Employees Provident

Funds And Miscel.

Provision Act,1952
By: Shrimee Srivastava
t.me/shrimeesrivastava

instagram.com/shrimeesrivastava
• Employees' Provident Fund is a statutory benefit payable to
employees working in India.

• The Employees' Provident Funds and Miscellaneous

Provisions Act, 1952 ("Act") is applicable pan-India.

• The administration and management of Employees' Provident

Fund(EPF) is carried out by the Central Board of Trustees
(CBT) established by the Central Government consisting of
representatives of the Government, employers and
employees respectively.

• The Employees' Provident Fund Organization (EPFO) assists

this Board in its activities.
• EPF is a welfare scheme brought into force to
secure a better future for employees.
• It is a statutory benefit available to the employees
post retirement or when they leave the services.
• In case of deceased employees, their dependents
will be entitled for the benefits.
• Under the Employees' Provident Fund Scheme
(EPF Scheme) both employers and employees have
to make their contributions towards the Fund.
• Interest earned on the amount is credited to the
member's Provident Fund Account (PF account)
and is available to the employee at the time of
retirement or exit from employment as the case
may be, provided certain conditions are fulfilled.
Applicability of the Act
• The Act applies to-
• 1) Every establishment,
• Which is a factory,
• Which is engaged in industry, specified in Schedule I to
the Act and
• in which 20 or more workers are employed;’
• 2) Any other establishment or class of establishment
• Employing 20 or more persons,
• Which may be specified by Central Government
• Once it applies, it continues to apply even if the number
of employees fall below 20.
• The Act does not apply to:

• 1) A co-operative society employing less

than 50 persons and working without the
aid of power;

• 2) A newly set up establishment for an

initial period of 5 years;

• 3) Any Central/ State Government

establishment having its own scheme
of provident fund
Schemes
• The following three schemes have been framed
under the Act by the Central Government
• a) The Employees' Provident Fund Schemes,
1952:The purpose of providing a post retirement
benefits
• b) The Employees' Pension Scheme, 1995: The
purpose of providing the superannuation pension,
retiring pension or permanent total disablement
pension.
• c) The Employees' Deposit-Linked
Insurance Scheme,1976: The purpose of providing
insurance benefits to the family in case of death
while in service
Employees covered under the scheme
• Person who is employed for wages
• in any kind of work, manual or otherwise,
• in or in connection with the work of the establishment and
• Who gets his wages directly or indirectly from the employer
• It further includes the following;
• 1) A person employed by or through a contractor in or in connection
with work of the establishment.
• 2) Person engaged as an apprentice (trainee), not being an apprentice
• Under the Apprentices Act, 1961 or.
• Under the standing orders of the establishment.
Eligibility to Join Provided Fund
• An employee whose pay is more than
Rs.15,000/- p.m. is not eligible to
join Provident Fund.
• However, an employee who is drawing a
salary of more than Rs.15,000/-p.m. can
become member of Provident Fund with the
permission of Assistant Provident Fund
Commissioner, if he and his employer agree.
• However in such a case, provident fund
contribution will be as per Rs.15,000/-p.m.)
• An employee ceases to be the member of
provident fund on attaining the
age of 60 years.
Employees' Provident Fund Scheme
• This is the main scheme under the Act.
• Both the employer and employee have to pay
contribution to the Provident Fund.
• The employer has to Deduct contribution of
employee from salary of employee and Pay
contribution of both (employee's & employer's
contribution)
• Through a challan
• Through approved banks.
• The employees gets a lump sum amount including
self and employers contribution with interest on
retirement.
Amount of Contribution
• The contribution is 12% of pay i.e., basic
wages and dearness allowance + Retaining
allowances
• Contribution of both employer and
employee is same i.e., 12% each.
• Note: An employee can voluntarily pay
more contribution above the statutory rate.
• However, employer does not have to match
the voluntary contribution over and above
the statutory rate.
Excluded Employees

• Following are the 'Excluded Employees' from Employees' Provident

Fund Scheme, 1952:

• An employee who has withdrawn the full amount of his accumulations in

the Fund;

