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Navin Arya (Administrative Head)     29 January 2011

EPF - Employer Role


  • Establishments employing 20 or more persons and engaged in any of the 180 industries / Classes of Businesses specified.
  • Co-operative Societies, employing 50 or more persons & working without the aid of power.
  • Establishments not coverable statutorily can come under the coverage of the Act statutorily.
  • An establishment continues to be covered under the Act, irrespective of the fall in the employment strength.
  • Since the Act applies on its own force to the establishments, the employers are required to file the particulars in the specified format for registration and allotment of business number.

Financial Obligations:

  • Statutory rate of contribution is 12% of emoluments (basic wages, dearness allowance, cash value of food concession and retaining allowances if any,) in the case of 175 establishments.
  • Rate of contribution shall be 10% in the case of the following:
    Brick, beedi, jute, guar gum factories, coir industry other than spinning  sector.
  • Establishments declared as sick undertakings by BIFR.
  • A matching contribution is to be collected from the emoluments of the employees.
    Out of 12% (or 10% as the case may be) of the employer’s share of contribution, 8.33% is to be remitted towards pension fund.
  • Employer is also required to pay a contribution of 0.5% of the emoluments towards EDLIS’1976.
  • An employer is required to pay administrative charges at 1.10% of emoluments towards provident fund charges and 0.01% towards EDLI Scheme 1976.
  • No separate administrative charges for pension scheme
  • In respect of exempted establishment under P.F. Scheme employer is liable to pay only inspection charges at the rate of 0.18% of emoluments.
  • In the case of establishment exempted from EDLI  Scheme, the employer is required to pay only inspection charges at the rate of 0.005%  of emoluments.
  • For belated remittances of contributions, administrative / inspection charges interest at the rate of 12% on such remittances for the period of delay is to be remitted.


  • For all the belated remittances of contribution and administration/inspection charges damages are also payable as penalty ranging from 17% to 37% p.a. depending upon delay.

Duties of Employer

  • Enrol all categories of employees including the employees engaged by or through contractors and also piece rated, hourly rated employees.
  • Remit the contributions and administrative charges before the 15th of the following month.
  • File the initial returns of Form 9, Form 3(P.S.), form 5A.
  • File the monthly returns in Form 12A, Form 5, Form 10 and Challans for remitting the dues.
  • Maintain the contribution card in respect of each employee in Form 3A and submit the annual returns in Form 3A and 6A after reconciliation with Challans and form 12A.
  • The employer has to ensure that statutory dues in respect of contractors employees are remitted and returns filed.
  • Employer should attest the form  No.2 and  the claims forms submitted by the member/ legal heirs/ nominees.
  • Make available all relevant records for inspection of visiting officials with due authorisation.

Exemptions under the Schemes

  • An individual member getting Provident Fund benefits on par with or better than statutory provisions can apply for exemption in Form 1 under para 27.
  • Employers can apply for exemption in respect of a class of employees getting similar or better benefits than the statutory P.F. Scheme under P. 27A  subject to the conditons  governing grant of exemption.
  • The  employer can seek exemption from P.F. Scheme for the entire establishment if the majority of the employees also consent for exemption, subject to certain  conditions governing grant of exemption and certain formalities.
  • Employer can avail exemption for the establishment as a whole, with the consent of majority of employees, if an alternative pension scheme is formulated by the establishment with benefits either on par with or superior to the EPS ’95 and subject to certification of the viability and long   sustenance of the scheme by an independent qualified actuary and satisfying the other conditions prescribed governing the grant of exemptions.
  • There is no provision for exemption of individuals or for class of employees.
  • The establishment can get exemption from the EDLI Scheme, if the employees therein are entitled for a benefit in the nature of insurance whether linked to their P.F. deposit or not and without paying any contributions.



 5 Replies

GUDAKESH KUMAR (LAW OFFICER)     29 January 2011

Please inform me, for an employer which do not come under the purview of EPF & MP, Act 1952 by virtue of section 52 of the act, what this employer will do regarding provident fund of a class of employees who are not on its rolls as for its regular and permanent employees its has its own private trust.

