An Establishment Once Covered Under the Provident Fund Shall Remain Covered Forever

This case study is about a Gujrat based non-profit making establishment. The EPF authority under the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 has covered the establishment calculating its dues. However, the plea of the establishment is that they are not coverable.

The labour law advocate appearing on behalf of the establishment challenged the order under Section 7A of the EPF & MP Act, 1952 passed by the EPF authority before the Hon’ble High Court. The establishment stated that proper inspection has not been done, hence, the order u/s 7A is liable to be set aside. On the other hand, the industrial dispute lawyers appearing on behalf of the EPF authority stated that the establishment failed to disclose year wise details of the employees in the establishment. It was further revealed on inspection of some earlier documents that during the year 1997-98, total strength of eligible employees touched 20.

The Delhi High Court held that even though the establishment is working on “no profit no loss basis”, it cannot escape the coverage of beneficial legislature like the EPF & MP Act. There is no distinction between permanent and temporary employee under this Act. Hence, as soon as the total strength of employee reaches 20, the Act becomes applicable to the establishment. Under Section 1(5) of the Act, once an establishment is covered, it remains covered forever even if the total strength of employee falls below 20.