Contractual employees entitled to PF benefits

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The Supreme Court recently held that contractual employees who draw salaries directly or indirectly are entitled to provident fund benefits under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF act).

In M/s Pawan Hans Limited & Ors v Aviation Karmachari Sanghatana & Ors, helicopter service company Pawan Hans was incorporated under the Companies Act, 1956, and was subsequently registered as a public company with the Registrar of Companies, Delhi. The government held a 51% shareholding in Pawan Hans and the remaining 49% was held by the Oil and Natural Gas Company (ONGC).

Out of a total workforce of 840 employees, Pawan Hans had engaged 570 on a regular basis, while 270 were engaged on a contractual basis. Pawan Hans implemented its own PF trust regulations for giving provident fund benefits to all its employees, but the same was implemented only with respect to regular employees, even though the term “employee” was defined to include “any person” employed “directly or indirectly” under the company’s PF trust regulations.

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The dispute digest is compiled by Bhasin & Co, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.

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