EDLI Compliance Dilemma: How to Handle EPFO Penalties for Missing Exemption?

EDLI Scheme

One of the organizations opted to take a policy from LIC to meet the statutory obligations. However, they did not seek exemption from the EPFO. Now, EPFO is demanding contributions with penalties/demurrage since the beginning.

What remedy is available to the employer who never had any malafide intentions?

Regards,

The organization had opted for a scheme with LIC but did not purchase it. Even if it was bought, they did not inform the EPFO. Without informing the EPFO, how can they know that you have a better scheme than their EDLI? This implies that the fault lies with you. Therefore, you will be required to pay interest and damages as claimed by the EPFO. There is no way around this; it is the cost of your gross negligence, and you will have to bear it on your own.

EPFO has the liberty to recover the damages.
While taking the LIC policy, you have to inform the PF Office and obtain an approval letter from them by submitting all the necessary documents. You must also complete a separate compliance process for it. The same applies if you wish to restart EDLI.

Before taking the EDLI policy from LIC, you need to obtain written exemption from EPFO, duly convincing them that you have a better scheme than theirs for the benefit of employees. It is clearly mentioned in the scheme. Since you have not complied with statutory provisions, EPFO is right as per the law to demand from you all the arrears with interest of the EDLI contribution. You may only request a waiver, but ultimately, EPFO will have the final say.