The Supreme Court of India in its recent judgment has held that the employees who draw wages or salaries directly or indirectly from a company are entitled to provident fund benefits under the Employees’ Provident Funds and Miscellaneous Provisions Act 1952.
Facts of the case:
The company was incorporated in the year 1985 under the Companies act 1956. The Government of India holds 51% shareholding and the remaining 49% is held by the Oil and the Natural Gas Company Ltd. (ONGC). The primary objective of the company was to provide helicopter and charter services for promotion of tourism in hilly areas.
The company drafted its Pawan Hans Employees provident Fund Trust Regulation. The total workforce was of 840 employees in which 570 were regular and the rest 270 were on a contractual basis. The company had made an exception in the definition of the term employee and excluded the contractual working people from the said benefit.
SC analyzed the provisions of the EPF Act on the ground of applicability and exemption of the provisions of establishments under the provisions of the EPF Act. The SC also referred to a precedent, i.e., in the case of Regional Provident Fund Commissioner Vs. Sanatan Dharam Girls Secondary School [(2007) 1 SCC (L&S) 167] where this Court laid down a twin test for an establishment to seek exemption from the provisions of the EPF Act. The twin conditions are:
- The establishment must be either “belonging to” or “under the control of” the Central or the State Government. The phrase “belonging to” would signify “ownership” of the Government, whereas the phrase “under the control of” would imply superintendence, management or authority to direct, restrict or regulate
- The employees of such an establishment should be entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits.
On satisfying both the above conditions, an establishment can claim exemption under Section 16(1)(b) of the EPF Act, but since the company failed to follow the second, test the exemption cannot be claimed under Section 16(1) (b) of the EPF Act.
As per Section 2(f) of the EPF Act, the definition of an ‘employee’ is an inclusive definition and is widely worded to include “any person” engaged either directly or indirectly in connection with the work of an establishment and is paid wages.
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