More than 10,000 companies – including 1,195 state-owned – nationwide have defaulted on provident-fund payments: 2,200 companies owe at least Rs 2,200 crore –to the EPFO, the portion of employee salaries they should have deposited.
The Airports Authority of India tops the list of defaulting institutions with a Rs 192 crore default, followed by HBL GLOBAL, Mumbai, and Ahluwalia Contracts India Limited, Delhi, with Rs 64.5 crore and 54.5 crore, respectively.
The Employee Provident Fund (EPF) is one of the most common forms of investment among salaried individuals.
Provident funds are meant to provide financial security to salaried employees, who must contribute 12 percent of their monthly salary with the employer contributing 13.6 percent.
Airports Authority of India started remitting the monthly contribution from Sep 2007. For the retrospective period ie from 1 April, 1995 (date of formation of AAI) to 22 Aug, 2007, AAI has remitted the pension contribution in respect of employees along with the interest thereon. The regional provident fund office, Delhi considered this period as a default period and levied the charges of Rs 192 crore for the period from April, 1995 to February 2006. The matter was taken up with central office and regional office stating that these charges are not payable by AAI as it pertains to pre-discovery period. However, CPFC/RPFC did not accept the argument of AAI and did not waive off those charges. Left with no other choice, AAI filed a case in High Court of Delhi to obtain a stay order. The next date of hearing in the case is 30 September, 2016.Rajesh Bhandari, Executive Director (Finance), AAI told Indiaspend
Remedies and Legal Action
EPFO’S role as a custodian of employee savings faces has not been too efficient as it does not tell employees that companies are defaulting until they come to settle, cases waiting for settlement are rising and corruption with the organisation endures.
EPFO trustee Sachdev said the organisation was “very slow” in dealing with complaints.
One can file a written criminal case with the police against one’s employer if they are not submitting PF and support their case with the salary slip that they receive every month.
However precautionary measures should always be taken to avoid difficulties in future. If delays happen then the employer will not only be liable for the dues but also liable for interest penalty based on the delay in payment. Interest amount will vary based on the number of delays.
Criminal offence:
- Not depositing the money deducted from an employee’s salary towards his share of contribution to EPF or Pension Scheme amounts criminal breach of trust under section 405 of IPC.
- As per section 406 of IPC, criminal breach of trust is punishable with an imprisonment upto 3years or fine or both.
Penalties for default on deposit: Para 32A of the EPF Scheme, 1952 provides for claiming of damages for default in making payment.
(With inputs from Indiaspend)
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