What Happens to PF Deposits if an Employee's Full and Final Settlement is Delayed?

If an employee doesn't follow the exit formalities properly, and as a result, their Full and Final (F&F) settlement is delayed, will the company wait to deposit the Provident Fund (PF) amount until the F&F issue is resolved? Or is the employer required to deduct and deposit the PF amount even before settling the F&F?

I understand that the 15th of the subsequent month is the last date for PF deposit. If the F&F issue is not resolved by that date, or if there is a legal dispute regarding notice pay, how should the employer handle the PF deposit?

For example, if an employee leaves on 20th September and the F&F is not yet settled, once it is settled, can the employer deposit the PF amount then? Or must it be deposited by 15th October regardless of any disputes, since the last working day was 20th September, making October the subsequent month?

Please suggest.

Up to the 20th September, salary is credited on the 30th September (or 1st October) to the employee ledger. Whether it is paid or not is another issue. Once the salary is accrued, ESIC/EPF and professional tax are payable. F&F settlement, penalties, or recoveries do not affect the basic concept of salary.

Hi,

Does that mean that the employer was supposed to deposit the EPF and deduct TDS before the 15th of October in this case, irrespective of the payment of salary/F & F? You have mentioned that F & F doesn't affect the salary concept. So, is the employer responsible for deducting and depositing the statutory payments even before the payment of F & F in this specific case?

Dear Arnab,

The PF Act states that the employer should deposit the due contribution and later recover it from the employee. Accordingly, the wages for Sep 16, after adjustments, should be deposited on or before 15-10-2016. F & F has no connection to the due amount. If any excess amount is deposited, it can be recovered from F & F once completed. If any amount cannot be recovered, it becomes a bonus to the member.

Thanks, Vidyadhar Bhat

End of the Month, calculate the salary as per the attendance, deduct statutory deductions, and keep it in the WITHHELD section.

If the employee returns after a few days, continue his payroll; otherwise, do the F&F Settlement as per the company policy.