Skip to main content

Contractual employees directly engaged by company entitled to Employee Provident Fund benefit

In Civil Appeal No. 353 of 2020, M/S. PAWAN HANS LIMITED vs AVIATION KARMACHARI SANGHATANA, the issue which arises for consideration is whether the contractual employees of the Appellant­Company are entitled to provident fund benefits under the Pawan Hans Employees Provident Fund Trust Regulations or under the Employees’Provident Funds and Miscellaneous Provisions Act, 1952 and the Employees’ Provident Fund Scheme, 1952 framed thereunder.

The members of the Respondent -Union had made several representations to the company to extend the benefit of the PF Trust Regulations since they were directly engaged by the Company on contractual basis, some of whom were working for almost 20 years. Being aggrieved by the inaction of the Company, the Respondent­-Trade Union approached the High Court. The High Court directed a liberal view must be taken in extending social security benefits to the contractual employees and that the benefits under the EPF Act be extended to the members of the Respondent­ Trade Union, and other similarly situated employees.

The company approached Supreme Court against the High Court order claiming that the company did not come under EPF Act. The Supreme  Court  observed that in Regional Provident Fund Commissioner v. Sanatan Dharam Girls Secondary School, 1 (2007) 1 SCC 268, a twin­ laid down  test for an establishment to seek exemption from the provisions of the EPF Act, 1952. The twin conditions are:
1) First, the establishment must be either “belonging to” or “under the control of” the Central or the State Government. The phrase “belonging to” would signify “ownership” of the Government, whereas the phrase “under the control of” would imply superintendence, management or authority to
direct, restrict or regulate.
2) Second, the employees of such an establishment should be entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme or rule framed by the Central Government or the State Government governing such benefits.

If both tests are satisfied, an establishment can claim exemption/exclusion under Section 16(1)(b) of the EPF Act.

Applying the first test to the instant case, the Central Government has a 51% ownership in the Appellant­ Company, while the balance 49% is owned by the ONGC, a Central Government PSU . which is applicable to the Appellant company but as for the failed that second test as it was observed that the Company had its own Scheme viz. the Pawan Hans Employees Provident Fund Trust Regulations which was not framed by the Central or State Government and restricted to only the ‘regular’ employees. Therefore the Supreme Court decided that that the Company has failed to make out a case of exclusion from the applicability of the provisions of the EPF Act.

As for the issue of whether the members of the Respondent­Trade Union are entitled to the benefit of Provident Fund under the PF Trust Regulations or under the EPF Act, the Supreme Court held that the members of the Respondent­-Union have been in continuous employment with the Company for long periods of time. They have been receiving wages/salary directly from the Company without the involvement of any contractor since the date of their engagement. The work being of a perennial and continuous nature, the employment cannot be termed to be ‘contractual’ in nature.

The Supreme Court decided that Clause 2.5 of the PF Trust Regulations would undoubtedly cover all contractual employees who have been engaged by the Company, and draw their wages/salary directly or indirectly from the Company and are entitled to the benefit of provident fund under the PF Trust Regulations or the EPF Act.

Comments

Post a Comment

Most viewed this month

Appellate authorities under Special Statutes cannot be asked to condone delay

Madras High Court in R.Gowrishankar vs. The Commissioner of Service Tax has held that Appellate authorities cannot be asked to condone the delay, beyond the extended period of limitation A Division Bench comprising of Justices S. Manikumar and D. Krishnakumar, made this observation while considering an appeal filed against Single Bench order declining to set aside the order made in the condone delay petition filed by the petitioner to condone 223 days in filing the appeal before the Commissioner of Service Tax (Appeals). Article referred: http://www.livelaw.in/appellate-authorities-special-statutes-cannot-asked-condone-delay-beyond-extended-period-limitation-madras-hc/
Post a Comment
Read more

'Seize assets to pay damages to accident victim'

Her story might be an inspiration for the physically challenged but justice has remained elusive for her. In 2008, a bus accident left research engineer S Thenmozhi, 30, paraplegic. In April 2013, the motor accident claims tribunal directed the Tamil Nadu State Transport Corporation (TNSTC) to provide her a compensation of 57.9 lakh. However, TNSTC refused to budge and on Tuesday a city court ordered attaching of movable assets of the transport corporation. Thenmozhi was employed in C-DOT, a telecom technology development centre in Bangalore. On July 21, 2008, she was coming to Chennai in a private bus. Around 2am, the bus had a flat tyre and the driver parked it on the left side of the road near Pallikonda in Vellore district on the Bangalore-Chennai highway. While the tyre was being changed, a TNSTC bus of Dharmapuri division hit the stationary bus. The rear part of the bus was smashed and passengers were injured. Thenmozhi who had a seat at the back of the bus suffered...
Post a Comment
Read more

Mumbai ITAT rules income of offshore discretionary trust is subject to tax in India

The Mumbai Income Tax Appellate Tribunal (ITAT) has recently determined the following issue in the affirmative in the case of Manoj Dhupelia: Should the income of an offshore discretionary trust be subject to tax in India, if no distributions have been made to beneficiaries in India? The question arose from appeals filed by individual beneficiaries in relation to a Lichtenstein-based trust, the Ambrunova Trust and Merlyn Management SA (the Trust) with the ITAT. It is important to note that the individuals in this case were amongst those first identified by the Government of India (GOI) as holding undeclared bank accounts in Lichtenstein. The ITAT ruling raises the following issues: Taxation of Trust Corpus: ITAT classified the corpus of the trust as "undisclosed income" and declared it taxable in the hands of the beneficiaries. Taxation of Undistributed Income: ITAT refused to draw a distinction between the corpus and undistributed income from the trust and declared i...
Post a Comment
Read more