A Supreme Court bench in a recent judgment held that the benefits of the provident fund under the Employees’ Provident Funds and Miscellaneous Provisions Act, should be extended to contractual employees engaged by a company, who draw their wages or salary directly or indirectly from the company.
A bench of U.U Lalit and Indu Malhotra gave the landmark decision in a petition filed by M/S Pawan Hand Limited, a government enterprise which provides helicopter support services to oil sector for its offshore explorations, and services in remote and rough terrain.
The Government of India holds 51% shareholding in Pawan Hans Limited and the remaining 49% is held by Oil and Natural Gas Company Ltd. (ONGC).
The company contended that it is excluded from the purview of the provisions of the EPF Act. However, the court taking a liberal view, laid down two-step test to see if an establishment can seek exemption from the provisions of the EPF Act.
First, the establishment must be either ‘belonging to’ or ‘under the control of’ the Central or State government. The phrase ‘belonging to’ signifies the ‘ownership’ of the Governemt, whereas the phrase ‘under the control of’ suggests authority to direct, restrict or regulate the affairs of the company.
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.
The Court held that in view of the fact that the company has failed to satisfy the second test, hence it cannot be said that it is out of the purview of the Act.