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EPFO should provide unemployment insurance, gratuity: Parliamentary panel

LiveMint logoLiveMint 11-04-2017 PTI

New Delhi: A Parliamentary panel has recommended amendments in social security schemes run by retirement fund body EPFO to include unemployment insurance and gratuity benefits.

At present, the Employees’ Provident Fund Organisation provides retirement fund (EPF), pension and group insurance under its three schemes. These schemes are Employees’ Provident Fund Scheme 1952, Employees’ Pension Scheme 1995 and Employees Deposit Linked Insurance Scheme 1976.

The Public Accounts Committee in its report tabled in Parliament on Tuesday said, “The scheme should be reviewed/modified so as to include unemployment insurance and gratuity under the scheme.”

However, the labour ministry in its response to the panel said that unemployment insurance is not under the present EDLI Scheme in which insurance is linked to the deposits and thus it is not feasible at this juncture.

The ministry has also explained that the payment of gratuity is governed by the Payment of Gratuity Act, 1972 which is administered by labour departments of states. However, the panel said that all benefits related to superannuation/death/sickness/disability of the employees should be covered under one scheme.

Flagging long delays in annual valuation of the Employees’ Pension Fund, the committee has recommended exemplary disciplinary action against those responsible for such huge delays and disclosure of annual valuation reports for ensuring transparency.

It also recommended that whenever an establishment (firm) is set up, they should be compulsorily be registered with the EPFO also as they register with sales tax/VAT departments etc.

The panel was of the view that making restoration mandatory at the time of setting up would ensure coverage of all establishments and consequently maximum number of workers would be covered under the scheme.

However, the ministry apprised the panel that this would require an amendment regarding coverage of establishments under the EPF & MP Act. At present all those firms which employ 20 or more employees come under the purview of the EPFO.

However, the ministry has told the panel that a bill to amend the Act to provide for reducing the 20-employee threshold for coverage under the EPFO to 10 has been sent to the Union Cabinet for approval. This is also expected to bring a large number of workers under the EPFO social security net.

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