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Business Laws and Ethics · Employees Provident Fund and Miscellaneous Provisions Act, 1952

Exemptions, Appeals and Transitional Provisions under the Social Security Code

Updated 10 October 2026 · Fact-checked

Under the Code on Social Security, 2020, the appropriate Government can exempt an establishment from the Code for an initial three years if its employees get similar or better benefits. Appeals on dues go to the Tribunal after depositing 25%. ESI disputes go to the Employees' Insurance Court. Section 153 keeps old bodies working until new ones are set up.

Understand Exemptions, Appeals and Transitional Provisions

The Code on Social Security, 2020 replaced older laws such as the Employees' Provident Funds Act, 1952 and the Employees' State Insurance Act, 1948. Three questions follow from this. Can an employer run its own fund instead of the statutory one? Where can an employer or employee challenge an order? What happens to the old bodies while the new ones are being set up? This topic answers those.

Exemption (section 143). The appropriate Government may, by notification, exempt an establishment or class of establishments, or an employee or class of employees, from any or all provisions of the Code or a scheme. The exemption is allowed only if the employees already receive benefits substantially similar or superior to those under the Code. Before exempting from the Provident Fund, Pension or Insurance Scheme, the Government must consult the Central Board. For Chapter IV (the ESI chapter), it must consult the Corporation.

An exempted establishment must form a board of trustees to run its fund. The board is a legal entity that can sue and be sued. The employer must furnish returns electronically, allow inspection and pay inspection charges. If conditions are broken, the Government may cancel the exemption. On cancellation, the surplus, reserves and each employee's accumulations move to the statutory fund. The employer can also apply to surrender the exemption after a board of trustees resolution.

Appeals. For Chapter III matters (provident fund and related schemes), a person aggrieved by an order on determination and assessment of dues (section 125) or levy of damages (section 128) may appeal to the Tribunal under section 23. An employer appealing against the determination of dues must first deposit 25% of the amount determined. The Tribunal should try to decide within one year.

For the ESI chapter, section 49 sends the listed disputes to the Employees' Insurance Court. These include whether a person is an employee, wage rates, contribution rates, who the employer is, and the right to benefits. An employer disputing dues with the Corporation must deposit 50% of the amount claimed, though the Court may waive or reduce this for reasons recorded in writing. Civil Courts have no jurisdiction over these matters.

Transition (section 153). Bodies created under the repealed laws keep exercising the powers and functions of their corresponding Code bodies after commencement. They continue until the corresponding bodies are constituted under the Code or their own term under the old law expires, whichever is earlier.

Key rules to remember

Exemption condition (s.143(4))
Exemption only if employees get benefits substantially similar or superior to the Code
This is the core test. Without it, no exemption can be granted.
Duration of exemption (s.143(3))
Initial period = 3 years from date of publication of notification
Extension is by the appropriate Government for the period prescribed by the Central Government. For PF, Pension and Insurance Schemes, the period is as per the respective scheme.
Prior consultation (s.143(1))
PF/Pension/Insurance Scheme: consult Central Board. Chapter IV: consult Corporation
Applies to both grant and renewal.
Pre-deposit for Tribunal appeal (s.23(3))
Employer deposits 25% of the amount due as determined under section 125
Applies to appeals on determination of dues, not to appeals on damages under section 128.
Pre-deposit for Employees' Insurance Court (s.49(2))
Employer deposits 50% of the amount claimed by the Corporation
Court may waive or reduce it, for reasons recorded in writing.
Time to decide appeal (s.23(4))
Tribunal endeavours to decide within 1 year of the appeal
It is a target, not a rigid bar.
Transitional rule (s.153)
Old body continues until the new body is constituted or its old term expires, whichever is earlier
Applies to the six listed bodies, such as the old Central Board and the ESI Corporation.

How to solve Exemptions, Appeals and Transitional Provisions questions

Most questions give a short fact pattern and ask whether an exemption, appeal or old body is valid. Use this method.

  1. 1Identify the issue: exemption, appeal on dues or damages, ESI dispute, or transition of old bodies.
  2. 2Pick the provision: section 143 for exemption, section 23 for Tribunal appeals, section 49 for the Employees' Insurance Court, section 153 for transition.
  3. 3State the rule in plain words with its conditions, such as similar or superior benefits, or the deposit percentage.
  4. 4Check the facts against each condition: who granted it, was consultation done, what the deposit was, what the period is.
  5. 5Compute any deposit. Take 25% of the determined amount for a Tribunal appeal or 50% of the claimed amount for the Court.
  6. 6Give a clear conclusion in one line, then add the consequence, such as cancellation and transfer of accumulations or the appeal not being entertained.

Quickest way: Forum and deposit table in your head

When to use it: Use for MCQs and short case questions where you must pick the forum, deposit or period.

  1. Provident fund dues or damages: Tribunal, with 25% deposit for dues appeals.
  2. ESI dispute about employee status, wages, contribution or benefit: Employees' Insurance Court, with 50% deposit by the employer, waivable.
  3. Exemption: 3 years initially, similar or superior benefits, a board of trustees, consultation first.
  4. Old bodies: continue under section 153 until new ones are formed or the old term ends, whichever is earlier.
  5. Eliminate options that swap 25% and 50% or that allow Civil Court jurisdiction.

