A significant shift is taking place within the Employees’ Provident Fund Organisation (EPFO) as companies are increasingly choosing to surrender their exemptions and join the EPF scheme. Over the past two years, a total of 27 companies have opted out of self-managing their employees’ provident fund (PF), contributing ₹1688.82 crore and 30,000 employees to the EPFO. This trend is attributed to the notable improvements in EPFO’s services, making it a more efficient and appealing option for businesses.
The Ministry of Labour and Employment has highlighted the positive impact of these enhanced services, stating that the improved claims processing, higher settlement rates, and robust monitoring system are driving more establishments to surrender their exemptions. These companies now prefer that the EPFO manages their employees’ PF, allowing them to focus on their core business operations.
Last year, the EPFO implemented several key initiatives under the Ministry of Labour and Employment to streamline the compliance process for establishments under the Employees’ Provident Fund Act. These efforts included publishing Standard Operating Procedures (SOPs) and manuals to clarify the process for exempted establishments.
The Ministry of Labour and Employment has announced the upcoming launch of a new software and portal, signifying a major step toward digitization within the EPFO. This platform will further simplify the process of surrendering exemptions, making it even more convenient for companies to transition.
It is important to understand that companies which desire to manage their employees’ PF collection independently are required to seek exemption under Section 17 of the EPF Act. This exemption grants them the authority to manage the PF Trust without adhering to regulatory contributions.
As of the end of the financial year 2022-2023, a total of 1,002 establishments were managing ₹3.2 lakh crore for their 31.2 lakh members. These companies are subject to regulations and are obligated to provide benefits to their subscribers that meet or exceed EPFO standards. They must comply with the exemption conditions outlined in the EPF Act.
The increasing focus of the EPFO on its stakeholders, combined with the steady returns generated for members, is further contributing to this growing trend of surrendering exemptions. Companies are recognizing the value and efficiency offered by the EPFO’s robust system and are choosing to leverage its expertise to ensure a secure and reliable future for their employees’ provident funds.
