Page 102 - DMGT306_MERCANTILE_LAWS_II

Unit 6: Employees’ Provident Fund Act, 1952

Objectives Notes

After studying this unit, you will be able to:
 Explain the genesis of the Act
 Discuss the definitions under this Act

 Get an overview of the Employees’ Pension Scheme, 1995
 Describe the Employees’ Provident Fund Scheme, 1952
 Discuss the Employees’ Deposit-linked Insurance Scheme, 1976
 Get an overview of determination and recovery of money due to employer

 Explain the Penalties under this Act
Introduction

As per Preamble to the Act, the EPF Act is enacted to provide for the institution of provident
funds, pension fund and deposit lined insurance fund for employees in factories and other
establishments. The Employees’ Provident Funds and Miscellaneous Provisions Act is a social
security legislation to provide for provident fund, family pension and insurance to employees.
Employee has to pay contribution towards the fund. Employer also pays equal contribution.
The employee gets a lump sum amount when he retires, which will be useful to him after
retirement. The Act covers three schemes, i.e. PF (Provident Fund scheme), FPF (Family Pension
Fund scheme) and EDLI (Employees Deposit Linked Insurance scheme). The EPF Act contains
basic provisions in respect of applicability, eligibility, damages, appeals, recovery etc. The three
schemes formed by Central Government under the Act make provisions in respect of those
schemes. The purpose of this unit is to enable the students to comprehend basic expressions. At
the end of this unit you should be able to understand various concepts regarding various schemes
included in EPF Act.
The Central Government with the motive of providing additional Social Security in the form of
Life Insurance to the family of the deceased member of the Provident Fund, introduced the
Employees Deposit Linked Insurance Scheme with effect from 1-8-1976 as provided under Section
6(C) of the Employees’ Provident Fund & MP Act, 1952. The benefit under the Scheme is so
devised that it acts as an incentive to the members to save more in their Provident Fund Account.
As the name of the Scheme says, the benefit is linked to the amount of accumulation in the
Provident Fund Account of the member.
6.1 Genesis of the Act

In the previous unit, we dealt with the Trade Union Act. Legislation for compulsory institution
of contributory provident fund in industrial undertakings was discussed several times at tripartite
meetings in which representatives of the Central and State governments and of employers and
workers took part. A large measure of agreement was reached on the need for such legislation.
A non-official Bill on this subject was introduced in the Lok Sabha in 1948 to provide for the
establishment and grant of provident fund to certain classes of workers by their employers. The
Bill was withdrawn only on an assurance by the government that it would soon consider the
introduction of a comprehensive bill. There was also a persistent demo that the Central
Government extend the benefits of Coal Mines Provident Fund Scheme to workers employed in
other industries. The view that the proposed legislation should be undertaken was largely

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