The Employees’ Provident Fund Organisation (EPFO) is set to introduce a new risk-based inspection scheme that will replace the traditional system of discretionary inspections with a technology-driven compliance framework, Central Provident Fund Commissioner Ramesh Krishnamurthi said on Wednesday.
Speaking at the ASSOCHAM event, Krishnamurthi said the proposed inspection scheme would rely on data analysis and risk profiling to identify establishments for scrutiny, instead of routine or subjective inspections by enforcement officials. “The new inspection schemes are purely going to be risk-based and based on thorough analysis. They will assess the kind of risk posed to the organisation in terms of non-compliance,” he said.
Krishnamurthi said that under the new system, EPFO will assess the risk of non-compliance by establishments and quantify the likely impact of violations before selecting units for inspection. The system will quantify the risks arising from non-compliance, and establishments will be selected for inspection based on the level of risk identified, he added.
“The primary focus will be on facilitation, with the first step being to request compliance and guide firms to comply. Only after repeated non-compliance or reluctance to comply will there be an inspection,” Krishnamurthi said, adding that inspections will primarily be web-based and electronically driven.
Krishnamurthi also said EPFO will soon renotify the Employees’ Provident Fund, Employees’ Pension Scheme, and Employees’ Deposit Linked Insurance Scheme in line with the labour codes, with reforms including simpler withdrawal rules, changes to the framework for exempted trusts, and greater automation of approval processes.
Echoing him, Labour Secretary Vandana Gurnani said the labour ministry is finalising a new inspection scheme under which inspections in the central sphere will largely be carried out by agencies including the office of the Chief Labour Commissioner, EPFO, the Employees’ State Insurance Corporation, the Directorate General Factory Advice Service & Labour Institutes, and the Directorate General of Mines Safety.
While states will continue to have their own inspection mechanisms, the overarching principle of the new framework will be self-compliance, she said. “There are some risk parameters that we have already developed based on previous instances of non-compliance and the linking of our datasets with other datasets. As we move forward, we will fine-tune the risk parameters and ensure our machinery focuses only on real defaulters,” she said.
The move, she added, would remove unnecessary human interface associated with inspections that “can happen anywhere and anytime”, while making the process entirely digital. The labour codes replace the earlier designation of “inspectors” with “inspector-cum-facilitators”, giving labour officials a dual role of checking violations and helping establishments comply with the law. The codes also allow for web-based inspections, electronic records, and computerised inspection systems, moving away from the older system of largely physical inspections that often depended on the discretion of individual officials. Inspections are proposed to be selected using risk-based criteria and data analysis, though trade unions have raised concerns that reduced physical inspections could weaken enforcement. Gurnani also urged Indian companies to shift from contractual employment to fixed-term employment amid concerns over delayed payments by contractors.
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