Raghunathan KE, EPFO Board member representing employers, said that the Employees Provident Fund Organisation (EPFO) will make sure that all Byju’s employees get their provident fund (PF) dues (if pending), attempting to allay fears of employees.
“Byju's employees need not worry about their PF dues. Their social security custodian, the EPFO, will ensure they get their hard-earned money back,” Raghunathan told Moneycontrol in a telephonic conversation.
“When such a matter comes to the notice of the EPFO, it duly examines further into it. The company will also be given a reasonable time to present their side. The EPFO's responsibility is to make sure the employer survives and the employees don't lose their employment, but at the same time, they get their dues of savings,” he said.
Raghunathan’s comment comes a day after Moneycontrol reported that Byju’s has delayed payments for almost all employees since October last year. Data officially sourced through the Employees Provident Fund Organisation (EPFO) suggested that the majority of employees were yet to get their PF payments for April and May, though the company had been deducting the PF portion from the salary every month.
Sanket Jain, Partner at Pioneer Legal, a legal services firm based in Mumbai, explained, if an employer defaults on PF payments for less than two months, it has to pay 5 percent of arrears per annum. If the default is for more than two months, but less than four months, then the rate charged is 10 percent, and if it is for more than four, but less than six months, then the rate goes up to 15 percent. For six months and above the employer is charged 25 percent.
“It must be a very, very difficult situation (for the company) otherwise nobody delays EPF payments,” said Jain. “It is not your money. It is a breach of trust. Under the IPC (Indian penal code), it is a criminal breach of trust, right, there is intent to not pay, so clearly, the IPC section gets invoked and criminal proceedings can be initiated. The labour ministry initiates such actions.”
Jain and two other PF consultants Moneycontrol spoke to also said that it is easier for companies to hide delays in PF payments as employees tend to not check their EPFO passbooks every month. “If an employee doesn’t receive salary, they will make noise. But very few would actually check PF,” he said. Delaying and holding back PF payments typically suggests cash flow issues at a company.
Byju’s, however, has maintained that the company has cleared all the pending dues on the PF front.
Byju’s, founded over a decade ago by former teacher Byju Raveendran, has raised over $5 billion, most of it in the past five years. The company soared to new highs in March 2022 when it raised an $800 million funding round at a whopping $22 billion valuation, becoming the most-valued startup in the country. But since then, fortunes have turned for the company.
In the most recent developments, the company has lost its auditor, Deloitte, and its non-promoter board members. Byju’s has also been in a tiff with its term loan B lenders for over six months. Both, the lenders and the company, have sued each other in US courts. In April, Byju’s offices in Bengaluru were also searched by India’s financial probe agency, the Enforcement Directorate, under the provisions of Foreign Exchange Management Act.
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