One of the most common estate‑planning dilemmas in India is: “Does my Will override the nomination I made years ago in my Provident Fund or Gratuity records?”
This question is not theoretical; it has led to thousands of disputes in Indian courts. The confusion arises because statutory dues like Employees’ Provident Fund (EPF) and Gratuity are governed by labour laws and the Code on Social Security, 2020 (CSS), while succession is governed by the Indian Succession Act, 1925 and personal laws.
Understanding the legal hierarchy between Wills and nominations is essential for employees, HR managers, and families to avoid painful litigation.
Important Note on the New Labour Codes
India’s four labour codes — Code on Wages, 2019; Code on Social Security, 2020; Industrial Relations Code, 2020; and Occupational Safety, Health and Working Conditions Code, 2020 were formally notified and came into force on November 21, 2025 and have become fully operational from April 1, 2026. Together, they subsume 29 central labour laws.
The Code on Social Security (CSS), 2020 now governs both gratuity and provident fund matters, replacing several older statutes. Key changes under the fully implemented CSS include:
- Gratuity eligibility for fixed‑term employees after just one year of service (reduced from five years)
- Expanded definition of “wages” for gratuity calculation, covering more allowances beyond basic salary and DA
- New prescribed forms for nomination and claims (see Section 4 below)
1. Nomination Wins the First Round (Immediate Payment)
| Asset Type | Role of Nominee |
| General assets (bank accounts, mutual funds) | Nominee is only a trustee / receiver |
| Statutory dues – EPF & Gratuity | Nomination is a statutory mandate under the Code on Social Security, 2020 |
Employer’s liability: Employers and EPFO discharge their legal duty by paying the nominee. This ensures immediate payout without waiting for probate or succession certificates.
At this stage, nomination governs who receives the money first.
2. Will vs Nomination – The Judicial Clarification
“Nomination only tells the employer or EPFO whom to pay immediately on the member’s death, so that the organisation gets a valid discharge. Succession law — including any valid Will — decides who actually owns that money.”
Supreme Court & High Courts have consistently held:
- The nominee is a receiving agent, not the beneficial owner.
- The amounts of provident fund and gratuity received by a nominee must ultimately be distributed in accordance with the Will, or if no Will exists, under succession law (personal law).
Practical effect: A Will can supersede nomination in determining final ownership, but not in the immediate disbursement process.
Key Supreme Court judgments (still good law under the CSS):
- Sarbati Devi v. Usha Devi (1984) – nominee holds money as trustee.
- Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023) – nomination does not confer beneficial ownership.
- Bolla Malathi v. B. Suguna (2025) – The Supreme Court ruled that nominees under EPF and GPF can claim directly without a succession certificate, simplifying the payout process. However, the Court reaffirmed that nominees act as trustees for legal heirs and do not gain absolute ownership.
3. The “Bachelor‑to‑Married” Trap – Under the CSS
Under the Code on Social Security, 2020, the nomination rules have been consolidated under Section 55. The key provision mirrors the old Rule 61(5):
Section 55(4): If at the time of making a nomination the employee has no family, the nomination may be made in favour of any person or persons, but if the employee subsequently acquires a family, such nomination shall forthwith become invalid and the employee shall make a fresh nomination in favour of one or more members of his family.
Case example: You nominated your sibling while single, but later marry. That nomination lapses automatically under the law. Your spouse and children become entitled, regardless of the old nomination or even a contrary Will provision.
Action: Update your nomination immediately after marriage.
4. Gratuity – New Forms Under the CSS (April 2026)
The Payment of Gratuity Act, 1972 has been repealed and its provisions replicated in Chapter V of the CSS (Sections 53 to 58).
Important change – New forms under the CSS:
- Gratuity Nomination: Must now be submitted in Form III (formerly Form F under the old Act). As per Rule 33(1) of the Code on Social Security (Central) Rules, 2025, employees who have completed one year of service must file Form III in duplicate with their employer.
- Gratuity Claim: The claim form is now Form I (updated from the old Form F).
| Provision | Rule |
| Section 55(3) | If family exists, nomination must be in favour of family members. Nomination of an outsider is void. |
| Section 55(4) | If no family at the time of nomination, you may nominate anyone. But once you acquire a family, that nomination becomes invalid. |
| Section 55(2) | You may distribute gratuity among more than one nominee in your nomination. |
| Form III (Nomination) / Form I (Claim) | All employees must file Form III nomination; claims are submitted in Form I. |
Action: If you have an old Form F nomination on file, verify with your HR whether a new Form III submission is required under the CSS rules.
Expanded “Family” Definition Under the CSS – A Major Change
The Code on Social Security, 2020 has significantly broadened who counts as “family” — a change that directly impacts nomination eligibility. Under Section 2(33) of the CSS, “family” now includes:
For all employees (male and female):
- Spouse
- Legitimate or adopted child dependent on the employee
- Dependent parents
- Maternal grandparents
- Minor unmarried brother or sister wholly dependent on the employee (if parents are not alive)
Section 2(33)(e) of the Code: The provision adds father‑in‑law and mother‑in‑law to the definition of “family”.
