EPFO Rules: Know What Happens When Employer Fails To Deposit Contribution In EPF Account

Employers are liable to cover damages in case there is a delay in the payment of an employee's EPF contribution, according to the Supreme Court ruling last year

Employers defaulting on contributions are liable to pay Damages & Interest on the amount due

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Did you know that non-payment of Employers' Provident Fund (EPF) contributions attracts penalties and higher interest payments to employers? Employers are liable to cover damages in case there is a delay in the payment of an employee's EPF contribution, according to the Supreme Court ruling last year.

In a recent tweet, EPFO specified the rate at which damages are covered due to delayed contributions. “Employers defaulting on contributions are liable to pay Damages & Interest on the amount due," tweeted EPFO on February 17.

Employers defaulting on contributions are liable to pay Damages & Interest on the amount due.#AmritMahotsav #epfo #PF @PMOIndia @byadavbjp @Rameswar_Teli @LabourMinistry @mygovindia @PIB_India @MIB_India @AmritMahotsav pic.twitter.com/19ZLL5ohA2

— EPFO (@socialepfo) February 17, 2023

Check rates of the damage imposed on the employers for delayed EPFO payment.

Duration             Applied interest (per annum)

0-2 months        5%

2-4 months        10%

4-6 months        15%

More than 6 months      25%

Damages are restricted up to 100 per cent of the amount in arrears, the EPF said. The Fund added that 12 per cent annual interest is applied on the amount due for the entire period of delay.

What’s the amount paid by the employee & employer in EPF

An employer is liable to pay a simple interest at the rate of 12 per cent per annum, according to section 7Q of the Employee's Provident Funds and Miscellaneous Provisions Act, 1952. It is mandatory that the employee and employer should contribute equal amount to the EPF account of 12 per cent of the employee's basic salary, dearness, allowance, and retention allowance if applied.

What can employees do if EPFO contribution is delayed?

Employees need to stay aware of the deposit of the PF contributions on a monthly basis. This can be done by tracking EPFO SMS alerts. Employees can also check by logging in to the EPFO portal.

If there is any delay in payments by employers, you can file a complaint with the EPFO against the employer.

An inquiry will be initiated by the EPFO against the employers. If found guilty of delayed payment, there can be legal action against the employer.

Also, note that EPFO can recover the damaged amount by charging interest on the late deposit as well. There can also be a police complaint against the employer.