Tech Mahindra’s recent disclosure of an Employees’ Provident Fund Organisation (EPFO) order has reignited a wider debate on corporate compliance, delayed regulatory enforcement, and the security of employee savings, drawing pointed reactions from legal, finance and technology professionals.
On December 19, Tech Mahindra informed stock exchanges that it had received an order from the Pune office of EPFO to remit ₹1,287.44 crore to provident fund accounts of certain identified domestic employees and employees deputed to foreign locations in non-SSA (social security arrangement) countries.
India has SSAs with select countries to coordinate provident fund obligations for employees on overseas assignments.
The provident fund authority invoked Section 7A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which empowers it to conduct inquiries and determine dues payable by employers.
The amount comprises ₹566.78 crore towards provident fund contributions and ₹720.66 crore as interest, and relates to the period between May 2014 and March 2016.
According to the disclosure, the EPFO has alleged non-remittance of provident fund contributions for the identified employees during this period. Tech Mahindra countered that it had already disclosed the matter as part of its contingent liabilities in its audited financial statements. The IT firm said it will file an appeal, and that it “does not reasonably expect the said Order to have any material financial impact on the Company.”
“Basis the Company’s assessment, an appeal will be filed, and the Company is hopeful of a favourable outcome at the appellate level,” the company said.
Wider Ramifications
The order has drawn attention because of its scale, retrospective application, and potential implications in how provident fund obligations are interpreted for employees on overseas deputation, particularly in countries without social security agreements with India.
While the filing itself is procedural, reactions from professionals across sectors reflect broader unease around provident fund compliance and enforcement timelines.
Harpreet Singh Saluja, advocate at the Bombay High Court and president of the Nascent Information Technology Employees Senate, advocating for the rights and welfare of IT and ITES employees, emphasised in a LinkedIn post that provident fund contributions represent employees’ life savings, long-term security and, in many cases, their only financial cushion after years of work.
“These are not technical lapses. These are deductions and contributions that should have gone into employees’ PF accounts years ago,” Saluja said.
“When large IT corporations speak of global excellence, ethics and governance, employees expect that the most basic statutory obligation will never be compromised. Overseas deputation cannot become a convenient excuse to dilute social security rights.”
Saluja added that compliance is not discretionary and that trust, once eroded, is difficult to rebuild.
The disclosure comes as a few ex-employees have complained of PF discrepancies in the company.
Harshl Deore, founder and CTO of AI automation firm Confidential, made an appeal on LinkedIn stating that a former Tech Mahindra employee from its Pune Sharda Centre had been struggling to get his provident fund transferred. According to Deore, the EPFO has sought a letter from Tech Mahindra because the PF category was not filled correctly during the employee’s service, leading to repeated rejection of the transfer claim by the field officer.
Deore said that despite multiple requests and follow-ups, the required letter has not been issued by the company’s PF team, leaving the former employee without any internal escalation route and causing them financial distress.
However, any link between the individual case and the EPFO order is yet to be established.
Tech Mahindra declined to comment on AIM’s request to explain the legal or interpretational issues that led to the alleged non-remittance, how it interpreted provident fund obligations for employees deputed to non-SSA countries, and whether its assessment of materiality would change if the appeal were unsuccessful.
The IT firm is certainly facing bottomline pressure, with its net profit declining 4.5% year-on-year in Q2 to ₹1,195 crore. Its IT headcount also declined 2,090 YoY.
The order comes on the heels of EPFO’s recent move allowing members to withdraw up to 75% of the corpus amount from their EPF accounts at any time. It also allowed for instant withdrawals through ATMs and UPI to the bank account of their choice.
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