The Employees' Provident Fund Scheme, 1952.

Introduction

The Employees' Provident Fund Scheme, 1952.

• The Constitution of India under "Directive Principles of State Policy" provides that the State shall within the limits of its economic capacity make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old-age, sickness & disablement and undeserved want.

• The Employees' Provident Fund Organization (EPFO) is a statutory body of the Government of India under the Ministry of Labour and Employment. It administers a compulsory contributory Provident Fund Scheme, Pension Scheme and an Insurance Scheme. It 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.

Applicability Of The Employees' Provident Fund Scheme, 1952.• The Employees' Provident Fund and

Miscellaneous Provisions Act 1952 applies to the whole India except Jammu & Kashmir.

• Employees' Provident Fund and Miscellaneous Provisions Act 1952 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. (List of Industries/Establishments)• Employing 20 or more persons .• Cinema Theatres employing 5 or more persons.

The Act does not apply to:• The co-operative societies employing less

than 50 persons and working without the aid of power. 16(1)(a)• The establishment to which this Act applies

shall continue to be governed by this Act , even if the number of employees falls below 20 at a later date. [ 1(5)].

Definition• Basic Wages:

"Basic Wages" means all emoluments which are earned by employee while on duty or on leave or holiday with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash, but dose not include

• The cash value of any food concession;• Any dearness allowance (that is to say, all cash payment by

whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other allowance payable to the employee in respect of employment or of work done in such employment.

• Any present made by the employer.

Employee Provident Fund Scheme:• Employees' Provident Fund Scheme takes care

of following needs of the members: (i) Retirement (ii) Medical Care (iii) Housing(iv) Family obligation (v) Education of Children (vi) Financing of Insurance Polices

CONTRIBUTION 

• contribution payable by the employer [Sec 29]

In respect of establishments employing 20 or more persons and engaged in industry notified under Section 6 of Act ( other than the Establishments. declared as sick )

• 12% of the basic pay DA , • Cash value of food concession and retaining

allowance , if any, subject to amaximum of Rs.6500/- per month.

• Voluntary higher contributions are also acceptable at the joint request of the member and the employer .

Circumstances in which accumulations in the Fund are payable to a member. [Sec 69]• A member of the provident fund can withdraw full

amount at the credit in the fund on retirement from service after attaining the age of 55 year. Full amount in provident fund can also be withdraw by the member under the following circumstance:

• A member who has not attained the age of 55 year at the time of termination of service.

• A member is retired on account of permanent and total disablement due to bodily or mental infirmity.

• On migration from India for permanent settlement abroad or for taking employment abroad.

In the case of mass or individual retrenchment. 

• In the case of the following contingencies, the payment of provident fund be made after complementing a continuous period of not less than two months immediately preceding the date on which the application for withdrawal is made by the member:• Where employees of close establishment are

transferred to other establishment, which is not covered under the Act:

• Where a member is discharged and is given retrenchment compensation under the Industrial Dispute Act, 1947. Withdrawal within one year before the retirement [Sec 68NN] A member can withdraw upto 90% of the amount of provident fund at credit after attaining the age of 54 years or within one year before actual retirement on superannuation whichever is later. Claim application in form 19 may be submitted to the concerned Provident Fund Office.

• Accumulations of a deceased member. [Sec 70] Amount of Provident Fund at the credit of the deceased member is payable to nominees/ legal heirs. Claim application in form 20 may be submitted to the concerned Provident Fund Office.

Duties of employers. [Sec 36]• (1) Every employer shall send to the

Commissioner, within fifteen days of the commencement of this Scheme, a consolidated return in such form as the Commissioner may specify, of the employees required or entitled to become members of the Fund

• showing the basic wage, retaining allowance (if any) and dearness allowance including the cash value of any food concession paid to each of such employees:• Provided that if there is no employee who is required

or entitled to become a member of the Fund, the employer shall send a ‘NIL’ return.

• (2) Every employer shall send to the Commissioner within fifteen days of the close of each month a return—• (a) in Form 5, of the employees qualifying to become

members of the Fund for the first time during the preceding month together with the declarations in Form 2 furnished by such qualifying employees, and• (b) in such form as the Commissioner may specify, of

the employees leaving service of the employer during the preceding month:

• Provided that if there is no employee qualifying to become a member of the Fund for the first time or there is no employee leaving service of the employer during the preceding month, the employer shall send a ‘NIL’ return.

Nomination.[Sec 61] 

• Each member shall make in his declaration in Form 2, a nomination conferring the right to receive the amount that may stand to his credit in the Fund in the event of his death • If a member has a family at the time of

making a nomination, the nomination shall be in favour of one or more persons belonging to his family. Any nomination made by such member in favour of a person not belonging to his family shall be invalid

Advance from the Fund for illness in certain cases. [Sec 68J](1) A member may be allowed non-refundable

advance from his account in the Fund in cases of

(a) hospitalisation lasting for one month or more, or

(b) major surgical operation in a hospital, or(c) suffering from T.B., leprosy, paralysis, cancer,

mental derangement or heart ailment and having been granted leave by his employer for treatment of the said illness.

• (2) The advance shall be granted if—• (a) the employer certifies that the Employees’ State

Insurance Scheme facility and benefits there under are not actually available to the member or the member produces a certificate from the Employees’ State Insurance Corporation to the effect that he has ceased to be eligible for cash benefits under the Employees’ State Insurance Scheme; and

• (b) a doctor of the hospital certifies that a surgical operation or, as the case may be, hospitalisation for one month or more had or has become necessary or a registered medical practitioner, or in the case of a mental derangement or heart ailment, a specialist certifies that the member is suffering from T.B., leprosy, paralysis, cancer, mental derangement or heart ailment.

Advance from the Fund for marriages or post-matriculation education of children. [Sec 68K]

• (1) The Commissioner or where so authorised by the Commissioner, an officer subordinate to him may on an application from a member, authorise payment to him or her of a non-refundable advance from his or her provident fund account not exceeding fifty per cent of his or her own share of contribution with interest thereon, standing to his or her credit in the Fund, on the date of such authorisation, for his or her own marriage, the marriage of his or her daughter, son, sister or brother or for the post-matriculation education of his or her son or daughter.

• (2) No advance under this paragraph shall be sanctioned to a member unless—• (a) he has completed seven years’ membership of the

Fund; and• (b) the amount of his own share of contributions with

interest thereon standing to his credit in the Fund is rupees one thousand or more.• (3) Not more than three advances shall be admissible

to a member under this paragraph.