1 / 175

INDUSTRIAL MANAGEMENT ACADEMY

INDUSTRIAL MANAGEMENT ACADEMY. PRESENTATION ON EMPLOYEES’ PROVIDENT FUND ACT AND SCHEME EMPLOYEES’ PENSION SCHEME EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME. by Mr. A. N. Roy, Formerly Additional Central Provident Fund Commissioner, Govt. of India. INDEX. INDEX. EMPLOYEES’ PROVIDENT

vandana
Download Presentation

INDUSTRIAL MANAGEMENT ACADEMY

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. INDUSTRIAL MANAGEMENT ACADEMY • PRESENTATION ON • EMPLOYEES’ PROVIDENT FUND ACT AND SCHEME • EMPLOYEES’ PENSION SCHEME • EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME by Mr. A. N. Roy, Formerly Additional Central Provident Fund Commissioner, Govt. of India

  2. INDEX

  3. INDEX EMPLOYEES’ PROVIDENT FUNDS & MISCELLANEOUS PROVISIONS ACT, 1952 AND EMPLOYEES’ PROVIDENT FUND SCHEME, 1952

  4. INDEX • EMPLOYEES’ PROVIDENT FUND ORGANIZATION, INDIA • A Statutory Organization under the administrative Control of Ministry of Labour, Govt. of India. • Performing the task of enforcing the provisions of the Employees Provident Fund & Miscellaneous Provisions Act, 1952 and the Scheme framed thereunder. AND • Providing service delivery to the members of the Fund and their family members in accordance with the Scheme.

  5. INDEX EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 Schemes Framed and Implemented Employees’ Deposit Linked Insurance Scheme, 1976 Employees’ Pension Scheme, 1995* Employees’ Provident Funds Scheme, 1952 *Formerly Employees’ Family Pension Scheme, 1971

  6. INDEX THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 Statement of Objects and Reasons The question of making some provision for the future of the industrial worker after he retires or for his dependents in case of his early death, has been under consideration for some years. The ideal way would have been provisions through old age and survivors’ pensions as has been done in the industrially advanced countries. But in the prevailing conditions in India, the institution of a pension scheme cannot be visualized in the near future. Another alternative may be for provision of gratuities after a prescribed period of service. The main defect of a gratuity, however, is that amount paid to a worker or his dependents would be small, as the worker would not himself be making any contribution to the fund. Taking into account the various difficulties, financial and administrative, the most appropriate course appears to be the institution compulsorily of contributory provident funds in which both the worker and the employer would contribute. Apart from other advantages, there is the obvious one of cultivating among the workers a spirit of saving something regularly. The institution of a provident fund of this type would also encourage the stabilization of a steady labour force in industrial centres.

  7. INDEX • THE EMPLOYEES’ PROVIDENT FUNDS & MISCELLANEOUS ACT, 1952 • Section 5 of the Act, empowers Central Government to frame & notify Employees’ Provident Fund Scheme, for the benefit of employees working in establishments to which the act applies. • As per Section 5(1A) the fund shall vest in and be administered by, the Central Board of Trustees constituted under Section 5A of the Act. • The Central Board of Trustees administers the fund through its operational setup viz., The Employees’ Provident Fund Organization.

  8. INDEX • OPERATIONAL STRUCTURE & SOURCE • The Employees’ Provident Fund Act, 1952 (Since renamed as the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952) enacted by the Central Government for institution of Provident Fund on contributory basis, for the benefit of employees working in establishments in Industrial & Commercial sectors. Over the period, the contributory provident fund system has been enlarged gradually combining pension and insurance benefits in an integrated manner. • Central Government notified – 1. The Employees’ Provident Fund Scheme, in 1952; 2. The Employees’ Family Pension Scheme, in 1971 followed by the Employees’ Pension Scheme in 1995; and 3. The Employees’ Deposit Linked Insurance Scheme in 1976. [Sec. 5, 6A & 6C] • Central Board of Trustees, a tripartite statutory body constituted to administer the funds. [Sec. 5(1A), 6A(4) & 6C(5)]

  9. INDEX • THE EMPLOYEES’ PROVIDENT FUNDS & • MISCELLANEOUS PROVISIONS ACT, 1952 • Primary objectives for enactment in brief has been :- • Providing old age / post service financial support / income security to the member / dependent survivors. • Assigning employers liability to make contribution in raising the fund for the benefit of employees and their dependent survivors on compulsory basis. • Promoting thrift habit amongst employees and enlarging domestic savings base. • Providing risk free and immunized deposit accretion to the member free from attachment etc. • Augmenting resource availability position for national economic development.