Kirti Kar Tripathi (lawyer)     01 February 2011

I hope that following material will satisfy all your queries in this regard



Employees Provident Fund and Miscellaneous Provisions Act


The Supreme Court has stated in Andhra University v. R.P.F.C. 1985 (51) FLR 605

(SC) that in construing the provisions of the Employees Provident Funds and

Miscellaneous Provisions Act 1952, it has to be borne in mind that it is a beneficent piece

of social welfare legislation aimed at promoting and securing the well-being of the

employees and the court will not adopt a narrow interpretation which will have the effect

of defeating the very object and purpose the Act. The preamble to the Act also states that

this is an Act to provide for the institution of:

                  (i) Provident Funds

                  (ii) Pension Fund and 

                  (iii) Deposit Linked Insurance Fund

for employees in factories and other establishments. It is with this background that one

must interpret the various provisions of the Act and the Scheme related to it.


The Employees Provident Funds and Miscellaneous Provisions Act 1952 applies to the

whole of India except the State of Jammu and Kashmir (Section 2). This Act applies

(Section 3) to:

(i) every establishment which is a factory engaged in any industry specified in Schedule I

and in which 20 or more persons are employed, and 

(ii) any establishment employing 20 or more persons or class of such establishments

which the Central Government may, by notification in the official gazette specify. 

The Central Government through the Employees Provident Fund Scheme 1952 {Section

3 (b)} has specified the establishments covered by the Act. Click here for the complete

list. Applicability to NGOs

Considering the operations of charitable institutions these include the following (though

they should be read with the relevant notification issued):

(i) Educational, scientific research and training institutions.

(ii) Establishments known as hospitals.

(iii) Societies, clubs or associations which render services to their members

without charging any fee over and above the subscripttion fee or membership


(iv) Establishments rendering expert services.

(v) Financial establishments (other than banks) engaged in the activities of

borrowing, lending, advancing of money and dealing with other monetary

transactions with a view to earn interest.

(vi) Establishments engaged in poultry farming.

(vii) Establishments engaged in cattle feed industry.

(viii) Agricultural farms, fruits, orchards, botanical gardens and zoological gardens.



An employee – sec. 2(f), means any employee who is employed for wages in any kind of

work, manual or otherwise, in or in connection with the work of an establishment, and

who gets wages directly or indirectly from the employer and includes any person:

(i) employed by or through a contractor in or in connection with the work of an


(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act

1961, or under the standing orders of the establishment. 

An apprentice means a person who according to the certified standing orders applicable

to a factory or establishment is an apprentice or who is declared to be an apprentice by

the authority specified by the appropriate government. • Accordingly, personal or domestic servants are not employees under the Act. 

• Contractor’s Employees: It has been held by the court in Enfield India v RPFC 2000

(85) FLR 519 (Mad) a person doing work of the principal employer, even though

employed by a contractor is also an employee covered by the definition.

• “Excluded Employee” has been defined in para 2(f) to mean an employee:

(i) who having been a member of the fund, withdrew the full amount of his

accumulations on retirement or emigration or

(ii) whose pay at the time he is otherwise entitled to become a member of the fund

exceeds Rs. 6,500.00 p.m.


The concept of employment essentially involves three ingredients: 


(2) Employee and 

(3) Contract of employment 

The employment is the contract of service between the employer and the employee

whereunder the employees agrees to serve the employer subject to his control and

supervision. If there is no relation as employer and employee then it is not open to

anyone claim benefit under the statute. Even if a person is not wholly employed, if he is

principally employed in connection with the functioning of the establishment he will be a

person employed within the meaning of the Act.


The provisions of the Employees Provident Funds and Miscellaneous Provisions Act

1952 do not apply to the following institutions (sec 16): (i) any establishment registered under the Co-operative Societies Act 1912 or under any

other law for the time being in force in any State relating to co-operative societies,

employing less than 50 persons and working without the aid of power.

(ii) Any establishment belonging to or under the control of the Central or State

Government and whose employees are entitled to the benefit of contributory provident

fund or old age pension in accordance with any scheme framed by such government.

