Define Contribution. Examine the law relating to contribution by the employer and employees under the Employees Provident Fund Act, 1952.
Find the question and answer of Labour Law only on Legal Bites.
Question: Define Contribution. Examine the law relating to contribution by the employer and employees under the Employees Provident Fund Act, 1952.Find the question and answer of Labour Law only on Legal Bites. [Define Contribution. Examine the law relating to contribution by the employer and employees under the Employees Provident Fund Act, 1952.]AnswerContribution refers to the act of contributing or paying a share of something, usually towards a common goal or purpose. In the context...
Question: Define Contribution. Examine the law relating to contribution by the employer and employees under the Employees Provident Fund Act, 1952.
Find the question and answer of Labour Law only on Legal Bites. [Define Contribution. Examine the law relating to contribution by the employer and employees under the Employees Provident Fund Act, 1952.]
Answer
Contribution refers to the act of contributing or paying a share of something, usually towards a common goal or purpose. In the context of employment, contribution typically refers to the amount of money that an employer and employee each pay towards a particular fund, such as a retirement or pension plan.
The Employees' Provident Fund Act, 1952 is an Indian law that governs the establishment and management of a Provident Fund for employees in India. The law mandates both the employer and employee to contribute to the fund, with the primary aim of providing a financial cushion to employees after their retirement.
Under the Act, an employer is required to contribute an amount equal to 12% of the employee's basic wages, dearness allowance, and retaining allowance (if any) towards the Provident Fund. The employer is also required to contribute an additional amount of 0.5% towards the Employees' Deposit Linked Insurance (EDLI) scheme, which provides life insurance cover to employees.
On the other hand, the employee is required to contribute an amount equal to 12% of their basic wages, dearness allowance, and retaining allowance (if any) towards the Provident Fund. This contribution is deducted from the employee's salary every month and deposited into the Provident Fund.
It is important to note that the employer's contribution towards the Provident Fund is not deducted from the employee's salary. Instead, it is an additional cost that the employer incurs as part of the employment relationship.
The law also provides for penalties and interest in case of any delay or non-payment of contributions by either the employer or the employee. In case of default, the employer may be liable to pay interest at a rate of 12% per annum, along with penalties and fines.
In summary, the Employees' Provident Fund Act, 1952 mandates both employers and employees to contribute towards the Provident Fund, to provide financial security to employees after their retirement. The law also provides for penalties and interest in case of default by either party. The EPF scheme offers several benefits, such as a tax-free interest rate on contributions, a lump sum payment at the time of retirement or resignation, and a pension scheme. In case of the death of an employee, the beneficiaries are entitled to receive the accumulated balance in the EPF account.
The EPF Act is administered by the Employees' Provident Fund Organization (EPFO), which is a statutory body under the Ministry of Labour and Employment, Government of India. The EPFO is responsible for implementing the provisions of the EPF Act and ensuring compliance by employers. The Employees' Provident Fund (EPF) Act is an Indian law that was enacted in 1952 to provide retirement benefits to employees. The Act applies to establishments with 20 or more employees and covers both private and public sector organizations.
Mayank Shekhar
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