This paper is
authored by Aryan Singh Chouhan, fourth-year law student at Institute of Law,
Nirma University. His main interests lie in Insolvency and Tax
Laws.
Introduction
The employees provident fund and miscellaneous (EPF) act, 1952 as the name suggests is a social welfare act, which aims to protect the employee, by giving them a sense of social security.
The EPF
act covers different types of funds in the act that is: -
(i) Provident
Fund
(ii) Pension
Fund
(iii) Deposit Linked Fund
The paper would try analyzing the EPF Act in detail, its applicability, the penalties for non-compliance and provision to appeal and would also cover the different schemes made to implement the EPF Act effectively.
Section 1[1] of the act determines the
jurisdiction of the Act, as to which establishments would be governed under the
act and it says that:-
(i) The jurisdiction of the EPF Act, applies to factories that may be classified as an industry as defined under the schedule 1 of the EPF Act, schedule 1 contains the list of industries that would be covered under the act , and another important condition is that even if a factory is under schedule 1 that would alone not make it mandatory for such factory to follow EPF Act, but also the number of workers shall be 20 or more than 20 and only then the act would apply.[2]
(ii) The act also empowers, central government that any other establishment which is not covered under the schedule 1, may have to follow the provisions of EPF Act and maintain the provident fund and other funds required under the Act, by specifying the same in the gazette[3]
(iii) The act also creates a special position of Central Provident Fund Commissioner, and if there is a case, when a establishment is not covered under the schedule 1 but the employer and the people working the establishment are in favor that the provision of this act shall apply to them, then they would be also covered under this act and the commissioner must notify the same in the gazette.[4]
So, these are the instances on which the act would apply but section 16 of the act also defines the type of establishments, on which this act would not be applied, and it involves:-
(a) The act
excludes, any place of work that is enrolled under the Co-operatives Act
(central or state) and one more condition is that the number of employees shall
be less than 50, only then it would be excluded from EPF Act provisions[5]
(b) The act
also excludes any workplace under the authority of Central or State Government,
where the persons working are getting the social security benefits from certain
other acts and in that situation, they would not be covered under the EPF Act[6]
The Different Schemes Under the Act-
(1) Employees' Pension Scheme (EPS)
Section 6A of the act, talks about the Employees' Pension Scheme (EPS), and gives the central government the power to form a scheme, called as the EPS wherein they can make provisions for pension which can include pensions of different type, like the retiring pension or widow pension, children pension or other such types of pensions.[7]
The act also talks about making of Pension Fund, wherein all the money collected for pension shall be stored and managed.
Following the powers given under the, the central government on 16th November 1995 made operational the Employees' Pension Scheme and Para 3 of the scheme, makes the duty to employer, the contribution for provident fund, that was made under section 6 of the EPF act, from that contribution, it is duty of employer to reserve 8.33% for the pension fund[8], further the central government had the responsibility for contributing to such funds at a fixed rate and the fixed rate are decided at 1.16% and thus it is duty of central government to contribute such amount in the pension fund.[9]
Para 6 of
the scheme defines who all are applicable to take the benefits of the Employee
Pension Scheme and it says that: -
(a) Any workmen or employee who is a part of the EPF Act, on the date the EPS Scheme became operational would be a get the benefit under this scheme and also if any place of work is exempted by the central authority under section 17 of the EPF Act can also avail benefit , but one more condition to avail such scheme is that an employee who wants to avail benefits under this scheme, their salary must be less than 15000 per month.[10]
(b) Also, before the EPS 1995, there was a scheme that was giving pensions to workers called as Employee Family Pension Scheme and any member of such scheme would be a member of EPS 1995.[11]
(c) If a worker who was part of EPF Act but not part of Employee Family Pension Scheme, also has the option to exercise his right and avail benefits of EPS Scheme.[12]
Also, Para 12 determines the different types of Pensions that is given under the Scheme like the:-
(1) Superannuation Pension- That is given only to person who performs any service which is eligible under the scheme for a minimum time period of 10 years and that he retires only after the age of 58 years then he is entitled for superannuation Pension[13]
(2) Early Pension- A person who retires before attaining the age of 58 years but had performed for more than 10 years doing a service which is considered as a service under the EPS Scheme would get Early Pension benefit.
So, this
was one such social security scheme passed for the welfare of employees
(2) Employee Deposit Linked Scheme (EDLS)
Another such welfare scheme was passed by the government called as the Employee Deposit Linked Scheme in 1976, the scheme was for the social security of workers working in private sector and the aim of scheme is to provide life insurance to worker working in private sector and in case of their death before retirement or during the time of service the family will receive financial help in the form of amount under the EDLS Scheme.
Who will
receive benefit under this scheme:-
· Any place
of work that has been registered under the EPF Act, their employees
will be registered and eligible to get the benefits of the
EDLS Scheme.
· Another
important criterion for EDLS Scheme is that the salary of
employee shall be less than 15000 per month and if their salary is more then
15000 per month, then the maximum financial assistance that they
family members could get after their death under the EDLS Scheme would be 6
Lakhs.[14]
(3) Employee Provident Fund Scheme
One of the most important schemes for social security benefit is the scheme of Employee Provident Fund Scheme, the scheme is the oldest scheme for social security of the workmen, made under section 5 of the EPF Act.
Under Para 26 of the scheme, the scheme determines who all members can be part of the scheme and it held that firstly the place of work shall be one which is eligible under the scheme, and every worker of such place shall get the benefit of the Provident Fund Scheme, but excludes the workers excluded.[15]
Further Para 27A of the scheme, gives power to the central government, to determine class of employees, who would not be eligible under this scheme so they can be notified by the government, but then such exemption would only come if they were covered by certain other benefits of similar nature.[16]
Further
Para 29 [17]determines the contributions that
the employer and employee have to do for the provident fund
scheme and that employer needs to pay 10% of the basic wage of every employee
who is covered under this act.
Conclusion
Social security is very important, every person while working enjoys the wages earned, but fears for the time, when he would not be earning wages due to any reason like retirement and how then they would survive, so to let overcome such fears, the legislature tried to enact various social benefit schemes, and three of such schemes has been discussed above.
Every worker has the right to enjoy such social benefits, which ensures them a sense of security for the future and the scheme such as the pension scheme is example of such sense of future security, where the employee remains calm, because he would get certain amount even after getting retired in the form of pension, he will get the fruit of his work even after retiring. So, these schemes are a must for every worker which ensures them a better and brighter future.
ALSO
READ- A. Rangaswami v Registrar of Trade Unions - 'Labour law'
[1] Section 1, THE EMPLOYEES
PROVIDENT FUND AND MISCELLANEOUS ACT, 1952.
[2] id.
[3] id.
[4] id.
[5] Section 16, THE EMPLOYEES
PROVIDENT FUND AND MISCELLANEOUS ACT, 1952.
[6] id.
[7] Section 6A, THE EMPLOYEES
PROVIDENT FUND AND MISCELLANEOUS ACT, 1952.
[8] Para 3, Employees’ Pension
Scheme, 1995.
[9] id.
[10] Para 6, Employees’
Pension Scheme, 1995.
[11] id.
[12] id.
[13] Para 12, Employees’ Pension
Scheme, 1995.
[14] EDLI – Employees Deposit
Linked Insurance Scheme, https://cleartax.in/s/edli .
[15] Para 26, Employees’
Provident Fund Scheme, 1952.
[16] Para 27A, Employees’
Provident Fund Scheme, 1952.
[17] Para 29, Employees’ Provident Fund Scheme, 1952.
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