THE EMPLOYEES PROVIDENT FUNDS

AND

MISCELLANEOUS PROVISIONS ACT,

1952

Dr. Showry
 Social Security Acts
 Workmen's Compensation Act 1923
 Employees state insurance act, 1948
 Employee Provident Fund 1952
 The Maternity Benefit Act, 1961
 Payment of Gratuity 1972
 Provident Fund
 A social security measure to make provision for
future of the industrial worker after retirement &
dependent after death
 Act

22 Sections

Schedule 1 Schedule 2
Matters for which
Matters of industry provisions can be made in
engaged in manufacture schemes

Schedule -3 Schedule 4-
Matters for which provision Matters to be provided for
can be made in pension the employees deposit
scheme linked insurance scheme
 Provident Fund
 To provide substantial security &long term protection
 During old age, offer survivor benefits , disability
 Timely monetary assistance in contingencies
 Timely advances to the families when in distress,
or Sick/unable to meet family/ social obligations
 Support family -the early death of bread-winner

 To stabilize labor force as well

 To induce employees a spirit to save a portion from
present earnings regularly for rainy day
 Schemes under EPF Act
 To provide social security benefits to members and their
dependents on cessation of employment of employees in
factories & Establishments

Employees’ Employees
Employees’
Provident Deposit
Fund Pension Scheme, Linked
Scheme, 1995 Scheme,
1952 1976’

 To provide for the institution of and administration of

Provident funds
Family pension
Deposit-linked insurance schemes.
 Applicability

❑ Extends to 187 classes of establishments.

❑ Any establishment under 187 categories and employing

more than 19 persons automatically comes under EPF & MP

Act 1952

❑ The employers are required to submit Particulars of

Ownership[Form 5A] & comply with relevant statutory

provisions
 Applicability

 An establishment/factory
 If not otherwise covered may be covered voluntarily with mutual consent
 Every employee to be a member of the fund from the DOJ
 Employee of a factory or establishment

 Employed through a contractor

 Excluding the apprentice

 Workers are eligible for joining scheme from DAY 1

 Not applicable
 Cooperative society with employees less than 50 without aid of power
 Newly established establishments for 5 years
 Any state or central govt having its own system of schemes
 Definitions
 Factory”
 Any premises or precincts where manufacturing process is being
carried on with or without the aid of power
 Exempted employee:
 An employee to whom a Scheme/Insurance would not
apply but for the exemption granted
 Exempted establishment
 Establishment exempted from all or any schemes

 “Authorized officer”
 Central Provident Fund Commissioner
 Additional Central Provident Fund Commissioner
 Deputy Provident Fund Commissioner
 Definitions
 Contribution- Payable in respect of a member - Scheme
 Employer
 Factory

◼ Owner or occupier, agent , legal representative of a

deceased owner/ occupier and, a manager of factory
 Any other establishment

◼ Person , or the authority who has the ultimate control

◼ Managing director or manager to whom the affairs
are entrusted
 Definitions
 Fund - The Provident Fund established under a Scheme
 Pension Fund - Pension Fund established (all sec 6)
 Pension Scheme : Employees‟ Pension Scheme
 Insurance Fund - Deposit-linked Insurance Fund established
 Insurance Scheme – Employees Deposit-linked Insurance
 Manufacture” or “manufacturing process
 Any process for making, altering, repairing,
ornamenting, finishing, packing, oiling, washing, cleaning,
breaking up, demolishing or otherwise treating or
adapting any article or substance with a view to its use,
sale, transport, delivery or disposal
 Member” means a employee/member of the Fund
 Family

EPF 1952 EPS 1995

 Spouse  Spouse
 Children whether  Son
married or unmarried  Daughter
 Dependent Parents
 Son’s widow
 Dependent Parent’s in
law in case of female
member
Component of Wages as for PF Contribution

Basic Wages

Dearness Allowances

Retaining Allowances if any

Deduct on Rs 15000 statutory Max

Deduct on Actual salary if both agree

 Basic Wages

Not Include
Basic wages
Cash value of any food
All emoluments
concession
Earned by an employee
Dearness allowance - all
while on duty or on leave
cash payments by whatever
as per the terms of contract
name called paid on
of employment
account of a rise in the cost
payable in cash
of living
House-rent allowance
Overtime allowance
Bonus
commission or any other
similar allowance
Pension Wage ceiling enhancement 2014

