Employee Provident Fund-(EPF)-Q&A-PART-II

1. What actions are taken to retrieve the PF amount from an employer who is in default?

To recover the PF amount from a defaulting employer, several measures can be implemented. Firstly, the EPFO can attach the employer’s bank accounts, freezing the funds to retrieve the dues. Additionally, outstanding payments can be collected from debtors who owe money to the employer.

If necessary, the EPFO can proceed with the attachment and sale of the employer’s properties, using the proceeds to cover the unpaid PF contributions. In extreme cases, the EPFO may consider taking legal action that could lead to the arrest and detention of the employer.

Under the legal framework, sections 406 and 409 of the Indian Penal Code and section 110 of the Criminal Procedure Code can be invoked to address a criminal breach of trust and detention issues. Moreover, the EPFO can pursue prosecution against the employer under section 14 of the EPF & MP Act, 1952, enabling legal consequences for non-compliance.

These measures underline the EPFO’s determination to ensure the recovery of owed PF amounts and to hold defaulting employers accountable for their financial obligations to their employees.

2. How does the EPF notify a member when contributions deducted from an employee’s wages are not transferred to the EPF as required?

The statement or passbook showing your PF account for the year will tell you how much your employer has paid. This helps you know if any payments were missed in a year. Nowadays, if you’ve activated your UAN (a special number), you can check if your employer has paid every month through an online passbook. Also, you’ll get SMS messages on your phone to confirm the monthly PF payment.

3. When a company can’t pay what it owes or stops working, the money that employees put into the Employees’ Provident Fund (EPF) will be given back to them before any other debts are paid.?

Section 11(2) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) states that any outstanding amount owed by an employer for Employees’ Provident Fund (EPF) contributions takes precedence over other debts. This implies that if a company is in financial trouble and has pending EPF payments, those payments must be settled before older debts.

This regulation is in place to safeguard the money employees have saved in their EPF accounts. It ensures that even if an employer faces insolvency or the company shuts down, employees still receive their EPF contributions as a priority.

For employees facing a situation where their employer is struggling financially, it’s advisable to reach out to the Employees’ Provident Fund Organisation (EPFO). They can guide the rights employees have and offer assistance in navigating the process of claiming EPF funds. This step is crucial in securing the money employees have earned and invested in their EPF accounts.

4. Is it allowed for a member to contribute more than the mandatory 12% contribution rate?

Yes, it is known as the Voluntary Provident Fund, A member has the option to make additional contributions beyond the usual 12% of Rs. 15,000. The combined contribution, which includes both the voluntary and mandatory portions, should not exceed Rs. 15,000 per month. (However, the employer might limit their share to the required rate.) Moreover, the member can choose to contribute based on a higher salary, above Rs. 15,000, but this requires approval from the APFC/RPFC, as specified in para-26(6) of the Scheme.

5. What is the process for opening a VPF (Voluntary Provident Fund) account?

To initiate the opening of a VPF (Voluntary Provident Fund) account, the employee is required to compose a request letter to the employer. The letter should specify the inclusion in the VPF scheme from a designated date and indicate the desired VPF contribution amount. Subsequently, the employer incorporates the additional VPF contribution into the ECR statement and processes the payment during EPF returns.

It’s important to note that there is no necessity to establish a distinct VPF account for the employee. Since VPF is an extension of the EPF scheme, the employee can maintain the same UAN (Universal Account Number).

6. How can one complete the ECR (Electronic Challan cum Return) for voluntary PF (Provident Fund) contributions?

Follow the below steps to file VPF in regular challan

1. 1. 1. To contribute to VPF (Voluntary Provident Fund), the employer should manually update the ‘EPF_CONTRI_REMITTED’ column in the ECR file to reflect the higher PF contribution amount (EPF + VPF).
      2. Additionally, adjust the ‘EPF_EPS_DIFF_REMITTED’ column to ensure that the employer’s EPF contribution does not exceed the required amount, as no additional PF amount is needed for VPF.
      3. It is unnecessary to modify the ‘EPF_WAGES’ column.

For easy tracking of VPF contributions each month, consider the following:

• • 1. Maintain a separate record: Keep a dedicated spreadsheet or document to monitor all employees’ VPF contributions.
    2. Use Payroll Software: If utilizing payroll software, check if it can automatically track and integrate these contributions into the ECR file.

7. What is the highest permissible contribution limit for an employee under the VPF (Voluntary Provident Fund?

Employees can contribute up to 100% of the basic wage under VPF contribution. 

