EPFO puts on hold implementation of its circular

Amid pressure from trade unions, EPFO has kept in abeyance, its circular that seeks to tighten norms for initiation of inquiry against employers in provident fund (PF) cases and clubbing of allowances with basic wages for computing PF contribution.

"It has been decided to keep the circular in abeyance with immediate effect and till further orders," another EPFO circular to field staff said.

After the controversial circular was issued by the Employees' Provident Fund Organisation (EPFO) on November 30, the trade unions had lodged their protest with Labour Ministry, terming it anti-worker.

According to the circular, the inquiry against employers can only be initiated after "actionable and verifiable information" is placed for consideration before the compliance officers.

With regard to the time period for initiating inquiry, it had said, "no inquiry or investigation shall ordinarily go beyond seven years, i.e., it shall cover the period of default not exceeding preceding seven years."

However, in a worker friendly move, the circular also redefined the meaning of "basic wages" for the purpose of provident fund deductions. It said: "All such allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as the basic wages."

The employers are also not happy with the EPFO's move to deal with splitting of remuneration by firms which help them to reduce their PF contribution obligation substantially.