FAQs

1. Any establishment which has been covered under the Act once shall continue to be governed by the Act even if the number of persons employed therein at any time falls below 20.

1. No, Where the establishment is closed down and only four security men are employed for keeping a watch over the assets and properties of the establishments, the Act would not be applicable.

1. Yes, a trainee would be considered as an employee as per the Act but in case the trainee is an apprentice under the Apprentice’s Act then he/ she will not be considered as an employee under this Act.

1. Yes, there is a body called as Provident Fund Appellate Tribunal where an employer can appeal.

1. - In case there is a dispute regarding the applicability of the Act or the quantum of money to be deducted etc. the authority to decide are the:
   • Central Provident Fund Commissioner,
   • any Additional Provident Fund Commissioner,
   • any Additional Central Provident Fund Commissioner
   • any Deputy Provident Fund Commissioner
   • any Regional Provident Fund Commissioner or
   • any Assistant Provident Fund Commissioner

1. It is the responsibility of the Contractor to deduct the PF and submit a statement to the Principal Employer in the prescribed format by 7th of every month.
2. The Company becomes the Principal Employer would be responsible for the PF deduction of the workers employed on contract basis.

1. Persons employed by or through a contractor are included in the definition of “ employee ” under the Employee’s Provident Finds Act, 1952, and as such, they are covered under the Scheme.

1. The Company being the Principal employer is responsible for the PF to be deducted from the Contract workers as well.
2. In case the Contractors fails to deduct and submit the PF dues then the Company has to pay the amount and can later on recover the amount from the Contractor

1. Employer cannot be punished or penalized in case there is a delay in the remittance of the contribution on account of delay in Bank or post office.

1. Arrears are considered to be emoluments earned by the employee and PF is to be deducted from such arrears.

1. Yes, if an employee desires to contribute an amount at a higher rate of interest than 12 % of basic salary then they can do so but it does not become obligatory for the employer to pay anything above than 12 %.
2. This is called voluntary contribution and a Joint Declaration Form needs to be filled up where the employer and the employee both have to give a declaration as to the rate at which PF would be deducted.

1. Compound interest as declared by Central Govt. is paid on the amount standing to the credit of an employee as on 1st April every year.

The Act is applicable to:

1. every factory engaged in any industry specified in Schedule I to the Act and employing 20 or more persons;
2. every other establishment employing 20 or more persons specified by the Central Government in this behalf./li>
3. Any establishment to which the Act applies shall continue to be governed by the Act even if the number of persons employed therein at any time falls below 20. {Section 1(3) & (5)}

1. Where there is neither an establishment nor an employer nor an employee, there is no point in saying that the Act would continue to apply
2. In such circumstances any continued application of the Act would be in vacuum.

1. Where a factory is closed down for good and only four security men are retained for keeping a watch over the assets and properties of the establishment, the Act would not continue to be applicable to the factory.

1. The plea that an establishment is a charitable institution is not relevant to the determination of the question of the applicability of the Act.

1. The provisions of Section 2(f)(ii) of the Act and Para 2(f)(iv) of the Scheme framed under the Act are to be kept in mind while considering if a trainee is an employee or not
2. These provisions show that a trainee who is an apprentice engaged under the Apprentices Act, 1961 or who is an apprentice according to the certified standing orders applicable to the establishment is excluded from the definition of an employee under the Act.

1. For the purpose of the Employees Provident Funds Act a partner of a partnership firm cannot be said to be an employee of the firm having regard to the provisions of the Indian Partnership Act. A person cannot be both an employer and employee.

1. A poly clinic is covered by the entry in respect of "establishments of hospital" as well as the entry in respect of "establishment of Medical Practitioners and Specialists" and therefore the Act applies to a poly clinic.
2. The object (of the two entries) is to bring all medical establishments employing 20 or more persons under the purview of the Act.

