Employees’ Provident Funds Scheme,1952 (Section 5)

Employees’ Provident Funds Scheme,1952 (Section 5) :

The Central Government may, by notification in the Official Gazette, frame a scheme to be called Employees’ Provident Funds Scheme,1952 for the employees or class of employees of establishments to which the Act applies. It may also specify the establishments or class of establishments to which the said scheme is to apply. As soon as may be after the framing of scheme, a Fund must be established in accordance with provisions of this Act and the Scheme.

The fund shall vest in and be administered by Central Board of trustees constituted under Section 5A by the Central Government [Section 5(I A)].

Subject to the provisions of the Act, the Scheme framed under Section 5(1) may provide for all or any of the matters specified in Schedule II [Section 5 (I B)]. Schedule II [See Section 5(IB)]

Matters for which provision may be made in a Scheme

1. The employees or class of employees who shall join the Fund and the conditions under which employees may be exempted from joining the Fund or from making any contribution.

2. The time and manner in which contribution shall be made to the fund by employers and by, or on behalf of employees (whether employed by him directly or by or through a contractor) the contribution which an employee may, if he so desires, make under Section 6, and the manner in which such contributions may be recovered.

2-A The manner in which employees’ contributions may be recovered by contractors from employees employed by or through such contractors.

3. The payment by the employer of such sums of money as may be necessary to meet the cost of administering the Fund and the rate at which and the manner in which the payment shall be made.

4. The constitution of any Committee for assisting any Board of Trustees.

5. The opening of regional and other offices of any Board of Trustees.

6. The manner in which accounts shall be kept, the investment of moneys belonging to the fund in accordance with any directions issued or conditions specified by the Central Government, the preparation of the budget, the audit of accounts and the submission of reports to the Central Government or to any specified State Government.

7. The conditions under which withdrawal from the Fund may be permitted and any deduction or forfeiture may be made and the maximum amount of such deduction or forfeiture.

8. The fixation, by the Central Government in consultation with the Board of Trustees concerned, of the rate of interest payable to members.

9. The form in which an employee shall furnish particulars about himself and his family whenever required.

10. The nomination of person to receive the amount standing to the credit of member after his death and the cancellation or variation of such nomination.

11. The registers and records to be maintained with respect to employees and the returns to be furnished by employees (or contractors).

12. The form or design or any identity card, token or disc for the purpose of identifying an employee, and for the issue, custody and replacement thereof.

13. The fees to be levied for any of the purposes specified in this Schedule.

14. The contraventions or defaults which shall be punishable under Sub-section (2) or Section 14.

15. The further powers, if any, which may be exercised by inspectors.

16. The manner in which accumulations in any existing provident fund shall be transferred to the Fund under Section 15 and the mode of valuation of any assets which may be transferred by the employers in this behalf.

17. The conditions under which a member may be permitted to pay premium on life insurance from the Fund.

18. Any other matter which is to be provided for in the Scheme or which may be necessary or proper for the purpose of implementing the Scheme.

The above mentioned Scheme may provide that any of its provisions shall be effective either prospectively or retrospectively on such date as may be specified in this behalf in the Scheme.

[Note: (i) The Central Government through Notification No. G.S.R. 148, dated 3rd September,2010 has amended the Employees’ Provident Funds Scheme,1952 by the Employees’ Provident Funds(Amendment )Scheme, 2010 laying down special provisions in respect to the International worker.

(ii) The Ministry of Labour and Employment through Notification No. G.S.R. 25(E), dated 15th January, 2011 made Employees’ Provident Funds (Amendment) Scheme, 2011. According to which interest shall not be credited to the account of a member from the date on which it has become inoperative account given in Paragraphs 60(5) &72(6) of the Employees’ Provident Funds Scheme,1952.

These amendments are for the knowledge purpose of the students]

Management of the Schemes

Following authorities have been constituted for proper and effective management of the schemes framed under the Act-

I. Central Board (Section 5A) : The Central Government may, by notification in the Official Gazette, constitute with effect from such date as may be specified therein, a Board of Trustees for the territories to which this Act extends (hereinafter in this Act referred to as the Central Board) consisting of the following persons, as members, namely :

1. (a) a Chairman and a Vice-Chairman to be appointed by the Central Government;

(aa) the Central Provident Fund Commissioner, ex-officio;

(b) not more than five persons appointed by the Central Government from amongst its officials;

(d) ten persons representing employers of the establishments to which the Scheme applies, appointed by the Central Government after consultation with such organisations of employers; and

(e) ten persons representing employees in the establishments to which the Scheme applies, appointed by the Central Government after consultation with such organisations of employees.

