The Code on Social Security, 2020 ("Social Security Code") is one of four major pieces of legislation that the Government of India has enacted in an effort to consolidate extant labour laws, with the overall objective of extending social security benefits to all employees and workers either in the organized or unorganized sector. While the effective date of the Social Security Code has not yet been notified by the Central Government, there are certain transitional provisions that have been notified to prepare for the eventual application of the Code as a whole.
2. NOTIFICATION OF SECTION 142 OF THE SOCIAL SECURITY CODE
On April 30, 2021, the Government of India notified Section 142 of the Social Security Code, with May 03, 2021 being the date on which this provision will be effective1. Section 142 mandates that beneficiaries under the Social Security Code are required to establish their identity, or as the case may be, the identity of her/his family members or dependents through their respective Aadhaar numbers. The requirement to do so arises if an eligible individual wishes to:
- Register as a member or beneficiary; or
- Seek benefits whether in kind, cash or medical sickness benefit or pension, gratuity or maternity benefit or any other benefit or for withdrawal of fund; or
- Avail services of a career center; or
- Receive any payment or medical attendance as an insured person himself or for his dependents.
3. MANDATORY SEEDING OF AADHAAR NUMBER FOR FILING OF ELECTRONIC CHALLAN-CUM-RETURNS
Pursuant to the notification of Section 142 of the Social Security Code, the Ministry of Labour and Employment via the Employees' Provident Fund Organization (the "EPFO") issued a circular dated June 01, 2021 mandating that employers file Electronic Challan-cum-Returns ("ECR") only for those members whose Aadhaar numbers are seeded and verified with Universal Account Numbers ("UAN")2 with immediate effect3.
ECRs are the electronic returns that every establishment is required to electronically file on a monthly basis. These returns have the wages and contributions of each member, and also include other information like details of new members and members who have left the employer. The approval of the ECR results in the generation of a challan which the employer uses to remit dues.
The EPFO has now deferred the effective date to September 01, 2021 by way of a circular dated June 15, 2021. Consequently, the last date for members to link their UAN with their Aadhaar cards is now August 31, 2021.
4. INDUSLAW VIEW
The primary benefit of having a member link their Aadhaar number with their EPF account is that the contribution can be withdrawn without the employer's attestation. Secondly, linking Aadhaar number with EPF accounts is expected to streamline processes and reduce the possibility of errors or duplicate accounts. The consequence of failing to link a member's EPF account with their Aadhaar number would also mean that any future claims could be rejected, and that contributions for that particular member may not be credited to her/his EPF account.
While news reports state that the EPFO has made attempts to apprise members of the deadline via SMS, phone calls and emails, ensuring that all members link their EPF accounts with their Aadhaar numbers is undoubtedly a daunting task. In our view, employers would need to adopt a more hands-on approach and use this extension provided by the EPFO to ensure that suitable communication drives are enforced so that all stakeholders are aware of the consequences of not being able to link Aadhaar numbers to their EPF accounts.
1. Please find gazette notification at https://egazette.nic.in/WriteReadData/2021/226829.pdf
2. The UAN is a 12-digit account number allotted by the EPFO to every subscriber by linking it to the member's current EPF account.
3. Please find relevant EPFO circular at https://www.epfindia.gov.in/site_docs/PDFs/Circulars/Y2021-2022/WSU_Aadhar_ECR_529.pdf
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