As per preface to the Act, the EPF Act is enacted to provide for the institution of provident funds, pension fund and deposit lined insurance fund for employees in factories and other establishments. The Employees’ Provident Funds and Miscellaneous Provisions Act is a social security legislation to provide for provident fund, family pension and insurance to employees. Employee has to pay contribution towards the fund. The employee gets a lump sum amount when he retires, which will be useful to him after retirement. The Act covers three schemes i.e. PF
(Provident Fund scheme),
FPF (Family Pension Fund scheme) and
EDLI (Employees Deposit Linked Insurance scheme).
The EPF Act contains basic provisions in respect of applicability, eligibility, damages, appeals, recovery etc. The three schemes formed by Central Government under the Act make provisions in respect of those schemes.
Factory / industry which have 20 or more persons are employed Central Government employees
This Act applies to whole of India except the state of Jammu & Kashmir.
Act not applicable to Certain Establishment
As per section 16(1)
Any establishment registered under Cooperative Societies Act or State law relating to cooperative societies, employing less than 50 persons and working without paid of power To any establishment belonging to or under Control of Central Government or a State Government and whose employees are entitled to benefit of contributory provident fund or old age pension. To any establishment set up under any Central or State Act and whose employees are entitled to benefit of contributory provident fund or old age pension.
Administration of the fund
Both employer and employee have to pay contribution at prescribed rates. These amounts are credited to a fund.
The fund vests in and is administered by Central Board.
Employees Covered Under the scheme
As per section 2(f), “employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer. Thus,
Persons employed through contractor in connection with work of establishment are covered Apprentices employed under Apprentices Act or under standing orders of establishment are disqualified, i.e. they are not employees. [The model standing orders merely state that an ‘apprentice’ is a learner who is paid an allowance during the period of his training].
Non-eligible Employees Under PF
Employee whose ‘pay’ is more than Rs. 6,500 per month are not eligible. Apprentices as per certified standing orders or under Apprentices Act Casual employees. However, employees employed through contractors have also to be covered under PF.
Employee to Become member of Fund Immediately on Joining
Every employee employed in or in connection with work of a factory or establishment to which the Act applies is entitled and required to become member of Provident Fund, unless he is an disqualified employee. Contribution by Employer & Employee
As per section 2(c) “contribution” means a contribution payable in respect of a member under a Scheme or the contribution payable in respect of an employee to whom the Insurance Scheme applies. As per section 6, contribution shall be paid by employer @ 12% of basic wages plus DA - dearness allowance plus retaining allowance. This amount is defined as ‘pay’.
Employees Provident Fund Scheme
This is the main scheme under the Act. Both employer and employee have to pay contribution to Provident Fund. The employer has to deduct contribution of employee from the salary of employee and has to pay both employees’ contribution as well as employer’s contribution by a challan in prescribed form. The amount has to be paid in approved bank. EMPLOYEE CAN PAY HIGHER CONTRIBUTION - Employee has to contribute 12% of his 'pay' as...