epf & misc provsions act, 1952

8/3/2019 EPF & Misc Provsions Act, 1952

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EMPLOYEES PROVIDENT FUND, EMPLOYEES PENSION

SCHEME & DEPOSIT LINKED INSURANCE ACT, 1952

Objects

(i) Social Security

(ii) Statutory requirement of employers &

Employee to contribute towards EPF


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Applicability

The Act applies to the whole of India except J&K

(i) to any factory or establishment employing 20 or more

(ii) The Central Government may after giving not less than

two months notice, make it applicable to any other

establishment employing less than 20 employees.

(iii) on voluntary basis (10%)

(iv) Cinema Theatres employing 5 or more persons.


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Eligibility

(i) Any person who is employed for work of an

establishment or employed through contractor in or in

connection with the work of an establishment.

(ii) Persons drawing Salary / wage less than Rs 6500 pm


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Constitutional validity of the Act was challenged in this case

Mohamedalli & Others v Union of India (1963)

In this case in exercise of its powers conferred by Sec 1 (3) (b) of

the Act the Central Government issued a notification whereby the

application of the Act was extended to hotels and restaurants.

The Act was challenged on the grounds that it (1) suffered from the

vice of discrimination and infringed Article 14 of the Constitution,

(2) conferred uncontrolled and uncanalised powers on theappropriate government, and (3) was intended to apply to mere

wage earners and not to salaried people and that schedule 1 is bad

in as much as it is discriminatory under Article 14 of the

Constitution.


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Act Not to apply to certain Establishment Sec 4

The Act does not apply to:

(i) Any establishment registered under the Co-operativeSocieties Act, 1912 employing less than 50 persons

and working without the aid of power.(ii) To any other establishment belonging to or under

the control of the Central Government or a StateGovt and whose employees are entitled to the

benefit of contributory provident fund or old agepension in accordance with any scheme or ruleframed by the Central Govt or the State Govtgoverning such benefits.


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(iii) any other establishment newly set up until the

expiry of 3 years from the date on which the

establishment is, or has been set up.


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In Gujchem Distillers India Ltd v RPF Commissioner,

(1985) Lab IC 1714 Guj, a company established a new

unit which was independent in respect of accounts,

administration and requirement of raw material and had

separate independent license, the company and unit

prepared separate balance sheets and also a consolidated

balance sheet for income and other specified purposes.


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It was held that the new unit was a separate unit entitled

to infancy benefit.


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Basic Wages [Sec 2(aa)]

It includes all emoluments which are earned by an employee whileon duty 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.

The following are not included in basic wages:

(i) cash value of any food concession;

(ii) any dearness allowance (that is to say all cash payments by

whatever name called, paid to an employee on account of a rise in

the cost of living), e.g. (a) House rent allowance, (b) overtime

allowance, (c) bonus, (d) commission or any other similar allowance

payable to the employee in respect of his employment or of work

done in such employment;

(iii) any presents made by the employer.


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Employees Provident Fund Schemes [Sec 5]

Sec 5 empowers the Central Government to frame, bynotification in the official gazette, a Scheme to becalled the Employees Provident Fund Scheme, for the

establishment of provident funds under the Act foremployees or class of establishment to which the saidscheme shall apply.

After framing of the EPF Scheme, there shall beestablished the Employees Provident Fund inaccordance with provisions of the Act. The fund shallbe administered by the Central Board constitutedunder the Act


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Contribution [Sec 6]

Statutory Rate of Contribution

Employee Employer Central Govt

EPF 12% Amount - 8.33%* -

-

DLI - 0.5% -

Pension Nil 8.33% 1.16%*{diverted out of }{EPFContribution }{ scheme }


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Withdrawal Before Retirement

A member can withdraw up to 90% of the amount of

provident fund at credit after attaining the age of 54

years or within one year before actual retirement on

superannuation whichever is later.


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Nomination

The member of Provident Fund shall make a

declaration in Form 2, a nomination conferring the

right to receive the amount that may stand to the

credit in the fund in the event of death.

The member may furnish the particulars concerning

himself and his family. These particulars furnished by

the member of Provident Fund in Form 2 will help

the EPFO in the building up the data bank for use in

event of death of the member.


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Framing of Family Pension Scheme Sec 6-A

The Central Government may, by notification in the

Official Gazette, frame a scheme to be called the

Employees Pension Scheme for the purpose of

providing for (i) Superannuation pension

(ii) Widow or widowers pension


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Penalties & Offences (Sec 14)

The Act provides for the imprisonment up to 3 Years

and / or fine of Rs 10,000.

Whoever having been convicted by a Court of an

offence under the Act commits the same offence

shall be subject for every such subsequent offence to

imprisonment for a term which may extend to 5

years but which shall not be less than 2 years and

shall also be liable to fine which may extend to Rs

25000/-


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epf & misc provsions act, 1952

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