Section 4: Constitution of the Central Board of Trustees (EPF)

Overview

This section deals with the Employees’ Provident Fund (EPF), a crucial social security benefit for employees in India. The EPF provides a financial safety net for employees upon retirement, resignation, or other qualifying events. Section 4 of the Code on Social Security, 2020, establishes the Central Board of Trustees (CBT) which is the governing body responsible for administering and overseeing the EPF schemes.

Who is Covered?

• The EPF scheme generally covers establishments employing 20 or more employees. However, even establishments with fewer than 20 employees can voluntarily adopt the scheme.
• Employees who are members of the EPF scheme are generally those who are engaged in organized sectors of the economy.
• Eligibility is typically not dependent on length of service, but contributions are required once an employee becomes a member. There are no specific wage limits currently defined in the Code, but previous regulations had upper wage ceilings for eligibility.

Benefits and Contributions

• Employee Benefit: The primary benefit is a lump-sum payment upon retirement, resignation, or other qualifying events (like death or disability). The accumulated amount includes employee contributions, employer contributions, and interest earned over time.
• Contribution Responsibilities: Both the employee and the employer contribute to the EPF. Currently, the standard contribution rate is 12% of the employee's basic wage and dearness allowance. The employer also contributes 12%, with a portion potentially allocated to the Employees' Pension Scheme (EPS). The government may also contribute to specific schemes or provide subsidies.

Procedure and Compliance

Here’s a simplified overview of the process:

1. Registration: Establishments covered under the EPF scheme must register with the EPFO (Employees' Provident Fund Organisation).
2. Contribution: Employers deduct the employee’s contribution from their salary and deposit both the employee’s and employer’s share with the EPFO on a monthly basis.
3. Claim Filing: Employees can file claims for withdrawal of their EPF balance under specific circumstances (retirement, resignation, medical emergencies, etc.) through online portals or designated EPFO offices.
4. Compliance: Employers are required to maintain accurate records, file annual returns, and comply with all EPFO regulations. Regular audits are conducted to ensure compliance.

Practical Examples

• Example 1: Employee Eligibility – Priya works at a company with over 20 employees. After completing one month of service, she automatically becomes eligible for EPF membership and both she and her employer begin contributing to her EPF account.
• Example 2: Employer Non-Compliance – A manufacturing unit fails to deposit the EPF contributions deducted from its employees’ salaries for three consecutive months. The EPFO initiates legal proceedings against the employer, including penalties and potential prosecution.

Disclaimer

This article is for basic understanding of social security law and should not be treated as legal advice. Laws and regulations are subject to change, and it is recommended to consult with a legal professional for specific guidance.