2. The terms and conditions subject to which a member of the Central Board may be appointed and the time, place and procedure of the meetings of the Central Board shall be such as may be provided for in the Scheme.

3. The Central Board, shall [subject to the provisions of Section 6A and Section 6C] administer the fund vested in it in such manner as may be specified in the Scheme.

4. The Central Board shall perform such other functions as it may be required to perform by or under any provisions of the Scheme (the Pension Scheme and the Insurance Scheme).

5. The Central Board shall maintain proper accounts of its income and expenditure in such form and in such manner as the Central Government may, after consultation with the Comptroller and Auditor-General of India, specify in the Scheme.

6. The accounts of the Central Board shall be audited annually by the Comptroller and Auditor-General of India and any expenditure incurred by him in connection with such audit shall be payable by the Central Board to the Comptroller and Auditor-General of India.

7. The Comptroller and Auditor-General of India and any person appointed by him in connection with the audit of the accounts of the Central Board shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor- General has, in connection with the audit of Government accounts and, in particular, shall have the right to demand the production of books, accounts, connected vouchers, documents and papers and inspect any of the offices of the Central Board.
8. The accounts of the Central Board as certified by the Comptroller and Auditor-General of India or any other person appointed by him in his behalf together with audit report thereupon shall be forwarded to the Central Board which shall forward the same to the Central Government along with its comments on the report of the Comptroller and Auditor- General.

9. It shall be the duty of the Central Board to submit also to the Central Government an annual report of its work and activities and the Central Government shall cause a copy of the annual report, the audited accounts together with the report of the Comptroller and Auditor-General of India and the comments of the Central Board thereon to be laid before each House of Parliament.

II. Executive Committee (Section 5AA) : The Central Government may, by notification in the Official Gazette, constitute, with effect from such date as may be specified therein, an Executive Committee to assist the Central Board in the performance of its functions.

The Executive Committee shall consist of the following persons as members, namely :

(a) a Chairperson, the secretary to the Government of India from the Ministry of Labour and Employment appointed by the Central Government.;

(b) two persons Additional secretary to the Government of India and the Financial Advisor from the Ministry of Labour and Employment appointed by the Central Government.

(c) three persons representating the Governments of the States( presently are the representative of the Government of the Assam, Rajasthan and of the Tamil Nadu) appointed by the Central Government.

(d) three persons representing the employers of the establishments to which the scheme applies appointed by the Central Government.

(e) three persons representing the employees in the establishments to which the scheme applies appointed by the Central Government..

(f) the Central Provident Fund Commissioner of Employees’ Provident Fund Oganisation. [This reconstitution of the Executive Committee is as per the Notification no. S.O.1045(E) , dated 13th May,2011 by the Ministry of Labour and Employment]

The terms and conditions subject to which a member of the Central Board may be appointed or elected to the Executive Committee and the time, place and procedure of the meetings of the Executive Committee shall be such as may be provided for in the Scheme.

III. State Board (Section 5B) : The Central Government may constitute Board of Trustees for the State in consultation with the Government of that State. The State Board shall exercise such powers and perform such duties as the Central Government may assign to it from time to time.

Board of Trustees to be body corporate (Section 5C) : The above Central Board or the State Board shall be a body corporate under the name specified in the notification constituting it, having perpetual succession and a common seal.

IV. Appointment of Officers (Section 5D) : The Central Government shall appoint a Central Provident Fund Commissioner who shall be the Chief Executive Officer of the Central Board. He shall be subject to the general control and superintendence of that Board.

The Central Government may also appoint a Financial Adviser and Chief Accounts Officer to assist the Central Provident Fund Commissioner in the discharge of his duties.

The Central Board may appoint subject to the maximum scale of pay, as may be specified in the Scheme as many Additional Central Provident Fund Commissioners, Deputy Provident Fund Commissioners, Regional Provident Fund Commissioners and Assistant Provident Fund Commissioners as it may consider necessary for the efficient administration of the Scheme.

The aforesaid appointments carrying a scale of pay equivalent to Group ‘A’ or Group ‘B’ posts under the Central Government must be made only after consultations with Union Public Service Commission. However, such consultation is unnecessary in regard to any such appointment :

(a) for a period not exceeding one year; or (b) if the person to be appointed is at the time of his appointment : (i) an I.A.S. Officer, or (ii) in the Service of the Central Government or State Government or the Central Board in Group A or Group B post.

