EPF Act Gives Lifetime Security To Construction Workers, More Adaptable In Dynamic Labour Markets Like Kerala: Regional PF Commissioner

Emphasizing on the benefits offered by the Employees' Provident Fund Act, the Regional Provident Fund Commissioner Kochi (Kerala) ruled that EPF Act is far more resilient than the Building and Construction Workers Act, as the former can adapt to evolving nature of employment and can provide better and lifetime protection to workers. 

The authority was hearing a construction company's plea seeking application of the Buildings and Other Construction Workers (Regulation of employment and Conditions of Service) Act, 1996 (BOCW Act) rather than the earlier Employees' Provident Funds and Miscellaneous Provisions Act of 1952 (EPF Act) on the ground that the benefits provided under BOCW act and relevant rules are far greater for construction workers than those provided under EPF Act specially in an unorganised sector. 

It was argued that under BOCW Act an amount of not less than 1% of the cost of construction incurred by the employer is to be remitted as a cess which is distributed to the members of Act 1996. The funds are being accumulated under the fund maintained by the authority under the Cess Act and an amount of Rs. 1600- is paid as pension every month.

The petitioner argued that 1996 Act is more beneficial considering that most construction workers are casual labourers who work at different sites within the same month. Many of these workers are migrant labourers who return to their hometowns after completing a project. Under the BOC scheme, contributions can be withdrawn after the age of 58. However, since migrant workers contribute only until their contract ends, their participation is not continuous, unlike the contributory nature of the EPF Act.

BOCW admirable legislation but EPF far more resilient

After hearing the arguments from all parties and stakeholders the Regional Provident Fund Commissioner Kochi (Kerala) & UT of Lakshadweep Uttam Prakash in his order observed:

"While the BOCW admirably targets the immediate welfare needs of one of the most vulnerable segments of India's workforce, it is increasingly evident that its benefits, though essential, are short- term, uniform, and administratively constrained. Despite its noble intent, the lack of transparency, inconsistent disbursal, and procedural rigidity diminishes its effectiveness, especially in dynamic labour markets like Kerala. In contrast, the EPF through its contributory, account-linked, and tech-enabled framework, offers a far more resilient, scalable, and sustainable approach to worker's protection and interests. The early enrolment advantage, portability across employers and states, digitally verifiable contributions, and proportionate, need- responsive benefits mark it out as a system designed not just for immediate aid but for lifetime security and beyond. The EPFO's pension and insurance arms, coupled with its structured governance and unified enforcement mechanisms, further strengthen its capacity to adapt to the evolving nature of employment, including transitions from informal to formal sectors". 

EPF more resilient aims at lifetime security

The authority however said that in contrast, the EPF through its contributory, account-linked, and tech-enabled framework, offers a "far more resilient, scalable, and sustainable approach to worker's protection and interests".

It said that the early enrolment advantage, portability across employers and states, digitally verifiable contributions, and proportionate, need-responsive benefits mark it out as a system designed not just for immediate aid but for lifetime security and beyond.

It further said that EPFO's pension and insurance arms, coupled with its structured governance and unified enforcement mechanisms, further strengthen its capacity to adapt to the evolving nature of employment, including transitions from informal to formal sectors.

EPF aligns better with Article 41 mandate, international labour standards

"Among both the frameworks the EPF framework aligns better with constitutional mandates under Article 41 (Right to Work and Public Assistance) and international labour standards equating benefits to entitlement a key distinction that are better enforceable under judicial review. Case law trends increasingly favour structured statutory frameworks like EPFO, especially where accountability and service delivery are provable through digital footprints and statutory guarantees. Based on the principles of adaptability, transparency, and empowerment, the EPFO framework stands at a firmer ground that can protect the dignity of labour today and ensure a retirement with dignity tomorrow," the authority said. 

The Commissioner thereafter ordered the construction company–M/s Veegaland Developers Private Limited to "continue to comply" with the provisions of EPF & MP Act whose schemes are beneficial as compared to the rules framed by Kerala Government under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

Background

The authority was hearing a plea by Veegaland Developers Private Limited–a construction entity–which moved a Writ Petition before Kerala High Court challenging notices issued by the office of Regional Provident Fund Commissioner. 

The Employees' Provident Fund Organisation (EPFO) said that BOCW Act does not override the EPF Act; rather, Section 63 of the BOCW Act provides that any other legislation offering greater benefits would prevail, thereby upholding the applicability of the EPF Act.

The high court referred the matter to the Commissioner to decide the issue in terms of benefits under the two acts, asking the authority to hear the parties and all stakeholders. 