• An employee whose pay exceeds the prescribed amount (Rs. 15,000/-pm);

and

• An apprentice.
Employees Pension Schemes
• The scheme is applicable to all subscribers of
employee's Provident Fund scheme.
• Employers' PF Contribution is Diverted Employers'
contribution of 8.33% is diverted to the fund of
pension scheme and Balance 3.67% is credited in
the employees name in the Provident Fund account.
• Employee DO NOT Contribution Employee does not
have to make any contribution.
• Members of this scheme will get pension on
Superannuation or Retirement from service or
Disablement during service.
Who will get Pension
• Family pension will be available to widow/
widower for life or until she/he marries.
• In addition, Children will be entitled to
pension up to 25 years of their age.
• If the person is unmarried or has no family,
pension is given to nominee for
specified period.
Employees Deposit Linked
Insurance Scheme
• Purpose of scheme is to provide life insurance benefits
• To employees already covered under Employees'
Provident Fund Scheme/ Employees'
Pension Fund Scheme
• Contribution by Employer
• Employer has to pay
• Contribution equal to 0.5% of total wages of employees.
• Administrative charges of 0.1% of total wages are also
paid by employer.
• Employee does not contribute any
amount to this scheme.
Amount of claims
• If any employee dies during employment,
• Maximum assured benefit up to Rs 7 lakh to be
paid to the nominee or legal heir of the EPF
member if death occurs while in service.
• Minimum assurance benefit is of Rs 2.5 lakh in
case the deceased member was in continuous
employment for 12 months prior to
his or her death.
Administration

• Administration of the scheme given under this act is done by the

Central board, State board, and regional committee, a chief executive
committee appointed and constituted by the central government
Structure of EPFO

• The Act and all its Schemes are administered by a tripartite Board called
Central Board of Trustees (EPF).

• It has representatives of Government (both Central and State), Employers

and Employees.

• The Board is chaired by the Ministry of Labour and Employment,

Government of India. The Central Board of Trustees (EPF)
operates 3 schemes.
Penalties
For avoiding any payment whoever knowingly makes or
causes to be made any false statement or false
representation - Imprisonment less than 1 Year or Fine
of Rs. 5000 or Both
An employer, who contravenes or makes default in
complying with the provisions of the payment of
inspection charges, administrative charges- Default of
payment of employees contribution – 1 year
imprisonment and Rs. 10000 Fine.
Other Case: 6 Months Imprisonment and Rs 5000 Fine
Max. Imprisonment – 3 Years
Payment of Gratuity
Act,1972

By: Shrimee Srivastava

• Gratuity is a retirement benefit like the provident
fund or pension.' But unlike pension, but like
provident fund, it is a lump sum payment to which
the employee becomes entitled after rendering long
and meritorious service to the employer.

• It is paid on his superannuation, death, disablement

due to accident or disease, retirement or resignation
after rendering service for a specified period.
• So, in order to be eligible for the payment of gratuity,
the minimum term of employment must 5 years.

• In India, this is all governed by the Payment of

Gratuity Act, 1972.

• It is a social security enactment providing for the

welfare benefits of the employees working in
industries, companies and organisations. The Act has
been amended in 2018 (The Payment of Gratuity
(Amendment) Act, 2018).
APPLICABILITY OF THE ACT
• The Act applies to every
• Factory, mining, plantation, port, and Railway
Company
• Shop and establishments, where 10 or more persons
are employed or were employed (on any day of the
preceding 12 months).
• establishments of class of establishments, where 10
or more persons are employed or were employed (on
any day of the preceding 12 months) (as
the CG may Specify)
• Act Continue to Apply (even if Employee fall below 10)
Employee
• It means
• any person (other than an apprentice)
• who is employed for wages,
• whether the terms of such employment are express
or implied,
• in any kind of work, manual or otherwise,
• in or in connection with the work of a factory, mine,
oil field, plantation, port, railway company, shop or
• other establishment to which this Act applies,
• But does not include any such person

• Who holds a post under the Central Government

or a State Government and

• Is governed by any other Act or by any rules

Providing for payment of gratuity

• The Teachers' have also been covered under the

definition of employee
Continuous Service
• According to this Act, the continuous service means an
uninterrupted service during the employment period.
• An employee shall be said to be in continuous service even
his/her service in interrupted by-:
• sickness.
• accident.
• leave,
• absence from duty without leave.
• leave with full wage,
• temporary disablement,
• laid-off period
• Maternity leave: 26 weeks
• In case of period of one year

• Employee will be treated as he in continuous service,

if he is employed by employer for the period of

• 190 days employment under the ground in mines, or

in establishment which works less than 6 days in a
week.

