Govt may waive mandatory provident fund contributions

New Delhi, December 23

The government is proposing to amend the Employees Provident Fund & Miscellaneous Provisions Act to enable the Centre to reduce or waive mandatory provident fund contributions by employees in certain cases.

As per the proposed changes, the Centre would take a decision in this regard based on financial position of class of industry or other circumstances.

“..if Central government is of opinion that having regard to the financial position of any class of establishments or other circumstances of the case, it is necessary to expedient to do so, it may, by notification...reduce or waive the contribution payable by the employees for such period as may be specified in the notification,” states the proposed amendments to the Act.

The Labour Ministry has invited comments from other departments on the draft Bill by December 30. It has also received several representations from various employers and employees organisations.

At present, the organised sector workers who are mainly covered under the Act, contribute 12% of their basic wages which include basic pay and dearness allowance.

The draft Bill also enables the Central government to reduce the PF contribution to 10% from existing 12% of basic wages.

It is proposed to reduce the threshold limit of workers for coverage under the Act. At present, firms which have employed 20 or more employees are covered under the legislations which would be reduced to 10 workers.

Reduction in the threshold limit of workers is expected to bring 50 lakh more employees under the purview of EPFO which implements social security schemes under the legislation.

The ministry, in the draft Bill, has proposed to reduce the number of representatives of employers as well as employees to half on the Central Board of Trustees which is an apex decision-making body of the EPFO.

The employers and employees have equal number of 10 representatives on the CBT which is proposed to be reduced to five members from each side.

Besides, the Bill provides that no representative of the employers and employees shall be member of Board for more than two terms consecutively.

The proposed amendment also provides for reducing the number of state government representatives on the Board from 15 to 8. However, there is no change in the number of Central government representatives on CBT. Centre can appoint its five members on the Board.

The Bill has proposed to increase the minimum fine for default on payment of employees’ PF contribution which has been deducted by employers from their wages, to Rs 70,000 from existing Rs 10,000.

In cases of other defaults under the Act, a minimum fine of Rs 35,000 has been proposed from existing Rs 5,000. — PTI