EPFO Releases Comprehensive SOP for Inspection of Establishments

Key Takeaways:

1. Clear guidelines for the sequence and targets for Periodic Desk Review (PDR) of establishments.
2. Detailed process and time-period of Nudging, including content of nudging emails/sms/letters.
3. Procedures for handling closed establishments and associated activities during PDR.
4. Implementation of SOP in a hybrid mode and the use of IT tools for inspections.
5. Priority Matrix for identification and prioritization of defaulting establishments for physical inspection.
6. Time-limit for submitting Inspection Report by the Inspector and maximum pendency with an Inspector.
7. Exemptions from CAIU permission and nudging, and cases requiring permission from CAIU.
8. Guidelines for generating inspections and the role of the Regional Head on SSP.

Synopsis:

The Employees’ Provident Fund Organisation (EPFO) has released a set of Frequently Asked Questions (FAQs) addressing the Standard Operating Procedure (SOP) for the Inspection of Establishments. This comprehensive guide aims to clarify doubts and provide insights into the inspection process. The document provides detailed information on various aspects of the inspection process, including the sequence of Periodic Desk Review (PDR), targets for PDR, the process and time-period of Nudging, content of Nudging emails/sms/letters, tasks to be ensured in respect of closed establishments, associated activities to be carried out during PDR, hybrid mode of implementation of SOP for Inspection of Establishments, Priority Matrix, time-limit for submitting Inspection Report by the Inspector, frequency of inspection, format of the Inspection Report, cases exempted from CAIU permission as well as nudging, cases requiring permission from CAIU, allotment of inspections through Category A/B lists of defaulting establishments, deployment of defaulting establishments on SSP, guidelines for generating inspections, PDR in case of inspections assigned in ECR Category, guidelines regarding coverage of establishments not registered for coverage, and the role of the Regional Head on SSP.

Let’s go through each of the questions and their answers in detail:

1. Sequence in which Periodic Desk Review (PDR) of establishments is to be conducted

Each field office will undertake Desk Review with the following selection-cum-prioritization criteria:

• All establishments starting from Oldest Registration Code (Establishment Master sorted in ascending order of Establishment PF Code).
• PDR has to be completed before Start Date of Inspection in all cases where Physical Inspection is assigned to Enforcement Officer.

2. Targets for Periodic Desk Review (PDR)

Each Field Office shall undertake Desk review of all the establishments (which are not marked as closed) within its jurisdiction at least once a year. The OIC shall assign PDR work in such a manner that the above target is met. Further, each SSA/SSSA entrusted with the task shall complete PDR in respect of at least 40 establishments per month.

3. Process and time–period of Nudging

Nudging is to be carried out in the following manner:

• By IS Division: In respect of ECR based defaulting establishments identified on the basis of priority matrix, centralised nudging will be done by IS division for a period of 3 months.
• By Regional/District Offices: Nudging is to be conducted by the Field Offices in respect of cases where, after conduct of Periodic Desk Review, it is deemed fit by the RPFC-I/OIC that Physical Inspection of an establishment is to be carried out. The nudging is to be done by the Field office as per guidelines issued vide HO Circular No. CAIU/SOP/2022/40 dated 09.2023. Such nudging will be for a period of 3 months.

4. Content of Nudging emails/sms/letters to be sent by the Regional Offices

Annexure-B of the approved SOP for Inspection of Establishments contains samples of sms/emails to be sent during the centralised nudging process. Similar formats for nudging, mutatis mutandis, can be utilized by the Regional Offices for nudging based on observations made during PDR. The content of the sms/emails/letters to be sent to the establishment/employer shall clearly mention the observations/discrepancies noted during the Periodic Desk Review.

5. Circumstances physical letters are to be sent during Nudging

Nudging email/sms is to be sent invariably via official email/number of the Regional Office and on the registered email/mobile number of the establishment and the owner. Only in cases where the registered email/mobile number is not available or the email/sms is returned as undelivered, physical letters should be sent to the establishment. The aim of nudging process is to nudge the employers towards compliant behavior. Therefore, the letters sent for the purpose of nudging should not be of the nature of Show Cause Notices.

6. Tasks to be ensured in respect of closed establishments

In respect of cases where the establishment has reported closure and furnished relevant proof of closure, the establishment shall be marked “Closed” in Unified Portal after verifying the enclosed proofs and ensuring the following:

• Date of Exit in respect of all employees should be marked by employer in the portal in accordance with para 36(2) (b) of the EPF Scheme, 1952.
• Contribution/NCP days up to the “Date of Exit” should be updated by employer in the portal. If required, permission for Physical Inspection may be obtained through CAIU Optional Inspection Dashboard. In respect of the permissions accorded by ZO, the Regional Head has to assign the inspection to Inspector on Shram Suvidha Portal without going through nudging phase.

