India: Proposal To Amend The Employees' Provident Fund & Miscellaneous Provisions (EPF And MP) Act, 1952

Last Updated: 2 September 2019
Article by Manishii Pathak, Avik Biswas and Natasha Sahni


The Ministry of Labour and Employment (the "Ministry") has proposed to amend the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (the "PF Act"). A draft of the Employees' Provident Fund and Miscellaneous Provisions (Amendment) Bill, 2019 (the "Bill") was circulated on August 23, 2019, seeking comments from the public. The last date for providing comments on the draft Bill is September 22, 2019.1

The Bill and the proposed amendments have been introduced in the context of the evolving industrial and economic scenario of the country, leading to increased mobility of labour and outsourcing of services.2


(a) Substitution of the definition of 'wages' in place of the existing definition of 'basic wage'

Under the PF Act, the basis for determining an employer or employee's provident fund ('EPF') contribution is basic wage, dearness allowance and retaining allowance. The proposed amendment seeks to fix components of remuneration paid. In this regard, the Bill suggests that, if identified components of wages3 paid are above 50%, or such other percentage as may be notified later, then such components, as per  the percentage identified, will be included in the definition of wages. Accordingly, a new definition of 'wages' has been introduced in the Bill, which will amend the existing definition of 'basic wages'. The said definition of wages is in conformity with the definition provided in the Code on Wages, 2019, passed earlier this year by the Parliament and assented to by the President of India on August 8, 2019.

(b) Flexibility with the Central Government to specify rates of contribution and the period for which such rates shall apply for any class of employees

The Bill proposes to introduce a concept where the Central Government will have the flexibility to specify rates of contribution and the period for which such rates shall apply for any class of employees. The rates of contribution will depend on various factors like age, income and gender. No change in the employers' contribution has, however, been proposed. This move is a logical step, after an announcement was made under paragraph 62 of the budget of the financial year 2015-16, which set out that, for employees below a certain monthly income threshold, contributions to EPF should be optional, without affecting or reducing the employer's contribution.

(c) Introduction of a period of limitation to initiate inquiries under Section 7A of the PF Act

Section 7A of the PF Act does not provide any period of limitation for the concerned authorities to initiate inquiries or settle disputes regarding (i) the applicability of the PF Act; and (ii) the determination of the amount due from any employer under any provision of the PF Act. The Bill proposes an amendment to Section 7A(1) of the PF Act to introduce a limitation period of 5 years for this purpose.

(d) Enhancement in the quantum of fines and penalties

The Bill proposes to enhance the quantum of fines, in pecuniary terms, by ten times.

(e) Composition of certain offences under the PF Act

The Bill proposes to introduce a new section, Section 14AD, which provides for the composition of certain offences under the PF Act, except those specified in sub-section (1), sub-section (1A) and sub-section (1B) of Section 14 of the PF Act.

(f) Option to subscribe to the National Pension System (the "NPS")

The Bill proposes to insert new sections , Sections 16B and 16C, under the PF Act, to provide an option to the EPF subscriber to opt for the NPS in lieu of benefits under the PF Act. The subscriber will also have an option to revert to the benefits under the PF Act. This amendment is also being tabled as a subsequent step to the announcement made under paragraph 62 of the budget of the financial year 2015-16.

(g) Introduction of guidelines for the grant of exemption under the PF Act

Currently, the PF Act does not stipulate any pre-condition for the grant of exemptions. Given this, the Bill proposes to introduce guidelines for the grant of exemption under the PF Act on lines such as past performance, net worth and group performance, as well as minimum strength of workers, collections, contributions and corpus of establishments.


The Bill has been introduced with the intention of addressing issues that have been the focus of several litigation proceedings in the past. These include disputes on basic wages and allowances.

Additionally, the Bill proposes to introduce a provision on limitation for actions under the PF Act. The proposal is in line with similar principles provided in legislations such as the the Employees' State Insurance Act, 1948 (prescribing a limitation period of 5 years) and the Income Tax Act, 1961 (prescribing a limitation period of 7 years). This step is likely to ensure effective compliance and uniformity, and also reduce the element of uncertainty for businesses across all sectors. Which of the proposed provisions will be introduced with retrospective effect, and which with prospective effect, remains to be seen.

Given the fact that the penalties under the PF Act were last revised in 1988, the proposal to increase the penalties seems to be in line with the Central Government's desire to be far more stringent with the compliance obligations of employers. The Central Government also seems to be trying its best to address the industry's demand of providing higher take-home salaries for certain categories of employees.



2. As stated by the Ministry, under the 'Brief note', attached with the Bill.

3. The aggregate of the following allowances, amounting to more than 50% or as notified percentage, of all remuneration, will be included in the definition of wages: (a) any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment;  (b) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government; (c) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon ; (d) any conveyance allowance or the value of any travelling concession; (e) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; (f) house rent allowance; (g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal; (h) any overtime allowance; (i) any commission payable to the employee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions