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Section 147: Power to exempt establishments

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter XIV: Miscellaneous
Competent Labour Forum
Act No. 36 of 2020
Section 146 All 163 Sections of Code on Social Security, 2020 Section 148

Legal Commentary & Landmark Judgments: Section 147

Section 147 of the Code empowers the appropriate Government to exempt any establishment or class of establishments from all or any provisions of the Code, subject to establishing that existing employee benefits are not less favorable.

  • Substantive Parity Condition for Exemptions: Mandates that an exemption can be granted only if the appropriate Government is satisfied that the existing benefits provided by the establishment are not less favorable than statutory benefits.
  • Requirement of Tripartite Consultation: Requires prior consultation with the Central Board or Corporation before granting exemptions from EPF or ESI chapters.
  • Strict Revocation Safeguards for Default: Empowers the Government to revoke exemptions immediately if the exempted trust breaches investment guidelines, underperforms statutory yields, or delays benefit claims.
Key Landmark Precedents:
  • Regional Provident Fund Commissioner v. Hooghly Mills Co. Ltd. (2012) 2 SCC 489: Supreme Court affirmed that exempted establishments must maintain benefits strictly equal to or superior to statutory standards; failure to do so warrants immediate cancellation of exemption.
  • Consumer Education & Research Centre v. Union of India (1995) 3 SCC 42: Affirmed that executive exemptions from social security statutes are conditional upon guaranteeing equal security to worker health and retiral dues.
  • Bakshish Singh v. Darshan Engineering Works (1994) 1 SCC 9: Affirmed that statutory exemptions cannot be used to depress worker retiral benefits.
Courtroom Practice & Strategic Litigation Guidance:

Exempted PF and gratuity trusts must conduct annual statutory audits and publish comparative yield statements proving that trust returns match or exceed official EPFO interest rates to preserve Section 147 exemption status.

Section 146 All 163 Sections of Code on Social Security, 2020 Section 148