EPF Contribution Rules: Under the Employees Provident Fund (EPF) rules, 12% of the salary (basic + dearness allowance) of the employee has to be contributed to the provident fund account. The employer also has to make a matching contribution, of which 8.33% goes towards the Employees Pension Scheme (EPS) and the remaining amount to the PF account. It is mandatory for the employer to contribute his and the employee’s shares to the latter’s PF account every month.
An employee can check whether their employer is making the mandatory monthly provident fund contributions to his account by logging into their PF account on the EPFO portal. The EPFO also sends an SMS alert whenever a contribution is made by the employer.
While it is mandatory for the employer to make monthly contributions to an employee’s PF account, what can an employee do if the former fails to do so?
Legal experts say that the employee may file a complaint with the EPFO regarding the non-deposit of PF contribution.
“Employees may file a complaint before the EPFO regarding non-deposit of PF contribution which may potentially lead to an inspection out by the authority. Thereafter, the statutory enquiry may commence wherein employers, in addition to their contribution, may be required to pay employees contribution as well,” says Suyash Srivastava, Partner at DSK Legal.
“In the event, the contribution is deducted but not deposited, such non-compliances are viewed very strictly and May warrant criminal action,” he adds.
Experts say that the EPFO can invoke penal provisions of the EPF Act and also file a police complaint under section 406/409 of the Indian Penal Code (IPC) for action against such employers.
“In case of default by the employer, the Employees Provident Fund Organization (EPFO) can invoke penal provisions of The Employees’ Provident Funds And Miscellaneous Provisions Act, 1952 (“Act”) to recover the dues from the employer. Complaint can be lodged with Police under section-406/409 of IPC by the EPFO for action against such employers,” says Anushkaa Arora, Principal and Founder of ABA Law Office.
“Section 14-B of the said Act provides powers to recover damages. If an employer makes default in the payment of any contribution to the Fund by giving an opportunity to the employer shall be given a reasonable opportunity of being heard,” Arora adds.
The experts said that employers are required to make EPF contribution within 15 days of the month end for which salary has been paid. For example, if the employer has paid the salary for the month of August on 1 September 2022 then he must deposit the employee and employer contributions to the PF account by 15 September.
The Union Budget 2021 amended the income tax rules to ensure that employers make timely contributions. According to experts, employers cannot claim the deduction if they fail to make EPF contributions on time.
(The article was first published on August 10, 2020)