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Unit 13: Industrial Law

13.2 The Employees' Provident Funds and Miscellaneous Provisions Notes
Act, 1952

This Act provides for the institution of Compulsory Provident Fund, Family Pension Fund and
Deposit Linked Insurance Fund for the benefit of the employees. The object of the Act and the
scheme framed there under is to ensure that all industries, to which the Act has been made
applicable, establish compulsory provident fund for employees with effect from the date when
the scheme has been declared applicable to them.
Object of the Act: The Act was passed with a view to making some provision for the future of the
industrial worker after his retirement or for his dependents in case of his early death and of
inculcating the habit of saving among the workers. The object of the Act is to provide substantial
security and timely monetary assistance to industrial employees and their families when they
are in distress and/or unable to meet family and social obligations and to protect them in old
age, disablement, early death of the bread-winner and in some other contingencies.
The Act provides for a scheme for the institution of provident fund for specified classes of
employees. Accordingly, the Employees' Provident Fund Scheme was framed under Section 5 of
the Act, which came into force on 1st November 1952.
Applicability of the Act: The Employees' Provident Funds and Miscellaneous Provisions Act,
1952 is applicable from the date of functioning or date of set-up of establishments, provided the
factory/establishment employed twenty or more persons. The Act, however, does not apply to
co-operative societies employing less than 50 persons and working without the aid of power.
The Central Government is empowered to apply the provisions of this Act to any establishment
employing less than 20 persons after giving not less than two months' notice of its intention to
do so by a notification in the Official Gazette. Once the Act is applied, it does not cease to be
applicable, even if the number of employees falls below 20. An establishment/factory, which is
not otherwise coverable under the Act, can be covered voluntarily with the mutual consent of
the Act.
Employees Entitled: Every employee, including the one employed through a contractor, who is
in receipt of wages up to 6500/- p.m. shall be eligible for becoming a member of the funds.

Notes 1. If the pay of a member-employee increases beyond 6500 after his having
become a member, he shall continue to be a member but the contribution
payable in respect of him shall be limited to the amount payable on monthly
pay of 6500.
2. An employee ceases to be member of the Employees' Family Pension Fund at
the age of 60 years. The Employees' Family Pension Fund has been replaced
by Employees' Pension Fund w.e.f. 16.11.95.

13.3 The Employees' Provident Fund Scheme, 1952

The statutory rate of contribution to the provident fund by the employees and the employers, as
prescribed in the Act, is 10% of the pay of the employees. The Act provides that the Central
Government may enhance the statutory rate of contribution to 12% of wages in any industry or
class of establishments.
The contributions received by the Provident Fund Organisation from unexempted establishments
as well as by the Board of Trustees from exempted establishments shall be invested, after
making payments on account of advances and final withdrawals, according to the pattern laid

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