 01-Sep-2014 Pension Wage ceiling enhancement

 From Rs 6,500 per month to Rs 15,000 per month
 Employee Contribution
 If PF wage is Less than Rs 15,000 per month
◼ Min PF contribution = 12% of the actual PF wage
 If PF wage of is more than Rs 15,000 per month
◼ Min PF contribution = Rs 1,800 per month (12% of 15,000)
◼ Max = 12% of actual salary 12% - 50000= Rs 6000+6000
 Employer's Contribution – 12% = ( 8.33% + 3.67%)
 To Pension Rs 1250 (8.33% of 15000)
 To PF Rs 550 (3.67% )
 Pension Wage ceiling enhancement
2014

❑ Contribution are payable

On maximum wage ceiling of Rs 15000
❑ The employee can pay at a higher rate
In Such a case employer is not under an obligation to pay
at a higher rate i.e 12%
❑ To pay contribution at a higher rate
Joint request from employee and employer
Form required Para 26 (6) of EPF
❑ Any employee can contribute 100% of basic wages
towards PF
Pension Wage ceiling
 For international workers
 Wage ceiling of 15000 is not applicable
 PF contribution is paid on actual Salary

 Administrative charges Rs 500 from 2018

 Rs 75 if there are no contributory members
 15000
 3 lakh
 12% of 300000 = 36000-36000 =72000
 Contribution Rate
Scheme 12 Employee 12 Employer’s Government Total
Account Name Contribution Contribution12 Contribution
EPF 12%=1800 3.67% =550 0 2350
EPS 0 8.33%=1250 1.16%=174 1424
EDLI 0 0.50% = 75 0 75
Admin Charges 0 0.50%= 75 0 0
Total 12% 12.5% 1.16% 24.34%
Monthly = 3848
X 12
For year= 46176
Interest @ 8.5
49985
20years
 Contribution Rate-EPF Total- Examples
Salar of Provident Fund Provident Fund Pension Total Yearly
employee Employee Employer Scheme Provident Deposits
Contribution Contribution Employer’s Fund Provident
Contribution fund
12% 3.67% 8.33% 15.67% 15.67%
Annually
10000 1200 367 833 1567 18804

15000 1800 550 1250 2350 28200

20000 2400 550 1250 2950 35400

100000 12% 12% ? ? ?

12000 18000
 Withdrawals
EPF withdrawal after completion of 5 years is not Taxable ELSE TAX

Full Withdrawals Partial Withdrawals

Construction of house
Retirement on superannuation
Sickness
Total& permanent incapacity Marriage-employee/ dependents
(i) Migrates from India for Higher education of children
permanent settlement Payment of life insurance
(ii) Retrenched under certain Temporary closure of
conditions establishment
Purchase of shares of cooperative
(iii) Completes 15 years of
society,
membership Damage of property by
(iv) Leprosy/T.B. Physically or exceptional calamities
mentally incapacitated Retrenchment
 Nominee
 Payment of PF
 To nominee in case there is a Nominee
 Nomee can be a Family member or friend
◼ In the event of the death of a member the full amount
standing to his credit is to be paid to the nominee
 In case there is no nominee
◼ the amount is to be paid to family members in the
prescribed proportions
 If No nominee or family members
◼ Amount is to be paid to the person legally entitled to
 II EPS
EMPLOYEES’
PENSIONSCHEME,1995
 Employees’ PensionScheme,1995
23

 Central Govt scheme Came into operation w.e.f

16.11.1995
 Apply to All Factories and Establishment s
 All PF subscribers including exempted establishments contributing
Pension Scheme
 Pension Fund is established by the funds given by the
 Employer's contribution of 8.33% of ( basic + DA) 15000
 Rs 1.16% from central government
 Employee need not pay any contribution
 Pension Fund is payable to Employee
 (a) on superannuation, retirement or permanent total
disablement
 (b) Widow or widower's children or orphan
Employees’ PensionScheme,1995
 Employees' Pension Scheme
 Compulsory for all the persons who were members of the
Family Pension Scheme 1971.
 Compulsory for the persons who have become members
of the provident fund from 16.11.1995
 Provident fund subscribers who were not members of the
Family Pension Scheme, have an option to join
 Employees, including those covered under the voluntary
retirement scheme have an option to join the scheme
w.e.f. 1-4-1993.
 Benefit
25

