Section 12: EPF Withdrawals and Claims

Overview

This section deals with the Employees’ Provident Fund (EPF), a crucial social security benefit for employees in India. Section 12 of the Code on Social Security, 2020, outlines the rules and procedures governing withdrawals, advances, and the settlement of claims related to the EPF. It aims to provide financial security to employees during various life events and after retirement.

Who is Covered?

• Generally, all employees working in establishments employing 20 or more persons are covered under the EPF scheme. The Code extends coverage to establishments with fewer employees through notification.
• Eligibility typically requires continuous service of at least five years to be eligible for full benefits, though exceptions exist for specific withdrawal reasons.
• The Code aims to universalize coverage, extending benefits to gig workers and platform workers, though specific implementation details are still evolving.

Benefits and Contributions

• The primary benefit is a lump-sum payment upon retirement, resignation, or termination of service, comprising employee contributions, employer contributions, and interest accrued over time.
• Employees contribute a specified percentage of their basic wages plus dearness allowance (currently 12% generally).
• Employers also contribute an equal percentage (12%) to the EPF account. A portion of the employer’s contribution may be diverted to the Employees’ Pension Scheme (EPS).
• The government may contribute a percentage towards EPF accounts of employees in certain unorganized sectors or as part of specific schemes.

Procedure and Compliance

Section 12 emphasizes a streamlined claim process. Key aspects include:

• Digital Submission: Claims can be submitted online through the EPFO portal, simplifying the process.
• Aadhaar-based Verification: Aadhaar integration facilitates quick and secure verification of employee details.
• Automated Tracking: The system provides automated tracking of claim status, enhancing transparency.
• Timelines for Settlement: The Code mandates specific timelines for settling EPF claims. Delayed payments attract interest penalties.
• Grievance Redressal: Robust grievance redressal mechanisms are in place to address employee concerns and disputes.
• Partial Withdrawals: Allowed for specific reasons like medical emergencies, marriage, education (self or children), home purchase/construction/renovation, and unemployment (subject to conditions).

Practical Examples

• Example 1: An employee, Ms. Sharma, has completed 10 years of service and resigns from her job. She is eligible to withdraw the full amount accumulated in her EPF account, including her contributions, her employer’s contributions, and the accrued interest.
• Example 2: An employer, XYZ Company, consistently delays the deposit of EPF contributions. Under the Code, XYZ Company will be liable to pay interest on the delayed amount and may face penalties and legal action by the EPFO.

Disclaimer

This article is for basic understanding of the Code on Social Security, 2020, and EPF regulations. It should not be treated as legal advice. For specific legal guidance, consult with a qualified legal professional.