Which are the different categories of employees covered under Provident Fund Act, 1952?

As per the provisions of the Provident Fund Act, 1952, the Act is applicable to all workers. The Provident Fund Act does not make any distinction between casual, temporary or permanent workers. If the Casual workers are employed in or in connection with the work of the establishment, the said workers are also eligible for coverage under the Provident Fund Act from their date of joining.

The employees employed by the establishment as Badli are also required to be covered under provision of Provident Fund Act, 1952 from their date of joining.

Employers employ a large number of ‘trainees’, such trainees are employed for performing the job of workers under the nomenclature ‘Trainee’. Such ‘Trainees’ work in all shifts, are put on the job and their services are utilized for production. A detailed analysis of the establishment’s Training Scheme shall reveal that the person is designated as a Trainee but is really a worker for all purposes. Therefore, the Trainees employed by the establishment can be covered under Provident Fund Act, 1952 in case Trainee is found to be a nomenclature used to avoid statutory benefits. However if the establishment has a genuine Training Scheme and the Trainee is provided with training, then such trainee will not be governed by the Provident Fund Act.

In a decision of the Hon’ble Madras High Court passed in 2001; Shri Ramvilas Services Limited V/s Regional Provident Fund Commissioner (W.P. No. 18090/1990 and W.M.P. No. 28518/1990, decided on 16.03.1999) it has been held that the Trainees appointed under Training Scheme for a specific period without guarantee of employment and paid stipend are not employees under Section 2 (f) of the Act. Therefore, as stated above, if a particular establishment involves its trainees in the production process of the establishment and such a trainee is made to work in all shifts like the existing workers of the establishment, he shall be a worker for all purposes and thereby covered under the Provident Fund Act, 1952.

While dealing with issues such as applicability of Provident Fund Act to Trainees, some other aspects need to be examined in this context. Issues concerning contribution, interest and damages due to default are all decided by the Provident Fund Office under S. 7A of the Provident Fund Act. The inquiry under section 7A is conducted by Assistant Regional Provident Fund Commissioner. In the said inquiry questions like whether the person is employed as a Trainee under Standing Order or Trainee is a nomenclature is decided. In the past many establishments have been asked to pay past arrears along with damages and interest to their employees. Such Orders under Section 7A can be challenged in the Tribunal in Delhi. The Court’s are reluctant to interfere with such Orders as the Provident Fund Act is considered to be a social legislation. Therefore, most High Court pronouncements tend to support the department, particularly on issues like coverage of employees etc. Apart from this there is also risk of prosecution by Department and payment of damages and interest. Therefore, employer should be careful with implementation of provisions of Provident Fund Act.

The Act also provides for coverage of employees employed by Contractors. As per various judgments of High Courts, the persons included in the definition of ‘employee’ under the Act includes any person employed in connection with the work of establishment and who are paid wages directly or indirectly for that work. Therefore, persons employed indirectly through contractor are employees under section 2 (f) of Provident Fund Act, even though they are not directly employed by employer. Reference can be made to following judgments.

Enfield India Limited v/s RPFC ( W.P. No. 16861/1991 and W.M.P. No. 25362/1991, decided on: 03.06.1999) and Gujarat State Civil Suppliers Corporation Limited V/s RPFC (Sp. C.A. No. 4153/1998, decided on 29.01.1999)

Therefore, the employees employed by Contractor are also required to be covered under Provident Funds Act, 1952.

As per the provision of Section 2 (f) under the Provident Fund Scheme 1952, the employee who is paid at that time he is otherwise entitled to become member of Provident Fund Rs.6500/- per month shall be considered as excluded employee and there is no need to cover such employee under the Act. However, such a person should be appointed on Rs.6500/- as salary at the time of joining. If an employee drawing at present Rs.6500/- or more and is covered under Provident Fund Act, he cannot be excluded by virtue of this definition. Therefore, if a new employee is recruited and he draws a salary of Rs.6500/- or more, he can be considered as an excluded employee and there is no need for to cover them under Provident Fund Act, 1952.