Contingencies for payment of monthly pension

 Superannuation on attaining age of 58 years

 Retirement

 Permanent total disablement

 Death during service or Death after retirement

 Not alive Pension to

 Spouse and two children below 25 years

 Orphan pension
Employees’ Pension Scheme,1995
 EPS contribution is payable by
 Employer

 Government

 Employee need not pay any contribution

 Pension contribution is not paid when
 An employee reaches 58 years of age, but still in
service, EPS service ceases
 When an EPS pensioner is drawing reduced pension and
rejoins as an employee
 Employees’ Pension Scheme,1995
27

 Eligibility
 Entitlement to pension

◼ For Minimum 10 years contribution

 Normal superannuation pension

◼ Payable on attaining the age of 58 years.

 Pension on a discounted rate

◼ Payable on attaining the age of 50 years

 Where pensionable service is less than 10 years

◼ Member has an option to remain covered for

pensionary benefit till 58 years of age
◼ claim return of contribution/withdrawal benefits.
Calculation of Pension
 Formula for Pension =
 Pensionable Salary x (Pensionable Service +2years)
70
 15000 x 33 /70 for 31 years
 7071
 Once applied is always employed
 Calculation of Monthly Pension
29
 Pensionable Salary
 Average salary drawn during the last 12 months.
 Maximum limit of pensionable salary is Rs 15000/- PM
 Pensionable Service
 Service of the member for whom contribution is made.
 Add 2 more years of service - A member who
superannuates on attaining 58 years, after rendering
pensionable service of 20 years or more
 Monthly Pension
 (Note –Pensionable salary = Avg salary drawn last 60 months
 Pensionable service = Service during which contribution for
pension fund is made
Pensionable Salary x (Pensionable Service +2years ) / 70
 Benefit
 The amount of monthly pension
 It will vary from member to member depending upon his
pensionable salary and pensionable service
 Ex- salary = 10000 12000 14000 15000
 Central Board
 Pension Fund shall vest in and be administered by as may
be specified
 Pension Scheme
 Provide for all specified Schedule III.

 May provide either prospectively or retrospectively

 Types of Pension members
 1. Superannuation
 Minimum age is 58 & 20 Years contribution
 Disablement
 Certificate to the effect of permanent disability should
be produced
 Retirement before superannuation
 If age between 50 and 58, with 20 years or more Exp.
 Short service cessation
 If age is above 50 years, 10 to 20 years of service 4%
short for every year
 5 types of Pension
 Death after minimum one month service
 Widow Pension
 Death upon member away from employment or after
superannuation till life or remarriage
 Children Pension
 Additionally along with widow pension up to 25 years of age –
Maximum 2 children
 Orphan Pension

 After death of member and widow

 Parent Pension
 If no family member, I e no spouse, children, and no nomination,
if parents are alive
 III - EDLI
EMPLOYEE’S DEPOSIT-
LINKED INSURANCE
SCHEME, 1976
 III Employee’s Deposit-Linked
34
Insurance Scheme, 1976
 Into force with effect from August 1, 1976.
 When does it become payable
 Only after the death of a member
 All the members of the Employees’ Provident Funds
Scheme are members of this Scheme
 Central Government frame a scheme
 Employees‟ Deposit-linked Insurance Scheme
 Purpose
 Providing life insurance benefits to the employees of
any establishment or class of establishments to which
this Act applies.
 Contribution
 Employer only pays
 0.5% of PF wages
 Shall pay into the Insurance Fund
 Not exceeding one-fourth of the contribution
 EDLI contribution is payable even after 58 years

 Central Government
 Meet all the expenses in connection with the administration of
the Insurance Scheme other than the cost of any benefits
 Insurance Fund shall vest in Central Board
 Insurance Scheme may provide for all specified -Schedule IV
 Insurance Scheme may provide that any of its provisions shall
take effect either prospectively or retrospectively
 The Employees' Deposit Linked Insurance
Scheme 1976 (EDLI)

1.The benefit provided in case of death of an employee who was

member of the scheme at the time of the death.
2.The payment of benefit amount to be 20 times of the wages or
Benefits based on the deposit in the Provident Fund, which ever is less. With
the increase in the wages ceiling from 6500/- to 15000/- from
01.09.2014, the maximum benefit amount has become 3 lakh & an
additional 20% of benefit amount calculated is also paid.

