All labour laws are supposed to be the simplestpossible so that any worker could understand thembut, in reality, it is the other way round. Even theexperts - be it lawyers, trade unionists or HRExecutives - all find it to mind boggling, complex andentangling like cobwebs.

The Employees' Provident Funds Act and theSchemes are not exception for understanding itsimplications. For instance, who is an employee to becovered under the Act and the Scheme is not sosimple as stated since it requires a study in depthnot only the Act and the Scheme but the judicialinterpretations also.

On increase in the salary-cap for coverage ofan employee from Rs.6,500 to Rs.15,000 per monthw.e.f. 1st September, 2014, over 50 lakh moreemployees (in addition to 117813454 as on 31stMarch, 2014) will be covered under the Act and theScheme. Who are the employees to be covered andwhether they remain covered if their wage/salaryincreases Rs.15,000 is mind boggling question.There are common instances that some employersdiscontinue the membership of an employee whenhis salary increases the wage-cap. This is a mistakenview and such employers have not only to pay theemployees share of contributions but damages also.Also, when an employee who was not be coveredunder the Act and the Scheme, is covered under theAct, the EPF authorities will not easily accede tobonafide correction what to talk of refund ofcontributions as wrongly deposited.

Section 2(f) of the Employees Provident Funds& Miscellaneous Provisions Act reads as under:-

2(f) Employee means any person who is employedfor wages in any kind of work, manual orotherwise, in or in connection with the work ofan establishment, and who gets, his wagesdirectly or indirectly from the employer, andincludes any person

(i) employed by or through a contractor in or inconnection with the work of the establishment;

(ii) engaged as an apprentice, not being anapprentice engaged under the Apprentices Act,1961, or under the standing orders of theestablishment.

The above definition is only illustrative but notexhaustive since it has to be read in conjunctionwith the Employees' Provident Fund Scheme with itsclause 2(f) in addition to paragraphs 26, 33, 81, 82and 83.

In view of the above, any person, irrespectiveof his/her age, who is appointed in an establishmentas covered by the Employees Provident Funds &MP Act on the salary below Rs.15,000 per month, isliable to be covered under the Employees ProvidentFunds Scheme on the first day of his/her joining.However, when the wage or salary of a newlyappointed employee is above the prescribed ceilingi.e. Rs.15,000 per month and who had not been themember of the Employees Provident Funds earlier,he will not be obliged for the membership of ProvidentFunds and the Scheme since he will be termed asan excluded employee. Be it clarified that once anemployee is enrolled as a member of the Fund, hewill continue to remain member atleast upto hissalary cap (prescribed maximum) for the subsequentperiod of employment. For instance, if an employeeis drawing Rs.14,500 per month, he will be memberof the fund. Assuming that his salary is increased toRs.16,000 per month, the employer will be under anobligation to continue him as a member of the Fundatleast upto Rs.15,000 per month.

If an employee, as covered under the Act,continues after his/her retirement on attaining the 55or 58 years and has not settled his dues, the EPFcontributions will be payable.

Employees engaged through

the contractor

The amended Act 28 of 1963 in section 2(f)categorically stipulates that the employees engagedby or through the contractor will be covered underthe Act. In one case, Rajasthan High Court has heldthat the employees of the contractors engaged forloading and unloading in respect of transport contractentered into the work of petitioners establishmentwould be covered under the Employees ProvidentFunds & Misc. Provisions Act.1 However, theemployees of the contractors supplying products ofan establishment will not attract the applicability ofthe Act.2 The employees engaged through the

on

under Employees Provident Funds & Miscellaneous Provisions Act

contractor of a cycle stand of the hospital will also becovered under the Act.3

1. D.C.M. Ltd. vs. Regional Provident Fund Commissioner,1998 LLR 533

2. Karachi Bakery vs. Regional Provident FundCommissioner, Hyderabad, 1991 LLR 24 (AP C).

3. Santokha Durlabhji Memorial Hospital, Jaipur vs. Asstt.Provident Fund Commissioner, Jaipur, 2001 LLR 68 (Raj. HC).

Piece-rated employee

The petitioner engaged in manufacture of eatablesand selling them at the counter has been engagingneedy women to manufacture the items and werepaid on piece rate basis hence they are not to becovered under the Act.

