The schemes of Provident Funds are meant to induce employees to save a portion from their present earnings for a rainy day. The object of the Act is to provide for institution of Provident Fund, Pension Fund and Deposit Linked Insurance Fund for employees in Factories and other establishments.
Definitions
"Basic wages"
means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him but does not include: (i) the cash value of any food concession; (ii) any dearness allowance (that is to say all cash payments by whatever name called paid to an employee on account of a rise in the cost of living) house-rent allowance overtime allowance bonus commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment; (iii) any presents made by the employer;
"Employer"
means : (i) in relation to an establishment which is a factory the owner or occupier of the factory including the agent of such owner or occupier the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act 1948 the person so named; and
(ii) in relation to any other establishment the person who or the authority which has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager managing director or managing agent such manager managing director or managing agent;
"Employee"
means any person 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 his 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 the establishment; (ii) engaged as an apprentice not being an apprentice engaged under the Apprentices Act 1961 or under the standing orders of the establishment;
Exempted Establishment
An establishment which has been granted exemption from the operation of all or any of the provisions of any scheme or insurance scheme prescribed under the Act. Such exemption may be granted to the establishment or to any person or to any class of persons of the establishment.
Applicability
This Act is applicable to all factories and establishments were 20 or more employees are/were employed.
The Act continues to be applicable even if the number of employees falls below 20.
Main Provisions of the Act
· The EPF and MP Act make provisions for 3 types of schemes. These schemes have been summarized as under
EPF and MP Act
Provident fund Pension Scheme Deposit Linked
Insurance
SN
Particulars
Provident fund (EPF)
Pension Scheme(EPS)
Deposit Linked Insurance (EDLI)
1
Objective
To provide for lumpsum payment at the time of retirement/death
To provide for monthly pension to member and his family
To provide for insurance of employee
2
Salary ceiling
The contribution to these schemes /fund are made on salary (Basic + DA) of Rs 6500/- Per month.
3
Contribution of – Employee
12 % of Basic + DA
Nil
Nil
4
Contribution – Employer
3.67% of Basic + DA + Any difference between actual 8.33% of Basic +DA and Rs 541/-
8.33% of Basic + DA ( subject to max of Rs 541/- (8.33% of basic + DA of Rs 6500)
0.5% of Basic + DA
5
Contribution-Central Govt.
Nil
1.16% of Basic + DA
Nil
6
Voluntary contribution of
employees
Allowed. However employer is not bound to contribute over and above the statutory
requirements
Not Allowed
Not Allowed
7
Returns
@ 9.5% per year
No Fixed returns
NIL
8
Advances
Allowed after membership of prescribed period
Not Allowed
Not Allowed
9
Benefits when received by employee
At the time of retirement or death
At the time of retirement or death
For death while in service
10
Types of benefits
Advances For
1. house building,
2. marriage,
3. LIC premium
4. Education
Pension on
a) Retirement
b) Disability
c) Commutation of Pension
Upon Death of an employee pension payable to:
d) Widow
e) Children
f) Orphan
g) Nominee
An amount equal to average balance upto Rs35000/- + 25%of balance amount subject to max of Rs 60000/- is paid to dependents
Establishment to include all branches/departments
All the branches and departments of establishment are included in the establishment for the purpose of this Act.
Administration of Schemes
The above schemes and funds are administered by the Employees Provident Fund Organization (EPFO). The EPFO has appointed officers at various levels to further apply the provisions of the Act e.g
Central Provident Fund Commissioners
Additional Central Provident Fund Commissioners
Deputy Provident Fund Commissioners
Regional Provident Fund Commissioners, etc
This officers are also authorized to listen to any complaints regarding contribution, benefits , etc and may pass orders suitably.
Protection against Attachment
the amount standing to the credit of account of an member cannot be attached, assigned or charged by any order of any court.
Employer not to reduce wages
Employer cannot reduce wages of an employee by reason of his liability of contributing to the schemes under this Act.
Definitions
"Basic wages"
means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him but does not include: (i) the cash value of any food concession; (ii) any dearness allowance (that is to say all cash payments by whatever name called paid to an employee on account of a rise in the cost of living) house-rent allowance overtime allowance bonus commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment; (iii) any presents made by the employer;
"Employer"
means : (i) in relation to an establishment which is a factory the owner or occupier of the factory including the agent of such owner or occupier the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act 1948 the person so named; and
(ii) in relation to any other establishment the person who or the authority which has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager managing director or managing agent such manager managing director or managing agent;
"Employee"
means any person 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 his 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 the establishment; (ii) engaged as an apprentice not being an apprentice engaged under the Apprentices Act 1961 or under the standing orders of the establishment;
Exempted Establishment
An establishment which has been granted exemption from the operation of all or any of the provisions of any scheme or insurance scheme prescribed under the Act. Such exemption may be granted to the establishment or to any person or to any class of persons of the establishment.
Applicability
This Act is applicable to all factories and establishments were 20 or more employees are/were employed.
The Act continues to be applicable even if the number of employees falls below 20.
Main Provisions of the Act
· The EPF and MP Act make provisions for 3 types of schemes. These schemes have been summarized as under
EPF and MP Act
Provident fund Pension Scheme Deposit Linked
Insurance
SN
Particulars
Provident fund (EPF)
Pension Scheme(EPS)
Deposit Linked Insurance (EDLI)
1
Objective
To provide for lumpsum payment at the time of retirement/death
To provide for monthly pension to member and his family
To provide for insurance of employee
2
Salary ceiling
The contribution to these schemes /fund are made on salary (Basic + DA) of Rs 6500/- Per month.
3
Contribution of – Employee
12 % of Basic + DA
Nil
Nil
4
Contribution – Employer
3.67% of Basic + DA + Any difference between actual 8.33% of Basic +DA and Rs 541/-
8.33% of Basic + DA ( subject to max of Rs 541/- (8.33% of basic + DA of Rs 6500)
0.5% of Basic + DA
5
Contribution-Central Govt.
Nil
1.16% of Basic + DA
Nil
6
Voluntary contribution of
employees
Allowed. However employer is not bound to contribute over and above the statutory
requirements
Not Allowed
Not Allowed
7
Returns
@ 9.5% per year
No Fixed returns
NIL
8
Advances
Allowed after membership of prescribed period
Not Allowed
Not Allowed
9
Benefits when received by employee
At the time of retirement or death
At the time of retirement or death
For death while in service
10
Types of benefits
Advances For
1. house building,
2. marriage,
3. LIC premium
4. Education
Pension on
a) Retirement
b) Disability
c) Commutation of Pension
Upon Death of an employee pension payable to:
d) Widow
e) Children
f) Orphan
g) Nominee
An amount equal to average balance upto Rs35000/- + 25%of balance amount subject to max of Rs 60000/- is paid to dependents
Establishment to include all branches/departments
All the branches and departments of establishment are included in the establishment for the purpose of this Act.
Administration of Schemes
The above schemes and funds are administered by the Employees Provident Fund Organization (EPFO). The EPFO has appointed officers at various levels to further apply the provisions of the Act e.g
Central Provident Fund Commissioners
Additional Central Provident Fund Commissioners
Deputy Provident Fund Commissioners
Regional Provident Fund Commissioners, etc
This officers are also authorized to listen to any complaints regarding contribution, benefits , etc and may pass orders suitably.
Protection against Attachment
the amount standing to the credit of account of an member cannot be attached, assigned or charged by any order of any court.
Employer not to reduce wages
Employer cannot reduce wages of an employee by reason of his liability of contributing to the schemes under this Act.
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