SEMINAR ON

EPF & MP ACT, 1952– MEMBERS’ SERVICES

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INTRODUCTION

The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 enacted by Parliament came into force w.e.f. 14.3.1952 and presently the following three Schemes are in operation under the Act:-1. The Employees’ Provident Fund Scheme, 19522. Employees’ Pension Scheme, 1995 and3. Employees’ Deposit Linked Insurance Scheme,

1976.

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FUNDING OF THE SCHEMESchemes Employer’s Employees’* Central Govt. Total

Provident Fund 3.67% 12% 0% 15.67%

Insurance Fund (EDLI)

0.5% 0% 0% 0.5%

Pension Fund 8.33% 0% 1.16% 9.49%

Total 12.5% 12% 1.16% 25.66%

* Rate of contribution is 10% in respect of following establishments :-less than 20 persons are employed.sick unit declared by the BIFR.

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(contd…)

Accumulated losses equal to or exceeding its entire network.

Any establishment in the (a) Jute, (b) Beedi, (c) Brick, (d) Coir and (e) Gaurgum industry or factories

Administrative Charges / Inspection Charges are applicable @ 1.10% and 0.18% respectively.

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COVERAGE

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APPLICATION OF THE ACT

All establishments / factories included in the list of notified industries and class of establishments as in Schedule I and employing 20 or more persons.

Any other establishment employing 20 or more persons or class of establishments which the Central Government may notify.

The Act will come into force in an establishment from the very date of set up or commencement of business except certain class of establishments as excluded under Section 16 of the Act

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(contd…)

– Departments or branches of an establishment, situated in the same place or different places shall be treated as parts of the same establishment for coverage under the Act.

– The Act once applied will continue to apply to the establishment even if the number of employees fall less than 20 after coverage.

– The Act is applicable to cinema theatres employing 5 or more workers

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VOLUNTARY COVERAGE

• With the consent of the employer and majority of employees, an establishment otherwise not coverable can be covered under Section 1(4) of the Act..

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MEMBERSHIP

- Persons / employees including regular, casual, piece rated, part time, temporary and contract employees.

- Coverage from the date of joining the establishment / factory.

- All employees getting the wages upto Rs. 6500/- per month.

- In case of wages more than Rs. 6500/- p.m. on joint request by employee and employer

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COMPLIANCE

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ROLE OF COMPLIANCE

Coverage of all coverable establishments .

Extending membership to all eligible employees in covered establishments .

Ensuring proper implementation of Act & Scheme provisions

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REGISTRATION

• A registration number otherwise known as Code Number issued to every establishment / factory to which the Act is applied.

• Issued by RPFC under whose jurisdiction the establishment is located.

• In case of factory, code number is allotted by RPFC under whose jurisdiction factory is located.

• A contractor employing 20 persons and engaged in the work of different establishments may obtain a separate Code Number

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(contd…)

• Normally Code Number is issued within 3 days on submission of requisite documents like proof of date of set up, Demand Draft towards PF dues for one month etc.

• All members be assigned with separate PF Account Number.

• The provisions of the Act applies to the establishment suo-moto, on fulfilling the conditions for the coverage

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COLLECTION / RECEIPT OF CONTRIBUTIONS

• Contributions in respect of each member as per specified rate received by the concerned RPFC.

• Maintenance of contribution card member-wise for each financial year.

• Deduction of employees’ share of PF from wages of the member before disbursement.

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(contd…)

• A member is required to contribute compulsorily upto Rs. 6500/- of his wages and he may voluntarily opt to contribute beyond the wage ceiling of Rs. 6500/- (i.e. upto his wages). During the course of membership, if the wages (Basic + Dearness Allowance including cash value of food concession and Retaining allowances) has crossed Rs. 6500/- the member and employer are required to pay PF contribution at least upto Rs. 6500/- only.

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(contd…)

• If an employee is willing he can also contribute to the fund in excess of the statutory limit of 10% or 12% of his wages, as the case may be. The employer need not pay in excess of the statutory limit.

• The employers’ share of PF contribution should not be deducted from the wage of a member or recovered from the member.

• Principal employer is liable for default by their contractors.

