Introduction
The Employees' Provident Fund Organisation (EPFO) vide its circular dated 8 January 2016 (Circular) has removed the grace period available to employers (in terms of the Manual of Accounting Procedure (Part – I General)), for payment of dues under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) and the Employees' Provident Fund Scheme, 1952 (EPF Scheme), Employees' Pension Scheme, 1995 (EPS Scheme) and the Employees' Deposit Linked Insurance Scheme, 1976 (EDLI Scheme) (collectively, the Schemes) with effect from February 2016.
Background
Paragraphs 38(1) of EPF Scheme, 3 of the EPS Scheme and 8(1) of the EDLI Scheme specify a time limit of 15 days from the close of every month for the employer to make payments towards contributions to the provident fund, pension fund and insurance fund, respectively. However, through Paragraph 5.1.3 of the Manual of Accounting Procedure (Part – I General) as applicable to the Schemes, the EPFO granted a grace period of 5 days to employers in addition to the available 15 days for making payments under the Schemes prior to applicability of penal provisions in terms of the EPF Act for delay on part of the employer.
Details of changes and analysis
The circular has changed the time period available to the employers to make payments under the Schemes as follows:
Change in the time limit
By issuing the Circular, the EPFO has removed the grace period of 5 days available to the employer to make payments, and accordingly, all payments and other dues contemplated under the EPF Act and the Schemes are to be made within the prescribed period of 15 days only.
Applicability
This Circular is made applicable from February 2016 with respect to payment by the employer towards all payments due in terms of the EPF Act and the Schemes arising in the month of January 2016 and payable in the month of February 2016.
Comment
While the Circular is in line with the recent developments in aligning the labour laws with the all-round developments, it will be helpful in curtailing the delay in making payments towards the Schemes by employers.
- Khaitan & Co | Employment Labour & Benefits Group
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