Tougher EPFO Norms for Employees
Those working in construction and real estate projects will soon find it difficult to claim their dues from their employers with Employees Provident Fund Organisation ( EPFO), which manages lifetime savings of 6.15 crore individuals, changing the norms. In case their PF accounts have not received the funds, employees and EPFO will have to prove that employers deducted the statutory dues while paying the salaries before undertaking an assessment. In addition, the agency has decided to limit investigations into allegations of default only if it is for the past seven years, a move that will again make life tougher for employees.
The EPFO (Employees Provident fund Organisation), which manages lifetime savings of 6.15 crore individuals, has just made life tougher for workers. Employees willl now have to prove that their employers deducted the statutory dues while giving them salaries, a move that will further benefit construction companies and contracters in particular who often claim that they have paid salaries to thousands of workers without actually transferring it.
What is going to add to the woes is EPFO's decesion to limit investigations into allegations of default only if it is for the past seven years. " It has been observed that open-ended assessment, inquiries and investigations serve no real purpose. Moreover, such inquiries often do not result in the identification of beneficiaries and only tend to haras the employers. It is accordingly directed that no inquiry or probe shall ordinaily go beyond seven years," central PF commissioner RCM mishra said in a circular issued on November 30, the day he superannauted.
While trade unions are protesting the move, the same circular also has a clause on lump-sum assessments dealing with establishments that hire "workers of migrtaory nature" on short term project-based employement, a reference largely to the construction and real estate sector.
They pointed to at least 20 raids conducted by EPFO's central squad in the Capital and NCR and irregularities were detected. "Evasion of PF dues is a common problem in labour-intensive sectors where employers show less workers than the actual number engaged in order to evade their PF amounts. So far, assessments were based on extensive examination of accounts which allowed recovery of PF contributions even if the attendance records were destroyed or not submitted by the companies for inspection. But it is now possible for a company to destroy employment records and claim immunity from PF liability as authorities are now saddled with the additional Officials in the agency admitted that the new directive will make it tough for workers to claim dues as they often do not have their PF account numbers although their employers would have shown in the records that salaries have been paid.
Under the law, entities employing over 20 workers have to mandatorily deduct 12.5% of the salary and transfer it to EPFO for provident fund and pension schemes.
Trade unions have raised the red flag against the move to limit the investigation period as they see the scales tilting in favour of defaulters of EPFO that manages assets to the tune of Rs 5.80 lakh crore.
"This circular is anti-worker. The law of limitation does not apply on us and does not stand the test of law as there are several Supreme Court rulings on the issue," said A D Nagpal, Hind Mazdoor Sabha secretary and a trustee on the EPFO board.
Nagpal said that fearing action, employees often do not complain against their employer till they leave service and the new provision will make it impossible for them to claim what is due to them.
"It is not proper to have a time limit for what is an employee's right," added Citu president A K Padmanabhan, who is also on the EPFO board. He said the EPF statement usually does not reach employees on time and very few actually check the balance and deposits carefully.
Even before the circular was issued, there were protests within EPFO over the move. Sources said some of the members of a committee of officers on judicial proceedings had opted out from giving their recommendations as they recognized that the move was not employee-friendly. Yet, Mishra went ahead and issued the directive.
Sriganga Consultancy View
In a country which has precious little by way of a social safety net, the provident fund is one of the few such fallback options, even if only for those in the organised labour force. Any change in the rules governing this scheme must therefore be tested on the touchstone of wheater it enhances the safety net or weakens it. Imposing a time limitation on when defaults can be investigated clearly weakens it. Most of those whose savings lie in the EPF do not regularly track wheather money is being deposited in it by their employers and, if so, whether it is as much as it should be. They may well discover a default well after it happens. Clearly, they cannot be left with no scope for redress due to a time limitation clause.