CITU is opposing the government’s decision to reduce penalty charges for defaulting employers
As per the latest notification, the defaulters will now have to pay only 1 percent of the premium amount per month as penalty for these three schemes.
The Center of Indian Trade Unions (CITU) has opposed the central government’s decision to reduce punitive charges on employers who default in depositing their employees’ provident fund, pension and insurance contributions with the Employees Provident Fund Organization (EPFO).
“This has apparently been done in the name of promoting ease of doing business at the expense of the ease of living of our working people, who have already lost their hard-earned wages,” CITU said in a statement.
Earlier on Saturday, the Ministry of Labor and Employment issued a notification significantly reducing the penalty charges for employers and making them uniformly applicable regardless of the duration of absenteeism.
If an employer defaults in payment of an employee’s contribution to the Employees Provident Fund, 1952; Employees Deposit Linked Insurance Scheme, 1976 or Employee Provident Scheme, 1995, the body of the pension fund used to recover the same money from the employer by imposing punitive damages at different rates for different periods of default.
As per the latest notification, the defaulters will now have to pay only 1 percent of the premium amount per month as penalty for these three schemes. This amounts to 12 percent of the contributions per year.
Previously, a penalty of 5 percent per year was imposed for default of less than two months, while a penalty of 10 percent per year was imposed for default for a period of two to four months. Later, the penalty was increased to 15 percent per year for defaults for four to six months and could increase to 25 percent per year if the default continued for more than six months.
“Of the nearly 500 million employees in the country, only about 118 million employees are covered by the EPF, exposing employers’ violation of the EPF law promoted by the government’s enforcement machinery. In addition, those covered by the EPF scheme will come under further pressure by promoting default by the employers and thereby enabling the employers to make unauthorized use of their employees’ savings in the EPF, by penalty for willful default.” said Tapan Sen, general secretary of CITU.
Currently, employers are required to file returns with EPFO for the previous month on or before the 15th of every month, and any delay after that is considered standard. Of the 12 percent of the employer’s share, 8.33 percent goes to the employee’s pension account under the EPS, 3.67 percent goes to the provident fund account under the EPF scheme and another 0.5 percent goes to insurance. kitty under the EDLI scheme. However, the total employee contribution of 12 percent goes into the PF account.
First print: June 16, 2024 | 8:35 PM IST