Shree Kutchi Visha Oshwal Mahila Mandal vs. Union of India,1992 LLR 584 (Bom HC).

Drivers/conductors of school

buses through contractor

A school, covered under the Act, will not be liable forpayment of contributions of the employees such asdrivers, conductors or the cleaners as engaged bythe transport contractor for providing transportationto the students and the staff since the Managementhas been paying for each trip of the buses and did nothave any casual or even remote connection over theemployees as engaged by the contractor who werenot working at the premises.

Springdales School vs. Regional Provident Fund Commissioner,2006 LLR 47 (Del HC).

Casual employee

Employing 'casual workers' month after month andyear after year cannot be due to some abnormalcontingency or emergency and hence, it is notpossible to hold that the provisions of the Act do notapply to the establishment.1 The Provident FundsAct, does not distinguish between regular employeeor casual or those engaged through the contractor.2

1. M/s. Autocrat Tours vs. Regional Provident FundCommissioner, 2004 (102) FLR 268 : 2004 LLR 780 : 2004 LIC 2249(Del. HC).

2. Jaggi & Co. vs. Presiding Officer, Employees' ProvidentFund Appellate Tribunal, 2008 LLR 126 (Del. HC)

Managing Director/Director

Managing Director or the Director of a Companycannot be an employee to be covered under theEmployees' Provident Funds & Misc. Provisions Act.

Sanatan Ghosh vs. Regional Provident Fund Commissioner,1990 LLR 742 (Cal HC).

Director of a company

The Patna High Court has held that the directors arenot 'employees' even if they get remuneration.1

However, the directors of a company working on part-time basis discharging extra duties apart from Director,will be employees under Employees' Provident Funds& Miscellaneous Provisions Act as held by CalcuttaHighi Court.2

1. Union of India vs. Patna Tyre House Pvt. Ltd., 2004 (101)FLR 666 : 2004 (1) LIC 727 : 2004 (3) LLN 397 (Pat. HC).

2. Tin Printers (Pvt.) Ltd vs. Regional Provident FundCommissioner, West Bengal,, 2000 LLR 1175 (Cal. HC).

Partner of a firm

A partner of the firm cannot be construed as anemployee.1 However, the partners of anestablishment receiving salaries will not be includedas employees for its coverage under EPF & MP Act.2

1. Prakash D. Shah and others vs. Union of India, throughthe Ministry of Finance and another, 2003 LIC 3631 : 2004 (100) FLR856 : 2004(1) LLJ 943 : 2004 LLR 218 : 2004 (1) LLN 987 : 2004 (1)CLR 68 : 2004 (105) FJR 844 (Bom. HC)

2. Om Roller Flour Mills vs. Union of India, 2002 LIC 1229 :2002 LLR 683 : 2002 LIC 1229 : 2002 (IV) LLN 127 : 2002-III LLJ 228(Cal. HC)

Sons of Proprietor

In one case, three sons of the proprietor who were inthe employment and were being paid wages, it hasbeen held that they will be deemed as 'employees'and liable to be covered under the Act.

Goverdhanlal Purohit vs. R.P.F. Commissioner, 1993 LLR 575(P&H HC).

