New Delhi, Jan 4 (KNN) In a move that will encourage many micro, small and medium enterprises (MSMEs) to enrol their employees as members under the Employee Provident Fund (EPF) scheme, EPFO has come up with a campaign under which employers can get themselves enrolled against payment of a minimal damage fee of Rs 1 per year of default.

The retirement fund body EPFO on January 1 launched a 3-month campaign where employers will get amnesty and will have to pay just Re 1 as damages for not registering their employees earlier.

Additionally, if the employee wasn't enrolled earlier and his/her share of contribution was not deducted from salary, the employer company had to pay this sum also in addition to the past defaults of its own contribution. Now under the amnesty scheme, only the employer's contribution has to be deposited.

It may be recalled that the Federation of Indian Micro and Small & Medium Enterprises (FISME) had written a letter to PM Modi in December in which it had stressed on the need for amnesty for previous years in context of labour laws.

FISME had noted that while most of the entrepreneurs can be counselled/persuaded to migrate to formal economy, the biggest hurdle in the way was the fear of persecution both in future and of non-compliance in past.

“A comprehensive ‘amnesty’ – a kind of safe passage, is needed especially in two spheres a) Taxation (Direct and Indirect Tax) and b) Labour/ Social Security along with assurance that the government machinery will also be reformed and made to work for the good of the nation and not to serve vested interests,” it said.

The letter further added, “In labour laws, not only is an amnesty required for the previous years, but urgent reforms are needed to make compliance feasible in future. Firstly, as promised by the Finance Minister in his Budget speech alternative option should be made available to employers/ employees for the ESI and the EPF. Secondly, the threshold of salary for mandatory Provident Fund deductions should be raised; the Employer’s contribution should be fixed @ 10% while the contribution from employee should be made voluntary. (Such a scheme has already been announced for apparel sector). Thirdly, the responsibility of providing medical facilities should be taken up by the State itself (as for Central Government employees) and the ESI contribution should be completely done away with, the industry body added.”

Talking to KNN, Virjesh Upadhyay, General Secretary, Bhartiya Majdoor Sangh, said, “It is an opportunity for the industries who were scared of paying the hefty penalties.”

“It will be beneficial for the labours. It is a welcome announcement,” he added.

The companies having 20 or more employees are required to mandatorily enrol those employees under the EPF scheme who have a salary of up to Rs 15,000 per month.

The EPF scheme is optional for those drawing a higher salary. Meanwhile, once an employee opts for the scheme, he or she cannot opt out.

Both the employer and employee are required to contribute 12% per month towards EPF against the employee's basic salary plus dearness allowance.

However, under the amnesty, interest at the rate of 12% on the amount due for delayed deposit of the contribution will be payable for the period of delay.

This amnesty scheme, which comes into force from January 1, is open until March-end.