The Central Government has been given wide powers to extend the application of the Act. It can apply the provisions of the Act:

1. to any factory or establishment even if such factory or establishment is employing less than 20 persons; {Section 1(3)(b) Proviso}
2. to any factory or establishment whatsoever if the employer and the majority of the employees of such factory or establishment have agreed that the provision of the Act should be made applicable to it on and from the date of such agreement or from any subsequent date specified in such agreement; {Section 1(4)}
3. To any factory employing 20 or more persons but not engaged in any industry specified in Schedule I to the Act. {Section 4}
4. where, immediately before the Act becomes applicable to any establishment there is a provident fund which is common to the employees in that establishment and employees in any other establishment, to such other establishment. {Section 3}

1. The Act permits the Central Government, subject to specified conditions, to exempt any class of establishments from the operation of the Act, if having regard to their financial position or other circumstances of the case; it is necessary or expedient to do so. {Section 16(2)}

The Act is not applicable:

1. to any factory or other establishment registered under any Central or State law relating to co-operative societies, employing less than 50 persons and working without the aid of power;
2. to any establishment belonging to the Central Government or a State Government and having a scheme of contributory provident fund or old age pension;
3. to any establishment set up under any Central or State Act and having a scheme of contributory provident fund or old age pension; {Section 16(1) and (c)}

An appeal lies to the Provident Funds Appellate Tribunal-

1. against any order passed under the proviso to subsection (3) of section 1, applying the provisions of the Act to any establishment employing less than twenty persons;
2. against any orders passed under subsection (4) or section 1, applying the provisions of the Act to any establishment on the application of the employer and employees;
3. against any notification of the Central Government under section 3, applying the provisions of the Act to any establishment having a common provident fund with another fund with another establishment to which the Act is applicable;
4. against any order passed under subsection (1) of section 7A, deciding any dispute regarding the applicability of the Act to any establishment and determining the amount due from any employer under the Act or any Scheme framed under the Act;
5. against any order passed under section 7B reviewing his own order;
6. against any order passed under section 7C, re-opening any case and redetermining the amount due from any employer;
7. against any order under section 14B, levying for de-fault any damages upon any employer by way of penalty.

1. Under Section 7-I of the Act an appeal against such order lies to E.P.F. Appellate Tribunal and as such a Writ Petition against such order is not maintainable.

1. If any dispute arises regarding the applicability of the Act to an establishment or as to the amount of moneys due from any employer under the Act or any Scheme, the Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may decide the same by holding an enquiry. {Section 7(A)}

1. If the employer pays any contribution or administrative charges for or on behalf of a contractor, he can recover the same from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.
2. The contractor can, then recover the employee's contribution from the wages of the employee. {Section 8(A)}

The Central Regional Provident Fund Commissioner can recover such arrears –

1. by issuing a certificate to the Recovery Officer to recover the arrears from the employer by one or more of the modes mentioned in section 8-B;2.
2. by requiring any person from whom any money is due to the employer to deduct the amount of arrears from such money and pay the same to him, i.e., the Central Regional Provident Fund Commissioner;
3. by issuing a notice to any person from whom any money is due to the employer, requiring to pay the amount of arrears to him, i.e., the Central Regional Provident Fund Commissioner;
4. by applying to the Court, in whose custody there is any money belonging to the employer, for payment of the amount of arrears from such money to him, i.e., the Central Regional Provident Fund Commissioner;
5. by distrait and sale of the moveable property of the employer in the manner laid down in the Third Schedule to the Income Tax Act, 1961. {Subsection 8(B) to 8(G)}

1. The position of a Recovery Officer in exactly that of an executing court.
2. He can recover only the amount specified in the certificate.
3. If the certificate does not include any interest, it is beyond the competence of the Recovery Officer to demand such amount.

1. The amount standing to the credit of a member in the Fund cannot be assigned, charged or attached under any decree or order of any Court.
2. Similarly, the amount standing to the credit of a member in the Fund at the time of his death is free from any debt or other liability incurred by the member before his death and cannot be attached under any decree or order of any Court. {Section 10}

1. Vesting of the amount in the nominee is for limited purpose of receiving the amount from the employer and handing over the same to the heirs entitled thereto.
2. The nominee is merely authorized to receive the amount for the benefit of heirs of the deceased.

1. The nominee cannot claim an absolute right to the amount excluding the right of the heirs.
2. An heir of the deceased employee can always initiate legal proceedings against the nominee for claiming his share in accordance with the law of succession.

