Will EPF rules change under new labour codes? Govt gives update

The government has stated that there are no immediate plans to modify the Employees’ Provident Fund Organisation (EPFO) scheme as part of the upcoming labour law reforms. The clarification was given by the Ministry of Labour and Employment in a written reply in the Rajya Sabha.

Responding to a question raised by Rajya Sabha MP Sandosh Kumar P, Minister of State for Labour and Employment Shobha Karandlaje explained that the current EPFO framework will continue even after the new labour codes come into force. The clarification comes amid growing interest among employees regarding possible changes to provident fund rules under the new labour law structure.

EPF interest rate: How it is determined

The ministry also explained how the interest rate on EPF deposits is decided. According to the Employees’ Provident Funds Scheme, 1952, the interest rate credited to EPF accounts is determined by the central government in consultation with the Central Board of Trustees (CBT) of the EPFO.

The Central Board of Trustees serves as the apex decision-making body of the EPFO and includes representatives from the government, employers, and employees. The government sets the interest rate after reviewing the organisation’s investment earnings and overall financial position.

Officials also noted that the government must ensure that the EPF interest account remains financially stable. Under the provisions of the EPF scheme, interest rates are fixed in a way that prevents overdrawal from the interest account, ensuring long-term sustainability of the fund.

EPFO schemes under the new Social Security Code

The Labour Ministry clarified that the existing EPFO schemes will continue even after the Code on Social Security, 2020 is implemented. According to Section 164(2)(b) of the code, current EPFO schemes can remain in force for up to one year after the new law comes into effect, provided they are not inconsistent with its provisions.

This means that the existing EPF structure will continue during the transition period, and any adjustments required under the new labour framework will be introduced gradually.

What is the Code on Social Security, 2020?

The Code on Social Security, 2020 is one of four major labour codes passed by Parliament to simplify and consolidate India’s labour laws. The four codes include:

• Code on Wages, 2019
• Industrial Relations Code, 2020
• Occupational Safety, Health and Working Conditions Code, 2020
• Code on Social Security, 2020

The social security code replaces several earlier laws related to worker benefits, including the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; the Employees’ State Insurance Act, 1948; the Payment of Gratuity Act, 1972; and the Maternity Benefit Act, 1961.

The objective of the reform is to streamline social security provisions while expanding coverage to more categories of workers.

EPF provisions under the new code

While the core EPF structure will continue, the new social security code introduces enabling provisions to expand benefits and modernise the system.

Employees working in eligible establishments will continue to receive provident fund benefits under the EPF framework. The central government will retain the authority to frame EPF schemes for both employees and employers covered under the law.

The new code also aims to expand social security coverage beyond the traditional organised sector. For the first time, it includes provisions that could extend certain benefits to gig workers and platform workers through separate welfare schemes.

Wider social security coverage

Another major objective of the labour codes is to broaden access to social security programmes. The Code on Social Security allows the government to design welfare schemes for gig workers, platform workers and unorganised sector workers.

These schemes may provide benefits such as life insurance, disability cover, health insurance and retirement protection. The code also consolidates several retirement-related benefits currently available under different laws, including provident fund contributions, pension benefits under the Employees’ Pension Scheme (EPS), and gratuity.

The law also introduces provisions allowing fixed-term employees to receive gratuity on a pro-rata basis even if they have not completed five years of continuous service.

Public consultation on labour code rules

The Labour Ministry is currently in the process of finalising the rules needed to implement the four labour codes. As part of this process, the government invited public feedback and suggestions on the proposed rules, allowing stakeholders between 30 and 45 days to submit their views.

This consultation is aimed at refining the rules before the labour codes are fully implemented across the country.

What this means for EPF subscribers

For now, the government’s response indicates that EPF subscribers should not expect immediate changes to the provident fund scheme solely because of the new labour codes.

The existing EPF system will continue during the transition phase, and any modifications under the new social security framework will be introduced gradually after the rules are finalised and the code is formally implemented. For millions of salaried employees in India, EPF is therefore expected to remain a central pillar of retirement savings under the evolving labour law framework.