Article (April-2017)


Employee under EPF Act needs to be redefined

H.L. Kumar

Designation : -   Advocate, Supreme Court

Organization : -  New Delhi


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Authorities are known for creating disputes where there is none or to make the net so wide so as to have galore of disputes. Finding the solution to the problems is not their hallmark but by making them messy ensures them the epithet of 'experts'. It has been the main reason for most of the litigations. Department of Provident Funds adopts many methods to use sticks against employers for their harassment on the one hand and for indulging in the corruption on the other. Although the technology has considerably reduced the scope of exploitation yet wherever there is any possibility of subjective consideration invidious ways are invariably adopted for arms twisting.

The terms of the definition of 'employee' under the employees' Funds act are very wide.  They include not only persons employed directly by the employer but also persons employed through a contractor.  Moreover, they include not only persons employed in the factory but also persons employed in connection with the work of the factory or establishment.  For example, a home worker in beedi industry, by the fact that he rolls beedies, is involved in an activity connected with the work of the factory but under the statutory definition even if a person is not wholly employed, he would be a person within the meaning of the term 'employee'.

Section 2(f) of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952, hereinafter referred to as Act of 1952, is very comprehensive, which defines an 'employee' as under, which says that any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets, his wages directly or indirectly from the employer, and includes any person -

(i)    employed by or through a contractor in or in connection with the work of the establishment;

(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment.

Despite above definition it is not easy to determine as to who is an employee in view of various nomenclatures like home worker, domestic help, daily wage worker, casual worker, workman, part-time retainer, advisor, consultant, piece rated worker, Director, partner, flexitime worker, field worker, agent, commission agent, hawker, vendor, apprentice, trainee, drivers and conductors of school buses, car driver, courier, loader-unloader, driver of the company executive getting reimbursement, team member, karamyogi, hon'ry doctor, volunteer, sevadaar, retired employee of government, re-employed retired employee, newspaper employees, cimena employees, employees from foreign countries or Indian employees appointed into foreign countries, summer trainees paid stipend etc.

Sometimes the employers do not want to cover such employees under the Employees Provident Fund Act whereas the authorities insist they should be covered.  There have been number of cases interpreting as to who is an employee to be covered under the Act.  Therefore, it is necessary to have a look at some of the judgments on the subject in order to understand the legal implications.  At the very outset reference is made to a landmark judgment of the Gujarat High Court in Satish Plastics vs. Regional Provident Fund Commissioner, 1982 (44) FLR 207, wherein it has been observed that:

"The inclusive part of the definition makes it clear that even if the person concerned has been employed through a contract in or in connection with the work of establishment, he would yet fall within the description of "employee" within the meaning of the Act.  In order to answer the question some other questions have to be asked and answered viz: -

(1) Was he doing the work of monetary payment?

(2)    Was the work done by him the work of the establishment or has a nexus with such work?

(3)    Was the payment made wages, in the sense of being remuneration for the physical or mental effort in connection with such work?

(4)    Was the work such that it had to be done as directed by the establishment or under its supervision and control to the extent that supervision and control are possible having regard to the specialised nature of the work or the skill needed for its performance?

(5)    Was the work of such a nature and character that ordinarily a master-servant relationship could exist and but for the agreement styling it as a contact common practice and common sense would suggest a master-servant bond?

(6)    Was the relation indicative of master-servant status in substance having regard to the economic realities irrespective of the nomenclature devised by the parties?

(7)    Was he required to do the work personally without the liberty to get it done through someone else?

(8)    Is such relationship any the less a master-servant relationship in case the person is allowed to work (1) at his own place, and/or (2) at the hours of his sown choice and/or (3) for someone else?"

In the era of very high technological development, where the very concept of work and workplace have completely changed and robotic machines are replacing human beings, the definition of 'employee' needs to be drastically changed to make it more rationale and in consonance with developing situations.