Byju’s has delayed provident fund (PF) payments of employees for almost all months starting October last year, in what is a violation of the PF Act, opening itself up to action from the Employee Provident Fund Organisation (EPFO).
Byju’s, which is India’s most-valued startup, has been making PF contributions with a lag of almost three to four months, according to data sourced from EPFO by Moneycontrol. In fact, for some employees, Byju’s made PF contributions for December only in June, the data showed.
The data obtained from EPFO has been viewed by multiple independent PF consultants, who confirmed that it suggests a delay in payment for most months.
The company expedited PF payment contributions after Moneycontrol reported last week that employees’ PF passbooks were not showing contributions from November last year, even though employees’ salary slips showed PF contribution entries.
When Moneycontrol had asked Byju’s about the alleged non-payment, the company had declined to comment. Sources close to the company had then said that it is a reflection issue and the company has been timely making PF payments.
However, according to the data, only about 10,000-13,000 employees have received PF payments for January, February, and March. The majority of employees are yet to receive PF payments for April and June, the data showed.
According to a Supreme Court ruling in February 2022, an employer is needed to cover damages if an employee’s PF contribution is delayed. Under the PF Act, companies are required to make PF contributions before the 15th of next month and if there is a delay in payments, employees can file a complaint with the EPFO against the employer.
If an employee files a complaint against the company, it initiates an inquiry by the EPFO against the employer. EPFO can recover the damage amount on the late deposit, while there can also be a police complaint against the employer. However, before any penal action, the employer is given ‘reasonable time and opportunity’ to present their point.
Under the PF act, employers defaulting on contributions are liable to pay damages under Section 14B and interest under Section 7Q of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 on the amount due.
In response to Moneycontrol’s queries, a Byju’s spokesperson said, “This is to confirm that there are no pending PF payments towards employees. There are no dues.”
EPFO did not respond to queries sent by Moneycontrol.
Delay in PF payments has a precedent. In 2016, the EPFO was probing the now-defunct Kingfisher Airlines for delaying its contribution to international workers. The EPFO had then slapped a fine of Rs 7.62 lakh on the airline for non-compliance. PF consultants, personal finance experts, and lawyers said the EPFO may issue a similar penalty.
The probable PF action could add to the long list of headaches for Byju’s and its founder Byju Raveendran, who are currently dealing with a number of issues, including auditor and board member resignations.
Last week, three board members of Byju’s–GV Ravishankar of Peak XV Ventures (formerly Sequoia Capital), Vivian Wu of Chan Zuckerberg Initiative, and Rusel Dreisenstock of Prosus–stepped down from the company’s board due to differences with Raveendran over operational issues.
Meanwhile, Deloitte, one of the biggest audit firms in the world, has tendered its resignation as the statutory auditor of Byju’s.
Deloitte’s resignation leaves Byju’s in limbo as the edtech company’s FY21 (2020-21) results had outlined a number of irregularities with respect to the company’s revenue recognition practices.
EPFO’s potential action comes just a couple of months after the Enforcement Directorate (ED), India’s financial probe agency, searched Byju’s offices in Bengaluru under the provisions of the Foreign Exchange Management Act. Additionally, the company has not yet filed audited results for FY22 (2021-22).
For FY21, Byju’s reported a significant increase in losses to over Rs 4,500 crore, while its revenue dropped marginally. This was surprising considering that FY21 was the first year of the Covid-19 pandemic, which provided a boost to online learning companies.
Founded over a decade ago by former teacher Byju Raveendran, Byju’s has raised over $5 billion, most of it in the past five years.
(With inputs from Preeti Kulkarni and Christin Matthew Philip)
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