THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952

Introduction

The Code on Social Security, 2020 (Act No. 36 of 2020) consolidates nine earlier social security laws into a unified framework. The Employees’ Provident Fund (EPF) system is primarily covered in Chapter III, which lays out the structure, administration, and regulatory framework of provident fund‑related social security in India. Chapter III outlines the organisational structure responsible for administering provident fund schemes. Key provisions include Appointment of Officers of the Central Board, responsible for the administration of Provident Fund schemes. Establishment of mechanisms for managing funds and ensuring nationwide compliance.

Applicability

The EPF covers

Additionally, if the employer and the majority of employees request the Central Provident Fund Commissioner to apply the EPF Act to their establishment, it can be applied from the date of agreement or a future date. It’s crucial to understand that once an establishment falls under the EPF Act, it continues to be regulated by it even if its employee count drops below 20.

Schemes

The EPF encompasses three primary schemes and these are managed by the Employees' Provident Fund Organisation (EPFO), which operates under the Ministry of Labour and Employment

  1. Employees’ Provident Funds Scheme: This scheme ensures that employees save a portion of their salary for retirement. Both the employee and employer contribute to the fund, which accumulates interest over time.
  2. Employees’ Deposit Linked Insurance Scheme: This scheme offers life insurance coverage to employees. In the event of the employee’s death, a lump sum amount is paid to the nominee or legal heir.
  3. Employees’ Pension Scheme: This scheme provides pension benefits to employees upon retirement, as well as to their families in case of the employee’s death. It is funded by diverting a portion of the employer’s contribution from the EPF.

These schemes collectively aim to provide comprehensive social security and financial stability to employees in applicable establishments.

EPF Calculation

The contribution to the EPF is divided into two parts: one part is contributed by the employee, and the other part is contributed by the employer.. Under the Employees' Pension Scheme (EPS), contributions are not applicable to employees whose basic salary exceeds ₹15,000 per month. This means that if an employee's basic salary is above this threshold, they and their employer are not required to contribute to the EPS. Instead, the entire employer's contribution goes towards the Employees' Provident Fund (EPF). The breakdown of the employer’s 12.5% of

basic wages contributions under the EPF, EPS, and EDLI schemes are hereunder:


Contribution towards
Employee’s contribution (in %)
Employer’s contribution (in %)

EPF
10% or 12%
3.67%

EPS/EPF
–
8.33%

EDLI
–
0.5%

EPFO also announces annual interest and below are the rates for past few years which is deposited in the employees’ account at the end of the financial year:

Conclusion

The EPF is a welfare legislation designed to benefit employees, with various provisions discussed in this article highlighting its significant role in the history of welfare laws. It involves contributions from both employees and employers. It is the government’s responsibility to address these issues to enhance the EPF Act’s effectiveness and ensure it benefits workers. Additionally, both workers and employers must be aware of their respective rights and duties. Each employee is assigned a Universal Account Number (UAN), which remains the same throughout their career, even if they change jobs. Employers must file Form IW-1, a monthly return under the EPF scheme for international workers (IWs), within 15 days of the close of each month. If there are no international workers employed during a particular month, employers are required to submit a ‘Nil’ return on the portal.