The Code on Social Security, 2020 repeals the existing laws on Employee Provident Fund (EPF) and brings forth certain key changes in the EPF scheme. This article culls out the key changes in the EPF Scheme which the employers need to look out for, and in-turn ensure compliance to avoid penal charges:
- Coverage: All establishments that employ 20 or more workers are now placed under the purview of EPF. Earlier it was applicable only to those establishments that were included in the schedule.
- Increased penalties: The penalty amount under the Code has been increased from INR 10,000 to INR 1,00,000.
- Increased imprisonment: T he employer may be imprisoned for a period of one to three years, for deducting the employee contribution from their salaries and failing to deposit the same.
- Legal action on subsequent failures: Subsequent failure to pay contributions by the employer shall attract imprisonment of two to five years, and a fine of three lakh rupees. One of the major reforms in the Employees Provident Fund Scheme is the incorporation of limitation period of five years for initiation of enquiries and a limitation period of two years for concluding them.
- Mandatory Aadhaar based registration: The Code on Social Security, 2020 mandates Aadhaar based registration for EPF purposes.
Trigger of Aadhaar storage requirements: Given the employers regularly assist their employees with the above-mentioned tasks, this provision triggers the need to look into the Aadhaar storage requirements enshrined under the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.
- Reduction of EPF contribution: The Code reduces the rate of Employee Provident Fund (EPF) contribution to 10 percent from the existing 12 percent of the wages.
- System: This System has been designed in a manner that covers the category of self-employed or any other category, under the purview of EPF scheme.
We are HR and employment law experts in Gurgaon, Delhi and Mumbai. The author of this article is Pushkar Thakur, Managing Partner at Corrida Legal. Pushkar is an ex AVP, Legal, Nomura and has led the legal teams at corporates namely Emaar India and Drake & Scull India. He represents clients before all major courts of India and has worked with Kochhar & Co., law firm. Pushkar is an expert in corporate law, contracts, litigation, employment law and data protection. Reach out to him on LinkedIn at: https://www.linkedin.com/in/pushkarthakurcorridalegal/ or pushkar.thakur@corridalegal.com. In case of urgent issues, you may call him at +91-8826680614.