PF Authorities shed some Powers off – Employers smile

PF Commissioner RC Mishra took the following decisions on 30-11-2-12, his last day at Office –

1. PF Authorities cannot take action against Employers for having failed to deposit the workers dues unless the PF Authorities are able name the workers against whose names the remittances are due.
2. No assessment shall be made unless the individual, into whose account the fund is to be credited, is identified. The Order also states that the employers cannot be penalised if they are ‘unable’ or ‘unwilling’ to submit requisite details.
3. The directive also sets a seven-year limit for probing cases of PF default by companies that are required to remit 24% of a workers’ salary into their provident fund accounts till they retire.
4. Specific complaints of default cases older than seven years could be examined, subject to certain conditions. Employee complaints must be accompanied with documentary evidence such as appointment letters, pay-slips, ID cards or bank account statement indicating the credit of salary from the employer.

PF Inspection

The above Orders have come under criticism for the following reasons –

• Until now, department officials could initiate investigations against a company if they noticed discrepancies between the wage bill and its PF contributions. But under the new rule, unless they can identify the names of the employees who have been denied benefits, it can’t begin proceedings.
• A limitation period is enshrined in the income tax laws, but cannot be applied in social security systems as the implication is that a person will be dispossessed of his rightful benefits,” he said, stressing that seven years is too short a limit to impose on savings that are accumulated over 35-40 years of a person’s working life

The PF Authorities have substantiated in support of their present Order stating that such enquiries against Employers often do not result in identification of beneficiaries and only tend to harass employers and establishments. Justifying the seven-year limitation for investigations, the official circular states that open-ended assessments and investigations serve no real purpose.

The Unions would be up in arms against the Orders. This Orders stands on a shaky wicket as Employers are large have been found to have defaulted on many counts. Compliance by the Employers is more often a result of the fear of being caught and be penalized for the period as long as they can be. Inspections as a result of anonymous complaints have led to defaults being unearthed.

When the purpose being that the rightful person should get his rightful dues, this Order definitely strives to meet that objective rather than to just flex their muscle against the Employer.

Courtesy ET : http://articles.economictimes.indiatimes.com/2012-12-07/news/35670504_1_pf-dues-pf-commissioner-pf-contributions