In a recent directive announced by the Employee Provident Fund Organisation (EPFO), a statutory body under the Ministry of Labour and Employment, all CBSE-affiliated schools are mandatorily required to register themselves with EPFO. The new norm is said to provide EPF benefits to employees or teachers working at small or mid-level schools located in rural areas and functional for three years or more, even without a minimum of 20 employees.
The new mandate for EPF registration is also aimed at improving compliance among establishments, including schools. “By registering with EPFO, schools can ensure that their employees receive retirement benefits like provident fund, pension, and insurance. Now as a legal obligation, social and financial security through retirement benefits will be extended to them. This step can help attract and retain talented employees,” says Bikram Agarwal, chief financial officer (CFO), Seth Anandram Jaipuria Group of Educational Institutions, Uttar Pradesh.
Now, even private schools are required to contribute 12% of the employee’s basic salary plus dearness allowance towards the employee’s EPF account, while the employee contributes an equal amount. In addition, employers are required to contribute 0.5% of the employee’s basic salary towards the Employees’ Deposit Linked Insurance (EDLI) scheme, which provides life insurance cover to the employee.
It is important to note that the benefits of PF amount may vary depending on the specific nature of the job and recruitment type. Explaining the benefits, Agarwal says, “School teachers hired on a contractual basis, for them the benefits of PF may be limited to the duration of the contract. However, in the long term, PF registration will prove to be mutually beneficial for both teachers and the school fraternity. Schools can attract and retain talented teachers. Also, teachers are more likely to stay with a school that offers them financial security and stability during post-retirement years as they will be provided a corpus of savings to manage their financial needs. This will bring job satisfaction among teachers and in the long term will also improve the overall academic health of schools.”
The new mandate also aims to improve the compliance of school authorities with PF regulations and penalise the defaulter for non-compliance. Thus, teachers and school staff can reach out to the relevant government authorities such as the Ministry of Labour and Employment or the EPFO office, if a CBSE school is not following the labour laws regarding PF contributions or any other employee benefit.
Most CBSE schools contribute to their employees’ accounts. By making school registration with EPFO mandatory, compliance awareness among schools from tier II, and III cities will grow, leading to accountability on their part.
Sharing the benefits, Bharathi Lakshmi, principal, Hindustan International School, Chennai, says, “The main problem with the process followed for the PF deduction and amount disbursal was that it was not prescribed as a legal mandate for management committees of all schools. So, teachers switching jobs faced issues getting their PF account details from their previous school employer. It used to hamper the practice of continuing the existing account for further acceptance of PF deductions.” This scenario is set to improve as school management will stay away from non-compliance and teachers can also bring the loopholes to the forefront. “As a principal, I am the coordinating factor between teachers and school management. Taking care of my duty, I am now obligated to make the process smoother and faster for teachers and even non-academic staff also. I have to ensure that full-time teachers and admission counsellors, administration staff, and lab helpers are provided the financial security net as applicable and the related communication is provided to them through monthly SMS and email services,” adds Lakshmi.