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ASSESSMENT OF DUES / RECOVERY

• In case of default, the dues can be assessed under Section 7A of the Act.

• Proceedings u/s. 7A is quasi-judicial process.• In case of belated remittance damages u/s.

14B and interest u/s. 7Q are leviable.

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CONSEQUENCES ON DEFAULT

• In case of non-payment of assessed dues the recovery actions as per provisions u/s. 8 of the Act read with 2nd / 3rd Schedule of I.T. Act, 1961.

• Penal damages upto 25% per annum and interest at the rate of 12% payable on the defaulted amount.

• Attachment of bank accounts.• Realisation of dues from Debtors.

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(contd…)

• Attachment of movable and immovable properties.

• Arrest and detention.• Action u/s. 406/409 of Indian Penal Code.• Action u/s. 110 Criminal Procedure Code.• Prosecution u/s. 14 of the EPF Act.

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DUTIES OF THE EMPLOYERS

• Enrol all categories of employees including the employees engaged by or through contractors and also piece rated, hourly rated employees.

• Remit the contributions and administrative charges before the 15th of the following month.

• File the initial returns of Form 9, Form 3(P.S.), form 5A.

• File the monthly returns in Form 12A, Form 5, Form 10 and Challans for remitting the dues.

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(contd…)

• Maintain the contribution card in respect of each employee in Form 3A and submit the annual returns in Form 3A and 6A after reconciliation with Challans and form 12A.

• The employer has to ensure that statutory dues in respect of contractors employees are remitted and returns filed.

• Employer should attest the form No.2 and the claims forms submitted by the member/ legal heirs/ nominees.

• Make available all relevant records for inspection of visiting officials with due authorisation.

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SERVICES TO MEMBERS

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• Payment of accumulation plus interest on retirement, resignation, death.

• Partial withdrawals permitted for specific purposes:o Financing life insurance policieso acquiring house or siteo Addition and substantial alterations of the dwelling houseo marriage of self and dependents o education of childreno treatment of illness etc.o Purchase of equipment by physically handicapped employees.o Financial assistance on dismissal, discharge, closure / lock out.

(i) Benefits under EPF Scheme

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OTHERS

(ii) Redressal of grievances at field office and Head Office levels.

(iii) Disposal of grievances in Bhavishya Nidhi Adalats.

(iv) Know Status of your Claim from EPFO Website.(v) Lodging the grievances on the Website under

CPGRAM.(vi) Status of claims settlement from Information

Kiosks.

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DIFFICULTIES IN IMPLEMENTATION OF PROVISIONS OF THE ACT

• No voluntary compliance by employers.• Lack of awareness among establishments

regarding compliance and submission of returns.• Lack of awareness among the employees

regarding social security benefits.• Wage ceiling at Rs. 6500/-.• Existence of Schedule Head. • Non-issue of statement of member’s account due

to non-submission of returns by the employer.

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(contd…)

(vii) Outsourcing and employees engaged on contract.

(viii) Engaging the contract / part time employee in the Government Departments.

(ix) Not fully computerization in EPFO.(x) Numerous returns submitted by the

employers.(xi) Delay in settlement of claims / grievances

due to heavy workload.

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(contd…)

(xii) Delay in issue of PF statements due to non-submission of returns.

(xiii) Illiteracy among members for maintaining their Date of Birth records.

(xiv) Employers reluctant to submit the claim forms in time.

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IMPORTANT SECTIONS OF THE ACT• SECTION 1 – APPLICABILITY OF THE ACT• SECTION 6 – RATE OF CONTRIBUTIONS • SECTION 7A – DECIDING APPLICABILITY AND

ASSESSMENT OF DUES• SECTION 7Q – IMPOSING OF INTEREST • SECTION 8 – RECOVERY OF DUES FROM

EMPLOYERS AND CONTRACTORS

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(contd…)

• SECTION 11 – PRIORITY OF PAYMENT OF EPF CONTRIBUTIONS OVER OTHER DEBTS

• SECTION 14 – PENALTIES FOR DEFAULTERS• SECTION 14B – LEVYING OF DAMAGES ON

BELATED PAYMENTS• SECTION 16 – EXCLUSION FROM THE ACT• SECTION 17 – EXEMPTION

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THANK YOU.

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