Page 251 - DMGT516_LABOUR_LEGISLATIONS

Labour Legislations

Notes employment. Gratuity is the gift or a present received by the employee from his organisation
for the services rendered by him. The Payment of Gratuity Act, 1972 provides a scheme for the
gratuity payment to employees engaged in factories, mines, oilfields, plantations, ports, railways,
etc. welfare measures like pension, provident fund, gratuity, etc are in confirmation with the
directive principles of State Policy of the Constitution of India.

10.1 The Employees' Provident Funds and Miscellaneous
Provisions Act, 1952

The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is a piece of social
welfare legislation; a beneficent measure, enacted for the purpose of institution of provident
fund for employees in factories and other establishments. The provisions are intended for the
better future of the industrial worker on his retirement and also for his dependents, in the event
of his death in the course of employment. The Act provided 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 thereunder 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.
Provident fund is an effective old-age and survivorship benefit, but when the employee happens
to die prematurely, the accumulations in the provident fund have been felt too slender to render
adequate and long-term protection to his family. With a view to providing long-term financial
security to the families of industrial employees in the event of their premature death, the
legislature has provided for a Family Pension Scheme for the employees covered by the Act and
a Family Pension Fund created thereunder for the purpose by diverting a portion of both
employer's and employees' contribution to the provident fund to which would be added a
contribution by the Central Government. Out of the fund so set up, family pension was to be
paid at prescribed scale to the survivors of employees who die while in service before reaching
the age of superannuation. Besides family pension, a compulsory life insurance benefit would
also be payable to the survivors of the employees in the event of death in service. In case of
retirement, a lump sum payment up to a prescribed maximum would be made to the employee
depending upon the length of his service.
A recent significant development in this line is the introduction of a pension scheme as the
present social security measures available to the employees have been found inadequate, for
they do not provide for monthly pension to members on superannuation, widow pension on
death of employee after superannuation, children pension, or disablement benefits. To fill these
lacunae in the existing system, the Employees' Provident Funds and Miscellaneous Provisions
(Amendment) Ordinance, 1995 was promulgated by the President of India date 5.1.1996, amending
the Act with effect from 16.11.1995 conferring power upon the Central Government to frame a
suitable pension scheme, incorporating provisions for superannuation pension, retiring pension
or permanent disablement pension to employees to whom the Act applies, and widow or
widower's pension, children pension or orphan pension payable to the beneficiaries of such
employees in the event of death. In exercise of this power, the Central Government framed the
Employees' Pension Scheme, 1995 providing for the aforesaid benefits effective from the date on
which the Ordinance commenced, repealing and replacing the Family Pension Scheme, 1971
framed under the existing provisions. As the Parliament was not in session to enact the said
ordinance, the same was repealed by the Employees' Provident Funds and Miscellaneous
Provisions (amendment) Second Ordinance of 1996, dated 27.3.1996, with effect from 16.11.1995
which was again replaced by the Third Ordinance of 1996. This Ordinance has been repealed by
the present Employees' Provident Funds and Miscellaneous Provisions (Amendment) Act, 1996
with retrospective effect from 16.11.1995. The new pension scheme thereunder shall apply to all
employees who were covered by the Family Pension Scheme and also to new members.

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