In its latest drive to cut down on employee grievances, the Employees Provident Fund Organisation (EPFO) has warned firms of penal action if they delay submission of employees' claims beyond five days of receipt.
In a strongly worded letter to regional PF offices, EPFO's additional commissioner SK Aggarwal said "it has been observed that some employers do not forward the claims submitted to them by their outgoing employees. This leads to harassment of such outgoing employees and gives rise to lodging of grievances with EPFO."
"It may be made clear to all employers that failure to comply with provisions as contained in Para 72(5) will invite penal action," Aggarwal said in the internal circular.
As per Para 72(5) of the EPF Act, an employer is duty bound to forward duly filled in and attested claim application to the respective PF office "within 5 days of its receipt".
EPF rules also stipulates that if any person fails or refuses to submit any return, statement or other document or submits a false return, statement or other document, or makes a false declaration, he shall be punishable with imprisonment, which may extend to one year or fine that may extend to Rs 4,000, or both.
Delay in transferring and withdrawal of PF balance has resulted in multiple accounts of several employees who have switched jobs. This has not only tainted the image of the EPFO but also raises its costs as the fund has to pay interest on those accounts for up to three years.
EPFO's annual report shows the number of claims settled in all the three schemes -- EPF, EPS and EDLI -- were 90.5 lakh during 2011-12 as against 72.49 lakh in 2010-11.
Still 5.86 lakh claims were pending at the end of March 2012. With slowdown and job losses, the number of claims may have risen in 2012-13 and 2013-14.
With only 40% of the 11 crore EPFO accounts being active where contributions are made every month, the EPFO has asked all its offices to settle claims within 30 days and introduced an online account transfer system to cut delays.