EPFO not to prosecute employers over Aadhaar non-compliance

In what can be seen as the proverbial sword of Damocles removed from over the employers' head, the Employees' Provident Fund Organisation (EPFO) last week issued a circular to Central Provident Fund Commissioners (CPFCs) to "avoid any coercive action by way of prosecution" in provident fund (PF)-Aadhaar linking cases.

Though the government-owned PF firm has not yet put out a notice on withdrawal of its orders on the mandatory linking of PF accounts with Aadhaar.

Last week's circular, a copy of which is with DNA Money, comes almost a month after the Supreme Court order on Aadhaar, which clearly states all benefits earned by an individual was not a government welfare scheme and therefore it's linking to Aadhaar cannot be made mandatory.

"Please refer to the above circulars whereby it was requested to carry out the above direction. However, in view of the Hon'ble Supreme Court order on the Aadhar Act, 2016, dated 26.09.2018, it is advised to avoid any coercive action by way of prosecution till further orders," says the circular sent out by EPFO last Thursday.

Suchita Dutta, executive director, Indian Staffing Federation (ISF), who has held several meetings with the EPFO officials over the last one year on the issue, said this came as a major relief as many employers had been slapped with prosecution notices for failing to remit their PF dues in time, mostly due to not being able to link their employees PF accounts with Aadhaar. She said they can now breathe easy.

"Yes, the EPFO has instructed all the CPFCs not to put any kind of pressure related to PF-Aadhaar linking on any of the companies. Earlier, they were pressurising companies to comply with the PF-Aadhaar linking rule by sending them prosecution notices or if they were not able remit PF of employees who had not done identity verification through Aadhaar," she said.

Dutta, however, said most employers were now waiting for the second part of EPFO's action on the SC's order. According to her, PF-Aadhaar linking continued to be mandatory on the EPFO's system.

She said authorities have assured employers' representative bodies the PF-Aadhaar linking rule would be removed in due course.

"We had a discussion with EPFO authorities. At this point in time, they are working on it (removing of mandatory linking of PF accounts to Aadhaar). They have assured us that they will be coming out with something on it. They are in the process of doing something about it," said the ISF chief.

Dutta said reversing to the old system of ID verification would require tweaking the information technology (IT) system; "they have said we should expect the change within next one month or so".

Another issue that needed to be sorted out by the EPFO before coming out with a notification was that of retaining Aadhaar verification for employees and employers availing of Pradhan Mantri Rojgar Protshahan Yojna (PMRPY) benefits.

Under the PMRPY scheme, the government pays the employers' Employee Pension Scheme (EPS) share of 8.33% for new employees for the first three years of their job. This scheme, which was launched in late 2016, is targeted at workers earning wages less than Rs 15,000 per month. It is meant to incentivise micro, small, and medium enterprises employ more to avail of benefits.

"The argument is that anywhere where there is government subsidy or the government is involved, in those cases some form of Aadhaar linking is necessary. In case of PF, anybody who is using the PMRPY scheme, the government will be paying the employers' share of joinees' EPS. Hence, any new system will include that (PMRPY)", she said.

The apex court's order on Aadhaar has limited the government's scope of subsidies under Section 7 of the Aadhaar Act. The last month's SC judgement very specifically states, "No doubt, the government cannot take umbrage under the aforesaid provision to enlarge the scope of subsidies, services and benefits. 'Benefits' should be such which are in the nature of welfare schemes for which resources are to be drawn from the Consolidated Fund of India."

NO COERCIVE ACTION

• PF body issues circular to provident fund commissioners to "avoid any coercive action by way of prosecution" in PF-Aadhaar linking cases
   
• However, it is yet to put out notice on withdrawal of its orders on the mandatory linking of PF accounts with Aadhaar