Just as government employees in India are provided social
security during retirement in the form of pensions, non-government
employees are protected under the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 (the "EPF Act").
The employees' provident fund under this Act plays a very
important role in building up the corpus to be used during the
post-retirement stage of an employee. Employees covered under
the EPF Act contribute 12% of their wages every month towards their
provident fund. The employer in turn makes a matching
contribution to the fund. The money goes into a fund managed
by the Employees' Provident Fund Organization or EPFO, the apex decision making body, under the
aegis of the Ministry of Labour and Employment.
The government permits employers to manage own provident fund
schemes, provided they comply with certain conditions. The
EPF Act offers flexibility of withdrawals - an employee can
withdraw for higher education or for the purchase of a house.
Withdrawals may also be made for paying premium amount on one's
life insurance policy.
Up until recently, for making a withdrawal from the Employees
Provident Fund (EPF), an employee required attestation from the
employer. Employees filing withdrawal forms manually were
required to have the necessary forms signed and sealed by their
respective employers. This was a mandatory step, which often
resulted in harassment of employees at the hands of the
employer. Instances of employers withholding consent to
disgruntled or former employees were quite common. The
EPFO has paid heed to the harassment complaints raised by employees
and has eliminated this mandatory requirement of obtaining employer
attestations. In its recent Notification regarding 'New
EPF Withdrawal Forms,' the EPFO granted relaxation to the
subscriber by allowing submission of withdrawal forms without any
According to the Notification, any employee who has linked their
Know Your Customer (KYC) details i.e., Aadhar number and bank
account details, with their Universal Account Number and whose KYC
are verified by their respective employer, can now submit the new
EPF withdrawal forms directly to his or her respective
jurisdictional EPF office without having to obtain the
employers' attestation. An employee will no longer need
the approval of his or her employer to withdraw money from the EPF
corpus, thus making the process for an employee hassle free.
The EPFO has launched simplified brief one page form for claiming
withdrawal, requiring a minimum amount of information to be
Also, moving a step closer to online settlement of EPF
withdrawal claims, the EPFO has recently allowed its subscribers to
file their applications directly to the body without employers'
attestation. The coming year will see certain other
significant changes to the EPF Act. The government has
proposed amendments, which if passed, will bring about the
following changes (labour.gov.in):
The proposed amendments will bring
more people under its coverage. The threshold limit of the
applicability of the EPF Act will be brought down from the existing
20 to 10, thus bringing more establishments under the EPF Act's
coverage. "This will ensure a wider coverage and
extension of social security benefits to uncovered areas. It will
add another 50 lakh new members and bring them under the social
security net of EPF Act," as quoted by Bandaru Dattatreya,
Minister of Labour and Employment2.
"Simplification of definition of
'Wages' is proposed. It will not be less than minimum
wages," Dattatreya said, adding that to expedite dispute
settlement, it is proposed to set up zonal appellate tribunals all
over India in addition to the existing one in
The Minister further said EPFO had issued 4.35 crore Universal Account Numbers (UAN) of which 10
per cent, that is about 44 lakh, had been
On 31 December 2015 the President gave his assent to certain amendments to the Payment of Bonus Act, 1965. The amendments have increased the wage threshold for determining applicability of the Act from INR 10,000 to INR 21,000 per month.
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