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EMPLOYEES' PROVIDENT FUNDS ANDMISCELLANEOUS PROVISIONS ACT, 1952

The Employees Provident Funds and Miscellaneous Provisions Act, provides forcompulsory contributory fund for the future of an employee after his/her retirement or forhis/her dependents in case of his/her early death. Its applicability: It extends to the wholeof India except the State of Jammu and Kashmir and is applicable to:

a) every factory engaged in any industry specified in Schedule 1 in which 20 ormore persons are employed;

b) every other establishment employing 20 or more persons or class of suchestablishments which the Central Govt. may notify;

c) any other establishment so notified by the Central Government even if employingless than 20 persons.

Every employee, including the one employed through a contractor (but excluding anapprentice engaged under the Apprentices Act or under the standing orders of theestablishment and casual laborers), who is in receipt of wages up to Rs.6,500 p.m., shallbe eligible for becoming a member of the funds. The condition of three monthscontinuous service or 60 days of actual work, for membership of the scheme, has beendone away.

Workers are now eligible for joining the scheme from the date of joining the

service.

1. The Act provides for three schemes viz.,

A. EMPLOYEES' PROVIDENT FUND SCHEME, 1952

An employee who is in receipt of pay up to Rs.6500/-p.m. is eligible formembership of the Fund. The contribution is 12 percent/10 percent of themonthly wages.

B. EMPLOYEES' PENSION SCHEME, 1995

Under this scheme, family members, of the employees who died in harness,were given monthly family pension. This scheme is funded by diverting 8.33% ofthe wages of the employees out of the employers' contributions to the ProvidentFund. The Central Government contributes at the rate of 1-1/6% of the wages ofthe employees.

C. EMPLOYEES' DEPOSIT LINKED INSURANCE SCHEME, 1976

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The employer shall pay such amount not being more than 1% of the basic wagesdearness allowance and retaining allowance (if any). The employer shall pay intothe Insurance Fund such further sums not exceeding % of the contributionabove to meet all the expenses in connection with administration of theInsurance Scheme. No contribution is payable by the employee.

2. The employer is required to contribute the following amounts towardsEmployees Provident Fund and Pension Fund:

a. In case of establishments employing less than 20 persons or a sick industrial(BIFR) company or sick establishments or any establishment in the jute,beedi, brick, coir or gaur gum industry. the employer contribution is 10% ofthe basic wages, dearness allowance and retaining allowance, if any.

b. In case of all other establishments employing 20 or more person- theemployer contribution is 12% of basic wages, dearness allowance and

retaining allowance, if any.

A part of the contribution is remitted to the Pension Fund and the remainingbalance continues to remain in Provident Fund account.

Where, the pay of an employee exceeds Rs.6,500 p.m., the contributionpayable to Pension Fund shall be limited to the amount payable on his pay ofRs.6,500/- only.

Basic wages" means all emoluments which are earned by an employeewhile on duty or on leave or on holidays with wages in either case inaccordance with the terms of the contract of employment and which are paidor payable in cash to him but does not include:

(i) the cash value of any food concession;

(ii) any dearness allowance, house-rent allowance, overtime allowance,bonus, commission or any other similar allowance.

(iii) any presents made by the employer;

For the purposes of this section dearness allowance shall be deemed toinclude also the cash value of any food concession allowed to the employee.Retaining allowance means an allowance payable for the time being to anemployee of any factory or other establishment during any period in which theestablishment is not working for retaining his services.

3. The contribution to the fund is to be deposited by the employer by 15th of the nextmonth.

4. Payment of contributions.

(1) The employer shall, in the first instance, pay both the contribution payable byhimself and also, on behalf of the member employed by him directly or by orthrough a contractor, the contribution payable by such member.

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(2) In respect of employees employed by or through a contractor, the contractor

shall recover the contribution payable by such employee and shall pay to theprincipal employer the amount of members contribution so deducted togetherwith an equal amount of contribution and also administrative charges.

