Byju's to hold board meeting on Dec 20 amid pending dues
Raghunathan KE, representing employers on the EPFO Board, has sought to alleviate concerns among Byju's employees regarding their pending provident fund (PF) dues. He reassured them that there is no need to worry as the EPFO, their social security custodian, will ensure that they receive their hard-earned money. Raghunathan emphasized that when such matters come to the attention of the EPFO, they thoroughly investigate the issue. The company will also be given a reasonable opportunity to present their side. He stated that the EPFO's responsibility is to ensure that both the employer survives and the employees do not suffer any loss of employment, while also receiving their due savings.
Sanket Jain, a Partner at Pioneer Legal, explained the consequences faced by employers who default on PF payments. If the default is less than two months, the employer must pay 5 percent of the arrears per annum. For defaults between two to four months, the rate increases to 10 percent, and for defaults between four to six months, it rises to 15 percent. Employers who delay payments for more than six months are charged 25 percent. Jain emphasized that delays in PF payments are usually indicative of significant financial difficulties for the company. He further noted that such defaults are a breach of trust and can potentially lead to criminal proceedings being initiated under the Indian Penal Code. The labor ministry is responsible for taking action in such cases.
Jain and other PF consultants highlighted that it is easier for companies to conceal delays in PF payments as employees tend to not regularly check their EPFO passbooks. While employees may voice their concerns if their salaries are delayed, they rarely monitor their PF accounts on a monthly basis. The consultants suggested that the withholding of PF payments often indicates cash flow issues within a company.
Byju's, founded by former teacher Byju Raveendran over a decade ago, has raised over $5 billion in funding, with a significant portion obtained in the last five years. The company reached new heights in March 2022 when it secured an $800 million funding round, valuing the startup at an impressive $22 billion and making it the most valuable startup in the country. However, recent developments have taken a negative turn for the company. Byju's has lost its auditor, Deloitte, and non-promoter board members. Additionally, it has been engaged in a dispute with its term loan lenders, Blenders, for over six months, with both parties filing lawsuits against each other in US courts. In April, Byju's offices in Bengaluru were searched by India's financial probe agency, the Enforcement Directorate, under the provisions of the Foreign Exchange Management Act.
Despite these challenges, Byju's has maintained that all pending PF dues have been cleared by the company. The assurance provided by the EPFO Board member aims to address the concerns of Byju's employees and alleviate any anxieties regarding their PF payments.
