Employee Provident Fund and Miscellaneous Provisions Act: An Overview

India made the decision to be a welfare state in its Constitution, and the Indian Parliament passed several social welfare laws to carry out this philosophy. Some of the laws established to put this social welfare program into action are the Employee Provident Funds Act and the Miscellaneous Act of 1952. The Act provides for benefits to the salaried class after retirement, for old age, and for any disease through its provisions.

Why is the Employee Provident Fund Important?

The act was establish to raise fund for the employee. The employee and employer of the establishment covered by the Act both make a monthly payment to this fund, which is collected by the EPFO.

This payment by the employer must be equal to 12 percent of the employee's base pay, dearness allowance, and retention allowance, if applicable, and must be contributed by the employee as well. Employer contributions are limited to Rs. 6500/- over the base pay.

However, the employer may opt to contribute more than the minimum limit of Rs. 6500/- and contribute 100% of the basic pay or any percentage of the basic wage to the provident fund. The employee may also voluntarily contribute to this provident fund, but the employer is not required to pay an amount equivalent to that of the employee.

Objective of Passing EPF Act

Industrial employees are supposed to have some kind of social security under the Employees' Provident Fund and Miscellaneous Provisions Act of 1952. The Act principally provides retirement or elderly benefits, including Provident Fund, Pension and Deposit-Linked Insurance. It has the following goals:

• The Act was created to set up organizations to offer provident funds, pension funds, and deposit-linked insurance funds for workers in factories and other places that fall under its purview.

• The Act is a social welfare law that aims to offer post-retirement benefits to the staff members of businesses that fall within its purview. It calls for the creation of an organization known as the Employee Provident Fund Organization, or EPFO, which will gather and disperse funds specifically established for the welfare of employees after retirement or for their old age.

Provision under the Act

There are 22 sections divided into one chapter and three schedules under the act. The important provisions are:

Section	Content
Section 2	Definitions
Section 3	Power to apply Act to an establishment which has a common provident fund with another establishment
Section 5	Employees’ Provident Fund Schemes
Section 6	Contributions and matters which may be provided for in Schemes.
Section 7	Contributions and matters which may be provided for in Schemes.
Section 14	Penalties.
Section 19	Delegation of powers.
Section 21	Power to make rules.
Section 22	Power to remove difficulties

Eligibility for the Employee Provident Fund Act

The eligibility are:

• The Act is applicable to all industries listed in Schedule I of the Act that employed 20 people or more.

• The Act is applicable to all businesses that employ 20 or more people and are required by central government notification published in the official gazette to register with the EPFO and offer provident fund services to employees.

• Employers and workers may voluntarily decide to register with EPFO and offer employees access to provident funds.

Non - Applicability under the Act

The EPF Act is not applicable:

Benefits of Provident Fund

A member may withdraw money for any personal purpose, such as paying off debt, financing a home purchase, or paying for a child's school or marriage. The use of this provident fund for life insurance policy financing might be advantageous to a member.

A member may withdraw their whole provident fund balance when he is retiring or moving overseas or being laid off or an establishment closing or when moving to another establishment.

Contribution to Provident Fund

The provident fund is a requirement for all establishments covered by the Act, and any employer who engages in any actions that avoid making contributions to the fund or who directly or indirectly lowers employee wages in order to make a smaller contribution to the fund is subject to fines and/or imprisonment. Employers are responsible for paying employee provident fund contributions. If there is a disagreement, the employee may submit an application to any of the authorities listed below. If the Commissioner's orders do not satisfy the employee, the employee may then appeal the Commissioner's decision by submitting an application to the Appellate Tribunal.

Authorities: EPF Scheme

The following institutions or authorities are under the Ministry of Labour and Employment's supervision:

Recent Scheme: The Employees Provident Fund Organization (EPFO)

The EPFO has implemented an e-passbook service for members or workers (covered by this Act) that will allow them to view their provident fund account.

The employee provident fund (EPF) e-passbook is an online version of the employee's provident fund account that allows members or workers to view their EPF balance at any time. Every transaction must be documented with the date it occurred so that the member can easily keep track of it.

Key Amendments to the EPF Act, 1952

The following substantial revisions to the current EPF Act, 1952, have been put into effect as of September 1, 2014, by the Ministry of Labour and Employment, Government of India. These are:

The Employees’ Provident Fund Scheme, 1952

The following are the amendments in the act:

Excluded Employee: Members who make more than Rs. 15,000 per month are no longer eligible for PF benefits since the definition of an excluded employee has changed. As a consequence, the employee's maximum monthly wage was raised from Rs. 6,500 to Rs. 15,000.

The Employees’ Deposit-linked Insurance Scheme, 1976

The following are the amendments in the act:

• Contribution: Instead of utilizing the previous monthly salary of Rs. 6,500, the contribution payable for Insurance Scheme purposes will now be calculated using a monthly salary of Rs. 15,000.

• Assurance benefits: In addition to the benefits that were previously admissible, the assurance benefits available under the Insurance Scheme have been enhanced by 20% in situations where a member dies away on or before September 1, 2014.

The Employees’ Pension Scheme, 1995

The following are the amendments in the act:

• New Members: A new employee who starts working at the factory or company on or after September 1, 2014 and is paid more than Rs. 15,000 per month is not allowed to voluntarily contribute to the pension plan.

• Maximum Pensionable Salary: The maximum pensionable salary has risen from Rs. 6,500 to Rs. 15,000 in order to calculate the monthly pension.

• Contribution Period: The average monthly earnings for the contribution period of the last 60 months (before, it was 12 months) prior to the date of termination of membership shall be used to calculate the pensionable wage.

• Minimum Amount of Monthly Pension: No member, present or prospective, may receive a monthly pension of less than Rs. 1,000 for the fiscal year 2014–15.

The aforementioned modifications to the three schemes announced by the GOI for the fiscal year 2014–15 have increased the scope, applicability, and benefits provided to employees under the EPF Act. The accountability of the employers has also risen. Employers are now required to enroll more qualified employees and pay a higher wage threshold.

Conclusion

The establishment of provident funds, a pension fund, and an employee deposit-linked insurance fund will be outlined in the act. According to the volume of financial transactions made and the number of beneficiaries that are covered, the Employees' Provident Fund Organization (EPFO) is one of India's biggest social security agencies.

FAQs

Q1. What is UAN?

Ans. The EPFO will assign you a "universal account number," or UAN. All of the member IDs that have been given to a peron by different organizations will be kept in one place at the UAN. A single Universal Account Number (UAN) is intended to link all Member Identification Numbers (Member IDs) issued to a single member.

Q2. Who is eligible for the EPF 1952 scheme?

Ans. The Employees' Provident Fund Scheme was created in accordance with the Act to offer post-retirement benefits to employees, or a class of employees, or their legal heirs in the case of their passing, who work for establishments to whom this Act applies.

Q3. Is PF applicable to all employees?

Ans. The employer is responsible for withholding and paying the Post-Pension Fund (PF), which employees are entitled to from the start of their employment. Both the employer and the employee should contribute the same 12% of the PF. A 12% portion of the base wage is contributed by the employer.