Can We Settle Unpaid PF Contributions After an Employee Leaves Due to Financial Strain?

Hi all,

I have a query regarding an employee who left us on 3-Jan-17. However, his PF contribution has not been paid by us since Apr 16. Now, he has applied for PF transfer as he has joined a new organization. Now, my question is, can we mark him as exited and pay the pending contribution later on as our company is going through financial crunches? Is it possible? Or can he only apply for PF transfer once we make the payment?

Thanking you in anticipation.

If you have deducted PF from the salary and not deposited it, you are in for very serious trouble. At once, you must deposit both the employee and employer share. The PF office will not listen to your argument of a financial crisis.

Dear Mr. Sharma,

Most probably, you have to rejoin that employee for the said month, pay his contribution as per the wage register, pay the employer's contribution, and pay 7Q and 14B accounts for damages and interest.

Regards

Unethical and Immoral Company Actions

Whatever the company has done is unethical and immoral as it has deducted the amount from the salary but has not deposited it. This is a criminal offense under the EPF Act. I am pasting the relevant provision here:

Penalties

(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act, the Scheme, the Pension Scheme, or the Insurance Scheme, or of enabling any other person to avoid such payment, knowingly makes or causes to be made any false statement or false representation shall be punishable with imprisonment for a term which may extend to one year, or with a fine of five thousand rupees, or with both.

(1A) An employer who contravenes, or makes default in complying with, the provisions of section 6 or clause (a) of sub-section (3) of section 17 in so far as it relates to the payment of inspection charges, or paragraph 38 of the Scheme in so far as it relates to the payment of administrative charges, shall be punishable with imprisonment for a term which may extend to three years but:

(a) which shall not be less than one year and a fine of ten thousand rupees in case of default in payment of the employees’ contribution which has been deducted by the employer from the employees’ wages.

Besides the above, you will face an inquiry under Section 7A of the Act simultaneously. Your Directors are at risk. Further, under the IPC, it will be treated as Criminal Breach of Trust. Please deposit the money with the PF department ASAP on your own; otherwise, if the employee makes a complaint, it will act as a trigger.

With warm regards,
Bharat Gera
HR Consultant

How will you file the returns without paying the PF dues? He cannot get his PF transferred until you pay, but the moment he files his application, your company's violation will come up and get flagged. You are going to get notices, and then criminal complaints will be filed freezing your bank accounts. So pay the amounts due, or at least pay for this guy and file a revised return later.