Byju’s has violated the PF Act by delaying employee provident fund (PF) payments for virtually all of the months since October of last year. As a result, the Employee Provident Fund Organization (EPFO) may take legal action against Byju’s.
According to information obtained from EPFO by Moneycontrol, Byju’s, the most valuable startup in India, has been paying PF payments with a delay of close to three to four months. The data revealed that Byju’s really made PF payments for December only in June for several workers.
Numerous independent PF specialists who have evaluated the data collected from EPFO have concurred that it indicates a payment delay for most months.
After Moneycontrol revealed last week that workers’ PF passbooks were not reflecting contributions from November of last year even though employees’ wage slips showed PF contribution entries, the corporation sped up PF payment contributions.
Byju’s neglected to respond when Moneycontrol questioned it about the alleged non-payment. The firm has been paying PF payments on schedule, according to sources close to the company, thus it is a reflection problem.
Only 10,000–13,000 workers, however, got PF payments for January, February, and March, according to the figures. According to the statistics, the majority of workers have not yet received their PF payouts for April and June.
In February 2022, the Supreme Court ruled that if an employee’s PF payment is delayed, the company must pay damages. According to the PF Act, businesses must make PF contributions by the 15th of the following month. If there is a delay in payments, workers may protest to the EPFO about the employer.
When an employee lodges a grievance against the business, the EPFO launches an investigation against the employer. In addition to filing a police complaint against the employer, EPFO has the option of recovering the damages from the late deposit. The employer is given’reasonable time and chance’ to make their case, nevertheless, before any disciplinary action is taken.
Employers that fail to make required payments are subject to Section 14B damages and Section 7Q interest under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
A Byju’s spokeswoman responded to Moneycontrol’s inquiries with, “This is to clarify that there are no outstanding PF payments for workers. There aren’t any fees.
Moneycontrol addressed questions to EPFO, but they were not answered.
Payment delays for PF have happened before. The now-defunct Kingfisher Airlines was being investigated by the EPFO in 2016 for delaying its payment to overseas employees. The airline was subsequently assessed a punishment by the EPFO of Rs 7.62 lakh for non-compliance. According to PF consultants, personal financial specialists, and attorneys, the EPFO could impose a comparable fine.
Byju’s and its founder Byju Raveendran are now grappling with a variety of challenges, including auditor and board member resignations. The potential PF action might add to their lengthy list of troubles.
Vivian Wu of the Chan Zuckerberg Initiative, GV Ravishankar of Peak XV Ventures (previously Sequoia Capital), and Rusel Dreisenstock of Prosus, three board members of Byju’s, resigned from the organization’s board last week owing to disagreements with Raveendran over operational difficulties.
One of the largest audit companies in the world, Deloitte, has submitted its resignation from its position as Byju’s statutory auditor.
Byju’s is left in uncertainty as a consequence of Deloitte’s departure since the edtech company’s FY21 (2020-21) results revealed a number of anomalies with regard to its revenue recognition procedures.
The Enforcement Directorate (ED), India’s financial investigation team, recently searched Byju’s Bengaluru headquarters in accordance with the Foreign Exchange Management Act. EPFO’s probable action would follow that. Additionally, the business has not yet submitted its FY22 (2021–2022) audited results.
Byju’s revealed that its losses for FY21 increased significantly to approximately Rs 4,500 crore while its income somewhat decreased. This was unexpected given that FY21 was the first year of the Covid-19 epidemic, which gave online learning businesses a boost.
Byju’s, a company founded by former teacher Byju Raveendran more than ten years ago, has raised more than $5 billion, the most of it in the last five years.
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