New Delhi: The government is likely to put on hold implementation of the EPFO's controversial circular that seeks to tighten norms for initiation of inquiry against employers in provident fund (PF) cases and clubbing of allowances with basic wages for computing PF contribution.

"Labour Ministry may soon ask the EPFO to keep the circular in abeyance in view of protest by trade unions as well as employers," a source privy to the development said.

After the circular was issued by the Employees' Provident Fund Organisation (EPFO) on November 30, the trade unions had lodged their protest with Labour Ministry, terming it anti-worker.

According to the circular, the inquiry against employers can only be initiated after "actionable and verifiable information" is placed for consideration before the compliance officers.

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With regard to the time period for initiating inquiry, it had said, "no inquiry or investigation shall ordinarily go beyond seven years, i.e., it shall cover the period of default not exceeding preceding seven years."

However, in a worker friendly move, the circular also redefined the meaning of "basic wages" for the purpose of provident fund deductions and said, "All such allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as the basic wages."

The employers are also not very happy with the EPFO's move to deal with splitting of remuneration by them which help them to reduce their PF contribution obligation substantially.

Commenting on the circular, Homi Mistry, partner, Deloitte Haskins & Sells said, "Given the fact that the matter is sub-judice before the apex court, this internal guideline may complicate matters especially for international workers for whom there is no minimum salary threshold to trigger PF compliance."

Corporates, Mistry said, "may find this (implementation of circular) a challenge as PF authorities, armed with this guideline could press their stand and levy huge demands."

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