Home workers

Home workers as covered under the Beedi CigarWorkers (Conditions of Employment) Act will becovered under the Act.1 The Madras High Court hasalso held that Weavers/Artisans working at home willalso be covered by EPF & MP Act as employees.2

1. Baji Beedi Factory vs. The Appellate Authority, 1998 LLR23 (Kant HC).

2. Padiyur Sarvodaya Sangh vs. Union of India, New Delhi,1999 LLR 551 (Mad HC).

Drivers of executive when

covered

The drivers, as engaged by the Managers of theCompany whose wages are reimbursed by theCompany through the Managers, will be coveredunder the Employees' Provident Funds &Miscellaneous Provisions Act, since the Companyhas been providing uniforms, foot wears, monsoonequipment, winter clothing and even overtime whentheir services were required by their Managers beyondtheir duty hours.1 In another case the Karnataka HighCourt has held that the drivers, engaged by theexecutives, will not be treated as employees of theCompany for coverage under Provident Fund Act.2

1. BASF India Ltd. vs. M. Gurusamy, Regional Provident

Fund Commissioner, Maharashtra and Goa, (2004) 2 Mah. LJ 164 :2004 LLR 463 (Bom. HC).

2. Employees' Provident Fund Organisation vs. L&T KomatsuLtd., 2009 LLR 1274 (Karn. HC).Retired government employee

A retired employee from government services whohas not been a member of Employees Provident Fundwill be covered as a member on joining anestablishment covered by the Act but he will not beenrolled as a member of Employees PensionScheme. Hence a retired employee from Railwayscannot be treated as excluded employee. Reason:-The Employees Provident Fund Act is neitherapplicable upon the government nor railwayemployees.

Central Provident Fund Commissioner vs. Modern TransportationConsultancy Service (Private) Ltd., 2009 LLR (SN) 324 (Cal. HC)

Apprentices

Apprentices and trainees, engaged under theApprentices Act or under the certified standing orders,are not covered. However, when the persons,engaged as apprentices but required to do work ofregular employees, are to be covered under ProvidentFunds Act.

N.E.P.C. Textile Ltd., Rep. by its Director, Coimbatore vs.Asstt. P.F. Commissioner, Coimbatore, 2007 LLR 535 (Mad. HC).Employees in newspaper/cine

establishment

The employees of newspaper industry have alwaysbeen treated as a class apart and as such not treatingthem as excluded employees under the EmployeesProvident Funds and Miscellaneous Provisions Actand the Scheme even when they are getting wages/salary more than the prescribed cap for coverage.Paragraph of the Employees Provident FundScheme also contains special provisions in the caseof cine workers.

Forum for clarification when the status of employee is doubted

If any dispute arises between employer and employee as to whether the latter is entitled or requiredto become or continue as a member, or as regards the date from which he is so entitled or requiredto become a member, the decision, thereon of the Regional Provident Fund Commissioner shall befinal. Provided that no decision shall be given unless both the employer and the employee havebeen heard.

Mani Hospital & Maternity Hospital Home vs. Regional Provident Fund Commissioner, 2012 LLR 404 (Del. HC).

Express Publications (Madurai) Ltd. vs. Union of India, 2004LLR (SN) 479 (SC)

International Worker

The amendments, as published in the Gazette ofIndia No. 538, dated October 1, 2008, have beenmade relating to Employees Provident Fund byintroducing a new category of employees known asan International Worker who will be required to jointhese schemes with effect from 1st November, 2008irrespective of wage cap. The employees, likely tobe affected or benefited, would include expatriates(foreign citizens) working in India and even Indianemployees deputed to work abroad. The notificationexempts international workers from those countrieswith which India has signed Social SecurityAgreements, commonly known as TotalisationAgreements, and who have been contributing to theirhome country social security schemes. As on date,India has reciprocal Social Security Agreement withBelgium, Switzerland, France, Korea, Hungary,Germany, Luxembourg, Denmark, Netherlands,Finland and Sweden.

Consulting doctors

Consulting doctors providing services for some hoursor so to different establishments without control overthem by that establishment would not come underthe category of employees coverable under section2(f) of the Act.

Employees Provident Fund Organisation vs. EmployeesProvident Fund Appellate Tribunal, 2012 LLR 165 (Ker. HC).

Deposit collecters

The deposit collecters empolyed by the emmployer,performing under control of the employer/Bank, wouldbe employees of the employer as per section 2(f) ofthe Act despite their being free to regulate their ownhours of work.

South Malabar Gramin Bank vs. Regional Provident FundCommissioner, 2013 LLR 470 (Karn. HC).

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