Supreme Court rules against linking of Aadhaar with provident fund accounts

Decision comes after tech firms turn to govt for help after EPFO makes linking Aadhaar with individual PF accounts mandatory

Image result for Supreme Court rules against linking of Aadhaar with provident fund accounts"
Image Courtesy: business-standard.com

After the Employee Provident Fund Organisation (EPFO) made it made it mandatory to link the Aadhaar card with individual Provident Fund accounts, a bunch of technology and back office companies turned to the government for relief, The Economic Times reported.

The companies, seeking help on the clarification of norms, approached the labour minister Suresh Kumar in Bengaluru last week, saying that the company was struggling to implement the mandate.

An executive from tech major Hewlett Packard (HP) said, “Employees are claiming that they will not give Aadhaar number for EPF as per the Supreme Court order. The EPFO, on the other hand, wants us to collect the number,” said the executive at the meeting.”

“Many of our employees are citing the SC judgment that said any such linking is optional,” he added.

In September 2018, the Supreme Court had ruled that Aadhaar wasn’t mandatory for pension schemes. The SC bench while upholding the constitutionality of the Aadhaar Act, had then said that Aadhaar can’t be made mandatory for the delivery of many public services including pension.

Last month, the Bombay HC had granted ad interim relief from prosecution to JP Morgan Services India Private Limited, after a criminal complaint by the EPFO for not sharing the Aadhaar link and bank account details of their employees.

What EPFO says

The EPFO points to a notification by the Unique Identity Authority of India (UIDAI) allowing the use of Aadhaarbased authentication for employee provident funds accounts. Additional Central PF Commissioner Pankaj Raman of the Employee Provident Fund Office (EPFO) in New Delhi cited a November 2018 notice on the matter.

Inc42 reported, in March 2018, a data breach through Employees’ Provident Fund Organisation (EPFO) also came to light via a letter circulated on Twitter. The letter titled ‘Secret’, which was addressed to the CEO of Common Service Centre, claimed that hackers exploited vulnerabilities through a government’s online website built to link Aadhar with PF account to steal data. This data breach is expected to have discouraged the employees to provide Aadhaar details to EPFO.

The way forward

A software professional, Elisha Ebenezer is also challenging the notification which has mandated linking of Aadhaar to Universal Account Number (UAN) for availing pension and provident fund benefits in the Madras High Court. He further believes that EPFO’s notification is unconstitutional and against SC directives.

While employees from tech companies said that their companies were planning to take disciplinary action against them for not linking their Aadhaar numbers with their PF accounts, it has come forth that employers are unable to contribute to a PF account as the EPFO isn’t allowing the company from creating a PF account in the absence of Aadhaar.

While companies on their part are trying to ease out things for its employees, EPFO suggests that they would introduce a facility that will facilitate employees to create the universal account number (UAN) on their own and link it with the Aadhaar. “This will remove apprehensions among employees as they do not have to part with the Aadhaar number,” an EPFO official told ET.

The official, who did not want to be named, added that the EPFO does not keep a database of Aadhaar numbers but it is used only to authenticate the credentials of the employees on the UIDAI database.

In February this year, a five-judge constitution bench had held that while Aadhaar would remain mandatory for filing of I-T returns and allotment of Permanent Account Number (PAN), it would not be mandatory to link Aadhaar to bank accounts and telecom service providers cannot seek its linking for mobile connections.