The umbrella legislation relating to provident fund is
the
Employees' Provident Funds & Miscellaneous Provisions Act, 1952 (EPF
& MP Act). The Act was enacted with the main objective of making
some provisions for the future of industrial workers after their retirement
and for their dependents in case of death. It provides insurance to workers
and their dependents against risks of old age, retirement, discharge,
retrenchment or death of the workers. It is
applicable
to every establishment which is engaged in any one or more of the industries
specified in Schedule I of the Act or any activity notified by Central
Government in the Official Gazette and employing 20 or more persons.
However, the Act shall not apply to any establishment:-
- Registered under the Co-operative Societies Act 1912
or under any other law for the time being in force in any State relating
to co-operative societies employing less than fifty persons and working
without the aid of power; or
- Belonging to or under the control of the Central Government
or a State Government and whose employees are entitled to the benefits
of contributory provident fund or old age person in accordance with
any scheme or rule framed by the Central Government or the State Government
governing such benefits; or
- Set up under any Central Provincial or State Act and
whose employees are entitled to the benefits of contributory provident
fund or old age person in accordance with any scheme or rule framed
under that Act governing such benefits; or
- Newly set up until the expiry of a period of three years
from the date on which such establishment has been set up.
The Act is administered by the Government of India through
the Employees' Provident
Fund Organisation (EPFO). EPFO is one of the largest provident fund
institutions in the world in terms of members and volume of financial
transactions that it has been carrying on. It is an autonomous tripartite
body under the control of Ministry
of Labour with its head office in New Delhi. It aims to extend the
reach and quality of publicly managed old-age income security programs
through its consistent efforts and ever-improving standards of compliance
and benefit delivery system to its members. This way it seeks to contribute
to the economic and social well-being of the country.
EPFO functions under the overall superintendence of the
policies framed by the Central
Board of Trustees, headed by Union Minister for Labour as Chairman.
The main functions of the Board are :-
- Administering the funds created and vested in the Board
and performing other works incidental thereto.
- Maintaining accounts of income and expenditure in prescribed
form and manner.
- Delegation of powers for administration of the schemes.
- Submitting audited accounts with comments and annual
report on performance of the Organisation to Government.
The main provisions of the Act are:-
- The Act aims to provide for institution of provident
funds, family pension funds and deposit linked insurance funds for the
employees in the factories and other establishments. Accordingly, three
schemes are in operation under the Act. These schemes taken together
provide to the employees an old age and survivorship benefits, a long
term protection and security to the employee and after his death to
his family members, and timely advances including advances during sickness
and for the purchase/ construction of a dwelling house during the period
of membership. These three schemes are as follows:-
- The Central Government may by notification in the Official
Gazette constitute a Central Board of Trustees for the territories to
which this Act extends. Also, the Government may constitute an Executive
Committee to assist the Board in the performance of its functions.
- The contribution
which shall be paid by the employer to the fund shall be eight and one-third
per cent of the basic wages, dearness allowances and retaining allowance
(if any) for the time being payable to each of the employees. While,
the employees' contribution shall be equal to the contribution payable
by the employer in respect of him and may if any employee so desires
and if the Scheme makes provision therefore be an amount not exceeding
eight and one-third per cent of his basic wages, dearness allowances
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 the Act.
- The Central Government may by notification in the Official
Gazette constitute one or more Employees' Provident Funds Appellate
Tribunal to exercise the powers and discharge the functions conferred
on such Tribunal by this Act and every such Tribunal shall have jurisdiction
in respect of establishments situated in such area as may be specified
in the notification constituting the Tribunal.
- No employer in relation to an establishment to which
any scheme applies, shall by reason only of his liability for the payment
of any contribution to the fund, or any charges under this Act or the
scheme, reduce whether directly or indirectly, the wages of any employee
to whom the scheme applies or the total quantum of benefits in the nature
of old age pension gratuity provident fund or life insurance to which
the employee is entitled.
- Whoever for the purpose of avoiding any payment to be
made by himself under this Act or of enabling any other person to avoid
such payment, knowingly makes or causes to be made any false statement
or false representation, shall be punishable with imprisonment or with
fine or with both.
