Employees Provident Fund and Miscellaneous Provision Act 1952

Employees Provident Fund (EPF) is a mandatory retirement savings scheme for salaried employees in India. It is managed by the Employees’ Provident Fund Organisation (EPFO), a statutory body under the Ministry of Labour and Employment, Government of India.

Under the EPF scheme, both the employer and the employee contribute a fixed percentage of the employee’s salary to the EPF account. Currently, the employee’s contribution is 12% of the basic salary and dearness allowance, while the employer’s contribution is 12% of the employee’s basic salary and dearness allowance. The contribution by the employer is divided into 8.33% towards the Employee’s Pension Scheme (EPS) and the remaining 3.67% towards the EPF account.

Employees Provident Fund and Miscellaneous Provision Act 1952

The EPF scheme (Employees Provident Fund and Miscellaneous Provision Act 1952) aims to provide financial security to employees after retirement, as well as in case of job loss, disability, or death. The EPF account earns an annual interest, which is decided by the government.

Objective

The Objective of Employees Provident Fund and Miscellaneous Provision Act 1952 To protect the interest of the employees after their retirement and their dependents after the death of the employee. This act also provides insurance to workers and their dependents against risks of old age, retirement, discharge, retrenchment, or death.

Introduction

The Employees’ Provident fund is a social welfare legislation intended to protect the interest of the workers employed in factories and other establishments. It is implemented by the employees’ provident fund organization (EPFO) of India. The employees’ provident fund bill was passed by both houses of the parliament and it received the assent of the president on 4th March 1952.

Features of Employees Provident Fund and Miscellaneous Provision Act 1952

• The purpose of this Act is to provide retirement and old age benefits such as Provident Fund, Superannuation Pension, Deposit Linked Insurance etc. with the intent to protect the interest of workers recruited in factories and other establishments.
• Provident Fund is a mandatory saving by an employee during the years of his employment.
• Further, the Provident Fund Act aids to provide terminal benefits in case of occurrence of accidents or mishaps or unforeseen events. These include retirement, closure, retirement due to achieving the age of superannuation, voluntary retirement or retirement as a result of circumstances resulting in the inability of the workers or employees to work.

The benefits received under the Provident Fund Act are utilized on retirement or termination of the service.

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Other Important Features of Employee Provident Fund

• EPF and also the Provident Fund of the exempted establishments is a Provident Fund acknowledged under Income Tax Act, 1961.
• An employee is entitled to receive a rebate on income tax applicable to his Provident Fund contributions. This is subject to a limit which is provided under the Income Tax Act.
• In case the employer fails to make a contribution towards the Employee Provident Fund for a specific period, the outstanding dues may be recovered by the Regional Provident Fund Commissioners. This may be done via prosecution, attachment of bank account or property, arrest and detention of the employer etc.
• If the employer seeks to recover the outstanding amount of contribution towards the Employee Provident Fund from the employee’s wages, it would be taken as a criminal breach of trust. Such an act is punishable under section 406/409 IPC.
• Payment of the Employees Provident Fund beyond the due date, that is the 15th of the succeeding month would be liable to the payment of interest and penal damages by the lawyer.
• The contribution made towards the Employee Provident Fund can be withdrawn to a certain extent. This can be done for reasons such as illness, marriage, housing etc.
• All the PF claims of a particular member need to be disposed of by the EPF offices within 30 days.
• The Employees Provident Fund office intimates the annual Employees Provident Fund balance to each employee. Annual account slips in Form 23 are now being provided online on the employer’s portal from the time online compliance has come into the scene. The members can also see their updated EPF passbooks online via the Universal Account Number (UAC) login.

UAN- Universal Account Number

A universal account number (UAN) is a number given to an employee by the Ministry of Employment and Labour under the government of India, who is maintaining a PF account. It used to know information or track information done by his employer regarding his provided fund (PF). When an employee joined the new organisation, he was assigned with new PF account, after UAN came into existence, the member of the assembly (employee) had all his PF account associated with multiple Ids of different organizations in one place. So through UAN, difficulties faced by the employee when he/she joins the new organization are overcome, with UAN they can track the activities if there are any payment issues.

Uses of UAN

• It is a unique number given to an employee, which is independent of employers.
• UAN is used to link all the PF account when the employee is switching his company.
• An employer can authenticate his employee by verifying this number and KYC documents.
• EPF passbook can be verified by sending SMS EPFOHO UAN ENG TO 7738299899 from the mobile number which is registered under the employee provident fund organization.
• An employee can check his deposit done by his employer through online using UAN number, and you can also get a monthly update regarding your deposit done by the employer.

Transparency Through UAN

• Through UAN employee can check the employer is depositing his PF amount periodically, by registering on EPF member Portal using his UAN.
• The employee would be able to find out whether his employer is deducted or hold back his PF.

Vision

1. Employees’ Provident Fund Organisation has a vision to reposition itself as a world class Social Security Organisation providing futuristic services meeting the growing requirements of all categories of its stakeholders.
2. EPFO Vision 2030 envisages
   1. Universal Social Security Coverage on mandatory basis by way of Provident Fund, Pension and Life Insurance for all workers of the country
   2. Online Services for all EPFO benefits with State-of-the-Art Technology.
   3. Implementation of policies for a benefit structure with adequate support level of social security.

EPFO Schemes

1. EPF Scheme 1952
   1. Accumulation plus interest upon retirement and death
   2. Partial withdrawals allowed for education, marriage, illness and house construction.
   3. Housing Scheme for EPFO Members to achieve Hon’ble Prime Minister’s Vision of housing to all Indians by 2022
   4. The monthly wages for this scheme should be up to ₹15,000.
2. Pension Scheme 1995 (EPS)
   1. Monthly benefit for superannuation/retirement, disability, survivor, widow(er) and children
   2. Minimum pension on disablement
   3. Past service benefit to participants of erstwhile Family Pension Scheme, 1971
3. Insurance Scheme 1976 (EDLI)
   1. Benefit provided in case of death of an employee who was a member of the scheme at the time of death
   2. Benefit amount 20 times of the wages. Maximum benefit of 6 lakh.

During COVID-19, in November 2020, Finance Minister Nirmala Sitharaman announced for 2 years subsidy to both employee & employer under Aatmanirbhar Bharat Rozgar Yojana, if the establishment makes hiring during COVID-19 recession period. She announced for Employees contribution (12% of wages) and employer’s contribution (12% of wages) totalling 24% of wages would be given to establishments for two years. This would be operational till June, 2021.