Section 13: Exemptions and Special Provisions

Overview

Section 13 of the Code on Social Security, 2020, deals with the Employees’ Provident Fund (EPF) and specifically addresses exemptions from its general provisions. It outlines how certain establishments can be relieved from directly contributing to and managing the EPF, allowing them to establish and maintain their own Provident Fund trusts, subject to specific conditions and oversight. This section also covers special provisions applicable to international workers, high-earning employees, and categories as notified by the government.

Who is Covered?

• Classes of employees and establishments covered: This section primarily concerns establishments that wish to seek exemption from the standard EPF scheme. This typically includes companies with a substantial number of employees and a demonstrated capacity to manage a Provident Fund independently. It also covers specific categories of employees like international workers and those earning above a certain threshold (as determined by government notification).
• Any eligibility conditions such as length of service or wage limits: Eligibility for exemption is determined by factors like the establishment’s financial stability, the number of employees, and its ability to comply with the stringent requirements set by the authorities. There are no fixed length of service requirements for employees *within* an exempted establishment, but the establishment itself must meet criteria for exemption. Wage limits for exemption eligibility are subject to government notification and may change.

Benefits and Contributions

• What benefit the employee gets: Employees in exempted establishments continue to receive Provident Fund benefits, including contributions towards their retirement savings and interest accrual. The benefits are generally comparable to those under the standard EPF scheme, though the administration is handled by the exempted trust.
• Contribution responsibilities of employer, employee and government: While the establishment manages the fund directly, the contribution responsibilities – typically a percentage of the employee’s salary split between the employer and employee – remain largely the same as under the standard EPF scheme. The government’s role shifts from direct collection and management to oversight and auditing of the exempted trusts. Specific contribution rates are determined by the Code and any subsequent notifications.

Procedure and Compliance

The procedure for seeking exemption involves submitting a detailed application to the appropriate authority, demonstrating the establishment’s financial capacity and commitment to maintaining a robust Provident Fund trust. If approved, the establishment must:

1. Establish a separate Provident Fund trust governed by a board of trustees.
2. Maintain accurate records of all contributions and benefits.
3. Invest the funds prudently in accordance with regulations.
4. Submit regular audits conducted by a qualified auditor.
5. Comply with all reporting requirements stipulated by the authorities.

Non-compliance can lead to revocation of the exemption and penalties.

Practical Examples

• Example 1: A large IT company with over 500 employees successfully applies for and receives EPF exemption. They establish a Provident Fund trust, contributing 12% of employee salaries (plus the employee’s contribution) to the trust, and manage the fund’s investments according to regulatory guidelines, ensuring employees receive comparable retirement benefits.
• Example 2: A manufacturing unit, having obtained exemption, fails to submit its annual audit report for two consecutive years. The authorities revoke their exemption, and the unit is brought back under the standard EPF scheme, facing potential penalties for non-compliance.

Disclaimer

This article is for basic understanding of the Code on Social Security, 2020, and Section 13 specifically, concerning EPF exemptions. It should not be treated as legal advice. Consult with a qualified legal professional for advice tailored to your specific situation.