Stipendiary Graduate Trainees Not 'Employees' Under EPF Act; PF Demand Unsustainable: Calcutta High Court

The Calcutta High Court has held that graduate trainees receiving only stipends cannot automatically be treated as “employees” for the purpose of provident fund contributions. At the same time, the Court upheld PF liability in respect of security personnel and fire-fighting staff directly engaged and paid by the principal establishment, observing that their wages clearly attracted statutory deductions.Justice Shampa Dutt (Paul) partly allowed a writ petition filed by West Bengal Power Development Corporation Limited (WBPDCL) challenging orders passed under Sections 7A and 7B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, which had fastened PF liability on several categories of workers at its Bakreswar Thermal Power Project.The Court set aside the EPF authority's finding fastening liability for graduate trainees, holding that the issue stood covered by the Supreme Court's decision in Regional Provident Fund Commissioner, Mangalore v. Central Arecanut & Cocoa Marketing and Processing Co-op. Ltd., which clarifies that trainees paid stipend, with no right or obligation of employment, fall within the category of apprentices and are excluded from the definition of “employee”.Terming the authority's conclusion on trainees “prima facie erroneous”, the Court held that such stipend-based trainees could not be saddled with PF liability.However, with respect to security guards and fire-fighting personnel, the Court noted that records showed they were directly paid by the establishment under the head 'safety and security expenses' and were not merely outsourced personnel. Upholding the EPF authority's conclusion, the Court ruled that their salaries/wages were liable for provident fund deductions.The Court also declined to interfere with findings regarding other contractual and directly engaged staff, observing that those conclusions were based on inspection reports and documentary material.On the challenge to the review order, the Court held that the petitioner had essentially repeated earlier submissions without bringing any new facts. The EPF authority was justified in rejecting the review application, noting that Section 7B could not be used to re-argue the entire case.The authority's observation that the review plea was “nothing but a mere repetition” of earlier contentions was found sustainable.Modifying the impugned orders, the Court set aside PF liability for graduate trainees, and upheld liability for security/fire-fighting and other eligible staff. The writ petition was accordingly disposed of.Case: West Bengal Power Development Corporation Ltd. v. Union of India & Anr.Case No.: WPA 9013 of 2011Click here to read order

Stipendiary Graduate Trainees Not 'Employees' Under EPF Act; PF Demand Unsustainable: Calcutta High Court

Srinjoy Das

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