• 240 days in case of other any establishments

(factories, companies, etc.)
• In case of period of 6 months

• Employee will be treated as he in continuous

service, if he is employed by employer for the
period of

• 95 days employment under the ground in mines, or

in establishment which works less than 6 days in a
week.

• 120 days in case of other any establishments

(factories, comnanies. etc.)
• In case of seasonal establishments

• An employee of a seasonal establishment shall

be deemed to be in continuous service if he has
actually worked for not less than 75% of the
numbers of days on which the establishment
was in operation during the 1 year or 6 months.
When to pay Gratuity
• Gratuity is payable to a person in the following
situations:
• 1) Superannuation
• 2) Resignation / Retirement
• 3) Termination because of disablement
• 4) Death
• Gratuity is payable only after an employee completes 5
continuous years of service.
• However, in the case of death or disablement, the
condition of minimum 5 years of continuous service
is not applicable.
AMOUNT OF GRATUITY PAYABLE

• Gratuity is payable at the rate of 15 days' wages

(Basic Salary + Dearness Allowance, as per the
latest salary/wages drawn)

• For every completed year of service

• In the Last year of service if the employee has

completed more than 6 months, it will be
treated as full year
Calculation of gratuity

• Gratuity = Monthly salary × 15/26 X Number of

years of service

• Monthly salary= last month drawn salary by

the employee.

• 26 = total number of working days in a month.

• 15 = number of days in half of the month.

Ceiling on the Amount of Gratuity
• According to the Act, the maximum amount
of gratuity payable to an employee has been
to Rs. 20 lakhs against earlier limit of 10
lakhs which was set in 2010.

• The amount of gratuity should not exceed

Rs. 20 lakhs. However an employer can pay
more than this limit, it will be termed as ex-
gratia
FORFEITURE (Total/Partial) OF GRATUITY

• Section 4(6) (a) provides that the gratuity of an

employee

• Whose services have been terminated For any act,

• willful omission or negligence

• Causing any damage or loss to, or destruction of,

property belonging to the employer, Shall be forfeited
to the extent of the damage or loss so caused.
• Section 4(6)(b) deals with a case
• Where the services of an employee have
been terminated:
• a) For riotous and disorderly conduct or
any other act of violence on his part, or
• b) For any act which constitutes an
offence involving moral turpitude
(provided that such offence is committed
by him in the course of his employment.)
• In such cases, the gratuity payable to the
employee may be wholly or
partially forfeited
Determination of the
Amount of Gratuity
• The person entitled to receive the gratuity amount
shall send an application in writing to the
employer. The employer shall calculate the
gratuity amount and provide notice in writing to
the concerned employee and the controlling
authority.
• The payment should be made within 30 days from
the date payable to the employee.
• Failure of payment within the prescribed limit will
result in payment of simple interests.
Inspectors Appointed for the
Purpose of this Act and their Powers
• The government may appoint an inspector or
inspectors who are deemed to be a public servant
under Section 21 of Indian Penal Code for the
purpose of ascertaining whether any of the
provisions of this Act are being violated or not
complied with and take necessary measures to
ensure the fulfilment of all the provisions this Act.
Recovery of Gratuity

• If the employer delays in the payment of gratuity

amount under the prescribed time limit, then the
controlling authority shall issue the certificate to the
collector on behalf of the aggrieved party and
recover the amount including the compound interest
decided by the central government and pay the
same to the person.
• However, these provisions are under two
conditions:

• The controlling authority should give the

employer a reasonable opportunity to show
the cause of such an Act.

• The amount of interest to be paid should not

exceed the amount of gratuity under this Act.
t.me/shrimeesrivastava

instagram.com/shrimeesrivastava