Comparison between BOW Act and EPF 

In coming to its conclusion as to which Act has better benefits and applicability vis-a-vis construction employees the authority examined the two legislations on various aspects. 

Entry

The authority observed that under BOCW Act, workers must be between 18 and 60 years of age to register. In contrast, the EPF Act allows for entry at any age below 58, with compulsory exit from the Employees' Pension Scheme (EPS) at 58. This absence of a minimum age criterion offers the EPF an advantage. which allows for a longer contribution period.

This enables workers to capitalize on the power of compounding interest over a longer duration with no minimum age requirement. The design of enrolment process under the BOCW Act is inherently voluntary, relying heavily on the worker's awareness, motivation, and access to registration facilities with an element of self-selection; which often results in lower participation rates. In contrast, the EPF framework mandates employer-initiated enrolment, reinforced by legal compulsions and entitlement guarantees by design for securing the rights.

"This top-down approach minimizes the possibility of eligible employees being excluded from the social security benefits altogether...Thus, when weighed on the criterion of "entry" including eligibility age, enrolment process, membership continuity, and benefit portability the EPF Scheme has an edge for a more inclusive and sustainable pathway to social security," it said.

Accessibility and adequacy of Benefits

The authority said that BOCW benefits are dependent on the government's financial bandwidth, and recent delays in pension payments have been acknowledged by Board representatives. In contrast, EPF pensions under EPS have a track record of consistent disbursements.

Additionally, many BOCW benefits carry minimum service or usage conditions such as 3 years for scholarships, tuition fee to attend coaching classes or for marriage, and some are structured as loans, not outright grants. Moreover, the need for minimum continuous registration can be a hurdle for casual workers, potentially limiting their continuity of access.

Where EPF stands apart, is in its encouragement of financial discipline, it said. It fosters "long-term savings, integrates employer contributions, and links benefit value to one's tenure and contribution size towards a financial cushion over time", it added.

It thus said that simplicity and clarity of BOCW's defined benefits may be appealing, but EPF's value-driven, need-based benefits provide a distinct advantage offering greater flexibility and personalization, for specific needs.

Enforceability & Sustainability

It said that while EPF was more structure but it excluded informal construction workers, but BOCW Act, though designed specifically for construction workers, suffers from poor implementation. The EPF scheme is financially sustainable, relying on regular employer-employee contributions and long-term investment returns. The BOCW Act, funded through a 1% cess on construction projects, is suited for low-income, migratory workers as it does not demand substantial worker contribution

Comparing the two on these points the authority said, "While the BOCW Act appears tailor-made for construction workers, a closer inspection reveals that the EPF Act may, in fact, provide greater long-term value through better enforcement mechanism and the fund management practices. Thus, BOCW wins in theory, but EPF wins in structure".

Empowerment and Dignity

It said that EPF Act, though not designed specifically for construction workers, offers a more sustainable, structured, and portable system. For grievance redressal, EPFO offers an online portal, monthly outreach programs (Nidhi Apke Nikat), email support, mobile app access, and a Public Relations Officer (PRO) in every field office. Conversely, the BOCW Act's service delivery system is predominantly through offline modes, requiring in-person visits to field offices; this can prove to be challenging for mobile and migrant labourers.

Cost of Compliance

The authority ruled that EPF  is better placed on the aspect of welfare benefits reaching workers efficiently, as through its e-governance model which now shifts many responsibilities earlier considered burden to be handled through technology. Example of this is Aadhaar based registration of employees.

The authority said that employer has no economic liability under the EPF Act. The 24% of the basic wages contributed to the Employee's Provident Fund under Section 6 of EPF Act are entirely employees' contribution. Section 6 splits the responsibility of depositing the contribution between the employer and employee.

"The intention of splitting the responsibility between the employer and the employee is to ensure that a default by one does not prejudice the entire provident fund contribution. Thus, the employer has no economic commitment under the EPF Act; its only responsibility is to timely deposit the contribution on its employee's behalf," the authority said. 

The EPF Act establishes a provident fund contributed to by the employees themselves. It said that in contrast, Section 3 of the Building and Construction Workers' Welfare Cess Act, 1996 levies a cess on the employer to fund welfare fund constituted under the Building and other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

"Thus, the petitioner company's only economic commitment is under the two BOCW 1996 Acts. It has no economic commitment under the EPF Act," the authority said. 

Case title: IN THE MATTER OF COMPLIANCE TO THE DIRECTIONS OF THE HIGH COURT OF KERALA WHILE DISPOSING WP (C) No 1807 of 2016 TITLED VEEGALAND DEVELOPERS PVT LTD Vs. UOI

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