  10. THE EMPLOYEES’ PROVIDENT FUNDS • & MISCELLANEOUS PROVISION ACT, 1952 • GENERAL / INTRODUCTORY: • A major social security legislation in India for benefit of the workers in general employed in Industrial/Commercial sectors. • Targeted for extending post service/survivors support to the member/family members. • Provides for contributory Provident Fund on compulsory basis with extended coverage of pensionary package and Deposit Linked Insurance in an integrated manner. • Structured as self-applying law – implementation through employers of the establishment on self-complying basis. • It extends to whole of India except the State of Jammu and Kashmir. • Presently three Schemes are in operation – viz. (i) Employees’ Provident Fund Scheme, 1952. (ii) Employees’ Pension Scheme, 1995 • (formerly Employees’ Family Pension Scheme, 1971). (iii) Employees’ Deposit Linked Insurance Scheme, 1976. INDEX

  11. INDEX • I.Applicability • Applies to establishments belonging to notified category employing 20 or more persons – (5 employees in case of Cinema/Theatre establishment and 50 employees in case of Co-operative Society working without power). • No infancy protection from September, 1997. • Provision exist for coverage on voluntary basis for non-applicable category. • Central Government empowered to exempt any class of establishment from the operation of the Act for specified period.

  12. THE EMPLOYEES’ PROVIDENT FUND & MISC. PROVISION ACT, 1952 The Act shall not apply to :- a) Any establishment registered under the “Co-operative Societies Act, 1912 or any other law in force relating to cooperative societies, employing less than 50 (Fifty) Persons and working without the aid of power, or b) Any establishment belonging to or under the control of the Central or State Government and whose employees are entitled to the benefits of CPF or old age pension in accordance with the scheme / rule notified by the central / state government; and Any statutory body whose employees are entitled to the benefits of CPF / Old age pension in accordance with the scheme / rule framed under that act governing such benefits. [Repeal of Sec. 16(1)(d) of the EPF & MP Act, 1952, vide Act 10 of 1998 shall have prospective form 22.9.1997 – infancy protection accrued to establishments prior to amendment would remain available.] [SL. Srinivash Jute Twine Mills (P) Ltd. vs. UOI & Ors. (Supreme Court)] C.A. No.–6777/2003 with C.A. 6778-80/2003. Judgement dated 15.2.2006 INDEX

  13. INDEX • THE EMPLOYEES’ PROVIDENT FUNDS • & MISCELLANEOUS PROVISION ACT, 1952 • Applicability: • [Sec. 1(3) of the Act] • Subject to the provisions contained in Sec. 16, the act shall apply: • In every establishment which is a factory engaged in any industry specified in schedule I in which twenty or more persons are employed, and • To any other establishment employing twenty or more persons or class of such establishments which the Central Government may, by notification in the official Gazette, specify in this behalf. • It is the notification extending the provisions of the scheme to an establishment par se that attracts his liability and not the service of notice on the employer that has this effect; it is an absolute and unqualified liability not depending on the vigilance of the department or on the will of the employer to make the workmen members of the scheme. Nazeena Trades (P) Ltd. vs. The Regional P.F. Commissioner [1966 (I) LLJ 334]

  14. THE EMPLOYEES’ PROVIDENT FUND & MISC. PROVISION ACT, 1952 1. ESTABLISHMENT :  The term “establishment” has not been defined in the Act, and consequently, it shall have to be given its ordinary meaning with reference to the definition of the term “factory”. • [E. Delhi Cloth & General Mills Co. Ltd. • vs. • Regional P.F. Commissioner, U.P. • [1961 (2) LLJ 444] • Unlike others Acts where either the expression “establishment” or other words analogous there to are used in conjunction with such expressions as “in the course of business or trade”, in the Act, the word “establishment” is not qualified in any way. It only means an organized which employees certain number of persons and nothing more”. • [Cosmopolitan Club, Madras • vs. • Regional P.F. Commissioner, Madras • [1967 (1) LLJ 797] INDEX

  15. INDEX II. Membership • Every employee to be enrolled to the membership of the fund from day one (eligibility requirement deleted from November 1990 onwards). • Membership compulsory for all except excluded employees. • Membership for all the schemes necessary – either of statutory scheme or exempted scheme. • Assigned responsibility upon employer of the establishment for Contractors employees.