7. Associated activities to be carried out during PDR mandatorily

During PDR, the associated activities that are to be undertaken mandatorily are as follows:

• Data Cleaning.
• Marking correct activity status of the establishment.
• Correction of establishment details (PAN, address, ownership, etc.).
• Updation/Collection of Form 5A, DSC/e-sign, etc.
• Correction of Coverage Section (in respect of establishments who have registered themselves u/s 1(4) but have submitted returns and/or contribution for 20 or more employees in any given month; and/or other cases where correction in Coverage Section is necessitated).

8. Hybrid mode of implementation of SOP for Inspection of Establishments

IT tools for implementation of the SOP for Inspections of establishments are still under development at IS Division. Vide HO Circular No. CAIU/SOP/2022/(E­47416)/2818 dated 31.07.2023, the SOP has been implemented in hybrid mode which combines use of existing IT tools along with manual processes.

9. Priority Matrix

The parameters for identification and prioritization of defaulting establishments for physical inspection will be as per the inspection scheme of EPFO. However, since defaulting establishments are much larger in numbers within those parameters, a ‘Priority Matrix’ has been decided on the basis of a mathematical formula by committee of CAIU, HO.

10. Time–limit for submitting Inspection Report by the Inspector

Once inspection is assigned, inspector should complete the inspection within 5 working days from the start date of inspection and upload its report within 48 hours on SSP.

11. Maximum pendency with an Inspector

No Inspector should have more than TWO inspections pending on SSP at any point of time. Before assigning new inspection, disposal of already assigned inspection is must in such a way that pending inspection should NOT go beyond TWO for any Inspector.

12. Frequency of inspection

Normally an establishment may be selected for inspection once in a year.

13. Format of the Inspection Report

The Inspecting Official shall submit his report in the format given as Annexure­C (Inspection Report Format) to the SOP for Inspection of Establishments.

14. Types of Cases exempted from CAIU permission as well as nudging

Inspections falling under the following categories are exempted from CAIU permission as well as nudging:

• Establishment undergoing process of Liquidation/Resolution under NCLT.
• Occurrence of an Industrial Accident involving an establishment or its.
• Any specific case assigned by CAIU, Head Office based upon intelligence inputs/ recommendation by Field Office through ZO. Regional Head may assign inspection in respect of these establishments on Shram Suvidha Portal with clear reasons to be mentioned under “Remarks” while assignment of such inspection. However, PDR is to be completed on priority for such cases.

15. Cases no nudging is to take place but permission is required from CAIU

Such cases are summarized as under:

• VIP/Complaint cases (refer Para 6.3B of SOP)
• Cases for processing of coverage u/s 1(4): only collection and verification of documents is to be carried out for the purpose of notification of establishment u/s 1(4) of the Act. In case the establishment is found under coverable u/s 1(3) of the Act, report shall be submitted accordingly along with necessary documents.
• Cases for processing exemption under provisions of the Act and Scheme.
• Establishment reported for closure (only in respect of closure cases where Inspection is required) However, PDR is to be completed on priority for such cases.
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16. Allotment of inspections through Category A/B lists of defaulting establishments

No. Circular No. CAIU/011(5)2016/Inspection/20509 dated 27/02/2018 has been superseded as per circular dated 31.07.2023. Hence, No inspections shall be assigned from category A or B defaulter list.

17. Deployment of defaulting establishments on SSP

Currently nudging phase is in process for the defaulting establishments as per Priority Matrix. The nudging phase shall be operational for a period of 3 months for each wage month cycle. After the nudging phase of 3 months ends, the list of remaining defaulters in ECR category will be deployed on SSP by the Head Office as per the Priority Matrix. The field offices will thereafter be able to generate Inspections from such lists deployed on SSP.

18. Guidelines for generating Inspection

On every first working day of the week, Regional Head (on SSP) will identify the number of Inspectors available for Inspections that week. Regional Head will thereafter select this number on SSP, which in turn will generate the list of establishments for Inspections. The establishments which will be fetched on SSP will be on a random basis out of the list of remaining defaulters deployed on SSP by CAIU (HO). These establishments will then be allocated one each to the available Enforcement officers by the Regional Head. Wherever necessary, Regional Head may allot it to a Squad also.

19. Periodic Desk Review (PDR) in case of Inspections assigned in ECR Category

The PDR of such establishments where Physical Inspection is assigned on SSP shall be ensured on priority by the Field Office before the “Start Date of inspection”. The Enforcement Officer has to refer the PDR Report before proceeding for Inspection.

20. Guidelines regarding Coverage of establishments not registered for coverage

The guidelines regarding Coverage of establishments who, despite being coverable under the Act, have not registered themselves for Coverage are governed by Para (3) of HO Circular No. CAIU/011(72)2016/Shram Suvidha Portal/2566 dated 03/05/2018. Further, as coverage of eligible establishments is a vital work area, the Zonal Offices shall process CAIU permissions in respect of new coverages within 3 working days.

21. Role of the Regional Head on SSP

The Regional Head role in SSP is to be assigned to the OIC (in Commissioner Cadre) of the Regional Office/District Office/Special State Office.