Employers Should Pay Damages If Provident Fund Contribution Delayed For Employees

However, several medium and small tech firms took undue advantage of this.

The Supreme Court has ruled that an employer must pay damages in case of delay in payment of the contribution of Employees’ Provident Fund (EPF) of an employee.

Duties Toward Employees

EPF contribution is the employer’s responsibility in order to provide financial stability to the employee during his retirement.

The contribution comes from both the employee and employer.

The law states that all companies having more than 20 employees have to make a contribution.

Penalties

If they fail to deposit EPF contribution before the deadline, the company is liable to pay an EPF interest of 12% per annum for every single day, explains Harpreet Saluja, President, Nascent Information Technology Employees Senate NITES.

He said, “We welcome the recent Hon’ble Supreme Court judgement pronounced in HORTICULTURE EXPERIMENT STATION GONIKOPPAL, COORG VERSUS THE REGIONAL PROVIDENT FUND ORGANIZATION. Employee Provident Fund contribution is a statutory obligation for an employer to provide financial stability to the employee during his retirement. Both employee and employer contribute towards EPF. As per law the contribution is mandatory for all companies having more than 20 employees. Currently as per law if an employer fails to deposit the EPF contribution before deadline, then the company is liable to pay an EPF interest of 12% per annum for every single day. Delay in EPF contribution by the employer also incurs penal charges which can go upto 25% per annum which may also go up to 100% if the delay is beyond 6 months. A lot of medium and small Tech firms took the undue advantage as these rules & norms were relaxed during lockdown period under Covid-19 pandemic. The employees who left the organizations struggled a lot to get their PF amount credited. The recent judgement of the Hon’ble Supreme court has once again sent a strong message to the employers that abiding to the statutory labour and social security laws is not a matter of choice. Also that the companies will face severe consequences if there’s any violation.”

The delay also incurs penal charges of up to 25% per annum which may go up to 100% if the delay is beyond 6 months.

Employees Cheated During Lockdowns

During the pandemic lockdowns, these rules and norms were relaxed.

However, several medium and small tech firms took undue advantage of this. 

As a result, employees who left the organizations struggled a lot to get their PF amount credited.

Message To Violators

The verdict given by the SC should send a clear and strong message to employers that obeying the statutory labour and social security laws is not a matter of choice but a responsibility..

They can expect severe consequences if there’s any violation on the company’s part.

Karnataka Case Hearing

The verdict was delivered as the Court was hearing a plea filed against the decision of the Karnataka High Court.

The Karnataka HC was hearing the case between Horticulture Experiment Station, Gonikoppal , Coorg Vs The Regional Provident Fund Organisation.

It had ruled that the employer will have to compensate for any delays in contributing to EPF.

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