  16. THE EMPLOYEES PROVIDENT FUND SCHEME,1952 ( Special provisions for specific class of employees ) ========================================== Para – 83. - Added by G.S.R 706 (E) dated 1st.October, 2008 • 1. Defines the term “International Worker” by inserting Para 2(ff). • (a) An Indian employee having worked or going to work in a foreign Country with which India has entered into a Social Security Agreement And being eligible to avail benefits under a Social Security Programme of that country for eligibility gained or going to gain • A foreign national holding other than an Indian Passport working for an establishment in India. • 2. Substitutes the parameter components of the term “Excluded Employee” In relation to International Workers – Para 2 (f) as under :- • An International Worker who is contributing to a Social Security Programme of his / her country of origin, either as a citizen or resident, With whom India has entered into a Social Security Agreement on Reciprocity basis and enjoying the status of detached worker for the Period and terms as specified in such agreement. • -commonly understood usual clause of ‘Prescribed Pay Ceiling’ not Provided.

  17. THE EMPLOYEES PROVIDENT FUND SCHEME,1952 ( Special provisions for specific class of employees ) ========================================== Para – 83. - Added by G.S.R 706 (E) dated 1st.October, 2008 3. Provides for revised membership enrollment related parameters, compulsory Membership for all International workers other than an ‘Excluded Employee,’ without voluntary enrollment on joint request4. Pay ceiling limit for contribution payment liability not provided for. Contribution payable on total Salary 5. Prescribes separate return submission requirement for International workers.

  18. V. IMPORTANT TERMINOLOGY IN BRIEF 1. ‘Employer’ [Sec. 2(e) of the Act) A. For Factory Establishment i) Owner or occupier or their agent and ii) Manager, if any B. For Other Establishment i) Person holding ultimate control; and ii) Manager/Managing Director/Managing Agent etc. ‘Employee’ [Sec. 2(f) of the Act] Any person employed for wages in or in connection with the work of an establishment including persons employed, if any. i) by or through contractor; and ii) an apprentice engaged otherwise than under the Apprentice Act, 1961 or standing order of the establishment. ‘Excluded Employee’ [Para 2(f) of the scheme] i) Former member of the EPF taken final settlement of PF under para 69 of the Scheme. ii) An employee whose pay at initial entitlement of membership exceeds prescribed pay ceiling. iii) An apprentice. INDEX A partner is not an “employee”. Regl. Director, ESIC vs. Ramanujam Match Factory [AIR-1985-SC-278] Managing Director/Director with specified function for specified annual remuneration is an “employee”. ESIC vs. Apex Eng. (P) Ltd. [1988-1-SCC-86]

  19. THE EMPLOYEES PROVIDENT FUND SCHEME,1952 ( Special provisions for specific class of employees ) ========================================== • “Excluded Employee” definition as provided in Para 2(f) of the EPF Scheme,’52 read with • Varying parameters as provided for Special category employees in Para 80 – 83.ibid. • ==================================================== • (A) ‘Excluded Employee’ means :- • An employee having been a member of the EPF, withdraw the full accumulation from The Fund on exit after attaining the age of 55years; • An employee (other than an employee in News Paper establishment) whose Pay at the time of membership enrollment entitlement exceeds prescribed pay ceiling of Rs.6500/- per month (Rs.25000/- per month for disabled employees and Rs.1600/-per Month for cine workers ) ; • An Apprentice. (other than News Paper & Cine establishments employees • (B) “Excluded Employee” for International Workers shall mean :- • An International worker who is contributing to a social security programme of his/her Country of origin, either as a citizen or resident, with whom India has entered into a Social Security Agreement on reciprocity basis and enjoying the status of detached Worker for the period and terms as specified in such agreement.

