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Tuesday, 22 July 2014

How to Represent before PF Authorities for Non-Applicability of EPF to Casual Labor - case study of Event Management Company

In our Organization we do the Event Management Services, where in different contractors does the work of erecting a set while other contractor will do the work of Coloring the Set, the work of erecting walls may be done by third contractor while woodwork may be done by still different person/contractor. The electrification, fixing of stage and its finishing, will each be done by still other contractors. In addition there would be host of casual labors working on the Event Management Sites, on per day wage basis. Labor force working with each contractor is different and they work for very short period and after finishing one site they move to other site with their contractor or coming to them. Such casual or temporary or site-workers are not employed in their establishment and as such we cannot be forced to cover them under PF Act as our employees. It is pointed out that under earlier paragraph 26 of 1952 scheme an employee who had put in particular length of service alone was required to be treated as covered under the scheme. Attention is invited to 1990 amendment to said paragraph 26 to show that such waiting period has been removed and from day one the employee is supposed to be covered under the scheme.

How ever we have to state that such casual labor / employees cannot be treated "as employed" with our organization and therefore are not covered by definition of Employee under Section 2(f) of PF Act. Paragraph 26(2) as it originally stood read: 26 (2). After this paragraph comes into force in the factory or other establishment, every employee employed in or in connection with the work of the factory or establishment, other than an excluded employee, who has not become a member already, shall also be entitled and required to become a member from the beginning of the month following that in which he completes six months continuous service or has actually worked for not less than 60 days within the period of three months or less in that factory or other establishment or in any factory or establishment to which the Act applies under the same employer, or partly in one and partly in the other or has been declared permanent in any such factory or other establishment whichever is earliest.

On 16 January 1981 period of six months in above clause was substituted by "three months". By later notification dated 1/11/1990 this para is amended as under:

26 (2). After this paragraph comes into force in a factory or other establishment, every employee employed in or in connection with the work of that factory or establishment other than an excluded employee who has not become a member already, shall also be entitled and required to become a member of the fund from the date of joining the factory or establishment.

When the question about the constitutional validity of this amendment came to Honorable Apex Court has in case between J.P. Tobacco Products etc. v. Union of India reported at 1995(II) C.L.R. 369 upheld the constitutional validity of this amendment. The controversy mentioned briefly above arises in this background, wherein it is pointed out that constitutional validity of amendment in Paragraph 26 of the scheme was challenged before Madhya Pradesh High Court and in ruling reported at 1995(II) C.L.R. 360 Khemchand Motilal Tobaco Products Ltd and Ors. v. Union of India the Division Bench upheld its validity. He further states that the aggrieved employers there challenged said Division Bench judgment before Honble Apex Court and in case between J.P. Tobacco Products etc. v. Union of India reported at 1995(II) C.L.R. 369, the Honble Apex Court upheld it.

Thereafter on 22/6/1995 the provident fund department issued circular by placing reliance upon this Apex Court judgment and directed all its officers to take necessary action for implementing the amended paragraph which stood amended with effect from 19/10/1990. Accordingly by issuing notices to petitioners the respondents initiated action in the matter. He states that Section 19-A of PF Act permits Central Government to remove difficulties in implementation of the provisions of PF Act and to clarify the doubts in its implementation.

He states that Section 19-A of PF Act permits Central Government to remove difficulties in implementation of the provisions of PF Act and to clarify the doubts in its implementation. In exercise of that powers delegated to him Legal Adviser of Central Government issued order on 8/2/ 1994 and clarified that the site workers employed in building and construction industry must be covered by Section 2(f) of PF Act and further stated that if such workers are casual workers they would not be governed by PF Act. He further clarified that laborers who are not obliged to report for duty every day and can change their employer of their own choice and therefore there is no element of any permanency or semi permanency in their employment are not included and are not governed by PF Act.

In our Event Management Site also, casual labor employed by us are just for that day, and they are not obliged to report for duty every day, and may or may not come to our Event Management Sites, the next day, there for there is no element of any permanency or semi permanency in working for us, hence they are not included and are not governed by PF Act, accordingly we request you to remove your claim for deduction of PF on Casual Labor, we  use for Event Management sites.