8. In cases where the contractor fails to pay the dues to the principal employer, how are contract employees ensured protection and their PF benefits?

The principal employer holds the responsibility of ensuring the contractor fulfils their obligations. Before approving payment, the principal employer should confirm the contractor’s compliance with enrolling and meeting the requirements for all eligible contract employees each month.

To verify remittances and employee names, the main employer can utilize the “Establishment Search” feature on the website www.epfindia.gov.in. This option can be accessed under “OUR SERVICES” >> “For Employers” >> “Important Links” >> “Establishment Search” (also showing Remittances and member names).

By ensuring that all contract employees activate their Universal Account Number (UAN), the main employer can effectively prevent potential issues stemming from contractor defaults.

9. Is there a specific time limit for withdrawing Provident Fund dues?

When an employee decides to resign from their job, there is a specific guideline regarding withdrawing their Provident Fund (PF) funds. In instances where the employee resigns (not due to retirement), there is a waiting period of approximately two months that they must observe before they are eligible to apply for the withdrawal of their PF balance. This waiting period is put in place to ensure the efficient management of the PF system and the proper disbursement of funds.

It’s important to keep in mind that this two-month waiting period generally applies only to cases of resignation and might not be applicable in other situations like retirement or unemployment.

10. Can a member transfer their PF account in the event of a change in employment?

Yes, an employee can get his/her Provident Fund (PF) account transferred to the new employer after leaving the previous job. The PF account is a retirement savings account that is mandatory for all employees in India. When an employee changes jobs, the PF balance from the previous job needs to be transferred to the new job so that the employee can continue to save for retirement.

The employee can transfer the PF account online through the EPFO (Employees’ Provident Fund Organization) portal. This requires the employee to have a Universal Account Number (UAN) and an Aadhaar number linked to the PF account.

Go to the EPFO portal and log in with your UAN and password.

Click on the “Member Services” tab >> Select “Transfer PF Account”. >>Enter the details of your old PF account and your new employer >> Submit the request.

11. How is the interest credited to the P.F. subscribers?

The Employees’ Provident Fund (EPF) interest is credited to the account at the end of the financial year. The interest rate is determined by the Employees’ Provident Fund Organization (EPFO) in collaboration with the government. For the financial year 2022-23, the EPFO has set the interest rate at 8.15 percent.

The interest is calculated on the monthly running balance of the EPF account. The monthly running balance is the total amount in the account on the last day of the month, after taking into account all contributions, withdrawals, and interest credited during the month.

12. Is it permissible for an employee employed in a Branch Unit situated outside the state to qualify as a member of the EPF?

Yes, an employee working in a branch unit located outside the state is eligible to become a member of the EPF. The Employees’ Provident Fund Act, of 1952 applies to an establishment as a whole, regardless of the location of the branch unit.

13. Is it possible for an employee to join the EPF without any age limitations?

Yes, an employee can join the EPF irrespective of their age. There is no age restriction for becoming a member of the Provident Fund, however, an employee who has already attained the age of 58 cannot be a member of the Pension Fund.

The Employees’ Provident Fund Act, 1952 does not have any age restrictions for becoming a member of the EPF. However, some other factors may affect an employee’s eligibility to join the EPF, such as the nature of their employment and the size of the establishment where they are employed.

14. Can an apprentice be eligible to enroll as a member of the EPF?

No, an apprentice can’t register as a member of the EPF. According to the Employees’ Provident Fund Act, 1952 (EPF Act), the term “employee” refers to an individual employed in an establishment for compensation. Apprentices are excluded from the EPF Act’s definition of employees; hence they are not entitled to join the EPF as members.

15. Is it feasible for an employee to solely participate in the Pension Scheme without making contributions to the PF?

No, it is not feasible for an employee to solely participate in the Pension Scheme without making contributions to the PF. The Employees’ Pension Scheme (EPS) is a defined benefit scheme, which means that the amount of pension that an employee receives is determined by a formula that takes into account the employee’s salary and the number of years of service. The formula also includes a contribution from the employer.

If an employee does not make contributions to the PF, they will not be eligible to receive a pension from the EPS. The PF is a defined contribution scheme, which means that the amount of money that an employee receives when they retire is determined by the number of contributions that they have made and the interest that has accrued on those contributions.

Therefore, if an employee wants to participate in the EPS, they must also make contributions to the PF. The minimum contribution that an employee must make to the PF is 12% of their salary.

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