  20. THE EMPLOYEES’ PROVIDENT FUND & MISC. PROVISION ACT, 1952 “Employee” [Sec. 2(c)]. Casual employment if covered …..The word “employment” must, therefore, be construed as employment in the regular course of business of the establishment; such employment obviously would not include employment of a few persons for a short period on account of some passing necessity or some temporary emergency beyond the control of the company. This must necessarily require determination of the question in each case on its own peculiar facts. [The Regional P.F. Commissioner, Andhra Pradesh vs. T. S. Hariharan, {1971(1) LLJ.416: 1971(22) FLR 260}] “Where an establishment employs temporary employees as a part of the regular feature of employment, such employees cannot be construed as Casual employees…..” [Chatram Agarwala vs. Regional P.F. Commissioner, Orissa {1972(1) LLJ 603] “…..The number of persons, who are ordinarily regularly employed in the establishment, should be counted for the purpose of Sec. 1(3)(a) of the Act, as distinct from merely temporary or Casual employees engaged for some abnormal or emergent purposes other than the normal work of such establishment. [Bikaner Cold Storage Co. Ltd. vs. Regional P.F. Commissioner, Rajasthan, 1981(1) LLJ 181] INDEX

  21. INDEX • III. Contribution • Contribution is payable by Employer and Employee both equally. • Employer is required to deposit the contribution and authorized to recover employees’ share/undertake contract labourers’ liability. • Basic rate of P.F. contribution – 10% • Higher rate of P.F. contribution – 12% • (Basic rate applicable on 5 Industries namely Beedi, Brick, Jute, Coir & Guar-gum Industries and establishments engaging less than 20 employees/sick units). • Contribution is payable separately for all the three schemes as prescribed.

  22. “Contribution” – Provision [Sec. 6] “Contribution” – The contribution which shall be paid by the employer to the Fund shall be 8[ten per cent] of the basic wages, 9[dearness allowance and retaining allowance (if any)] for the time being payable to each of the employees 1[whether employed by him directly or by or through a contractor], and the employee’s contribution shall be equal to the contribution payable by the employer in respect of him and may, 2[if any employee so desires, be an amount exceeding 8[ten per cent] of his basic wages, dearness allowance and retaining allowance (if any), subject to the condition that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this section]. 2[Provided that in its application to any establishment or class of establishments which the Central Government, may, by notification in the Official Gazette specify, this section shall be subject to the modification that for the words “8[ten per cent]”, at both the places where they occur, the words 8[“12 per cent]” shall be substituted]. 3[Explanation I.] – Dearness allowance shall be deemed to include also the cash value of any food concession allowed to the employee. 5[Explanation II.] – “Retaining allowance means allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working, for retaining his services. INDEX

  23. “Basic Wage” 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 contract of employment and which are paid or payable in cash, but excluding: (1) Cash value of food concession; (2) Dearness allowance, i.e., all cash payments on a/c of rise in cost of living, House rent allowance, overtime allowance, Bonus, Commission or any other similar allowance payable to the employee in respect of his employment or work done in such employment and; (3) Any presents made by the employer. [Sec. 2(b)]

  24. SUPREME COURT DECISION Minimum Wage notified – whether – can be split up ? Minimum Wage as notified will be a package and shall constitute wage. Law does not permit it to be split up taking advantage of the components taken into consideration for its determination by the competent authority, i.e., the Government. [Air Freight Corporation Ltd. vs. State of Karnataka & Ors. 1999 – LLR – 1008 (SC)] “Special Allowance” being paid along with salary Constitute basic wage. Exclusion shall qualify for items specified in clauses (i), (ii) & (iii) of Sec. 2(b) of the EPF & MP Act, 1952 only. [Gujarat High Court :– Gujarat Cypronet Ltd. vs. Assistance PF Commissioner (0225-1-LLJ)] (Kolkata High Court :– Vivekanand Vidya Mandir vs. RPFC (2005-LLR-392)] INDEX

  25. INDEX LEAVE ENCASHMENT – P.F. CONTRIBUTION PAYMENT EXEMPTION “Encashment of Leave” will not attract Provident Fund Contribution payment liability – Definition of ‘Basic Wage’ as given u/s 2(b) of the E.P.F & M.P Act, 1952, did not intend to include such type of payments – contribution already deposited may be adjusted from future payments to be made. Supreme Court decision in the case of : Manipal Academy of Higher Education – vs – RPFC. [2008 – LLR – 243] Note:- Reliance placed on earlier interpretation given by the Apex Court in Bridge & Roof case- [1963(2) SCR 978] Test Norm Followed: (1). Where the ‘wage ‘ is universally, necessarily and ordinarily paid to all across the board, such emoluments are basic wage. (2). Where the payment is available to be specially paid to those who avail of the opportunity is not basic wage. (3). Any payment by way of a special incentive or work is not basic wage.