The State Board may, with the approval of the State Government concerned appoint such staff as it may consider necessary.

The method of recruitment, salary and allowances, discipline and other conditions of service of the aforesaid Commissioner and the Financial Adviser and Chief Accounts Officer shall be such as may be prescribed by the Central Government. Such salary and allowances must be paid out of the Fund.

The method of recruitment, salary and allowances, discipline and other conditions of service of the Additional Central Provident Fund Commissioner, Deputy Provident Fund Commissioner, Regional Provident Fund Commissioner, Assistant Provident Fund Commissioner, and other officers and employees of the Central Board shall be such as may be specified by the Central Board in accordance with the rules and orders applicable to the officers an employees of the Central Government drawing corresponding scales of pay.

Provided that where the Central Board is of the opinion that it is necessary to make a departure from the said rules or orders in respect of any of the matters aforesaid, it shall obtain the prior approval of the Central Government.

In determining the corresponding scales of pay of officers and employees under clause (a), the Central Board shall have regard to the educational qualifications, method of recruitment, duties and responsibilities of such officers and employees under the Central Government and in case of any doubt, the Central Board shall refer the matter to the Central Government whose decision thereon shall be final.

The method of recruitment, salary and allowances, discipline and other conditions of service of officers and employees of a State Board shall be such as may be specified by that Board, with the approval of the State Government concerned.

Acts and proceedings of the Central Board or its Executive Committee or State Board not to be invalidated on certain grounds (Section 5DD) : No Act done or proceeding taken by the Central Board or the Executive Committee constituted under Section 5AA or the State Board shall be questioned on the ground merely of the existence of any vacancy in, or any defect in the constitution of the Central Board or the Executive Committee or the State Board, as the case may be.

Delegation (Section 5E): The Central Board may delegate to the Executive Committee or to the Chairman of the Board or to any of its Officers and a State Board may delegate to its Chairman or to any of its Officers such of its powers and functions under this Act as it may deem necessary for the efficient administration of the Scheme. This delegation may be subject to such conditions and limitations, if any, as the said Board may specify.

Contributions and matters which may be provided for in Schemes (Section 6) : The employees’ contribution to the fund shall be 10% of the basic wages, dearness allowance and retaining allowance (if any). An employee can at his will contribute beyond 10% if the scheme makes provision therefor subject to the conditions that the employer shall not be under an obligation to pay any contribution over and above his contribution payable under this Section. This rule will prevail irrespective of whether the employer employs the person directly or through contractor.

According to the first proviso to the Section the Central Government may, however, raise the aforesaid percentage of contribution from 10% to 12% in respect of any establishments. It may do so after making such enquiries as it deems fit.

According to the second proviso if the amount of any contribution involves fraction of a rupee, the Scheme may provide for rounding off such fraction to the nearest rupee, half of a rupee or a quarter of rupee.

It may be noted that the dearness allowance mentioned above shall be deemed to include also the cash value of any food concession allowed to the employees; also that “retaining allowance” means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working, for retaining his services.[Explanation 1 and 2 to Section 6]

[Note:- Clarification pertaining to contributions after revision in wage ceiling as per the Employees’ Provident Funds(Amendment) Scheme,, 2014— As per the revision in wage ceiling from Rs. 6500 to Rs. 15,000 per month with effect from 1st September, 2014 with respect to excluded employee drawing wages more than ` 15000/-, he can also become member of the Fund and the Schemes on joint request and if, for instance, such employee is getting ` 20,000/-per month his share towards Provident Fund Contribution will be Rs. 2400 at the rate of 12% ]

Formulae for calculating the contribution of employees and employers to the Employees’ Provident Fund

Section 6 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 sets out the formulae for calculating the contribution of employees and employers to the fund

(i) At the rate of 10%

Contribution is 10% of the basic wages, dearness allowance and retaining allowance of the employee.

Pay Scale	EPF Contribution
` . 2000	` . 200
` .3000	` . 300
` .5000	` . 500
` .8500	` . 850
` . 10000	` . 1000
` . 15000	` . 1500

(ii) At the rate of 12%

Contribution is 12% of the basic wages, dearness allowance and retaining allowance of the employee.

Pay Scale	EPF Contribution
` . 2000	` . 240
` . 3000	` . 360
` . 5000	` . 600
` . 8500	` . 1020
` . 10000	` . 1200
` . 15000	` . 1800

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