Employees' Provident Fund Organization (EPFO) is responsible for managing the contributions made to the PF account of employed persons in India. Both the employee and the employer contribute to this account. EPFO transfers interest only to those accounts in which EPF contribution has been made on time. In February 2022, the Supreme Court of India issued an order stating that if a company fails to transfer money to an employee's PF account on time, resulting in a loss of interest to the employee, the company has to be compensated.
As per Section 14B and 7Q of the Employees' Provident Fund Act, a company has to compensate the employee for the loss due to delayed contribution to his EPFO account. The amount of compensation would depend on how late the contribution was made and could be up to 100 per cent of the contribution.
The company will have to deposit this fine in the employee's account as arrears and will have to pay interest at the rate of 12 percent on the outstanding amount. 5 percent for delays up to 2 months, 10 percent for delays of 2-4 months, 15 percent for delays of 4-6 months and 25 percent for delays of more than 6 months will have to be paid.
A part of the employee's salary, equal to 12 per cent of their basic salary, is deposited in the PF account, and the employer invests in the account equal to this contribution. Of the employer's contribution, 8.33 per cent is deposited in the Employees' Pension Scheme, while the remaining 3.67 per cent is deposited in the EPFO account. Money deposited in a PF account can be withdrawn in case of emergency like a medical emergency, the marriage of a child or the construction of the house. The total accumulated amount can be withdrawn as a lump sum after retirement.