  26. INDEX Wage Components not attracting P.F Contribution • House Rent Allowance., Overtime Allowance, Bonus Commission or any other similar allowance payable to the employee in respect of his Employment or work done in such employment. (Provision u/s 2(b)(ii) of the EPF & MP Act.,’52.) • Any presents made by the employer. (Provision u/s 2(b)(ii) of the EPF & MP Act.,’52.) 3. Any ex-gratia / ad-hoc payment in lump sum as a result of bilateral settlement with unions. (High Court ruling given in the case Burma Shell Oil Storage & Distributing Co. Ltd.-vs-RPFC, Delhi [1981(2)LLJ86,] and EID parry (I) Ltd.-vs-RPFC. [1985-FJR-205]) • Back wages on reinstatement awarded by Courts (Gujrat High Court ruling given in the case of Swastik Textile Engineers (P) Ltd.-vs-Virijibal Mavjibhai Rathod & another [2008-LLR-472]) • Notice Pay / Retrenchment Compensation paid as per law u/s 33(2)(b) of I.D.Act. (Dinesh Khare-vs-Ind. Tribunal, Rajasthan, Jaipur & others.[1959 LIC.517] Ghanshyam & Co. – vs – RPFC, Delhi [ 51 FJR 357 ] RPFC –vs– Southern Alloy Foundry. [1982(1)LLJ.28 ])

  27. INDEX COMPLIANCE OF STATUTORY OBLIGATION BY PRINCIPAL EMPLOYER IN RESPECT OF CONTRACT LABOUR CANNOT BE A DECIDING FACTOR FOR HOLDING THAT CONTRACT LABOUR ARE EMPLOYEES OF PRINCIPAL EMPLOYER ---------------------------------------------------------------------------------------------------------- Complying of statutory liability by the Principal Employer for payment of ESI and Provident Fund Contributions for the employees engaged through Contractor will not be a deciding factor and it cannot be held that the workers of the Contractor should become the employees of the Principal employer as the company cannot shirk from statutory obligation.. Bhartiya Kamgar Sena – vs – Udhe (I) Ltd. & Another – Bombay High Court. [2008 – LLR – 344 ]

  28. INDEX Bill of Rights of Employees • Right to membership of Provident Fund, Pension and EDLI Schemes for every employee of covered establishment drawing monthly basic pay and D.A. upto Rs. 6,500. • To receive Annual Statement of Provident Fund Account by 30th September of the following year. • To obtain claim form free of cost from any Provident Fund Office. • To obtain assistance/guidance from Public Relations Officers in filling up of forms. • To submit claim application in any office of EPFO and obtain acknowledgement. • To get partial withdrawals settled within a maximum period of 30 days for specified purposes.

  29. Contd. • To get final withdrawals settled within 30 days from the date of submission of claim. • To get the accumulations transferred to employee’s new account within 30 days of change of employer and to execute nomination for receiving Provident Fund accumulations/pension. • To register grievance and get redressal. • To approach Office-in-charge of any office for redressal of grievance without prior appointment. • To receive Provident Fund dues from Special Reserve Fund: o in case of non-payment by employer of contribution deducted from wages; o in case of non-payment by the employer of establishment closed for more than three years. o in case of fraudulent withdrawal from employee’s account.

  30. Contd. • To demand from the visiting Enforcement Officer an authority issued by RPFC/APFC. • To get Business Number allotted within three days from the date of application. • To approach the Employees’ Provident Fund Organisation to seek clarification/guidance relating to Provident Fund matters. • To be heard before imposition of any liability on account of contribution and penal damages. • To get various forms free of cost. • To demand improved service delivery for subscribers of establishments.

  31. INDEX IV.Benefit Admissibility 1)Provident Fund Scheme ’52 : • Lump sum payment of accretion with interest on retirement / leaving the job. • Partial withdrawal during job for specified purposes. 2) Deposit Linked Insurance Scheme ’76 : • Upon death while in service – additional payment in lump sum equal to average P.F. accretion subject to maximum of Rs. 60,000. 3) Employees’ Pension Scheme, 1995 • Pension to member on retirement / invalidity. • Pension to Family members on member’s death.

