Buckling under pressure for the second time in two months, the government on Tuesday rolled back a diktat making it difficult to make withdrawals from the employees’ provident fund (EPF) before retirement.
The move, following violent protests by textile industry workers, came a month after the government went back on its budget proposal to tax EPF.
On 10 February, the labour ministry revised the EPF withdrawal norms allowing employees to withdraw only their own contribution (12% of basic salary) to EPF and prescribing that the employer’s share (3.67% of basic salary after keeping 8.33% for Employees’ Pension Scheme) can only be withdrawn at the retirement age of 58 years.
Until then, employees had been allowed to withdraw the total EPF amount before retirement for medical emergencies, to fund children’s marriage or while changing jobs.
This has now been retained.
“The objective was to provide a minimum social security to the workers at the time of retirement. It was noticed that over 80% of the claims settled by EPFO belonged to pre-mature withdrawal of funds, treating the EPF accounts as savings accounts, and not a Social Security instrument,” a labour ministry statement issued on Tuesday said.
However, thousands of garment workers, angry with the change in EPF withdrawal norms, protested for the second day in a row in Bengaluru, torching buses and attacking a police station, forcing security forces to fire tear gas shells to control the crowds.
Following the protests, the labour ministry first announced earlier on Tuesday that the notification was being kept in abeyance till 31 July, before completely withdrawing it later in the evening. Earlier, it had put the notification on hold till 30 April.
D.L. Sachdeva, general secretary, All India Trade Union Congress, said the government does not have the right to force workers to retain their EPF savings until the age of 58 year.
