Facing Penalties Under EPF Scheme: How Should I Handle This HR Dilemma?

I am working as an HR in an organization. Under the EPF Employer Enrollment Scheme 2017, we have enrolled 47 members and declarations have been given. For this, there are no penalties or damages.

However, we received a statement for damages and penalties. We met with the Assistant Commissioner, who informed us that we had paid the amount before providing the declaration. After making the remittances, we declared in the portal. Therefore, he stated that this scheme does not apply to us. The remittances were made on 28.03.2017, and as per the EPFO office, the declaration was made in the portal on 31.03.2017. Consequently, the scheme is not applicable, and we are required to pay damages and penalties totaling Rs. 2 lakhs.

As an HR professional, what should I do in this situation? Kindly assist me with this matter.

Interest Payment and Waiver of Damages

If interest was paid upfront with the contribution in a separate challan, then the employer can depute a counsel to appear in 7A court for waiver or reduction of damages. However, if interest was not paid, then the department will not consider any such appeal.

Declaration System and Interest Calculation

With the declaration system, the employer had to submit the declaration first. Then, on the same page, submit the details of employees including the period and amount. In most cases, interest was auto-calculated at the time of the challan, except in cases of a break in service where it did not work properly.

Importance of Upfront Interest Payment

Upfront interest payment was a vital point for the waiver of damages and reduction of the amount up to Rs 1 per year. It is essential to check whether interest is paid along with the contribution. If paid, the commissioner will conduct a hearing and is authorized to reduce or waive the damages, provided that the employer accepts that a clerical mistake has occurred in the submission.