What to do if the Company does not pay or delays the Provident Fund (PF) Amount?
Team SoOLEGAL 7 Jul 2023

What to do if the Company does not pay or delays the Provident Fund (PF) Amount?

The Employees' Provident Fund (EPF) is a social security scheme in many countries, designed to provide financial security to employees after their retirement. Employers are mandated by law to deduct a portion of their employees' salaries and contribute it to the EPF. Unfortunately, there are instances where employers fail to pay or intentionally delay the PF amount, causing financial distress to employees. In such cases, employees have legal remedies available to ensure the timely payment of their PF amounts. This article will outline the steps that employees can take to address non-payment or delayed payment of PF amounts by their employers.

Concept of Provident Fund

The concept of a provident fund is established to ensure financial stability and security for the working class. When an employee begins their employment, they contribute a portion of their monthly salary to this fund. The purpose of the fund is to help employees save money that can be utilized when they are no longer able to work, such as during retirement, termination, or retrenchment. The Indian Constitution, specifically Entry 24 of List III of Schedule Seven, addresses the welfare of labor, including provisions for provident funds, employer liabilities, workmen's compensation, pensions, and maternity benefits.

According to the law, deductions from an employee's wages can only be made in accordance with the provisions stated in the Payment of Wages Act, 1936. These deductions may be for subscriptions to recognized provident funds, as defined in the Income-tax Act, 1961, or any provident fund approved by the appropriate Government. Companies with over 20 employees must register with the Employees Provident Fund Organisation of India (EPFO), which oversees and maintains the fund, ensuring proper implementation of the Act.

Employees Provident Funds & Miscellaneous Provisions Act, 1952 protects the interests of the working class

The Employees Provident Funds & Miscellaneous Provisions Act, 1952, aims to protect the interests of the working class. Under this Act, employers and employees in establishments covered by the Act contribute to a statutory fund. The collected funds are used to provide retirement benefits and offer loans to employees during unforeseen circumstances. The Act emphasizes the employer's responsibility to deduct employees' contributions, add their share, and promptly deposit the funds into the designated account.

The judiciary plays an active role in ensuring justice for employees who have been denied their provident fund. However, before seeking a remedy from the apex court, employees should be aware of the basic remedies available to them if their company fails to pay or delays their provident fund. The legislature has enacted laws to protect employees in such cases. Employees are eligible for provident fund benefits if their wages have been subjected to authorized deductions under Section 7(2)(i) of the Payment of Wages Act, 1936.

Employee remedies if Provident Fund amount is not received

The Employees Provident Funds & Miscellaneous Provisions Act, 1952 applies to various establishments, including factories engaged in specified industries, establishments employing 20 or more persons, or establishments specified by the Central Government. Section 7A of the Act allows relevant authorities to determine the monies due from employers and decide disputes regarding the Act's applicability. Section 7B provides for the review of orders passed under Section 7A.

Employees have remedies available to them if they do not receive their provident fund amounts. Section 14A of the Act holds companies accountable for offenses committed under the Act. The Act considers individuals responsible for the conduct of a company's business to be guilty of offenses committed by the company. Additionally, if offenses are committed with the consent, connivance, or neglect of directors, managers, secretaries, or other officers of the company, they will be held liable.

The Act was enacted to provide support and financial security to the working class during their retirement. It relies on employers collecting funds from workers' wages, adding their contributions, and depositing the funds into the provident fund. If employers neglect to remit or divert the funds for other purposes, it depletes the fund and denies retirees the support they need. This can have a demoralizing effect on the working class and undermine the community's hopes.

The Constitution of India, under the Directive Principles of State Policy, mandates the state to make effective provisions for securing the right to work, education, and public assistance in cases of unemployment, old age, sickness, disability, and undeserved want. The Employees Provident Funds & Miscellaneous Provisions Act, 1952, was enacted to fulfill these provisions.

The Act consists of various provisions to ensure the effective functioning of provident funds and the protection of employees' interests. It establishes the Employees' Provident Fund Organization (EPFO) as the governing body responsible for administering the funds and enforcing the Act's provisions.

One important aspect of the Act is the establishment of a Provident Fund Scheme, which outlines the rules and regulations governing the operation of the fund. The scheme covers aspects such as the eligibility of employees, the rate of contribution by both employees and employers, the management of the fund, the payment of benefits, and the resolution of disputes.

Under the Act, both the employee and the employer are required to contribute a certain percentage of the employee's wages to the provident fund. The current rate of contribution is 12% of the employee's basic wages plus dearness allowance, with an equal contribution from the employer. These contributions are deposited into the employee's account within the fund.

The Act also provides for the payment of various benefits to employees. These include provident fund accumulations, pension benefits, and insurance benefits. Employees are eligible to withdraw their provident fund accumulations upon retirement, resignation, or termination of employment. The Act also allows for the partial withdrawal of funds under certain specified conditions such as medical emergencies, housing, education, or marriage expenses.

In addition to provident fund benefits, the Act establishes a pension scheme for employees. The pension scheme provides for a monthly pension to be paid to employees upon reaching a certain age or in the event of their death. The amount of the pension is determined based on the employee's length of service and the average of their salary in the last few years of service.

Furthermore, the Act includes provisions for insurance benefits. It mandates the compulsory insurance of employees against disability or death caused by employment injury. Employers are required to pay insurance contributions for their employees, and in the event of disability or death due to work-related accidents, employees or their dependents are entitled to receive insurance benefits.

To ensure compliance with the Act's provisions, the EPFO has been empowered with various enforcement mechanisms. It conducts inspections of establishments to verify compliance, initiates legal proceedings against defaulting employers, and has the authority to recover any amount due to the fund. Employees who face issues related to their provident fund can approach the EPFO or the appropriate authorities for resolution.

In recent years, the EPFO has taken steps to enhance the accessibility and efficiency of provident fund services. It has introduced online portals and mobile applications for employers and employees to manage their accounts, check balances, and initiate claims. These digital initiatives aim to streamline processes, reduce paperwork, and provide better services to the beneficiaries of the fund.


The Employees Provident Funds & Miscellaneous Provisions Act, 1952, plays a crucial role in safeguarding the financial well-being of employees. It establishes the framework for the creation and management of provident funds, ensuring that employees have a reliable source of savings for their post-employment years. The Act's provisions help in promoting social security, financial stability, and a sense of economic protection among the working class in India.

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Trevor   10 Jul 2023 1:21pm
I lost my job few months back and there was no way to get income for my family, things was so tough and I couldn’t get anything for my children, not until read more

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