(iii) Any other establishment set up under any Central, Provincial or State Act and whose

employees are entitled to the benefit of contributory provident fund or old age pension in

accordance with any scheme framed under that Act.

(iv) The P.F. Scheme is not applicable to tea factories in the State of Assam {para



 It has been decided by the courts that trainees are not employees and are not covered by

the EPF Act. The court has held that stipend paid is not wages. It must be noted that

trainees were recruited under a particular Training Scheme and there was no guarantee of

employment after completion of the training period  and that they were not entitled to

other benefits, which were available to other permanent employees. These aspects have

been decided in  Sri Rama Vilas Service Ltd. V RPFC 2000 –I-LLJ-709(Mad) and

Gandhi Vinita Ashram v PFC 1996 (1) CLR 1140 (P&H).

Exempted Establishment

The Central Government may, by notification in the Official Gazette and subject to such

conditions, exempt prospectively or retrospectively, from operation of all or any of the

provisions of the EPF Scheme:

(i) any establishment, the rules relating to its provident fund are not less

favorable that of section 6 of the EPF Act or (ii) (ii) any establishment if its employees are in enjoyment of benefits in the

nature of P.F. , pension or gratuity, which are not less favorable to employees

covered by the Act or the Scheme.

Where an establishment is exempted from any of the  provisions of the Act, then such

institution must have its own trust and:

(i) have a Board of Trustees for the trust

(ii) maintain detailed accounts

(iii) submit such returns to the Regional P.F. Commissioner.

(iv) invest monies in accordance with the directions of the Central Government issued

from time to time.

(v) transfer the account of any employee, where necessary

(vi) perform such other duties as may be specified.

Employees Required to Join the Fund

The following employees are required to join the fund (Para 26 of EPF Scheme):

(i) Every employee employed in or in connection with the work of the factory or other

establishment to which the EPF Scheme applies except an excluded employee i.e.

drawing a salary exceeding Rs. 6,500.00 p.m. {Para 26(1)}.

(ii) Every employee is required to join the fund from the date of joining the factory or

establishment {Para 26(2)}.

(iii) Every excluded employee on his ceasing to be excluded employee i.e. makes an

application jointly with the employer.


If an organisation finds that the Employees' Provident Fund and Miscellaneous

Provisions Act 1952 is applicable to it,then it can fill-in the attached proforma for

registration. The duly filled-in proforma alongwith one or more of the documents mentioned in the Performa can be submitted to the respective provident fund offices for

getting the registration.


The contribution envisaged under sec 6 read with notification dated 9th April 1997 and

para 29 of the EPF Scheme, specifies that the rate of contribution under the E.P.F. Act as

12%. The employer has to deposit 12% of the basic wages, dearness allowance and

retaining allowance (if any), on his part and an equivalent amount on behalf of the

employee, which is to be recovered from the employee’ salary (para 32 of EPF Scheme). 

• For this section ‘dearness allowance’ shall be deemed to include the cash value of any

food concession allowed to the employee. The ‘retaining allowance’ means an allowance

payable for the time being to an employee for retaining his services, when the

establishment is not working.

• Basic Wage {sec 2(b)}means emoluments which are earned by an employee while on

duty or on leave or on holidays with wages. It includes cash value of food concession,

dearness allowance and any presents made by the employer.

• Encashment of leave does not fall under dearness allowance or retaining allowance or

basic wages and is not to be considered in computing the amount to be deposited under

the EPF Act. This aspect has been upheld by the court in Hindustan Lever Employees

Union v RPFC 1995 (71) FLR 46 (Bom).

• The Supreme Court, in M.P. Shikshak Congress v RPFC (1999) 1 SCC 396 decided

that the EPF Act was applicable to the teachers and employees of the aided school in

Madhya Pradesh. Further the inclusion of dearness allowance (D.A.) for computing

salary was upheld in the case of Gyan Bharti v RPFC (1996) 2 CLR 734 (Cal).

