The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (commonly known as the EPF Act) is one of the most important social security legislations in India. Designed to provide financial security and stability to employees, the Act ensures that workers build a retirement corpus through systematic savings during their working life. Over the decades, the Act has undergone several amendments to adapt to the changing needs of the workforce and the evolving economic landscape.
In this blog, we break down the EPF Act, its objectives, coverage, and major amendments, making it easier for employers and employees alike to understand their obligations and rights.
What is the EPF Act, 1952?
The EPF Act, 1952 was enacted with the primary aim of providing social security benefits to employees working in factories, establishments, and organizations. Under this Act, both the employer and employee contribute a fixed percentage of the employee’s wages to the Employees’ Provident Fund (EPF), which serves as a retirement savings scheme.
The Act covers three main schemes administered by the Employees’ Provident Fund Organisation (EPFO):
- Employees’ Provident Fund Scheme, 1952 (EPF): Provides retirement savings.
- Employees’ Pension Scheme, 1995 (EPS): Offers pension benefits post-retirement.
- Employees’ Deposit-Linked Insurance Scheme, 1976 (EDLI): Provides insurance coverage to employees.
Applicability of the EPF Act
The EPF Act applies to:
- Establishments employing 20 or more workers.
- Certain organizations notified by the Central Government, even if they employ fewer than 20 workers.
- Both permanent and contractual employees are covered under the Act.
Key Amendments to the EPF Act
The EPF Act has been amended multiple times to improve benefits, increase inclusivity, and align with modern-day workforce needs. Some of the major amendments include:
1. 1995 – Introduction of the Employees’ Pension Scheme (EPS):
- The EPS was introduced to provide monthly pension benefits to employees after retirement, disability, or to family members in case of death.
- A part of the employer’s contribution (8.33%) is diverted to the EPS.
2. 2014 – Raising Wage Ceiling for Coverage:
- The wage ceiling for mandatory coverage was increased from ₹6,500 to ₹15,000 per month, thereby expanding the scope of EPF benefits to more employees.
3. 2015 – Universal Account Number (UAN):
- Introduction of the UAN for employees to ensure portability of EPF accounts across different jobs.
- Helped in reducing paperwork and improved transparency.
4. 2016 – Amendments for Ease of Withdrawals:
- Employees were allowed to withdraw EPF balances for specific purposes such as housing, education, marriage, and medical emergencies.
- Online withdrawal and claim settlement system introduced.
5. 2018 – Higher EDLI Benefits:
- Maximum assurance benefit under the Employees’ Deposit Linked Insurance (EDLI) Scheme was raised from ₹6 lakhs to ₹7 lakhs.
6. 2020 – COVID-19 Related Amendments:
- Employees were allowed to withdraw a non-refundable advance from EPF accounts to manage financial stress due to the pandemic.
7. 2021 – Social Security Code Alignment:
- The Code on Social Security, 2020 consolidated multiple labour laws, including the EPF Act.
- It expanded the definition of employees, strengthened digital compliance, and sought to bring gig and platform workers under social security coverage.
8. 2022 & Beyond – Digital Initiatives:
- Mandatory Aadhaar seeding for EPF accounts.
- Face authentication facility introduced for UAN activation through UMANG App.
- Simplified online claim settlements and grievance redressal system.
Importance of the EPF Act for Employers & Employees
For Employers:
- Ensures compliance with statutory obligations.
- Reduces legal risks and penalties from non-compliance.
- Enhances employee trust and retention.
For Employees:
- Creates a retirement corpus with regular savings.
- Provides pension benefits post-retirement.
- Offers financial security to family members through EDLI.
- Allows access to funds during emergencies through advances/partial withdrawals.
The EPF Act, 1952 and its amendments have consistently evolved to protect the interests of employees and ensure long-term financial stability. With initiatives such as UAN, Aadhaar integration, and online claim settlement, the EPFO has made the system more transparent and accessible.
For employers, staying compliant with EPF provisions is not just a legal obligation but also a way to build credibility and foster employee loyalty. For employees, the Act continues to be a critical pillar of financial security throughout their careers and beyond.
Looking for end-to-end EPF compliance support for your organization?
At Sankhla Corporate Services Pvt. Ltd., we specialize in EPF registration, monthly compliance, UAN activation, audits, and advisory services to ensure 100% compliance with the law. Reach us at info@sankhlaco.com | www.sankhlaco.com