An Inspector appointed under the Act has power-

1. to require any employer or contractor to furnish any information required by him;
2. to enter and search any establishment or premises and require any one found in charge thereof to produce any accounts, books, registers and other documents relating to employment or wages for his examination;
3. examine any employer or his agent, servant or employee found in such establishment or premises;
4. Make copies of any book, register or other document or seize such books, register or other document. {Section 13}

1. Where an establishment consists of different departments or has branches, whether situate in the same place or in different places, all such departments or branches shall be treated as parts of the same establishment. {Section 2(A)}

1. On the application of the statutory Provident Fund Scheme to an establishment, the accumulations in the private provident fund in that establishment standing to the credit of the employees who become members of the statutory Provident Fund must be transferred to the statutory Provident Fund.
2. The accumulations will be credited to the accounts of the employees entitled thereto in the statutory Provident Fund. {Section 15}

1. If any person, for the purpose of avoiding any payment to be made under the Act or the Schemes, knowingly makes any false statement or false representation, he would be punished with imprisonment upto one year, or with fine upto Rs. 5000.00 or with both.
2. If any employer makes default in payment of the employer's contribution or the employee's contribution payable under the Employees' Provident Funds Scheme or paragraph 38 of the said scheme relating to the payment of administrative charges, or under section 17(3)(a) of the Act relating to the payment of inspection charges, he would be punished with imprisonment upto three years but it shall not be less than one year and a fine of Rs. 10000.00 in case of default in payment of the employee's contribution which has been deducted by the employer from the employees' wages and six months and a fine of a Rs. 5000.00 in any other case.
3. If any employer makes default in payment of the employer's contribution or the administrative charges payable under the Deposit Linked Insurance Scheme under section 6-C or contravenes the provisions of section 17(3)(a) relating to the payment of inspection charges, he would be punished with imprisonment upto 1 year, but which shall not be less than 6 months, plus fine upto Rs. 5000.00
4. If any person contravenes or makes default in complying with any other provision of the Act or any condition for exemption from any scheme, he would be punished with imprisonment upto six months but which shall not be less than 1 month and with fine upto Rs. 5000.00 or with both.
5. If any person convicted of an offence under the Act or the Schemes commits it again, he would be punished with imprisonment upto five years but which shall not be less than two years, plus fine upto Rs. 25000.00 {Section 14 & 14(AA)}

1. No period of limitation is prescribed in the Act for exercising the power of levying damages under section 14-B of the Act.

1. In 1991, the Central Government, by inserting Para 32-A in the Employees' Provident Funds Scheme, has laid down different rates of damages depending upon the period of default. Courts have held that it is not just and fair to levy damages at a flat rate for different periods of default.

If any employer makes default-

1. in the payment of any contribution to any Fund;
2. in the transfer of accumulations as required under Section 15(2) or Section 17(5);
in the payment of any charges payable under the Act or Schemes the Central/Regional Provident Fund Commissioner can levy and recover from the employer by way of penalty such damages not exceeding the amount of arrears, as may be specified in the scheme. The Central Board may reduce or waive the damages levied by the Commissioner in certain case. {Section 14(B)}

1. If the remittance of contribution to Provident Fund is delayed on account of the delay in a Bank or post office, the employer cannot be penalized for it under section 14-B.

1. The employer is liable to pay the employer's contribution as well as the employee's contribution irrespective of the fact that wages have been paid to the employees or not.

1. The offence relating to default in payment of any contribution especially the employee's share deduct from the wages of the employees by the employer is cognizable. That means a person committing such offence can be arrested by the police without warrant. {Section 14(AB)}

1. The Act permits the Central Government or the State Government, subject to specified conditions, to exempt any establishment from the operation of all or any of the provisions of any Scheme if the Government thinks it fit to do so having regard to the adequacy of the benefits similar to those of the Schemes available to the employees of such establishment. {Section 17(1)}

1. The provisions of sections 6, 7-A, 8 and 14-B shall, so far as may be, apply to the employer of the exempted establishment and where such employer contravenes, or makes default in complying with any of the said provisions or any other provision of the Act, he shall be punishable under section 14 as if the said establishment had not been exempted. {Section 17(1A)}

1. The Central Government is empowered to authorize any employer of an establishment employing one hundred or more persons to maintain a Provident Fund account in relation to the establishment so as to ensure prompt service to the members of the Fund. {Section 16(A)}