Employees Provident Fund Scheme 1952 | What Should You Know As An Employee and An Employer?

Employees’ Provident Fund (EPF) is a welfare scheme brought into force to secure a better future for employees. It is a statutory benefit available to the employees post-retirement or when they leave the services. In the case of deceased employees, their dependents will be entitled to the benefits.

Under the Employees’ Provident Fund Scheme (EPF Scheme) both employers and employees have to make their contributions towards the Fund. Interest earned on the amount is credited to the member’s Provident Fund Account (PF account) and is available to the employee at the time of retirement or exit from employment as the case may be, provided certain conditions are fulfilled.

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What is the Employees Provident Fund (EPF) Scheme?

Employees Provident Fund Scheme (EPFS) is a long-term retirement saving scheme managed by Employees Provident Fund Organization (EPFO) and it is covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

Under EPF Scheme, an employee and employer have to pay a certain percentage of equal contribution in the provident fund account, and on retirement, an employee gets a lump sum amount of contribution made by employer and employee with interest on both.

EPF is the main scheme under the Employees’ Provident Funds and Miscellaneous Act, 1952. The employee and employer each contribute 12% of the employee’s basic salary and dearness allowance towards EPF. Currently, the rate of interest on EPF deposits is 8.10% p.a.

Contribution under the EPF Scheme

S.No.	Number of Employees	Contribution
1.	More than 20 employees	12%
2.	Less than 20 employees	10%

Here “percentage of contribution” is calculated on basic wages plus dearness allowance plus retaining allowance.

The Breakup of Employers’ and Employees’ Contributions

The Breakup of employers’ contributions shall be as follows

S.No.	Contribution by	Employees’ Pension Scheme	Employees Provident Fund Scheme	Employees Deposit Linked Insurance Scheme
1	Employer – 12%	8.33%	– 3.67 %	0.5 %
2	Employee – 12%	0	0	0

Types of schemes under the Act

Employees’ Provident Fund Scheme, 1952: Employees’ Provident Fund Scheme was set up under the Act for the purpose of providing a post-retirement benefit for the employees or a class of employees or their legal heirs in case of death, employed under an establishment to which this Act applies.
Employees’ Pension Scheme, 1995: Employees’ Pension Scheme was framed under the Act for the purpose of providing the superannuation pension, retiring pension or permanent total disablement pension to the employees of any establishment or class of establishments to whom this Act applies; and widow or widower’s pension, children pension or orphan pension payable to the beneficiaries of such employees.
Employees’ Deposit-linked Insurance Scheme, 1976: Employees’ Deposit-linked Insurance Scheme (EDLI Scheme) was framed under the Act for the purpose of providing insurance benefits to the employees of an establishment or a class of establishments to whom this Act applies in case of death while in service.

What is the objective of EPF Scheme?

EPF Scheme is implemented to help the government, public or private sector employees financially by providing a lump sum amount on their retirement or separation from their job by managing the provident fund for them.
It helps in providing social security to the members of this scheme.

Employees Provident Fund Scheme - EPF Scheme 1952

Key Highlights Of EPF Scheme 1952

Name of the scheme	Employees’ Provident Fund Scheme
Launched by	Government of India
Beneficiary	Employees
Objective	To provide social security to the Employees by providing a lump sum amount on retirement or on the separation from the job.
Official website	https://www.epfindia.gov.in
Year	1952

To whom the EPF Scheme is applicable?

Employees’ Provident Fund has been set up under The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (“Act”) applicable pan-India. The Act is applicable to every factory or industry mentioned in Schedule 1 of the Act, wherein 20 or more persons are employed or to any other establishment which the Central Government specifies by notification in the Official Gazette, even when the number of employees is less than 20.

That means. this scheme is applicable to every establishment in which 20 or more persons are employed other than excluded employees and in certain cases organisation employing less than 20 persons are also covered, subject to certain conditions and exceptions.

However, excluded employees can also become members of the EPF Scheme, if the Assistant PF Commissioner granted permission to them.

Here, “excluded employees” means employees drawing wages exceeding INR 15,000 per month.

What are the eligibility criteria for registration under EPF Scheme?

Every establishment in which 20 or more persons are employed other than excluded employees shall get registered under the Scheme within one month from the date of its applicability.

Enrollment for PF membership is mandatory for:

Any person employed for wages for any work of an establishment either manual or otherwise.
Any person employed through a contractor or engaged as an apprentice but not being an apprentice under the Apprentices Act, 1961.
Any person under the standing orders of an establishment, earning less than or equal to Rs. 15,000 per month other than the excluded and exempt employees under Section 17 of the Act.

What is Interest on EPF?

Interest is an additional amount given to employees every month on the contribution of PF.
Interest in EPF is calculated on the basis of the monthly running balance on the EPF Account.
The EPF interest rates are declared annually by the central government.
EPF interest rate revised for FY18-19 is 8.65%.

When an amount of PF can be withdrawn from PF Account?

As per the rules of the EPF Scheme 1952, withdrawal of PF amount can be done fully or partially depend on the conditions as follows:

Post Retirement

When an individual retires from employment after attaining the pre-determined retirement age i.e. 55 years, he can withdraw the entire amount of EPF which includes the employer’s and employee’s contributions along with the interest earned.

