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What are the possible charges an employee can take against an employer regarding Provident Fund - An employee works in a company for a short duration i.e., less than a year. Employee who was able to get the first month's salary slip and noticed a Provident Fund deduction but the employer failed to share Provident Fund details to the employee during and after the period employment. Now, the employee is able to figure out that the employer never created a Provident Fund account for the employee.

  • Does this amount to breach of trust under IPC and lead to prosecution?
  • Can the employer create an employee Provident Fund account and pay the Provident Fund amount along with a penalty after a PF department inspection?
  • On the other hand, if the employer is allowed to make the payment along with a penalty to the PF department, then can the employer be prosecuted for criminal breach of trust as well?
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Does this amount to breach of trust under IPC and lead to prosecution?

PROBABLY with the caveat that the full facts need to be examined by the court to be sure.

An employer's failure to properly account for Provident Fund payments in accordance with the Employees Provident Funds and Miscellaneous Provisions Act 1952 is, on the face of it, the offfence under s.406 of the Indian Penal Code:

Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

  Depending on the employer's capacity, it may also be an offence under s.409:

Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment for life, or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine.

(The OP's final two bullet points would be a matter for the PF Commissioner and courts to decide upon.)

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  • How we evaluate employer capacity in this case?
    – Venkatesh J
    Apr 26, 2021 at 8:53
  • @Venkatsh The employer's capacity will depend on what business function he performs. If it's one of those listed in s.409 then there's the potential for harsher sentencing if found guilty of breaching trust.
    – user35069
    Apr 26, 2021 at 9:02
  • Thank you for your prompt response! Does employer dealing in IT sector with close to 35+ employees fall under ambit of S.409?
    – Venkatesh J
    Apr 26, 2021 at 9:13
  • I doubt it, unless it falls within "any manner entrusted with property" but an experienced lawyer who specialises in this area should be able to help you.
    – user35069
    Apr 26, 2021 at 9:25

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