The Employees’ Provident Fund Organisation (EPFO) issued an important circular on December 17. This circular is expected to provide major relief to the dependents or legal heirs of EPFO members who have passed away.
Along with this, the EPFO has also clarified rules related to job changes, stating that weekends and holidays should not be treated as breaks in service.
This clarification is especially important for claims under the Employees’ Deposit Linked Insurance (EDLI) scheme, which provides financial support to the family of a deceased employee.
Small Gaps in Service Were Leading to Claim Rejections
According to EPFO, the pension regulator observed that many EDLI death claims were either rejected or settled for a lower amount. The main reason behind this was small gaps or breaks in service when an employee changed jobs.
In many cases, proper verification and assessment were not done while the employee was still in service. As a result, when the employee passed away, their family faced difficulties in getting the full EDLI benefit.
Weekends and Holidays Will Not Be Treated as Service Breaks
The EPFO gave an example where an employee left a company on a Friday after completing more than 12 months of service and joined a new company on the following Monday.
In such cases, Saturday and Sunday were earlier counted as a break in service. Due to this, the employee was declared ineligible for EDLI benefits.
To solve this problem, the EPFO has now clearly stated that service will be treated as continuous if the gap between the exit date from one company and the joining date at another company is only due to weekends or holidays.
As per the circular, service will be considered continuous if the difference in dates is only because of:
Saturdays or Sundays
Weekly offs
National holidays
Gazetted holidays
State holidays
This rule will apply as long as both employers are covered under the EPF & MP Act, 1952.
Job Change Gap of Up to 60 Days Allowed
The EPFO has further clarified that even if there is a gap of up to 60 days between two jobs, it will still be treated as continuous service.
This move will help employees who face short employment gaps while switching jobs and will ensure that their families do not lose EDLI benefits due to technical reasons.
Minimum EDLI Payout Increased to ₹50,000
The EPFO has also increased the minimum payout under the EDLI scheme to ₹50,000 for dependents and legal heirs. This benefit will be available even if the EPFO member has not completed 12 months of continuous service.
Importantly, this minimum payout will be provided even if the member’s PF balance is less than ₹50,000.
EDLI Benefit Available Even with Low PF Balance
The circular also states that if a member passes away within six months of making their last PF contribution, the nominee or legal heir will still be eligible for the minimum EDLI benefit of ₹50,000.
The only condition is that the member must be on the employer’s rolls at the time of death.
