Centre rethinks plan to widen EPF coverage

Labour pangs: The proposal is found ‘contradictory’ with the one giving an option to staff to switch to the NPS.

Labour pangs: The proposal is found ‘contradictory’ with the one giving an option to staff to switch to the NPS.  

The centre is reconsidering a plan to widen the social security net for workers by bringing more factories under the provident fund coverage.

The Cabinet Secretariat has pointed out a few contradictions in the Labour Ministry’s proposal to amend the Employees’ Provident Fund and Miscellaneous Provisions Act of 1952, senior labour ministry officials said.

The Labour Ministry had proposed to bring down the threshold limit for coverage of firms under the Employees’ Provident Fund (EPF) to factories with at least 10 workers. At present, the EPF Act is applicable to factories with minimum 20 workers.

Senior labour ministry officials said the proposal to decrease the threshold limit was found to be contradictory with another proposal in the Act to give an option to workers to switch to the National Pension System (NPS), managed by the Pension Fund Regulatory and Development Authority.

“It was observed that on one hand, there is a proposal to bring larger number of people under the EPF fold and on other hand, there is another proposal to give workers an option to opt out of EPFO and move to NPS. This is contradictory and needs a re-think,” the official said, on conditions of anonymity.

Further deliberations

“We will go for further internal deliberations before sending the final proposal for Union Cabinet’s nod,” the official added.

In his Union Budget 2015-16 speech, Finance Minister Arun Jaitley had proposed allowing EPF subscribers to opt for NPS and to make EPF contributions optional for workers below a certain income threshold.

In June this year, Centre proposed making EPF optional for textile workers earning less than Rs 15,000 a month as a part of a special package for the garments sector.

The government’s proposal to bring factories with at least 10 workers under the EPF fold can bring 50 lakh additional workers under the social security coverage, All India Trade Union Congress Secretary D.L. Sachdev said.

“Central trade unions had unanimously supported the government in its endeavour to provide EPF coverage to factories with at least 10 workers while opposing any move to make EPF optional. However, this comes as a major setback as around 50 lakh workers could have come under EPF coverage with this move,” Mr. Sachdev said.

8.7 crore workers

At present, 8.7 crore workers are subscribed to EPFO out of which around 3.77 crore workers made active contributions to their PF account till 2015-16.The proposal to cover factories with at least 10 workers under the EPF Act was one of the recommendations of the 44th Indian Labour Conference Session held in 2012.

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