The Employees’ Provident Fund and Miscellaneous Provisions Act 1952 (“EPF Act”) is a social security legislation framed to render retirement benefits and financial security to salaried employees. All eligible employees contribute a specified percentage of their salary to the provident fund established by the Central Government (“PF Fund”) under the Employee Provident Fund Scheme 1952 (“EPF Scheme”). When an employee is drawing a monthly salary of less than Fifteen Thousand Rupees, the employer is required to make a contribution to the PF fund, and a matching contribution shall be deducted from the salary of the employee and paid to the PF fund.

The provisions of the EPF Act are mandatorily applicable to every establishment employing at least 20 (twenty) persons, as mentioned in Schedule I of the EPF Act. The EPF Act provides for a redressal mechanism for the resolution of disputes which arise between the employees, employer, or the appropriate government (cumulatively “Aggrieved Party”) relating to the following situations:

1. Determination of whether the employer is required to make contributions to the PF Fund in respect of the concerned employees; and or

2. Determination of the amount of contribution due from the employer as per the EPF Act read with the EPF Scheme.

As per Section 7A of the EPF Act, an aggrieved party may approach the Central Provident Fund Commissioner appointed by the Central Government (“PF Commissioner”) for inquiry and adjudication of such disputes.

Section 7A of the EPF Act bestows the PF Commissioner with the power to pass a composite assessment order (“Assessment Order”). E.g. In situations where the dispute concerns the liability of an employer to make contributions to the PF Fund, and the PF Commissioner decides that the employer is liable to make the said contribution to the PF Fund, then a separate application need not be filed by the employee for adjudication of the quantum of contribution to be made by the employer. The PF Commissioner may decide this question as part of the same adjudication process.

Powers and Jurisdiction of the PF Commissioner

In order to conduct an inquiry regarding the disputes, Section 7A (2) of the EPF Act vests the PF Commissioner with the powers of a Civil Court, i.e. to enforce attendance of any person or examine him under oath, discovery, and production of documents, to receive evidence on affidavit, and to issue commissions for the examination of witnesses. Before initiating any inquiry, the PF Commissioner is required to issue a notice to the employer, detailing the allegations made against the employer.

While adjudicating a dispute under Section 7A, the PF Commissioner is required to follow the principles of natural justice, and provide the employer concerned with a reasonable opportunity of being heard. The PF Commissioner is also required to pass a justified Assessment Order. However, the PF Commissioner does not have the power to decide abstract questions of law, and can only determine the actual differences in payment of PF contribution and other dues.

Review/Appeal of Assessment Orders passed under Section 7A of the EPF Act

For every Assessment Order passed under Section 7A of the EPF Act, the aggrieved party has the following two remedies-

1. Review under Section 7B of the EPF Act; or

2. Appeal under Section 7I of the EPF Act. After exhausting these two remedies, the aggrieved party may also file a writ before the respective High Court of the State. 

Review

If the employer does not appear before the PF Commissioner during the inquiry carried out under Section 7A of the EPF Act, and as a result, the PF Commissioner passes an ex parte Assessment Order, the employer may, within 3 (three) months from the  date of communication of such order, apply to the PF Commissioner to set aside the Assessment Order, after showing sufficient cause as to why he was prevented from appearing when the inquiry was held.

Further, upon discovery of new and important evidence which was not available at the time of inquiry, or on account of some mistake or error apparent on the face of the record or for any other sufficient reason, either party may apply for review of the Assessment Order passed by the PF Commissioner.

Appeal

Section 7I of the EPF Act provides for an appeal mechanism against Assessment Order passed by the PF Commissioner under Section 7A of the EPF Act. The aggrieved party may file an appeal in the Industrial Tribunal established by the Central Government.  An appeal under Section 7I may be heard by the Industrial Tribunal, subject to the employer depositing 75% (seventy-five percent) of the amount assessed to be payable by the employer in the Assessment Order with the Industrial Tribunal. Such amount is subject to change or may even be waived completely by the Industrial Tribunal by providing sufficient reasons in writing.

Writ Petition

In order to challenge an Assessment Order passed under section 7A of EPF Act before a High Court under Article 226 or before the Supreme Court under Article 32 of the Constitution of India 1950, the petitioner must first exhaust all remedies available under the EPF Act (discussed above). Upon exhaustion of all the remedies of review and appeal, the aggrieved party may file a writ petition.

In order to protect the interest of employees post retirement and deter employers from defaulting in their duties of making appropriate and timely social security contributions, Section 14(1A) of the EPF Act empowers the PF Commissioner to levy penal damages on the employer for failure or default in payment of contribution to the PF Fund. The employer may be punished with imprisonment for a term not less than 6 (six) months which may extend to 3 (three) years, and a fine which may extend to INR 5000 (Indian Rupees Five Thousand Only). Therefore, it is imperative that the employer makes timely contributions to the PF Fund in order to avoid any penal actions being instituted against them.

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