Ushering in an era of objective inspections: EPFO implements a streamlined SOP

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Periodic desk review

Each field office will undertake an annual desk review (periodic review) of all establishments within its jurisdiction starting from the establishment with the oldest registration code. Physical inspection cannot be assigned to the Enforcement Officer (EO) unless nudging is completed (as explained in the subsequent paragraph), and desk review is undertaken. This desk review report should be recorded in compliance e-file of the establishment and populated in a format given in Annexure-I of the circular. The periodic review should examine variations in membership and contributions made across a minimum of 14 monthly reports. Where the data is inadequate, the activity status of the organisation can be determined using available data from other agencies such as Employees’ State Insurance Corporation and Ministry of Corporate Affairs. Any findings arrived at pursuant to the periodic review may trigger an inspection in an establishment after approval of the Regional Provident Fund Commissioner / Officer in Charge. The designated authority in this respect shall review a minimum of 40 establishments per month and submit reports through e-office.

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Nudge and watch

Defaulting establishments will be identified for the purpose of ‘nudging’ based on ‘priority matrix’ which in turn would be based on parameters such as establishments involved in non-filing of electronic challan-cum-return (ECR), variations in ECR, intelligence received on the basis of periodic review, etc. This matrix will be dynamic in nature, consisting of several indicators to be reviewed every 6 months by the CAIU. An office-wise list of defaulting establishments as per this matrix will be provided to CAIU, and such establishments will receive weekly SMS and e-mail alerts during the nudging phase on the contact information available with the EPFO. All members whose contribution is not deposited by the due date by the employer will also receive SMS alerts. Any response by these defaulting establishments will be duly recorded in the desk review report and compliance e-file of the establishment. The process of nudging will continue from the due date up to 3 months, post which an auto-populated message will be reflected in the employer’s account on the EPFO portal to the effect that any arrears towards employees’ provident fund contributions should be remitted within 30 days, else the defaulting employer may face inspection and penalties under the law.

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Physical inspection

After conclusion of the nudging phase, defaulting establishments which did not comply with the notifications received from the EPFO during the nudging phase will fall in the pool of establishments that would be subjected to physical inspection. The EO shall complete the inspection within 5 working days from the day on which the inspection began and upload the report on the Shram Suvidha Portal within the next 48 hours. This process will be repeated each week and an electronic show-cause notice (format of which is also available in the SOP) will be sent to the registered email address of the establishment.

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Inspection report and follow-up action

The inspection report will be put up in the establishment e-file within 3 working days for necessary action by the Circle Officer. Thereafter, within 5 working days, the Circle Officer will examine the report and record consequent actions on the e-file. Any response received by the establishment will further be recorded in the compliance e-file. In case of non-production of records by the establishment, the report will be sent ahead for processing of filing prosecution against the establishment under Section 14 of the EPF Act.