According to Section 2(f) of the Employee Provident Funds and Miscellaneous Provisions Act (1952) (hereinafter referred to as the EPF Act), Any individual who is (i)employed by or through a contractor in or in relation to the work of the establishment is considered to be an employee; or (ii)engaged as an apprentice but not under the terms of the establishment’s standing order or the 1961 Apprentices Act.
The Supreme Court stated in The Officer-In-Charge, Sub Regional Provident Fund Office Vs. M/s Godavari Garments Limited, that workers’ status as employees for the purposes of the EPF Act will not be diminished simply because they were allowed to perform the work off-site.
The EPF Act, 1952 is social welfare legislation enacted for securing the future of the industrial worker on his retirement and for his dependents in the event of their passing. It includes various legislations like the Employees Provident Fund Scheme, 1952, the Employees’ Pension Fund Scheme, 1971 and Deposit linked Insurance Scheme, 1976.
Employees drawing a monthly salary of no more than Rs. 15,000/- are covered by the Act. The scheme of the Act had changes that were effective on September 1st, 2014. Recently, through a notification dated May 18th 2020, some adjustments were made as contributions under the EPF Act, for both employers and employees, have been decreased from the present 12 per cent to 10 per cent.
Salient features of the Act
In order to safeguard the interests of workers hired in factories and other places, this Act aims to provide retirement and old-age benefits such as Provident Fund, Superannuation Pension, Deposit Linked Insurance, etc. Employees are required to save money into a provident fund while they are employed.
To the extent permitted by the Income Tax Act, an employee is entitled to a refund of the income tax that applies to his payments to the provident fund. If the employer does not make a payment to the Employee Provident Fund for a predetermined length of time, the Regional Provident Fund Commissioner may pursue legal action, pay damages, attach property or bank accounts, arrest the employer, and detain him or her.
Section 17AA of the Act gives overriding effect in order to ensure the efficient implementation of the Deposit-Linked Insurance Scheme’s provisions and safeguarding the benefits granted under it, which cannot be revoked by reference to any Life Insurance Act provision.
Applicability of the Act
The applicability of the Act is covered in Sections 1(3)(a) and (b) to 1(5). In Regional Provident Fund Commissioner, Bombay v. Sree Krishna Metal Manufacturing Co., it was determined that Section 1(3)(a) clearly states that the factories must pass both of the following requirements: (i) they must employ at least twenty people, and (ii) they must be involved in one of the industries listed in Schedule I.
The Central Government is given the authority to apply the Act to trade or commercial establishments, whether or not they are factories, under Section 1(3)(b). Further, the Central Provident Fund Commissioner has the authority to enforce the Act against any establishment under Section 1(4). Additionally, according to Section 1(5), an establishment to which this Act applies may be subject to its regulations even if the number of people working there at any given time is less than 20. In Regional Provident Fund Commissioner, Rajasthan v. Bikaner Cold Storage Co., Limited, it was held that
temporary or casual employees who are unrelated to the work being done in the establishment are not protected.
According to Section 16(1) of the Act, establishments covered by the Pradhan Mantri Garib Kalyan Yojana, establishments owned or controlled by the government, and Central or State Public Sector Enterprises are exempt from the Act’s application.
According to Section 16(2), the Central Government may, by notification in the Official Gazette, and subject to such conditions, as may be specified in the notification, exempt whether prospectively or retrospectively that class of establishments from the application of this Act for such period as may be specified. This exemption may be made with respect to the financial position of any class of establishment or other circumstances of the case.
Employees’ Provident Fund Organization (EPFO)
The Employees Provident Fund Organization is responsible for carrying out the Employees Provident Fund and Miscellaneous Provisions Act of 1952. (EPFO). On March 4th, 1952, the organisation was founded. A Central Board of Trustees that includes representatives from employees, businesses, and the federal or state government oversees EPFO. It is in charge of managing and regulating provident funds in India. In terms of clientele and the volume of financial transactions handled, EPFO is one of the largest social security organisations in the world.
In essence, the EPF Act is a social welfare measure that incorporates non-withdrawable financial benefits and can be categorized as a retirement benefit. An employee who is of or beyond the age of 60 years ceases to be a member of the Employees Family Pension Fund.