Move seen as bid to foil diversion of funds by contractors and employers
Contract workers and other Provident Fund subscribers can heave a sigh of relief, as the Employees Provident Fund Organisation (EPFO) has decided to take steps to ensure that money collected in the name of the workers is deposited in their name and action is taken against defaulting employers.
The EPFO has issued two circulars this week that could stop diversion of funds meant for provident fund of employees, either by contractors or employers.
The circulars, issued on November 30 and December 5, say that the EPFO and its website would now have not just the total number of subscribers under the head of each organisation, but the names of these workers for whom payments have been made by the company.
The first circular was signed by the outgoing Commissioner R C Mishra on the day he retired, while the second one is an elaboration on it.
Mishra refused to comment on the circulars which deal with the illegal practice of 'bulk payments', but said it was the result of the organisation’s effort to stop diversion of funds meant for the poor. "We have not changed the rules, but tried to stop something that is contrary to the law," he said.
"The principle employer is not giving names of the workers for whom they are making PF contributions. Our PF officials are also not asking for the names of these workers. The moment we insist on names, the employee is empowered. And if an employer does not cooperate then we proceed under law with criminal action," EPFO sources said.
The two circulars would put a lid on the prevailing practice of 'bulk payment" of PF contributions by contractors colluding with officials of the principal employer and provident fund employees rather than into specific accounts, says a senior official of the EPFO.
None of these workers would ever get the amount as nothing exists in their name thanks to the arbitrariness that prevails now in the matter of collection of payments, the official said. On lumpsum payments, the circular of November 30 says:
"The problem of lump-sum assessments happens mostly in contractor establishments and in establishments employing workers of migratory nature having short-term project-based employment in various establishments. The lump-sum assessments happen because the default detection and the subsequent compliance action take place much after the occurrence of default. Further, the employer is either unwilling or unable to provide details of its employees, when so required during the course of enquiry."
The circular has made it mandatory for establishments to file returns of employees both regular and contractual through ECR.
If the workers are deputed to another establishment on contractual basis, then the EPF code number of the establishment would be mentioned in the ECR. It says: "There shall be no assessment without identifying individual members in whose account the fund is to be credited.
It adds grimly that "If the employer or contractor is unable or unwilling to submit requisite details, action under Section 14, 14A, 14AA, 14ABand 14 ACof the EPF Act shall be initiated."
Another circular issued five days later on December 5 re-emphasises the need for companies to provide names of subscribers each month. This would make information transparent and available each month on a real time basis, officials said.
This transparency would help in ending exploitation of the contract workers at the hands of the contractors and the employers, they said.
EPFO sources denied as motivated reports that the new circulars would leave the workers to fend for themselves and the EPFO would cease to be responsible for tracking the money paid in their names.
In fact, the November 30 circular gives a detailed account of the course to be followed to catch culprits under Section 7 A of the Employees' Provident Funds & Miscellaneous Provisions Act 1952.
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