  32. THE EMPLOYEES’ PROVIDENT FUND SCHEME, 1952 • Provisions relating to payment of contribution by the employer and recovery of members share of contribution/contribution in respect of contractors employees. • The employer shall in the first instance pay both the shares of contribution payable, i.e., the “employers” as also the “employees share” in respect of all categories of employees including the persons engaged by or through contractors. [Para – 30(1)] • The contractor shall pay to the principal employer the contributions payable in respect of contractors employees, both shares and also the administrative charges.[Para – 30(2)] • It shall be the responsibility of the principal employer to pay both the contribution payable by himself in respect of employees directly employed by him as also the employees engaged by or through a contractor and also the administrative charges. [Para – 30(3)] INDEX

  33. INDEX • Not withstanding any contract to the contrary, employers’ share not to be deducted/recovered from the members. [Para – 31(1)] • Members contribution paid by the employer shall be recoverable by means of deduction from the wages for the relevant month/period of the member and not otherwise. [Para – 32(1)] • Recovery of members’ contribution for past period could be permitted by the Provident Fund authorities in the event the recovery is necessitated for bonafide error as a result of (i) false declaration given in writing by the employee concerned or (ii) for an accidental mistake or clerical error.[Proviso under Para 32(1)] • Deduction of contribution made from the wage of the employee shall be deemed to have been entrusted for the purpose of paying the contribution to the fund as prescribed. [Para – 32(3)]

  34. INDEX OFFENCES UNDER THE EPF & MP ACT AND SCHEMES THEREUNDER The following acts on the part of any person/employer constitute offence : For the purpose of avoiding any payment to be made under the Act or Scheme by himself or of enabling any other person to avoid such payments, knowingly making or causing to be made any false statement or false representations. Failure to pay any contribution and/or administrative charges as specified under para 38 of the EPF Scheme, para 10 of Family Pension Scheme and para 8 of EDLI Scheme/inspection charges payable under Section 17(3) and 17(3A) of the Act which he is liable to pay. Deductions or attempt to deduct from the wages or any other remunerations of a member, the whole or any part of the employers’ contributions; Failure or refusal to submit any return, statement or other document required by the scheme or submission of false return, statement or other document or making a false representation; Obstructing any Inspector in the discharge of his duties or failure to produce any record for inspection by such Inspector or other official; (Section 14 of the Act and para 76 of Employees' Provident Fund Scheme, 1952)

  35. THE EMPLOYEES’ PROVIDENT FUND SCHEME, 1952 INDEX Circumstances in which accumulations in the Fund are payable to a member by way of final settlement. [Para – 69 of EPF Scheme, ‘52] Accumulations in the provident fund account of a member becomes payable for final settlement under following situations:- On retirement from services after attaining the age of 55 years; On retirement as a result of total and permanent disablement rendering incapable for work; Immediately before migration from India for permanent settlement abroad or for taking employment abroad; Termination of service upon mass or individual retrenchment; Termination of service under a voluntary retirement scheme; and Termination of job and remaining unemployed for over two months or leaving the job from a covered establishment and joining an establishment not covered by P.F.

  36. INDEX THE EMPLOYEES’ PROVIDENT FUND SCHEME, 1952 – Permissibility of advances under para 68 The Scheme provides for drawal of advance from Provident Fund accumulation while in service, under following situations :- For purchase/acquiring a dwelling house/flats including site for the purpose. [Para – 68B] For repayment of housing loan. [Para – 68BB] Upon closure of establishment and non-payment of wages. [Para – 68H]. For meeting medical expenditure involving hospitalization/Surgical Operation. [Para – 68J] For meeting the cost of marriage or post matriculation education of children. [Para – 68K] Upon damage of property as a result of natural calamity. [Para – 68L] Upon reduction in wage earning as a result of cut in electric supply to the establishment. [Para – 68M] For purchasing support equipment for physically handicapped. [Para – 68N] Before one year of retirement after attaining 54 years of age. [Para – 68NN] [NOTE: Form 31 is prescribed for applying for advance]

  37. THE EMPLOYEES’ PROVIDENT FUND SCHEME, 1952 Duties of Employer’s [Para – 36 & 36A of EPF Scheme, 1952] The employer is required to enroll every employee, other than an excluded employee, to the membership of the fund and furnish its details to P.F. authorities in Form-9. The employer is required to obtain declaration in Form-11 from every new employee joining the establishment as to his previous membership details, if any, and help arrange transfer process if required. The employer is required to report to the P.F. authorities every month in prescribed return in Form-5 as to joining of new employees during the return period and the enrollment details to the membership of the fund. Likewise, the employer is required to report the exit cases during the relevant period in Form-10. The employer is also required to obtain from every employee/new entrant. Their Family/Nominee details in Form-2 and forward it to the P.F. authorities. The employer is required to remit contribution every month together with remittance details in Form 12/12A by 15th of the following month. INDEX

