CITU decries Central govt’s reduction of penalty charges on EPFO defaults

New Delhi, June 14: The Centre of Indian Trade Unions (CITU) has strongly criticised the Central government’s recent move to drastically reduce penalty charges on employers defaulting on contributions to the Employees’ Provident Fund Organization (EPFO).
The new notification, issued by the Ministry of Labour and Employment on June 14, 2024, lowers the penal charges for delays in depositing EPF, Employees’ Pension Scheme (EPS), and Employees’ Deposit-Linked Insurance Scheme (EDLI) contributions, the CITU said in a statement issued here.
The CITU criticised the decision, stating that it promotes employer defaults on their statutory obligations and undermines workers’ financial security. According to the new rules, the penalty for late deposits has been reduced to 1% per month, or 12% per annum, across all schemes. Previously, penalties ranged from 5% per annum for delays under two months to 25% per annum for delays exceeding six months, it said.
“The just sworn-in NDA government has revealed its true face by allowing private corporate employers to mishandle workers’ Provident Fund and Pension Fund contributions,” the CITU said. “The Labour Minister of Modi Cabinet has issued a most atrocious gazette notification drastically lowering all the penal charges on employers who default in the timely deposit of contributions.”
Under the EPF Act of 1952, the EPFO can recover defaulted amounts by levying penalties and damages, the CITU said, adding that the previous rates for penalties were set to discourage delays and ensure timely deposits, which are crucial for the financial well-being of workers.
The CITU said that out of approximately 487.9 million employed workers entitled to EPF/Pension, only around 118 million are currently covered. The reduction in penalties, it said, will further squeeze the limited number of workers covered under the EPF scheme by encouraging employer defaults and unauthorized use of workers’ lifetime savings.
Moreover, the CITU further said that the new amendments undermine the deterrent provisions of the Employees’ Pension Scheme, 1995, and the EDLI Scheme, 1976, which were essential for ensuring compliance with the EPF Act passed by Parliament.
The CITU has called upon the Central government to rescind the notification immediately and urged working people to organise protests across the country against these “anti-labour” amendments.