Hello Experts, I have come across a company through some acquaintances which has committed the following misdemeanors:
During the fiscal year 2017-18, they recruited around 15 employees and stated in their appointment letters that the Employee Provident Fund (EPF) would be deducted at 12% of the basic, subject to a maximum of 15K being considered as basic.
All the employees who joined had a basic salary of more than 15K.
The company deducted the PF amount but did not deposit either the company's share or the employee's share with the Employee Provident Fund Organization (EPFO).
Now, they have received notices under section 7A.
I am aware of the damages that they need to pay under sections 14Q and 7A. I also understand there is an additional penalty to be paid.
However, the company is currently in dire straits and has no money to pay any of the outstanding dues.
My queries are:
1) What options does the company have at this point?
2) If all the employees are made external independent consultants (not contract labor), can the company claim that there was no necessity to pay the EPF contribution?
3) What recourse do the individuals, whose EPF has been deducted but not paid, have? I understand all of them have resigned from their services in 2019.
4) If the company fails to pay the due amount, what punitive actions will the EPFO take against the company and who within the company will be held responsible? Also, what is the timeframe within which the EPFO initiates action after delivering the 7A notice?
The location of the company is Mumbai, India. I would appreciate your valuable insights into this situation.
During the fiscal year 2017-18, they recruited around 15 employees and stated in their appointment letters that the Employee Provident Fund (EPF) would be deducted at 12% of the basic, subject to a maximum of 15K being considered as basic.
All the employees who joined had a basic salary of more than 15K.
The company deducted the PF amount but did not deposit either the company's share or the employee's share with the Employee Provident Fund Organization (EPFO).
Now, they have received notices under section 7A.
I am aware of the damages that they need to pay under sections 14Q and 7A. I also understand there is an additional penalty to be paid.
However, the company is currently in dire straits and has no money to pay any of the outstanding dues.
My queries are:
1) What options does the company have at this point?
2) If all the employees are made external independent consultants (not contract labor), can the company claim that there was no necessity to pay the EPF contribution?
3) What recourse do the individuals, whose EPF has been deducted but not paid, have? I understand all of them have resigned from their services in 2019.
4) If the company fails to pay the due amount, what punitive actions will the EPFO take against the company and who within the company will be held responsible? Also, what is the timeframe within which the EPFO initiates action after delivering the 7A notice?
The location of the company is Mumbai, India. I would appreciate your valuable insights into this situation.