If you are stuck in such a situation, here is what to do.

Mr. Rohan Mehra, an employee at a tech firm named ‘Innovate Solutions Pvt. Ltd.’ in the city of Aryavarta, recently made a shocking discovery. Upon checking his Employees’ Provident Fund (EPF) statement, he realized that for the past fifteen months, his company had not deposited any of the PF contributions. This was despite the fact that his monthly salary slips clearly showed deductions for his share of the PF amount.

The company had been deducting the employee’s contribution from his salary and also failing to deposit its own mandatory employer’s contribution. Essentially, the company was unlawfully retaining these funds. When Rohan approached the Human Resources department, he was met with evasive answers, citing “procedural delays” and “accounting glitches.” He felt betrayed and cheated, as his hard-earned retirement savings were being misappropriated by his employer.

This situation is not just a breach of contract but a serious criminal offense under Indian law. The employer, in this case, acts as a trustee for the employee’s contribution and is legally bound to deposit it with the Employees’ Provident Fund Organisation (EPFO) within the stipulated time.

Advice in such cases

If you find yourself in a similar situation, it is crucial to act systematically and not panic. Your retirement savings are protected by law, and there are clear legal remedies available.

• Gather all relevant documents, including your salary slips for the entire period of non-deposit, your employment contract, and your bank statements.
• Download your e-passbook from the EPFO portal to have official proof of the non-deposit.
• Send a formal written communication (preferably via email or registered post) to your company’s HR and finance departments, demanding an explanation and immediate deposit of the outstanding dues along with interest.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

The non-deposit of PF contributions is a cognizable offense. The primary laws applicable are:

• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952: This is the special act governing provident funds. Section 14 of the Act prescribes penalties, including imprisonment and fines, for employers who default on contributions. The Act also empowers the EPFO to recover the dues by attaching the employer’s bank accounts and property.
• Bharatiya Nyaya Sanhita, 2023 (BNS): The employer’s failure to deposit the employee’s share of the PF contribution after deducting it from their salary amounts to a criminal breach of trust. Section 316 of the BNS deals with this offense. An FIR can be lodged against the employer under this section.

If you are the complainant

As the complainant (the employee), you are the aggrieved party and must initiate the action. Your primary recourse is to file a formal complaint.

• File a Complaint with the EPFO: The first step is to lodge a grievance on the EPFO’s official portal. Provide all details of your employment and the period of non-deposit. The EPFO will launch an inquiry under Section 7A of the EPF Act to determine the outstanding amount and issue an order for recovery.
• File a Police Complaint: You can also approach the local police station and file a First Information Report (FIR) against the employer (specifically the directors/partners of the company) for criminal breach of trust under Section 316 of the BNS.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

As the victim of this illegal act, your rights are paramount. You are entitled to receive the entire overdue amount, including both the employee’s and employer’s shares, along with statutory damages and interest for the period of delay.

• Follow Up Persistently: Both EPFO and police procedures can be slow. It is important to regularly follow up on your complaints. Keep a record of all communication, reference numbers, and officer names.
• Do Not Be Intimidated: Your employer might try to pressure you into withdrawing the complaint. Understand that the law is on your side. Do not agree to any private settlement that does not involve the full payment of dues through the official EPFO channel.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

Initially, the police might be hesitant to register an FIR, viewing it as a civil or labor dispute. However, you must insist that non-deposit of the employee’s share of PF is a clear case of criminal breach of trust under Section 316 of the BNS. Once an FIR is registered, the police are obligated to investigate. The investigation will involve summoning the company directors, seizing financial records, and verifying the non-payment with the EPFO. A lawyer’s intervention can often expedite this process and ensure the police take the matter seriously.

FAQs people normally have

Many employees facing this issue have similar questions about the process and what to expect.

What evidence is required?

To build a strong case, you will need clear and comprehensive evidence. The most crucial documents are:

• Salary slips for the months the PF was deducted but not deposited.
• The EPF passbook/statement downloaded from the EPFO portal showing no credits for the corresponding period.
• Your letter of appointment or employment contract.
• Any written communication with the company regarding the PF issue.

How long will the investigation take?

The timeline can vary significantly. An EPFO inquiry is generally faster and may conclude within 3 to 6 months. The EPFO has powers of a civil court to recover the dues. A police investigation followed by a criminal trial is a much longer process and can take several years to conclude in court. However, the initiation of criminal proceedings often puts immense pressure on the employer to settle the matter by depositing the dues.

Advocate Sudhir Rao, Supreme Court of India