Contractual employees are entitled to the benefit of Provident Fund -Supreme Court


The benefits of the provident fund should be extended to contractual employees, the Supreme Court has held in a recent judgment.

A Bench of Justices U.U. Lalit and Indu Malhotra has held that employees who draw wages or salaries directly or indirectly from a company are entitled to provident fund benefits under the Employees Provident Fund (EPF) Act.

The judgment came on the basis of a petition filed by M/s Pawan Hans Limited, a government company that provides helicopter support services to the oil sector for its offshore exploration operations, services in remote and hilly areas, and charter services for the promotion of tourism.

Company Vs. Union

The company had filed the petition against its employees’ union, the Aviation Karmachari Sanghatana, which sought uniformity in-service conditions among employees.

Of a total workforce of 840 employees, the company had engaged 570 employees on regular basis, while 270 employees were engaged on “contractual” basis.

The company implemented the PF Trust Regulations only with respect to the regular employees, even though the term “employee” had been defined to include “any person” employed “directly or indirectly” under the PF Trust Regulations.

The contractual employees have been seeking parity with the regular employees, who are covered under the Pawan Hans Employees Provident Fund Trust Regulations.

‘Uniform service conditions’

“We find that the members of the union, and all other similarly situated contractual employees, are entitled to the benefit of the provident fund under the PF Trust Regulations or the EPF Act. Since the PF Trust Regulations are in force and are applicable to all employees of the company, it would be preferable to direct that the members of the union and other similarly situated contractual employees are granted the benefit of provident fund under the PF Trust Regulations so that there is uniformity in the service conditions of all the employees of the Company, ” Justice Malhotra, who wrote the judgment, ordered.

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