Common mistakes in Exemptions, Appeals and Transitional Provisions

  • Swapping the 25% and 50% deposits.

    Both are pre-deposits for appeals, and students memorise the numbers without the forum.

    Fix: Link 25% to the Tribunal (determination of dues) and 50% to the Employees' Insurance Court (Corporation's claim).

  • Saying the 25% deposit applies to every Tribunal appeal.

    Students read section 23 loosely.

    Fix: The deposit is required only for an employer's appeal on determination of dues under section 125, not on damages under section 128.

  • Treating the 50% deposit as absolute.

    Students skip the proviso.

    Fix: Add that the Court may waive or reduce it for reasons recorded in writing.

  • Granting an exemption without the benefits test.

    Students think the Government can exempt at will.

    Fix: Always state that employees must already receive substantially similar or superior benefits.

  • Ignoring what happens when an exemption ends.

    Students stop at the grant of exemption.

    Fix: On cancellation or surrender, surplus, reserves and each employee's accumulations go to the statutory fund as specified.

  • Thinking old bodies end the moment the Code starts.

    Repeal is confused with the end of functioning.

    Fix: Under section 153 they continue until the corresponding bodies are constituted or their old term expires, whichever is earlier.

Worked examples

Example 1

Sunrise Textiles Ltd, Coimbatore, was ordered by the authority to pay provident fund dues determined at ₹8,40,000 under section 125. It wants to appeal to the Tribunal. Advise on the pre-condition and the amount.

Show the solution
  1. Identify the forum: an appeal against determination of dues under section 125 lies to the Tribunal under section 23(1)(a).
  2. Note the condition: section 23(3) says the employer's appeal will not be entertained unless it deposits 25% of the amount due as determined.
  3. Compute: 25% of ₹8,40,000 = ₹2,10,000.
  4. The deposit is made with the Social Security Organisation concerned.
  5. Add that the appeal is filed in the form and manner, within the time and with the fees prescribed by the Central Government, and the Tribunal should try to decide it within one year.

Answer: Sunrise Textiles can appeal to the Tribunal only after depositing ₹2,10,000 (25% of ₹8,40,000) with the Social Security Organisation concerned.

Example 2

Greenfield Pharma Pvt Ltd has its own provident fund trust and wants exemption from the statutory scheme. Explain the conditions for exemption, its duration, and the consequences if conditions are breached.

Show the solution
  1. Rule: under section 143(1), the appropriate Government may exempt by notification, subject to prescribed conditions.
  2. Pre-condition: under section 143(4), exemption is granted only if employees already get benefits substantially similar or superior to those under the Code or scheme.
  3. Procedure: for the Provident Fund, Pension or Insurance Scheme, the Government must consult the Central Board before granting or renewing the exemption.
  4. Duration: under section 143(3), the exemption is initially for three years from the date of publication of the notification. It may be extended as prescribed.
  5. Management: under section 143(5), the employer forms a board of trustees, a legal entity that can sue and be sued, to run the fund.
  6. Compliance: under section 143(6), the employer furnishes returns electronically, allows inspection and pays inspection charges.
  7. Breach: under section 143(7), the Government may cancel the exemption. Under section 143(8), surplus, reserves and each employee's accumulations are then transferred to the statutory fund.

Answer: Greenfield Pharma can get exemption only if its employees receive similar or superior benefits, after consultation with the Central Board. It runs for three years initially, through a board of trustees. If conditions are breached, the exemption can be cancelled and the accumulations move to the statutory fund.

Exam tips

  • Learn the two deposit figures with their forums: 25% for the Tribunal and 50% for the Employees' Insurance Court.
  • For a 14-mark answer, structure it as grant, conditions, duration, compliance, cancellation or surrender, then transfer of funds.
  • For section 153 questions, quote the phrase 'whichever is earlier' and list the old bodies that continue.
  • In MCQs, watch for options that allow a Civil Court to hear ESI disputes. Section 49(3) bars this.
  • Always cite the section number you are sure of: 23, 49, 143 and 153 are safe from this topic.

Practice questions from Employees Provident Fund and Miscellaneous Provisions Act, 1952

Exemptions, Appeals and Transitional Provisions: frequently asked questions

Who can grant exemption to an establishment under the Code on Social Security?

The appropriate Government grants it by notification under section 143. For PF, Pension and Insurance Schemes it must first consult the Central Board, and for Chapter IV it must consult the Corporation.

How much must an employer deposit to appeal to the Tribunal?

For an appeal against determination of dues under section 125, the employer must deposit 25% of the amount determined. Without this deposit, the Tribunal will not entertain the appeal.

Which forum decides ESI disputes?

The Employees' Insurance Court decides the matters listed in section 49, such as employee status, wages, contribution rates and benefit claims. Civil Courts have no jurisdiction over them.

What does section 153 of the Code on Social Security do?

It lets listed bodies created under the repealed laws, such as the old Central Board and the ESI Corporation, keep working as the corresponding Code bodies. They continue until the new bodies are constituted or their old term expires, whichever is earlier.