(3) It shall be the responsibility of the principal employer to pay both thecontribution payable by himself in respect of the employees directly employed byhim and also in respect of the employees employed by or through a contractorand also administrative charges.

5. Recovery of damages for default in payment of any contribution.

Where an employer makes default in the payment of any contribution to the fund,or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 of the Act or in thepayment of any charges payable under any other provisions of the Act orScheme or under any of the conditions specified under section 17 of the Act, theCentral Provident Fund Commissioner or such officer as may be authorised bythe Central Government, by notification in the Official Gazette in this behalf, mayrecover from the employer by way of penalty, damages at the rates given below:

Period of default Rate of damages (% of

arrears per annum)(a) Less than two months 17

(b) Two months and above but less than fourmonths

22

(c) Four months and above but less than sixmonths

27

(d) Six months and above 37

6. Duties of employers

(1) Every employer shall send to the Commissioner within fifteen days of theclose of each month a return

(a) in Form 5, of the employees qualifying to become members of theFund for the first time during the preceding month together with thedeclarations in Form 2 furnished by such qualifying employees, and

(b) in prescribed form of the employees leaving service of theemployer during the preceding month:

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(2) Every employer shall maintain an inspection note book in prescribed form

for an Inspector to record his observation on his visit to the establishment.

(3) Every employer shall maintain such accounts in relation to the amountscontributed to the Fund by him and by his employees as the CentralBoard may, from time to time, direct, and it shall be the duty of everyemployer to assist the Central Board in making such payments from theFund to his employees as are sanctioned by or under the authority of theCentral Board.

(4) Every employer in relation to a factory or other establishment to which theAct applies on the date of coming into force of the Employees ProvidentFunds (Tenth Amendment) Scheme, 1961, or is applied after that date,

shall furnish in duplicate to the Regional Commissioner in Form No. 5Aannexed hereto, particulars of all the branches and departments, owners,occupiers, directors, partners, manager or any other person or personswho have the ultimate control over the affairs of such factory orestablishment and also send intimation of any change in such particulars,within fifteen days of such change, to the Regional Commissioner byregistered post and in such other manner as may be specified by theRegional Commissioner:

Provided that in the case of any employer of a factory or other establishment towhich the Act and the Family Pension Scheme, 1971, shall apply the aforesaidForm may be deemed to satisfy the requirements of the Employees Family

Pension Scheme, 1971, for the purpose specified above.

7. Duties of contractors

Every contractor shall, within seven days of the close of every month, submit tothe principal employer a statement showing the recoveries of contributions inrespect of employees employed by or through him and shall also furnish to himsuch information as the principal employer is required to furnish under theprovisions of the Scheme to the Commissioner.

8. Withdrawal from the Fund

Under the following circumstances withdrawal from the Fund is permitted.

I. (i) For the purchase of a dwelling house/flat including a flat in a buildingowned jointly with others (outright or on hire purchase basis),or for the constructionof a dwelling house including the acquisition of a suitable site for the purpose fromthe Central Government, the State Government, a co-operative society, andinstitution, a trust, a local body or a Housing Finance Corporation (hereinafter

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referred to as the agency/agencies);(ii) for purchasing a dwelling site for thepurpose of construction of a dwelling house or a ready-built dwelling house/flat fromany individual;(iii) for purchasing dwelling house/flat on ownership basis from apromoter governed by the provisions of any Flats or Apartments Ownership Act orby any other analogous or similar law of the Central Government or the StateGovernment as may be in force in any State or area for the time being and whointends to construct or constructs dwelling house or block of flats and the memberis required to pay to the said promoter in advance for financing the saidconstruction of the house/flat (iv) for the construction of a dwelling house on a siteowned by the member or the spouse of the member or jointly by the member andthe spouse, or for completing/continuing the construction of a dwelling housealready commenced by the member or the spouse, on such site or for purchase ofa house/flat in the joint name of the member and the spouse under clauses (i) and(ii) above.

