Page 112 - DMGT306_MERCANTILE_LAWS_II

Unit 6: Employees’ Provident Fund Act, 1952

The scheme came into force from August 1, 1976. It is applicable to all factories/establishments Notes
to which the Employees’ Provident Funds Act, 1952 applies. All the provident fund member-
employees, both in the exempted and unexempted establishments, are covered under this scheme.
While the employees are not required to contribute to the Insurance Fund, the employers are
required to pay contributions to it at the rate of 0.5% of the pay of the employers who are
provident fund subscribers. The Central Government also contributes to the insurance fund at
the rate of 0.25% of the pay in respect of the covered employee.

Notes The employers are also required to pay administrative charges to the insurance
fund at the rate of 0.01% of the pay drawn by the employees, subject to a minimum of 2
per month. The Central Government also meets partly the expenses in connection with
the administration of the insurance scheme by paying into the insurance fund an amount,
at the rate of 0.005% of the pay drawn by the employee members subject to a minimum of
1 per month. The employers of exempted establishments are required to pay inspection
charges at the rate of 0.02% of the pay of the employee-members.

Under the Scheme, the nominees/members of the family of employees of covered establishments
will get, in the event of death while in service, an additional amount equal to the average
balance in the provident fund account of the deceased during the preceding 12 months wherever
the average provident fund balance is less than 25,000. In cases where the average provident
fund balance of preceding twelve months exceeds 25,000 plus 25% of the amount in excess of
25,000 subject to a maximum of 35,000.
There is provision in the scheme for the exemption of factories/establishments which have an
insurance scheme approved by government and conferring-more benefits than those provided
under this statutory scheme, provided that a majority of the employees are in favour of such
exemption. Subject to certain conditions, individual employees or class of employees may also
be granted exemption. The Central Government is the appropriate authority to grant exemption
from the Employees’ Deposit-linked Insurance Scheme under Section 17(2A).
The employer shall pay into the Insurance Fund such further sums of money not exceeding
one-fourth of the contribution which he is required to make under sub-section (2) as the Central
Government may from time to time determine to meet all the expenses in connection with
administration of the Insurance Scheme other than the expenses towards the cost of any benefits
provided by or under that Scheme.

Task If any establishment has departments or branches, are these departments or branches,
to be treated as separate establishments or parts of the same establishments?

Self Assessment

State whether the following statements are true or false:

13. The scheme came into force from August 1, 1986.
14. In cases where the average provident fund balance of preceding twelve months exceeds
25,000 plus 25% of the amount in excess of 25,000 subject to a maximum of 35,000.

15. The employers of exempted establishments are required to pay inspection charges at the
rate of 0.01% of the pay of the employee-members.

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