Are Contractual Employees Entitled to Provident Fund Benefits?

Entitlements of the provident fund to be extended to contractual employees: Supreme Court

The Hon’ble Supreme Court of India, vide its judgment dated 17.01.2020 in the matter of M/s. Pawan Hans Limited & Ors. Vs. Aviation Karmachari Sanghatana & Ors. clarified that the contractual employees who are drawing wages/salary directly or indirectly are entitled to the Provident Fund Benefits.

The judgment by SC definitely brings a respite to the contractual employees of the Organization as well as other nationwide employees in such a situation, who had been seeking equality with the regular employees under the PF Trust Regulations of India.

More About the Judgement 

The Apex Court held that the appellant company/employer to satisfy its tests for an establishment to seek exemption under section 16 (1) of the PF Act i.e. The establishment must be either:

A. ‘belonging to’ which signify ownership of the establishment by Government or

B. ‘under the control of’ which means superintendence, management or authority to direct, restrict or regulate the establishment.

Here, the appellant company/employer qualifies the first ingredient of the test. However, it did not qualify the second, hence could not claim exclusion/exemption as stated above.

Moreover, section 2 (f) of the Act defines an employee and includes ‘any person’ engaged directly or indirectly in connection with the work of an establishment that brings contract employees under the purview of ‘any person’ on broader classification.

Therefore, the respondent labor union in this case and all contractual employees in like manner are entitled to provident fund benefits.

For a detailed judgment copy, kindly click here.

Further, if you want to learn more about the provident fund, we give you all the information in this regard - Here