T he EPF & MP Act require two way compliance to serve the beneficiaries with the benefits provided by different schemes framed under the Act; one seeking compliance from the employers by the authorities, and, the other is to give compliance to-words the members and beneficiaries by the department the EPFO.
While seeking compliance from the employers, the authorities always quote - specially while passing orders and under section 7A of the EPF & MP Act 1952 - some judicial quotations and pronouncement which are known as landmark judgments. Such as -
"As it (the EPF & MP Act) is to fulfil the social obligations it has been termed as Beneficial Legislation and require to be interpreted to the constitutional directives it bears. No Labour Legislation, no special legislation, no economic legislation can be considered by the court without applying the principle of social justice in interpreting the provisions of these laws [Prakash Cotton Mills (P) Ltd Vs. State of Bombay 1957 (2) LLJ 490]. It is the duty of the courts to interpret the Act in such a manner as to give effect to the intention of the legislation and not to put a very narrow construction which may defeat the object of the Act [Kumpur Textile Finishing Mills Vs RPFC - AIR 1955 Punjab 130]. In construing the provisions of the Act if, two views are reasonable possible the courts should prefer the view which helps the achievement of the object, for such purpose, the stretching the word to an unreasonable degree is not proper [RPFC vs. Shibu Metal Works - [1965(1) LLJ 473]."
But, while extending benefits to the employees - members, the authorities fail to recall the above interpretation and become more and more conservative, ridden on bureaucratic wings. They forget even the heartfelt wordings of judiciary that - "EPF Act fit to as a beneficial legislation enacted as a measure social justice and should be constituted liberally to confer benefits on the employees to the maximum extent” - [Nazeena Traders (P) Ltd. Vs RPFC AIR 1965 AP 200; 1066(1) LLJ. 334].
This has happened more than once in the history of the EPFC MP Act, 1952 but, recent interpretations crop up (rather seeded and spread) after the Honourable Supreme Court dated 04.10.2016 in a Pension case, has become a puzzle for all the beneficiaries, the stakes holder and the judiciary itself with more than 600 cases in different High Courts.
The first hurdle which has been put is "whether an employee for whom PF contribution on a pay beyond ceiling amount has been or is being paid, has exercised an option jointly with his employer or not. In fact, when the PF contribution on a pay beyond ceiling amount has been or being paid, it becomes merely a bureaucratic paper satisfaction to seek a proof whether such option was exercised or not.
Secondly, if, in a case (this happen in almost all the eases) such option for contribution to PF on a higher salary was not exercised, whether the PF contribution paid on a higher pay will be treated illegal? If, it is treated illegal, whether the PF contribution paid over and above the ceiling amount will be paid-back to the employers and members? Perhaps, there is no answer about such refund, and no authority will prefer it to allow such out flow from the fund. Then what is to be done by the authorities? The authorities, being a bureaucratic wing rider, will not be able to give answer except seeking or advising to seek an order (a hunter wave) from the judicial authorities. That state of affair becomes the extreme of indecision which is seen all over India, not in EPFO but, in other Government offices, reflected in numerous cases in the courts.
How the state of indecision can be overcome? Obviously by an interpretation of the law, of the provisions, as guided by the judiciary in the past as quoted in the opening of this article..
Hence, let some light be thrown on the relevant provision of paragraph 26 (6) of EPF Scheme, 1952, which regulates PF membership of an excluded employee and PF contribution on the pay beyond the ceiling amount put in the EPF Scheme, 1952.
Para 26(6) reads as-
"(6) notwithstanding anything contained in this paragraph, an officer not below the rank of an Assistant Provident Fund Commissioner may, on the joint request in writing of any employee of a factory or other establishment to which this Scheme applies and his employer enrol such employee as a member or allow him to contribute more than [fifteen thousand rupees] of his pay per month if he is already a member of the fund and there upon such employee shall be entitled to the benefit and shall be subject to the condition of the fund provided that the employer gives an under taking in writing that he shall pay the administration charges payable and shall comply with all statutory provisions in respect of such employee."
There are two actions which can be done by a joint request by the employee and his employer. Here, it may be noted that the word "option" has not been used in the para but, the words "a joint request" have been used. 'Option' denote to choose, which can be done by a single person only. In the provision, the word "option" has not been used but preferred the words "a joint request" to allow for contain action, that is enrol PF member (an excluded employee) or allow (the word permission has not been used) to contribute on a pay more than Rs.15000 (earlier Rs. 6500).
Secondly, there are two action defined in this sub paragraph; one is to enrol an excluded employee as PF member which has an inherent permission to contribute on a higher salary also; and the another, to allow to contribute on a higher pay to a member who is already a member of the fund. This clearly spells out that if an excluded employee is enrolled as PF member no further action as to seek permission for contribution on higher pay is required. In another case if, contribution on higher pay is paid after exceeding statutory ceiling, it becomes a case of allowing to contribute on higher salary.
As such, the things depend on a joint request and allowing for. where excluded employees has been enrolled as PF member en-mass and contribution in both the situations being paid, it is being accepted by the EPFO for several past years and being accounted for, that is an action which has allowed the employees and employers to contribute on the higher pay, by the authorities. Beyond this, regular inspections have also been carried out and other liabilities on this account occurred under Section 14-B and/or under Section 7Q have been borne by the employers, if attracted, both the requirements under papa 26(6) of the EPF Scheme 1952 satisfy by a deemed permission by such action of acceptance of the higher contribution.
Accordingly, asking for any options that might have been filed to satisfy para 26(6) as a precursor for contribution on a higher pay under deleted proviso to para 11 (3) of EPS, 1995 as the Hon'bl supreme court used this word in its judgment dated 04-10-2016. Intention of the Supreme Court to mention Para 26 (6) as precursor for contribution on a higher pay is to answer whether the employer of an employee has also paid his PF share on a higher pay from which the contribution @ 8.33% of the pay is required to be transferred into the pensioner fund under EPS, 1995 for a handful pension.
Membership of Excluded Employees and pre-cursor for contribution on higher Salary after the Supreme Court judgment in the case of R.C. Gupta dated 04.10.2016 and the EPFO circular dated 23.03.2017, which is being denied on the pretext of pre-cursor of paragraph 26 (6) of the EPF Scheme, 1952?