Huge EPFO dues befall on India Inc

Oil public sector undertakings (PSUs) on the divestment block "" GAIL, HPCL, BPCL and IOC "" will have to cough up sizeable dues to the Employees Provident Fund Organisation (EPFO). ONGC is also on the list of companies facing liability payable to the EPFO.

This liability follows the Supreme Court judgement upholding the validity of the Employees' Provident Funds & Miscellaneous Provisions Act 1996 and the Employees' Pension Scheme 1995, which had been challenged by over 80 corporate and PSUs as being "unreasonable, arbitrary and discriminatory".

The creation of liability is likely to amount to thousands of crores of rupees in dues to the EPFO. Apart from oil PSUs, there are a host of other government entities "" APSRTC, BHEL, National Organic Chemicals, among others having such liability to EPFO.

Liabilities are also due from private corporates including Hindustan Motors, ACC, Tata Hydro Gas, Spic, Voltas, as well as multinationals such as Siemens, Wyeth, Hindustan Lever, Philips, and Dunlop.

"The liability will be phenomenal as the SC has upheld the validity of the schemes. Companies will not only need to pay up past dues, but also a penalty at the rate of 25 per cent annum to make up for the opportunity lost for want of investing in the scheme," said senior officials at the Central Provident Fund Commission Office.

Over 50 of the 85 cases challenged by various employee unions are from the state of Maharashtra, with seven from Andhra Pradesh, and six each from the states of Uttar Pradesh and West Bengal.

Corporates and their PSU counterparts took the Union government to court when they filed their respective suits in various high courts across the country.

These cases were then transferred to the Supreme Court through the filing of a transfer petition. Since 1996, corporates and PSUs which have challenged the government social welfare scheme, have in most cases failed to transfer incremental employee funds to the EPFO.

The contention among India Inc followed the replacement of the family pension scheme of 1971 with a comprehensive family pension scheme in 1995.

"The existing benefits from the PF have been depleted to a great extent by diversion of 8.33 per cent employer's share, and pension payable under the new scheme is far below the accruals in the pension fund," stated many corporates challenging the Centre.