Unemployment

EPFO subscribers have an option to withdraw their PF in two parts;
- 75% of fund after the completion of one month of unemployment, and
- 25% can be transferred to a new EPF account after gaining new employment.
They can also withdraw their PF contribution directly after two months of unemployment and settle the account in one go. A subscriber can withdraw the full PF amount and the interest earned over it.
One is also allowed to withdraw the EPS amount if the service period has been less than 10 years and not later on.
The employee compulsorily gets pension benefits after retirement, if he withdraws any time after 10 years of service.
After 2 months of unemployment, PF can be withdrawn fully.

What are the duties of the Employer?

Employers are responsible for the following under the EPF Scheme:

Filing of monthly returns in electronic form in ECR format on or before the due date.
Submission of the particulars related to employees joining or leaving the service and nomination form in the prescribed form and manner.
Submission of Aadhar card and other KYC-related documents of their employees who become members of the EPF Scheme.

What are the rights of the Employer?

The Employer can have the following rights under EPF Scheme:

Ask for an identity card from the visiting enforcement officer.
Right to get the Business Number (PF Code No.) allotted for complying with the provision of the scheme.
Approach EPFO for seeking clarification or guidance on PF-related matters.
Avail online services for filing returns and remitting the contribution.
Right to meet the officer in charge.
To have at least one relationship officer in each field.

What are the duties of Employees, who are a member of EPF Scheme?

Employees who are a member of the EPF Scheme are responsible for the matters as given below:

Submission of his/her UAN with declaration regarding membership of fund immediately after joining an establishment to the employer.
Submission of the nomination form for EPF to an employer in Form 2.
Submission of Aadhar card and KYC-related document correctly.

What are the rights of Employees, who are a member of EPF Scheme?

Employees who are a member of the EPF Scheme have the following rights;

obtain the claim form free of cost.
obtain guidance in filing forms.
right of the partial/final withdrawal from the provident fund.
register their grievance and get it redressed within 15 days.
right to obtain UAN from EPFO.
right to receive a monthly payment of Pension.
right to get transferred their accumulated fund to their new account.

What is the statutory compliance requirement on the part of the Employer?

There are certain obligations or the compliances on the part of the Employer which they are supposed to comply to, if not, they could be subjected to certain offenses or penalties provided in the act.

Several compliances that need to be followed are

Establishment of a Board of trustees for the management of PF.
Transfer of PF to the Board of Trustees from time to time by the 15th of each month following the month for which the contributions are payable.
Bear all administration expenses of the Provident Fund.
Display on the notice board of the establishment, a copy of the rules of the funds as approved by the appropriate authority and as and when amended thereto along with a translation in the language of the majority of the employees.
Settlement of claims of PF on time.

What is the redressal mechanism for grievances related to EPF?

Every employee can contact an additional central PF commissioner for grievances related to PF through the online portal by lodging complaints at www.epfigms.gov.in or offline registered address additional central PF commissioner, EPFO, Bhavishya Nidhi Bhawan, 14 Bhikaiji Cama Palace, New Delhi – 110066.

The authority will redress the grievance within 15 days of a complaint being lodged.

What are the Offences and penalties under the EPF Scheme?

The false representation or statement to avoid payment of PF – punishable with imprisonment for a term which may extend to one year or with a fine of Rs. 5000 or with both.
Contravention of the provisions related to payment of inspection/ administration charges – punishable with imprisonment for a term which may extend to three years.
Default in payment of employees’ contribution which has been deducted from employees’ wages – punishable with imprisonment of not less than one year and with fine of Rs. 10000.
In any other cases – punishable with imprisonment of not less than 6 months and with a fine of Rs. 5000.

What are the forms and registers to be maintained under the EPF Scheme?

Forms and registers to be maintained are as follows:

S.No.	Forms	Description
1	Form 2	Declaration by persons already employed at the time of institution of the Fund/Nomination
2	Form 3 / 3A	Preparation of Contribution Cards
3	Form 5	Details of employees qualifying to become members of the Fund for the first time during the preceding month
4	Form 5	Return of employees qualifying for membership
5	Form 5A	Particulars of ownership by employer
6	Form 6A	consolidated annual Contribution Statement
7	Form 10	Return of members leaving service during the month
8	Form 11	Declaration by person taking up employment in organization
7	Form 12A	Statement of contribution
8	Form 13	Application for transfer of EPF account
9	Form 19	Form for claiming PF dues
10.	Form – 20, 10-D,5IF	Composite claim form in case of death
11.	Form-10C	For Claiming refund of employers share, withdrawal benefit, scheme certificate

What is Universal Account Number (UAN)?

The UAN number alloted to each member by EPFO. The UAN of an employee remains the same even after he/she switches jobs. In the event of a job change, the member ID changes, and the new ID will be linked to the UAN. However, employees must activate their UAN in order to avail the services online.

You can get your UAN through your employer. In case you are unable to do so, you can easily login to the UAN portal (https://unifiedportal-mem.epfindia.gov.in/memberinterface/) with your member ID and find the UAN.

Universal Account Number (UAN) has been made mandatory for all individuals covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
UAN is a 12-digit number allotted by EPFO to every employee to whom EPF Scheme is applicable.
An employee is supposed to have a single UAN.
The UAN will show both the PF numbers, the previous employer’s as well as that of the new employer, linked to it. The UAN, therefore, acts as an umbrella for multiple member IDs allotted to the individual by different employers.
It is a one-time permanent number that will remain the same throughout one’s career.
When you join a new organisation, the first thing you should do is ask your employer for the ‘New Form No. 11- Declaration Form’ to furnish the existing UAN. If you don’t have one, then just give your previous PF number along with the date of exit from your previous job.

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