Case Study: Gujarat High Court Rules Employers Cannot Be Forced to Contribute Over Statutory EPF Limit

Case

Satishkumar Induprasad Chaturvedi & Ors. v. SVM Institute of Technology & Anr.
R/LPA No. 1028/2019 in R/SCA No. 12638/2013

Court and Date

Hon’ble Mr. Justice A.S. Supehia
Hon’ble Mrs. Justice Mauna M. Bhatt
Gujarat High Court
Date of Order: 27 September 2024

Relevant Law

• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  • Section 12: Prohibits reduction of wages to evade EPF liability.
  • Paragraph 26(a) & 29 of the EPF Scheme, 1952: Define employer and employee contributions and ceiling limits (10% or 12% of basic wages).

Background

Employees of SVM Institute of Technology contributed to the Provident Fund (PF) based on their actual basic pay, while the employer contributed only up to the statutory wage ceiling.

• From 1997–2002, employer contributed as per the statutory ceiling.
• From 2003–2011, employer voluntarily contributed 12% of full basic salary (well above the ceiling).
• From Feb 2011 onwards, employer reduced its contribution back to the statutory ceiling — 12% of ₹15,000.

Employees approached the Assistant Provident Fund Commissioner (APFC), who ordered the employer to match their higher contributions.
The employer challenged this before a Single Judge (writ court), who set aside the APFC’s order.
The employees then filed this Letters Patent Appeal before the Gujarat High Court.

Legal Issue

Whether an employer can be compelled to continue contributing to EPF at the same higher rate as employees’ contribution exceeding the statutory wage ceiling.

Key Legal Findings

• Statutory liability is capped:
  Under Paragraph 29(1), employer’s contribution is 10% or 12% of basic wages, subject to the statutory ceiling (₹15,000).
• Employee may contribute more — employer not bound to match:
  Proviso to Para 29(2) clearly states that if an employee contributes more than 12% or on salary above the ceiling, employer is not obliged to match the excess.
• Voluntary excess contribution is not a statutory obligation:
  • If an employer voluntarily pays above the ceiling for some period, it does not create a permanent statutory obligation.
  • Such extra payments are liabilities by volition, not enforceable in law.
• EPF Act overrides any internal ordinance:
  The Institute’s Ordinance 69(a)-Clause 17(b) could not override the EPF Act & Scheme because no separate scheme was ever framed by the Institute.
• Section 12 not attracted:
  Reducing the employer’s contribution from voluntary higher rate back to the statutory ceiling is not “reduction of wages” under Section 12.

“The employer cannot be compelled to contribute more than which is provided by the statute… The employee cannot enforce the voluntary contribution of large amount as a statutory obligation.”
— Gujarat High Court, Paras 23–24

Judgment

• The Division Bench dismissed the appeal, upholding the Single Judge’s decision.
• Held that:
  • The employer’s obligation is limited to 12% of the statutory ceiling (₹15,000).
  • Employees cannot demand matching contribution on full salary if it exceeds the statutory ceiling.
  • The earlier voluntary contributions by the Institute do not create an enforceable legal right for employees to continue receiving them.

Conclusion

This judgment clarifies that employers are only legally bound to contribute to EPF up to the statutory wage ceiling (currently 12% of ₹15,000).
Even if they previously contributed more, they can reduce their contribution back to the statutory level, and employees cannot enforce voluntary excess as a legal entitlement.
The EPF Act and Scheme override any internal institutional ordinances on provident fund contributions.

Key Learning

• Employer liability is capped at 10%/12% of the statutory ceiling (₹15,000).
• Employees can contribute more voluntarily, but employer need not match the excess.
• Voluntary excess contribution ≠ statutory obligation.
• Section 12 does not prohibit reducing contributions back to the statutory limit.
• Internal rules/ordinances cannot override the EPF Act and its scheme.

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