Good News for Employers: No Penalties for Lockdown EPF Delays
No. C-I/Misc/2020-21/Vol.1/1112
Date: 15.05.2020
To:
All Addl. CPFCs in charge of Zones
All RPFCs in charge of Regional Offices
All OICs in charge of District Offices
Sub: Relief to establishments and factories covered under EPF and MP Act, 1952 from levy of penal damages for delay in deposit of dues during COVID-19 pandemic
Sir,
In view of the prolonged lockdown announced by the Government to control the spread of COVID-19 pandemic and other disruptions due to Pandemic situation, the establishments covered under EPF & MP Act, 1952 are distressed and not able to function normally.
The Hon’ble Apex Court of India in McLeod Russel India Limited vs. RPFC (2014) and 263 has underlined the broad contours of essential elements of a sine qua non of the Act that held that mere delay, or culpable state of mind of the employer, is not a ground for inviting damages under section 14B. In other words, the provision of section 14B would get attracted only when there is a positive evidence of mens rea on the part of the employer while committing default in timely remittances. This legal position has later been reaffirmed in Assistant Provident Fund Commissioner vs. Management of RSL Textiles (CA 96-97 of 2017).
Considering the difficulty faced by the establishments in timely deposit of contributions during the period of lockdown due to operational and economic reasons, it is evident that such delays are without mens rea of the employer. The delay in the deposits and contributions during the period of lockdown cannot be attributed to any culpable state of mind of the employer and will not, therefore, attract the provisions of section 14B of the EPF & MP Act, 1952.
Therefore, for any delay in payment of any contributions or administrative charges due for any period during the lockdown, no proceeding should be initiated for levy of penal damages in such cases.
Get the copy of this circular giving penal damages waiver covid-19 : download now
