Employers feel the pinch of Aadhaar-UAN linking

As the ministry of labour and employment is aggressively pushing regional provident fund commissioners (RPFC) at the Employee Provident Fund Organisation (EPFO) to ensure 100% linkage of Universal Account Number (UAN) to Aadhaar, many employers are bearing the brunt by paying penalty for employees who fail to provide correct Aadhaar information.

And this misplaced accountability has got the employers harried.

A UAN is a unique number given by the EPFO to its members and is generated for each PF account number. Today, a UAN number cannot be acquired by an employee without furnishing Aadhaar details.

Suchita Dutta, executive director of Indian Staffing Federation (ISF), apex body for the temporary staffing industry, told DNA Money the EPFO has been slapping a penalty on many employers for not generating UAN for their employees; "the entire penalty is being levied on the employers. If a jobseeker is not getting back with an updated Aadhaar in time for monthly PF remittance, which cannot be done without the UAN, why should the employer be penalised. The penalty, if designed, should be by way of either holding the interest till employee links his updated Aadhaar himself or holding his power to withdraw his PF. Why is the government not allowing employers to deposit the dues that are deducted from an employee's salary due to PF Aadhaar mismatch? The ministry keeps addressing this as teething problems. The question is if they are aware then why are they not being considerate that employers also will need time to collect the same?"

ISF has been taking up this issue with various authorities in the labour and employment ministry and EPFO but to no avail. The lobbying body for temporary staffer firms is requesting for 90 days or another document option, which allows an employee to give some other document other than Aadhaar for acquiring a UAN.

After over six months of running from pillar to post, employers still have not found any solution.

For sure, the recent UAN-Aadhaar seeding is a curious issue. The EPFO has issued a notice to companies but does not clearly say whether it is mandatory.

A web circular, dated November 11 2018, issued by EPFO states "You are aware that EPFO has made available a number of online services through EPFO web platform and the mobile platform of UMANG. A number of EPFO members want to avail these online services by providing their Aadhaar number".

The notice further prods "In order to facilitate the members to avail effective and efficient online service delivery by EPFO, the field offices are advised to take up following actions immediately: i. All Regional Offices and District Offices must ensure a facilitation centre in the office premises to enable the members for updating their Aadhaar details or enrolling for Aadhaar.

Post the circular, companies have undertaken the attachment of Aadhaar to UAN on a war footing. They are goading employees to share their Aadhaar details but not everyone is keen to do so.

A senior employee of a leading domestic company, who has been receiving employee provident fund (EPF) in his provident fund (PF) account for over a decade now, received an email last week requesting him to "send a copy of the Aadhaar card for updation".

The employee has reservations about sharing his 12-digit identification (ID) number for the EPF remittance. But if he refuses to share his Aadhaar details it would be his employer who would be held responsible for it.

ISF's Dutta also said that in the light of Supreme Court's (SC) order on the usage of Aadhaar card last year private companies were hesitant to force employees to share their Aadhaar number.

"Private companies cannot ask for Aadhaar information from employees. Jobseekers are saying no to Aadhaar. SC court has said private companies cannot collect it then on what basis are they (EPFO) asking us to collect it," she said.

A notice on the EPFO website states; "seeded Aadhaar against activated UAN is mandatory for online claim submission".

When DNA Money posed the query on why were the employers were being penalised for employees not linking their UAN to their PF account to Heera Lal Samariya, secretary, Ministry of Labour and Employment, he said; "we have nothing to say on that," and disconnected the phone.

Rahul Narayan, an SC advocate, told DNA money the SC's judgement clearly states since EPF was an earned benefit it cannot be made mandatory.

"They (government) have to explain under what authority they can still do this because as far as earned benefits are concerned they cannot be made mandatory. That is what the SC had said in its judgement last year," he said.

The SC verdict in paragraph 322 had stated: "We also make it clear that a benefit which is earned by an individual (e.g. pension by a government employee) cannot be covered under Section 7 of the Act, as it is the right of the individual to receive such benefit".

It had also called for an examination of meaning assigned to 'benefits' by the government.

"Another facet which needs examination at this stage is the meaning that is to be assigned to the expression 'benefits' occurring in Section 7 of the Aadhaar Act, along with 'subsidies' and 'services'. It was argued that the expression 'benefits' is very lose and wide and the respondents (government) may attempt to bring within its sweep any and every kind of governmental activity in the name of welfare of communities, which would result in making the requirement of Aadhaar virtually mandatory," the SC order had said.

An executive with a major local firm, who spoke to DNA Money anonymously, said the irrational step the ministry of labour and employment will push companies towards unorganised sector or resort to depositing EPF remittance in suspense account. He said if this were to happen then the objective of reaching the PF to the employee is defeated.

He also said making Aadhaar linking was also resulting in under-reporting of employment number.

"The loss is only of the employees. The employee's PF gets deducted. He doesn't know that if the Aadhaar linking has not happened then his PF remittance cannot happen. When employees don't link UAN to PF number, the money gets collected with the employer because he is not able to deposit it in the absence of his PF account. The employer can also deposit the money into the suspense account. But has the work really happened? Has the employee got the money in his account? Because once the money is deposited in the suspense account, no one knows whose money it is. The employee doesn't know the money has got deposited into the suspense because he doesn't get information on this. If the objective of the government is to ensure that the social security is reaching to the right person then they have to make the jobseeker responsible for getting it done. The government has taken the step without taking the consequence into consideration," he said.