If the employer willfully defaults or intentionally fails to deposit the PF funds, they may face severe penalties, with the Employees' Provident Fund Organisation (EPFO) having the authority to take legal action against the company
Indian cricketer Robin Uphappa is facing potential arrest due to allegations of misappropriating employee provident fund contributions. As director of Bengaluru-based apparel brand Centaurus Lifestyle Brands, he allegedly deducted PF from employee salaries but failed to deposit the funds. Authorities are now seeking to recover Rs 23.36 lakh in damages from Uphappa.
When a company deducts Provident Fund (PF) contributions from an employee's salary but fails to deposit the funds into the Employees’ Provident Fund (EPF) account, it may lead to serious legal, financial, and reputational consequences. Under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, employers are legally required to remit the deducted PF amounts to the Employees' Provident Fund Organization (EPFO).
Penalties Employers Can Face If They Do Not Deposit PF Funds
If the employer willfully defaults or intentionally fails to deposit the PF funds, they can face severe penalties. The Employees' Provident Fund Organisation (EPFO) has the authority to take legal action against the company.
This includes imposing interest on the delayed payments. Additionally, the company could face criminal charges.
In the case of significant or repeated defaults, the company owner or responsible officers may be prosecuted under the law. They could face imprisonment for up to three years, a fine, or both. Therefore, if the failure to deposit PF contributions is deemed intentional, the company owner or officers responsible may be arrested.
What Employees Can Do
For employees, this failure means their retirement savings are affected, as they may not accumulate the expected PF balance, leading to a loss of interest that would have been earned on the funds.
If an employer deducts but fails to deposit PF contributions, employees should first contact their HR or employer for clarification. If unresolved, they can file a complaint with the EPFO using its online grievance system.
If this doesn't lead to a resolution, employees can approach the labour commissioner or seek legal recourse under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Employers may face penalties, fines, or even imprisonment for non-compliance. EPFO offices can also assist in ensuring that the contributions are deposited and employees’ rights are protected.