(ii) On an application from a member in the prescribed form theCommissioner or any authorized office may sanction withdrawal from the amountstanding to the credit of the member in the fund.

a) The amount of withdrawal for the purpose of purchase of a site for construc-tion of house thereon shall not exceed the members basic wages anddearness allowance for twenty-four months or the members own share ofcontributions, together with the employers share of contributions with interestthereon or the actual cost towards the acquisition of the dwelling site,whichever is the least.

b) The amount withdrawal for the purpose of acquisition of a ready builthouse/flat or for construction of a house/flat, shall not exceed the membersbasic wages and dearness allowance for thirty-six months or the membersown share of contributions, together with the employers share ofcontributions, with interest thereon, or the total cost of construction,whichever is the least.

No withdrawal under this paragraph shall be granted unless:

(i) the member has completed five years membership of the Fund;

(ii) the members own share of contributions with interest thereon in

the amount standing to his credit in the Fund is not less than onethousand rupees;

(iii) a declaration from the member that the dwelling site or thedwelling house/flat or the house under construction is free fromencumbrances and the same is under title of the member and/or thespouse

II. For repayment of loans in special cases.

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(i) The Commissioner or any authorized officer may on an application froma member, sanction from the amount standing to the credit of the member in theFund, withdrawal for the repayment, wholly or partly, of any outstanding principaland interest of a loan obtained in the name of the member or spouse of themember or jointly by the member and spouse from a State Government,registered co-operative society, State Housing Board, Nationalised banks, publicfinancial institutions, Municipal Corporation or any body similar to the DelhiDevelopment Authority solely for the purposes specified in (1)(i) above.

(ii) The amount of withdrawal shall not exceed the members basic wagesand dearness allowance for thirty-six months or his own share of contributionstogether with the employers share of contributions, with interest thereon, in themembers account in the Fund or the amount of outstanding principal and interestof the said loan, whichever is least.

(iii) No withdrawal shall be sanctioned under this paragraph unless

(a) the member has completed ten years membership of the Fund;and

(b) the members own share of contributions, with interest thereon, inthe amount standing to his credit in the Fund, is one thousand rupees ormore; and

(c) the member produces a certificate to such other documents, asmay be prescribed by the Commissioner or where so authorised by theCommissioner, any officer subordinate to him, from such agency,indicating the particulars of the member, the loan granted, the outstandingprincipal and interest of the loan and such other particulars as may berequired.

(iv) The payment of the withdrawal under this paragraph shall be made directto such agency on receipt of an authorisation from the member

III. Advance from the Fund for illness in certain cases.

i) A member may be allowed non-refundable advance in cases of (a)hospitalisation lasting for one month or more, or (b) major surgical operation in a

hospital, or (c) suffering from T.B., leprosy, paralysis, cancer, mentalderangement or heart ailment and having been granted leave by his employer fortreatment of the said illness.

(ii) The advance shall be granted if the employer certifies that theEmployees State Insurance Scheme facility and benefits there under are notactually available to the member or the member produces a certificate from theEmployees State Insurance Corporation to the effect that he has ceased to beeligible for cash benefits under the Employees State Insurance Scheme; and a

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doctor of the hospital certifies that a surgical operation or, as the case may be,hospitalisation for one month or more had or has become necessary or aregistered medical practitioner, or in the case of a mental derangement or heartailment, a specialist certifies that the member is suffering from T.B., leprosy,paralysis, cancer, mental derangement or heart ailment.

(iii) A member may be allowed non-refundable advance from his account inthe fund for the treatment of a member of his family who has been hospitalised,or requires hospitalisation, for one month or more for.