Upper Limit: There is no upper limit for contribution by an employee towards the E.P.F. Inspection Charges: The employer has to contribute 0.18% of the basic wages, D.A.,

retaining allowance and cash value of food concession towards inspection charges, (para

30 (3) of the EPF Scheme). This amount cannot be recovered from the employees.

Duties of Contractors: Every contractor shall within 7 days of the close of the month,

submit to the principal employer a statement showing the recoveries of contributions for

employees employed by or through him and such other information to the principal

employer as is required to be filed with the Regional PF Commissioner, (para 36B of the

EPF Scheme).

Time Frame for Deposits: Para 38 of the EPF Scheme specifies that the contributions

and administrative charges have to be deposited within 15 days of the close of the month

by separate drafts / cheques on account of contributions and administrative charges. The

cheque should be on a local branch and deposited with the Reserve Bank or the State

Bank of India.

Attachment: The contributions made towards provident fund cannot be attached by any

decree or order of any court, nor can it be assigned or charged (Sec. 10).

Employees Pension Scheme

1. The Employees Pension Scheme was introduced w.e.f. 16th November 1995.

2. Contributions:

(i) The contribution envisaged under sec 6 is 8.33% of the basic wages, dearness

allowance and retaining allowance (if any) from the employer’s contribution.

{Sec.6A (2)(a)}.

(ii) Ceiling: The contribution of 8.33% has a ceiling of Rs. 541.00 p.m. w.e.f. 1st June

2001. This implies that there is a ceiling on the salary, D.A., and retaining allowance

of Rs. 6,500.00 in computing the contribution towards the pension scheme. {Para 3(2)

of the E.P. Scheme}. (iii) Central Government Contribution: It shall contribute 1.16% of the pay of the

members of the Employees Pension Scheme to the Fund {Para 3(2) of the Employees

Pension Scheme}.

3. Retention of Membership: An employee shall cease to be a member of the pension

fund on attaining the age of 58 years or from the date of vesting of admissible

benefits under the scheme, whichever is earlier.

4.Commutation: A member after completing 3 years of membership of the pension

scheme can opt for commuting 1/3 of his pension so as to receive 100 times the monthly

pension as commuted value {Para 12A).

5. Monthly Pension: This is based on a formula = (Pensionable Salary x Pensionable

Service) / 70. 

(i) Pensionable Salary = average monthly salary over 12 months immediately preceding

the date of exit from the scheme.

(ii) Pensionable Service = service in years rendered by the member for which

contributions have been received. Normally this would be limited to Rs. 6,500.00 p.m.

unless certain enhanced contributions are made by the employer. 

Employees Deposit Linked Insurance Scheme:

This is a scheme to provide life insurance benefits t employees. The employer shall pay

0.5% of the salary comprising of basic wages, dearness allowance and retaining

allowance (if any), subject to a maximum salary of Rs. 6,500.00. In addition he has to

pay 0.01% as administrative charges. In the case of an exempted establishment the

inspection charge is 0.005%.

The employee does not contribute to the Employees Deposit Linked Insurance Scheme.

Attachment: The amount due under EDLI cannot be attached by any decree or order of

any court, nor can it be assigned or charged. Declarations, Contributions and Returns

The details of filing declarations, deposit of contributions and returns can be seen as


Purpose Form No.  Time Frame

Para No.

of EPF


Declaration Form by Employee 2  On Demand 33

Preparation of Contribution Cards

by Employer (prepared and kept

but filed with RPFC when

employee leaves the scheme)


Prepared Monthly and

filed at least yearly


Deposit Contributions and

Administration Charges



15th of following



Details of Employees qualifying

to become members of scheme

5 with

Form 2

15 days from close of



Particulars of Ownership of

Employer i.e. details of branches



Within 15 days of any



Consolidated Return at

Commencement of Scheme 

9 Within 15 days 36(1)

Return of Members Leaving



Within 15 days of close

of Month 


Monthly Abstract showing

aggregate recoveries made 

12 & 12A

of EP


25 days of close of


38(2) Consolidated Annual

Contribution Statement 


By April 30, i.e. within

one month of close of

period of currency 


Submission of Contribution

Cards to RPFC


By March 31 and

within 20 days of the

close of the month

when an employee

leaves the service


Details of Recoveries made by

Contractor submitted to Principal


Copy of

Form 12 &


By 7th of the month 36B

Application for Transfer of EPF



Within 15 days of close

of Month


Claim of P. F. Dues by Adult



After 60 days of

leaving service &

leaving the scheme


Claim of P. F. Dues by Minor


20 - do - 69

Application for Advance 31 -  -


Para 32A of the EPF Scheme provides for claiming of damages for default in making

