required to contribute towards Deposit Linked Insurance Fund.If an employee so desires, he may opt to make contribution to the fund at a higher rate also.The employer shall not be, however, underan obligation to contribute at such higher rate. The employer is required to deduct the employees contribution from his wages and deposit the same into the provident fund account along with his own contribution.

Central Governments Contribution The Central Government shall also contribute @ 1.16% of the pay of the members of the Employees Pension Scheme to the Pension Fund.Where, however, the pay of the member exceeds Rs. 6,500 p.m., the contribution payable shall be limited to the amount payable on his pay of Rs. 6,500 only. Administrative Charges An employer is required to pay the following administrative charges also: 1.10% of the employees wages subject to a minimum of Rs.5 every month, for administration of Provident Fund. 0.01% of the employees wages subject to a minimum of Rs.2 every month, for administration of Deposit Linked Insurance Fund.

Time and Mode of Deposit The employer shall within 15 days of the close of every month deposit the total amount of the employers and employee contributions and administrative charges with P.F. Commissioner into the respective accounts maintained at the State Bank of India.Separate cheques should be used for contributions and administrative charges. Investment of Funds and Interest The amounts deposited into the Provident Fund Account are invested in specified securities and under Special Deposits Scheme.The Commissioner shall credit to the provident fund account of each member, interest at such rate as the Central Government may determine, on the balance standing to his credit on first day of April each year.The rate of interest notified for the year 2001-02 is 9.5%.Interest is also earned on the Pension Fund and Deposit Linked Fund Accounts. Protection of Provident Fund The amount standing to the credit of any member of the fund cannot be in any way assigned or charged, nor it is liable to attachment under any decree order of the court in respect of any debt or liability incurred by the member. Employers Obligations The obligations of the employers under the three schemes have been summarised below: To pay the employers and employees contributions and administrative charges as required under the Act/schemes. To furnish to the Provident Fund Commissioner, returns in the prescribed forms, such as returns of ownership/management, of membership of employees, of employees leaving the service during the month, monthly and annual returns of contributions made by employer and employees. To maintain records/registers such as: Contribution Cards, Eligibility Register, Provident Fund Register, Provident Fund Ledger, Inspection Book, etc. To allow the employees to avail of temporary/permanent withdraws out of their contributions, pension, life insurance benefit, insurance benefit, etc. permissible under the schemes. To transfer within the specified time, the accumulated balance in the account of an employee leaving the service and obtaining re-employment in another establishment