  38. The employer is required to furnish annual return in Form 3A/6A for the year ending [April-March] by 30th April every year summarizing memberwise contribution remittance details reconciling with the monthly remittances made; The employer is required to submit to the P.F. authorities initially and as and when there is any change, particulars of ownership in Form-5A. The employer is required to endorse the application seeking settlements / transfers in respect his employees, as and when it becomes due, and forwarded the same to the P.F. authorities for needful action. The employer is required to submit necessary details as may be desired by the P.F. authorities and submit returns that may be prescribed. The employer is required to maintain an inspection note book for recording observation upon inspection of the establishment by an Inspector. The employer is required to carry out the directions, if any issued, by P.F. authorities for the purpose of carrying out the requirement of the act and the schemes framed thereunder. The employer is required to exhibit the compliance details for general information of the members, and allow inspection of contribution card details if desired.

  39. INDEX • THE EMPLOYEES’ PROVIDENT FUNDS & • MISCELLANEOUS PROVISIONS ACT, 1952 • Exemption – Provisions • Section 17 of the Act, provides for exemption admissibility. • The term “Exemption” does not mean allowing establishment to go out of the purview of the P.F. law. But it means only relaxation from the operation of the statutory Scheme provisions in an authorized manner. • Exemption needs to be taken separately for separate Schemes.

  40. INDEX • Exemption from EPF Scheme is admissible upon comparable benefit admissibility at par or more beneficial than Statutory Scheme – Benefits in the nature of contributory Provident Fund or combination of Provident Fund and Pension and/or Gratuity. • Exemption process provides for :- (a) Individual exemption. (b) Class of employees exemption. (c) Exemption of the establishment as a whole. • Authority competent to grant exemption. (a) Individual exemption–Regional PF Commissioner. (b) Class of employees – Appropriate Government. (c) Establishment as a whole – Appropriate Government.

  41. INDEX [(1A)] Where an exemption has been granted to an establishment under clause (a) of sub-section (1), – the provisions of sections 6, 7A, 8 and 14B shall, so far as may be, apply to the employer of the exempted establishment in addition to such other conditions as may be specified in the notification granting such exemption, and where such employer contravenes, or makes default in complying with any of the said provision or conditions shall be punishable under section 14 as if the said establishment had not been exempted under the said clause (a); the employer shall establish a Board of Trustees for the administration of the provident fund consisting of such number of members as may be specified in the Scheme; the terms and conditions of service of members of the Board of Trustees shall be such as may be specified in the Scheme;

  42. INDEX The Board of Trustees constituted under clause (b) shall – (i) maintain detailed accounts to show the contributions credited, withdrawals made and interest accrued in respect of each employee; (ii) submit such returns to the Regional Provident Fund Commissioner or any other officer as the Central Government may direct from time to time; (iii) invest the provident fund monies in accordance with the directions issued by the Central Government from time to time; (iv) transfer, where necessary, the provident fund account of any employee; and (v) perform such other duties as may be specified in the Scheme. (1B) Where the Board of Trustees established under clause (b) of sub-section (1A) contravenes, or makes default in complying with, any provisions of clause (d) of that sub-section, the Trustees of the said Board shall be deemed to have committed an offence under sub-section (2A) of section 14 and shall be punishable with the penalties provided in that sub-section.

  43. INDEX • THE EMPLOYEES’ PROVIDENT FUNDS & • MISCELLANEOUS PROVISIONS ACT, 1952 • Exemption Provisions – Employees Pension Scheme, 1995 • Sec. 17(1C) [as amended by act 25 of 1996] provides for exemption admissibility. • Para 39 of the Employees Pension Scheme 1995 prescribe detailed conditionalities. • Exemption is permissible for the “Establishment” as a whole only – No partial exemption permissible for class of employees or individual employee. • Exemption admissible upon comparable pensionary benefit availability at par or more beneficial than statutory scheme. • Appropriate Government is competent to allow exemption.

  44. INDEX • THE EMPLOYEES’ PROVIDENT FUNDS & • MISCELLANEOUS PROVISIONS ACT, 1952 • Exemption Provision – Employees Deposit Linked Insurance Scheme, 1976 • Sec. 17(2A), (2B), (3) & (3A) and para 28 of the EDLI Scheme ’76 provides for exemption admissibility and related conditionalities. • Exemption is admissible for Individual employee/Class of employees or the establishment as a whole. • Exemption permissible on life insurance coverage without members contribution with better benefit quantum admissibility. • Central Provident Fund Commissioner is competent to grant exemption.

