Govt rolls back PF withdrawal curbs under trade union pressure

New Delhi: Stunned by the massive violent protests in Bengaluru that led to torching of vehicles and even burning down of a police station that went on almost throughout the day, the Narendra Modi government at the Centre finally bowed to the people's demand and cancelled the notification on tightening of Provident Fund withdrawal norms.

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The notification was issued on 10 February.

"The notification issued on 10th February, 2016 is cancelled. Now the old system will continue," Union Labour Minister Bandaru Dattatreya said at a press conference in Hyderabad.

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"I will take ratification from CBT (Central Board of Trustees of EPFO)," he said after violence rocked Bengaluru for the second day when garment industry workers torched several buses and attacked a police station protesting against the tightening of rules.

Giving reasons for the rollback, Dattatreya said, "The reason is the request of trade unions. The earlier decision (to tighten the PF withdrawal norms) was also taken by the opinion of the trade unions. Now, when the trade unions are requesting, then we have rolled back the decision."

Earlier in the day in New Delhi, the Minister had said, "The notification (tightening PF withdrawal norms) will be kept in abeyance for three months till July 31, 2016. We will discuss this issue with the stakeholders."

Dattatreya said employees and workers need not have any misconceptions in the wake of the cancellation of the notification.

The decision would have barred withdrawal of the employer's contribution from the PF money till the age of 58 years.

In a placatory move, the Labour Ministry also said it was contemplating permitting withdrawal of all accumulations by Employees' Provident Fund Organisation's (EPFO) subscribers on grounds like purchase of house, serious illness, marriage and professional education of children. The matter has been referred to Law Ministry for clearance.

People have also launched online campaign against the decision, which was to be implemented from 10 February but was later put on hold till 30 April.

Protesters pelted stones at Hebbagodi Police Station in Bengaluru and torched seized vehicles parked there, as the spontaneous agitation with no trade union leading it spun out of control.

Police said they had to resort to lathicharge and fire teargas shells to disperse violent protesters.

At least two Karnataka State Road Transport Corporation buses and one of Bengaluru Metropolitan Transport Corporation have been set on fire, they said.

City Police Commissioner NS Megharikh said the situation was under control, but there "are some issues" on the city's outskirts.

"...we are at work, our officers are at the spot, reinforcement has already gone there. The situation is being brought under control," he said.

Police said other workers too have joined garment workers in the protest on Tuesday.

There are approximately over 12 lakh garment factory workers in Bengaluru, the city police chief said.

Workers opposing amendment to EPF Act have expressed fear that the new rule would take away their right over employer's contribution portion of provident fund till they attain 58 years.

Dattatreya said a meeting of the Central Board of Trustee would be called "to see how best the employers' contribution to EPF (3.67 per cent of basic wages) can be utilised for workers."

In February, the ministry had issued a notification restricting 100 per cent withdrawal of provident fund by members after unemployment of more than two months, among others.

Following the concerns raised by trade unions and other stakeholders, the ministry decided to keep the notification in abeyance till 30 April. Its implementation has later deferred till 31 July, as per a labour ministry statement.

Now, the EPFO subscribers who are out of job for more than two months can file for full and final settlement of provident fund till July end.

"On the direction of Labour Minister, the said provision will now come into effect from 1 August 2016 by issue of an amended notification," the statement said.

The proposal to amend the scheme to allow all accumulations on different grounds like purchase of house, serious illness, marriage and professional education of children, has been sent for vetting by the Law Ministry.

The proposal also allows withdrawal of all accumulation by EPFO members who have joined an establishment or firm of Central or state government and became the member of contributory provident fund or old age pension under any scheme frame by them.

The unions have been demanding complete rollback of the decision tightening the PF withdrawal norms.

Earlier in February, the EPFO had amended the EPF Scheme 1952 to tighten the various norms for withdrawal of provident fund including increasing age limit for filing such claims by retiring employees to 58 years from 54 years.

Besides, the EPFO had also restricted withdrawal of PF to own contribution of subscribers and interest earned on that, if the claimant has remained unemployed for more than two months. The member would be able to withdraw employer's contribution on maturity.

Earlier norms used to allow subscribers to claim 90 percent of their accumulations for investing in the scheme after attaining the age of 55 years.

With PTI inputs