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Last Updated : Mar 27, 2017 08:50 AM IST | Source: Moneycontrol.com

PF may become voluntary as EPFO’s Central Board of Trustees is set to discuss move

The inclusion of the agenda item of the Central Board of Trustees’ (CBT) to make PF contributions voluntary for the garment and made-up sectors has raised doubts on the government’s long-term intent on provident fund structure.

Is the government planning to open a window to make contributions to Employees' Provident Fund (EPF) voluntary for establishments which come under the ambit of the EPF and Miscellaneous Provisions Act, 1952?

A move by the Employees' Provident Fund Organisation (EPFO) to include an agenda item in its forthcoming Central Board of Trustees (CBT) meeting to make PF contributions voluntary for garment and made-up manufacturers has raised doubts on the government’s long-term intent on provident fund.

Central trade unions allege that the move to make PF contributions voluntary for a segment of industry could signal a long-term plan to alter the very purpose for which the EPF and Miscellaneous Provisions Act (EPF Act) was enacted.

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“This is part of a systematic effort by the government to dismantle the social security scheme. There is no logic in making PF voluntary. However little a worker's contribution is towards PF, it goes on to create a corpus for old age. Unless it is mandatory, there is hardly any chance of contributions from the employee," AK Padmanabhan, President, Center for Indian Trade Unions (CITU) and a member of CBT told Moneycontrol.

At present, all establishments that have 20 employees or more come under the ambit of the EPF Act and have to mandatorily deduct 12 percent from an employees' salary and match it with a similar contribution from the employer as provident fund contribution.

DL Sachdeva, General Secretary, All India Trade Union Congress (AITUC) said that the trade unions would oppose the move. "We will strongly oppose the move to make PF contribution voluntary for the garments and made-up industries. Once we give in, more sectors may be given a similar treatment, thereby dismantling the very edifice of the EPF structure," Sachdeva said.

The government had in December 2016 got the approval of Union Cabinet chaired by Prime Minister Narendra Modi to make employees’ contribution to EPF optional for employees earning less than Rs 15,000 per month. However, the employer would still be required to contribute their 12 percent share of the employee's earning.

Sachdeva said that move would require an amendment to the EPF Act.  "As of now it is a move cleared by the Cabinet. It cannot be implemented unless the Act is amended. If the Act is amended it will throw open the floodgates for more sectors to be included. Also, employers may later say that their contribution should be made voluntary. This would be disastrous for the social security structure," Sachdeva said.

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First Published on Mar 24, 2017 02:50 pm
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