Nominatio 1.The nomination under the EPF Scheme will be applicable for the
n EDLI Scheme also.

Claim 1.For claiming Insurance Benefit by a nominee/ beneficiary in case

Forms of member’s death while in service: Form 5IF
 Benefits
37
 Benefits cant less than Rs 2.5 lakhs and more than 7 lakhs at the death
of an employee subscribing
 Two parts
 Part 1
◼ If Avg Provident Fund balance of preceding 12 months is less than
Rs. 35,000
◼ Benefit-Additional amount equal to average balance in PF
◼ If the avg provident fund balance of preceding 12 months is more
than Rs. 35,000
◼ Benefit = Rs.35,000 plus 25% of the amount in excess of
Rs.35,000, subject to a max 60K
 Part 2
◼ 50% of the avg PF balance, or last 12 month contribution
which ever is less subject to maximum of Rs 1, 75,000
 Total EDLI = Part 1 + Part 2
 Contribution
 Where employer is declared as insolvent or wound up company
 PF contributions are paid to be first priority than other debts
 Social Security money cannot be taken away by any one
 cannot be attached on account of debts of employer or liabilities
 No employer shall directly or indirectly cut wages or gratuity for the
purpose of meeting liability of PF
 Contractor
 Employer can recover PF dues payable towards employees either
by dedication or debt
 Contractor can deduct PF from employees
 Penalties
• Rs 5000 or imprisonment extend to one year
 Any false representation for avoiding any pay as per Act
 Avoid such payments to the Pension or Insurance Scheme

◼ Not be less than one year and a fine of 10k

◼ Default in payment of the contribution already deducted
 Imprisonment for a term extend to 3 years
 Default in complying with, the provisions relates to the
payment of inspection charges, or para 38 of the Scheme/
payment of administrative charges
 Any other case
◼ Not be less than 6 months and a fine of 5k
Determination of due from employers

 Conducting the inquiry

 (a) Enforce attendance of any person to examine
 (b) Requiring the discovery and production of documents
 (c) Receiving evidence on affidavit;
 (d) issuing commissions for the examination of witnesses
 No order shall be made unless the employer is given a
reasonable opportunity of representing his case
 Where the employer, employee or any other person required
to attend the inquiry fails to attend such inquiry without
assigning any valid reason or fails to produce any document or
to file any report or return
 Decide the applicability of the Act or determine amount
Determination of due from employers

 Where an order is passed against an employer

 He may within 3 months from communication of such order
Apply to officer for setting aside order if he satisfies the
officer
◼ The show cause notice was not duly served
◼ Prevented by any sufficient cause from appearing the
inquiry
 Officer shall make an order setting aside his earlier order
◼ Shall appoint a date for proceeding with the inquiry:
Appeals to Tribunal
 Any person aggrieved by a notification issued by any
authority, except an order rejecting an application for
review
 May prefer an appeal to a Tribunal against such order

 Every appeal shall be filed in such form and manner, be

accompanied by such fees, as may be prescribed.
 Tribunal shall have power to regulate its own procedure
exercise of its powers or of the discharge of its functions
 A Tribunal may after giving the parties to the appeal, an
opportunity of being heard, pass such orders thereon as it
thinks fit, confirming, modifying or annulling the order
Universal Account Number (UAN)
 It is a 12 digit number allotted to the employee
 It remain same throughout the life of the employee.
 It does not change with the change of Job.
 Help in easy transfer and withdrawals of claims.
 Along with the service of Online Passbook, SMS
Service on each deposit of contribution & online
KYC update can be provided on the basis of UAN
 Before that UAN need to be activated on EPFO
portal