  45. INDEX • THE EMPLOYEES’ PROVIDENT FUNDS & • MISCELLANEOUS PROVISIONS ACT, 1952 • Provisions Relating to “Contractors Employees” • Liability enjoined with the employer of the establishment whose work is done, i.e., the principal employer. • Provisions apply uniformly with regular employees of the establishment. • Contractors unit has no locus-standi separately for the purpose of applicability [Section 2(f) & 6 of the Act]. • Principal employer is empowered to recover the contribution & other charges from the contractor [Section 8A of the Act].

  46. Principal employer is authorized to obtain requisite details relating to engagement of contractors employees and other related information from the Contractor. • The Contractor is liable to submit such details / information to the Principal employer every month / as and when required. [Para 36B of the Scheme] • Principal employer to secure the requirement from the Contractor and ensure reporting compliance. [Para 30 & 32 of the Scheme] • Failure/default will entail principal employers’ liability with attendant penal measures.

  47. COMMON HINDRANCE IN THE MATTER OF COMPLIANCE FOR “CONTRACTORS EMPLOYEES” • Operational complexities arising as a result of short duration and frequent mobility of Contract employees in changing employment & place of work. • Lack of awareness among Contract employees and seriousness on the part of employer/Trade Unions. • General aversion of the employer. • Avoiding tendency for fear of complication. • Common reservation in accepting parity/ responsibility with regular employees of the establishment. INDEX

  48. “Contractors Employees” Compliance under the EPF & MP Act, 1952 – Suggested course for safeguarding employers statutory liability: (1) Obtain copy of the wage/salary payment scroll from the Contractor relating to persons engaged for contract work and retain it on record. (2) Verify Correctness of the employment details furnished in keeping with work assignment and deployment of workers there against. (3) Ensure remittance of Provident Fund contributions in respect of employees engaged by or through contractors and retain supporting document. (4) Ensure verification/identification process upon entry/exit in respect of “contractors employees”. (5) Obtain requisite details relating to submission of returns in regard to, “contractors employees” from the contractors concerned on month to month basis. (6) Periodically verify correctness of direct compliance if any made by the contractor in respect of contract employees. (7) Correlate release of security deposit with compliance clearance.

  49. SUPREME COURT RULING ON RESPONSIBILITY OF “PRINCIPAL EMPLOYER” FOR CONTRACTORS EMPLOYEES IN REGARD TO EMPLOYEES PROVIDENT FUNDS & MISCELLANEOUS PROVISIONS ACT, 1952 COMPLIANCE I. Employment classification attracting liability :- • Persons engaged by/through contractor with or without the knowledge and/or approval of the employer of the establishment; and • Persons working with the material, finance or otherwise assistance from the employer or through agent of the employer/contractor. • Work need not be carried on at employers’ place. Working elsewhere or even at the home of the worker shall attract the liability. It is only when the contractor engages labour for or on his own behalf and supplies the finished product to the establishment, employers liability will not arise. A genuine sale transaction could point in this direction as an independent contractor. Authority of the employer in issuing direction or right of rejection in such cases could vitiate the position. Case reference : 1. Mangalore Ganesh Beedi Works vs. UOI [AIR 1974 (SC) 1832] 2. P.M. Patel & Ors. vs. UOI & Ors. [AIR 1987 (SC) 447] INDEX

  50. SUPREME COURT RULING ON RESPONSIBILITY OF “PRINCIPAL EMPLOYER” FOR CONTRACTORS EMPLOYEES IN REGARD TO EMPLOYEES PROVIDENT FUNDS & MISCELLANEOUS PROVISIONS ACT, 1952 COMPLIANCE II. Regulatory points for consideration • To be an employee it is necessary that the relationship of master and servant exists. • For establishing master and servant relationship the authority of the employer to supervise and control the work of the employee is prime requirement. • In determining the element of supervision and control, physical presence of the worker or overseeing their operational performance personally by the employer, nor working in the employers’ place are essential. Even working at home of the worker suffice. • Authority of the employer or employers agent providing specification requirement of the work and right to rejection has been recognized as adequate yardstick to meet the requirement. Case reference : 1. Mangalore Ganesh Beedi Works vs. UOI [AIR 1974 (SC) 1832 2. P.M. Patel & Ors. vs. UOI & Ors. [AIR 1987 (SC) 447] INDEX

More Related