Official clarification (ESIC Notification, November 28, 2025): The Employees’ State Insurance Corporation (ESIC) has clarified that this inclusion applies specifically to a woman employee — meaning father‑in‑law and mother‑in‑law of a woman employee are now recognised as part of her family, making them eligible for Medical Benefit.
This clarification stems from the official notification by ESIC following the implementation of the Code on Social Security, 2020, which came into force on November 21, 2025. The revised definition of “family” for a woman employee now includes her father‑in‑law and mother‑in‑law, enabling their access to medical benefits under ESIC.
What this means for your nomination:
- You can now nominate in-laws (for women employees), maternal grandparents, and dependent siblings for gratuity benefits.
- The definition is based on financial dependency, expanding coverage beyond the traditional narrow family unit.
- The expanded definition applies to all major statutory schemes including gratuity and ESIC under the CSS.
Action: If you have dependent extended family members (parents-in-law, grandparents, siblings), review and update your nominations to include them.
5. EPF – A Special Note on Current Status
Unlike gratuity and other labour laws that have been fully integrated, the Employees’ Provident Funds and Miscellaneous Provisions Act (EPF Act), 1952 has not yet been formally repealed. While the Code on Social Security (CSS), 2020 under Section 164(3) provides for the repeal of the EPF Act, this specific clause has not been notified by the Central Government and is therefore not in effect.
What this means for you:
- The EPF Act of 1952 and its nomination rules under Para 61 of the EPF Scheme, 1952, remain in full force.
- The principle remains the same: nomination governs immediate payout, but a Will determines ultimate ownership.
- The expanded “family” definition under the CSS does not yet apply to EPF nominations. You must continue using the narrower definition of “family” under the EPF Act (spouse, children, dependent parents) until the repeal is notified.
Action: Continue to update your EPF nomination through the UAN portal. Monitor government notifications for the formal activation of Section 164(3) of the CSS. Once notified, revisit your nomination to take advantage of the expanded CSS framework.
6. Helpful Peer Action Plan
1. Check EPF UAN Portal
- Verify/update your e‑Nomination online under the existing EPF Scheme.
- After updating, download the digitally signed form and request written confirmation from your HR that the change has been transmitted to EPFO.
- Note: e‑Nomination is now mandatory for all EPF members. Claims will not be processed without a valid e‑Nomination.
2. Update Gratuity Nomination Under the CSS
- Submit a fresh nomination (Form G) under the Code on Social Security, 2020.
- Ensure your HR issues a stamped acknowledgement of the new nomination. Without it, the employer may later claim they never received the update.
3. Align Your Will – Nominee as Trustee, Not Beneficiary
Your Will cannot stop EPFO or your employer from paying the statutory nominee. However, your Will can and should declare that any amount received by the nominee from EPF or gratuity is held by that nominee as a trustee for the ultimate beneficiaries named in your Will.
Sample clause for your Will:
“Notwithstanding any nomination made by me under the Code on Social Security, 2020 or the EPF Scheme, 1952 (as applicable), the person receiving such amounts shall hold the same as a trustee and shall distribute the net proceeds to the following persons in the following shares: [name beneficiaries and shares]. The nominee shall have no beneficial interest in the said amounts.”
Without such a clause, a nominee who is not your intended heir may legally receive the money and could refuse to pass it on, forcing your true heirs to litigate.
4. Understand the Dual Role
- Nomination governs immediate payout.
- Will governs ultimate ownership.
Example: You nominate your brother for EPF, but your Will leaves everything to your daughter. EPFO pays the brother. He must then transfer the amount to your daughter, or she can sue him for it.
5. Review Nominations After Life Events
Under Section 55(4) of the CSS, marriage, divorce, or the birth of a child can invalidate prior nominations. Always update your nominations after:
- Marriage
- Divorce
- Birth of a child
- Death of a nominee
- Change in dependency status of a family member
6. Take Advantage of the Expanded Family Definition
Under the CSS, you can now nominate:
- Parents-in-law (for women employees)
- Maternal grandparents
- Dependent siblings
- Dependent parents (expanded definition)
If you have financially dependent extended family members, include them in your nomination.
Bottom Line
| Aspect | Governing Principle |
| Immediate payout | Nominee (EPFO/employer pays nominee) |
| Ultimate ownership | Will (or succession law if no Will) |
| Role of nominee | Trustee / receiving agent, not beneficial owner |
| Marriage effect | Invalidates prior nomination (Section 55(4) of CSS) |
| Family definition | Expanded under CSS – includes in-laws, grandparents, dependent siblings |
| Best practice | Update nomination after every life event + draft Will with nominee‑as‑trustee clause |
Courts consistently treat nominees as trustees, not beneficial owners. A well‑drafted Will ensures your assets reach the people you truly care about.
Disclaimer: This blog is for informational purposes only. Entitlements depend on the Employees’ Provident Fund Scheme, 1952, the Payment of Gratuity Act, 1972, the Code on Social Security, 2020, and succession law. For case‑specific advice, consult a qualified Labour Law Consultant or Advocate.