Provident Fund (EPF and MP Act, 1952)
1. Contractors PF
As per The EPF and MP Act, 1952 (Definition of ’employee’ under sec 2 (f) of the Act read with para 30) – the PF Authorities always insist upon the principal employers to ensure that the contractors as engaged, must pay the PF Contributions and in case of non-payment, the principal employers are held liable.
However, as per the court judgement in various cases, it has been held that the contractor and not the principal employer will be liable for payment of PF Contributions for the employees engaged by him. E.g. Steel Authority of India Ltd vs National Union Water Front Workers, 2001
2. The consequences when a RETIRED coverable employee is not covered under provident fund:
You can be held liable to pay both the shares since no deduction can be made from the wages/salary of the employees towards the EPF contributions for more than one month wages.
It is clarified that as per provision contained in para 2(f)(i) of the the EPF Scheme, an employee who having been a member of the EPF, withdraws the full amount of the accumulation on retirement after attaining 55 years or leaving the service for disablement or for migration from India for permanent settlement abroad shall be deemed as an excluded employee on appointment thereafter.
As such engagement of retired government employees, who were not governed by EPF Scheme, shall not qualify for the same and will be coverable under EPF Scheme, the retired employees from Railway cannot be treated as excluded employees.
So, next time when you hire a retired employee, kindly comply.