Battling for a consensus on various important issues in the Employees Provident Fund Organisation (EPFO), the Union government has proposed cutting the number of its trustees by almost half, to ensure “effective” functioning.
The Centre has proposed reducing the body’s Central Board of Trustees (CBT) — chaired by the Union labour minister — to 23 from the present 43. The members include employers, employees and state government representatives.
CBT takes key decisions on issues such as fixing the interest rate on EPFO deposits and where and how to invest these. The government has not been able to persuade the trustees to invest a portion of EPFO money in the equity markets for quite while.
The move is part of various changes proposed by the Union government in the Employees’ Provident Funds and Miscellaneous Provisions Act. A draft Bill has been put up for public consultation.
“It is felt the present strength of CBT is quite excessive, leading to operational difficulties and delay in decision-making (and should) be reduced to a more manageable number,” goes a suggestion from the labour ministry to EPFO separately.
Business Standard had reviewed a note (not in public domain) that the ministry had given to EPFO under the head of “Amendments which are considered necessary by the ministry”.
The new proposal includes reducing the number of employee and employer representatives from 10 to five and those from state governments to eight from 15. However, there is no change proposed in the number of central government representatives on CBT (five at present).
A CBT member explained that many a time, consensus is not built on various important issues, leading to delay in decisions. “The issue of investment in equity always became a hot potato, with trade unions unwilling to even deliberate upon the matter,” said the member, unwilling to come on record.
Another proposed amendment will empower the Union government to waive or reduce the share of employees’ contribution towards the provident fund, if it feels the financial position of any class of companies covered under EPFO is getting weak.
At present, an employee contributes 12 per cent of his or her basic pay towards PF and an equal share is contributed by the employer.
According to the proposals, any company employing at least 10 workers will be covered under this Act, compared to the present 20.