The Employees Provident Funds & Miscellaneous Act, 1952

[This Act is applicable only if entity is registered under EPF Act]


  • To make provision for the application & institution of Provident Funds, Pension Funds and Deposit – Linked insurance Funds for employees in Factories and other establishments
  • The act aims to ensure a retiral benefit to secure the future of the employees after retirement.


It applies to

  • To every establishment) which is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed

to any other establishment employing twenty or more persons or class of such establishments which the Central Government may, by notification in the Official Gazette, specify, in this behalf

Provided that the Central Government may, after giving not less than two months notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than twenty as may be specified in the notification.

However this act shall not apply to certain establishment specified in the Act.


  • An establishment to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below twenty.



For Definitions please refer Definition Annexure.

When we talk about Merger (under section 230 TO 232 of the Companies Act, 2013) under EPF Act, there are three parties involved in a transaction i.e.,

  1. Transferor Company, (Seller Company)
  2. Transferee Company and (Buyer Company)
  • Employees of Transferor Company.

An employee proposed to be transferred have an option not to work under the management of Transferee Company and under the circumstances Transferor Company needs to absorb the said employee or pay all the dues  as per the terms of the appointment and also under various labour laws including retrenchment compensation if so applicable.

Otherwise, after completion of the transaction, Liability of Transferor Company towards its employees get transferred to Transferee Company and Transferee Company is liable to pay Contribution towards EPF of employees of Transferor Company.

Transfer of Establishment

Section 17B of the Employees Provident Funds & Miscellaneous Act, 1952 (EPF Act) -

“Liability in case of transfer of establishment - Where an employer, in relation to an establishment, transfers that establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, the employer and the person to whom the establishment is so transferred shall jointly and severally be liable to pay the contribution and other sums due from the employer under any provision of this Act or the Scheme or the Pension Scheme or the Insurance Scheme as the case may be, in respect of the period upto the date of such transfer:

Provided that the liability of the Transferee Company shall be
limited to the value of the assets obtained by him by such transfer.” (Gross value of assets)

For determining the liability of the Transferee Company under this Act, the value of assets shall be taken at market value.


Therefore, as per Section 17B of the EPF Act –

Transfer of Establishment” also include transfer of establishment “in whole or in part” and “in any other manner whatsoever” – modes of transfer can include transaction/ arrangements in addition to sale, gift, lease or licence, etc.

So, transfer of assets & liabilities of Transferor Company, in the course of merger under section 230 to 232 of the Companies Act, 2013 ; to the Transferee Company, shall constitute Transfer of Establishment.



  1. Which date shall be taken as the transfer date under section 17B of this Act?
  • Here in - “the period up to the date of such transfer” shall mean the contribution or any amount due under this Act up to the effective date. So effective date shall be taken as the date from which the establishment is so transferred.
  1. In case of merger if the transferor company has establishment covered by this Act but the Transferee company doesn’t have any establishment and is so not covered by this Act then post amalgamation will the establishment of the merged company be covered by this Act ?
  • As stated above the registration under establishment wise. As the transferred establishment will continue to be a part of the Transferee Company therefore after such transfer the whole establishment will get covered by this Act. If Transferee Company not registered earlier then it shall get registered within the time specified under the Act.
  1. If in a process of merger the Transferor Company is exempted under sec. 16(2) of this Act then post-merger whether the Transferee Company will also be exempted under the same section of this Act?
  • No, the benefit cannot be availed as exemption given to any establishment or class of establishment shall be restricted only to that establishment or class of establishment and not have the right to be extended to other establishments.
  1. What are the alternatives available to the Transferee Company in respect of registration after part of the establishment is transferred i.e. amendment or new registration?
  • Registration under this Act is establishment wise i.e. if an establishment to which this Act applies has factories or branches situated in different places then irrespective of whether each factory fulfils the conditions for applicability or not but all the factories shall be deemed to be parts of the same establishment and the establishment as a whole will be applied by this Act.

If Transferor Company (Old Employer) and the Transferee Company (New Employer) both are already register under the act-

After such transfer of ownership Transferor and Transferee Company both have to send RETURN OF OWNERSHIP TO THE REGIONAL COMMISSIONER stating the changes in ownership within 15 days of such change by registered post and in the prescribed manner.

  1. If contribution amount is different for Transferee Company as compared to transferor company which amount to follow post transaction?
  • In case Transferor company contributing less than Transferee Company:-

The Employee will get the benefit of contribution made by Transferee Company after such transfer.

In case Transferor company contributing more than Transferee Company:-

In case of above condition it is advisable for transferor and Transferee Company to provide for one time compensation to the transferred employees in order to avoid future legal hassles.

However everything will depend upon the agreement between transferor and Transferee Company.

  1. Who is the authority to decide disputes regarding the applicability of the Act to an establishmentor as to the quantum of the moneys due from any employer?
  • If any dispute arises regarding the applicability of the Act to an establishment or as to the amount of moneys due from any employer under the Act or any Scheme, the Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may decide the same by holding an enquiry. {Section 7(A)}.