The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (Act No. 19 of 1952) was enacted with the purpose to provide for the institution of provident funds, pension fund and deposit-linked insurance fund for employees in factories and other establishments. The Act extends to whole of India except the state of Jammu and Kashmir. Moreover, this Act is applicable to establishments which is factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed which and such establishments employing such persons which Central Government may by notification in Official Gazette specify in this behalf.
The Act is beneficial piece of legislation and it is described as social security statute to ensure the employees better future on his retirement and of his dependents on his death. This statutory obligation under the Act, cannot possibly be deferred in the event of an untimely death of an employee as discussed in Balbir Kaur vs. Steel Authority of India by Supreme Court of India.
Section 2 of the Act provides for definition clause where, definitions of appropriate government, basic wages, employer, employee, exempted employee, exempted establishment, factory, industry, manufacture or manufacturing process, occupier of factory, etc. are provided.
Section 3 of the Act empowers Central Government that it may by notification in Official Gazette direct that the provisions of this Act should became application to such establishment, where immediately before this Act becomes applicable, there was existence of provident fund. Further Section 4 of the Act empowers Central Government that it may by notification in Official Gazette add to Schedule I of the Act any other industry in respect of the employees where it is of opinion that the Provident Scheme should be framed under this Act.
Similarly, Central Government under Section 5 of the Act empowered to frame a scheme namely “Employees’ Provident Fund Scheme” for establishment of provident funds under this Act for employees or class thereof. Further Section 5A of the Act provides for establishment of Board of Trustees namely Central Board for the territories to which this Act extends, consisting of Chairman, Vice-Chairman appointed by Central Government and other persons from different field. Also, Section 5B of the Act provides for establishment of State Board as per Scheme.
Section 6 of the Act makes provisions for contributions from employer to the Funds which should be ten percent of the basic wages, dearness allowance and retaining allowance payable to employees. Similarly, Employees should contribute equal to the contribution what is to be made by Employer. The Scheme for employees’ superannuation pension, widow or widower’s pension, children pension or orphan pension payable to the beneficiaries of such employees is provided under Section 6A of the Act where Central Government frames scheme namely “Employees’ Pension Scheme”. The Act also makes provisions for framing of “Employees’ Deposit-Linked Insurance Scheme” under Section 6C of the Act by Central Government for providing life insurance benefits to the employees or class thereof.
Section 7 of the Act empowers Central Government as to modification i.e. addition or alteration either prospectively or retrospectively by amending any such schemes discussed above. Further Sections of the Act makes provisions as to determination of moneys due from employers and also determination of escaped amount. Section 7D of the Act provides for constitution of one or more Employees’ Provident Funds Appellate Tribunal by Central Government consisting of only person appointed by Central Government itself. And further Sections make provisions for qualification, terms of office, resignation, salary and allowances and staffs of Tribunal and Power and Jurisdictions also provides for procedure to be followed by Tribunal.
Similarly, Section 8 makes provisions as to recovery of amount of provident funds contributions from employer, employees and others. An order under Section 7A(3) is a condition precedent to the making of a demand under Section 8 of the Act, as discussed in A.T. Union (P) Ltd. vs. RPF Commissioner. Other important provision under the Act is Section 12 of the Act where Employer is restricted not to reduce wages, etc. for any connected scheme. Section 13 of the Act makes provisions for appointment of Inspectors by Appropriate Government for carrying on the purpose of this Act and schemes framed thereunder.
Section 14 of the Act provides for penal provision for avoiding such payments which were required under this Act or Schemes framed thereunder. Section 14A of the Act clarifies offences by Companies. Even default in such payments by employers could also result in criminal cognizance under Section 14AB of the Act. Section 14AC of the Act says all such cognizance could only be taken with prior sanction of Central Government. The delay in making payments should not prejudice the employees for whose benefit the fund is created. Where ‘default’ is found, but no apparent ‘fault’, the quantum of damages should be compensatory rather then penal in nature as discussed in Shanti Garments Pvt. Vs. Regional PF Commissioner, 2003 by Hon’ble Madras High Court.
Section 15 of the Act provides for special provisions relating to existing provident funds.