(a) a major surgical operation, or

(b) the treatment of T.B., Leprosy, paralysis, cancer, mentalderangement or heart ailment:

Provided that no such advance shall be granted to a member unless hehas produced

a certificate from a doctor of the hospital that the patient has beenhospitalised or requires hospitalisation for one month or more, or thata major surgical operation had or has become necessary, and

a certificate from his employer that the Employees State InsuranceScheme facility and benefits are not available to him for the treatmentof the patient.

IV. Advance for marriages or post-matriculation education of children.

(i) A non-refundable advance not exceeding fifty per cent of his or her ownshare of contribution with interest thereon, standing to credit in the Fund of themember , on the date of such authorisation, for his or her own marriage, themarriage of his or her daughter, son, sister or brother or for the post-matriculationeducation of his or her son or daughter. Not more than three advances shall beadmissible to a member under this paragraph.

(ii) No advance under this paragraph shall be sanctioned to a memberunless

(a) he has completed seven years membership of the Fund; and

(b) the amount of his own share of contributions with interest thereonstanding to his credit in the Fund is rupees one thousand or more.

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V. Grant of advances in abnormal conditions.

(1) A non-refundable Advance may be given to a member whose property, movableor immovable, has been damaged by a calamity of exceptional nature, such asfloods, earthquakes or riots, authorise payment to him from the provident fundaccount, a non-refundable advance, of rupees five thousand or fifty per cent ofhis own total contribution including interest thereon standing to his credit on thedate of such authorisation, whichever is less, to meet any unforeseen expendi-ture:

(2) No advance under sub-paragraph (1) shall be paid unless

(i) the State Government has declared that the calamity has affected the

general public in the area;

(ii) the member produces a certificate from an appropriate authority to theeffect that his property (movable or immovable) has been damaged as a result ofthe calamity];

(iii) the application for advance is made within a period of 4 months from thedate of declaration referred to in sub-para (i).

VI. Grant of advance to members who are physically handicapped.

A physically handicapped member may be allowed a non-refundable advancefrom his account in the Fund, for purchasing an equipment required to minimisethe hardship on account of handicap.

VII. Withdrawal within one year before the retirement.

A member may be permitted to withdraw of up to 90 per cent of the amountstanding at his credit, at any time after attainment of the age of 54 years or withinone year before his actual retirement on superannuation, whichever is later.

VIII. Option for withdrawal at the age of 55 years for investment in VarishthaPension Bima Yojana.

A member may be permitted withdrawal of up to 90 per cent of the amountstanding at his credit at any time after attaining the age of 55 years, which is tobe transferred to the Life Insurance Corporation of India for investment inVarishtha Pension Bima Yojana.

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9. Dispute, Determination and Recovery

In case, where a dispute arises regarding applicability of the Act, the CentralProvident Fund Commissioner or any other officer (to whom the powers ofdetermination have been delegated), may decide the dispute and determine theamount due from an employer, under the Act or the schemes framed thereunder. Before making any order the officer shall conduct such inquiry as he maydeem necessary and shall allow a reasonable opportunity to the employer forrepresenting his case.

Further, where an officer has reason to believe that an amount due from theemployer has escaped determination, he may re-open the case within five yearsand re-determine the amount due from the employer.

Interest

The employer shall be liable to pay simple interest @ 12% p.a. on any amountdue from him under the Act, from the date on which it becomes due till the dateof its actual payment.

Modes Of Recovery

Any amount of contribution, damages, accumulations required to be transferred,

or administrative charges, due from an employer, may be recovered from him inany of the following modes-

attachment and sale of the movable or immovable property of theestablishment/employer;

arrest of the employer and his detention in prison;

appointing a receiver for the management of the movable or immovableproperties of the establishment/employer.

The Recovery Officer pursuant to a recovery certificate issued by the authorisedofficer specifying shall make the recovery the amount of arrears.

Stay Of Recovery Proceedings

The authorised officer may grant time for the payment of the amount, andthereupon the Recovery Officer shall stay the proceedings until the expiry of thetime so granted.

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1 1 employees pf act

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