payment of any contribution. The details are given below: Sl. No. Period Of Default

Rate of Damages (% of

arrears p.a.)

1 Less than 2 months 17%


2 months & above but less than 4




4 months & above but less than 6



4 6 months & above  37%

The Central Board has the power to reduce the damages upto 50%, depending on the

merit of the case (para 32B).

Section 14 of the E.P.F. Act also prescribes for penalties, which are:



Details of Violation Penalty

1  For avoiding any payment

knowingly makes any false

statement or representation

Shall be punishable with

imprisonment upto 1 year or fine

of Rs. 5,000.00 or both.

2  An employer who contravenes

sec. 6 (re. contributions) or sec

17(3)(a) for payment of inspection

charges or para 38 re. payment of

Administration Charges

Shall be punishable with

imprisonment upto 3 years but:

(a) will not be less than 1 year

and fine of Rs. 10,000.00 if it

relates to  payment of employees

contribution, which has been

deducted by the employer.

(b) will not be less than 6 months

and fine of Rs. 5,000.00, in any

other case.

The court can decide a lesser

term for imprisonment but for reasons recorded.

3 An employer who contravenes sec

6C Re. EDLI or sec 17(3A)(a) re.

inspection charges

Shall be punishable with

imprisonment upto 1 years but

will not be less than 6 months

and fine of upto Rs. 5,000.00. 

4   Failure to comply with any

provision of the Act or Schemes 

Shall be  punishable with

imprisonment upto 1 years or

with fine of upto Rs. 4,000.00 or


5  Contravenes any provision or

condition for which exemption u/s

17 was given and no other penalty

is prescribed 

Be punishable with imprisonment

upto 6 months but not less than 1

month and also fine upto Rs.


Benefits to Employees

1. The employees are entitled to certain benefits by being members under the E.P.F. Act,

which can be seen to be the following:

 (i) Income Tax deduction u/s 88 subject to certain conditions.

(ii) Full refund of P.F. with interest on retirement, resignation, retrenchment or death.

(iii) Partial withdrawal for the purposes of:

(a) Housing

 (b) Marriage / Higher Education 

(c) Temporary Unemployment 

(d) Medical Treatment 

(e) Natural Calamity 

(f)Purchasing equipments for physically handicapped.

(iv)  Partial withdrawal of 90% of the amounts standing to the credit of the member

before one year of retirement. (v) Under EDLI, an amount equal to the average balance in PF of deceased member

subject to a maximum of Rs. 60,000.00.

(vi) Monthly pension under the Employees Pension Scheme 1995, on superannuation,

retirement, permanent / total disablement, for widow / widower, for children, for orphan.

2. An important aspect is that there is a regular saving for the employee and a certain

social security.

GUDAKESH KUMAR (LAW OFFICER)     01 February 2011

my query is with regard to the employer which is not covered under the purview of EPF & MP Act by virtue of Sec 16 (2) of the act and has its own private Trust for PF of its regular and permanent employees, what it will do for the provident fund of casual workers and daily wagers whose PF it cannot deposit in its own private Trust and the PF is also not being accepted by EPFO stating that the establishment does not come under the purview of Act.

raki reddy (Accountant)     27 February 2011

Dear sirs,

I have a doubt. My client having Society (Voluntary organisation), running veterinary clinic. they have employees app. 32. Are they need to join the EPF scheme.

PBS KUMAR (HR - PROFESSIONAL)     24 March 2011

Dear Gudakesh Kumar ji,


Which organisation is that ?  Will you please inform us.



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