Byju’s Fails to Pay PF for Majority of Employees in June, Defying EPFO Directive: Report
Written By Rajan Das
According to official data obtained by Moneycontrol, Byju’s, an edtech company, has not paid provident fund (PF) to the majority of its employees for June, despite receiving a nudge from the Employee Provident Fund Organisation (EPFO) due to irregularities in PF contributions. The data revealed that PF contributions have been made for only 738 employees in June, significantly lower than the 25,000 employees in the previous month.
Last month, after media outlets reported on the delay in PF payments, Byju’s released PF contributions for 24,818 employees on June 26. However, prior to that, the company had not made PF contributions for April and May. For January, February, and March, they had only made PF payments for around 10,000 to 13,000 employees.
In response to Moneycontrol’s queries, a Byju’s spokesperson stated that there are no pending PF dues and all PF payments until June 2023 have been cleared for their employees. They cited some authentication issues that are being addressed individually with the employees and the PF department.
Industry consultants suggest that Byju’s delays in PF payments could be indicative of cash flow pressures faced by the company. Byju’s, which was valued at $22 billion, has undertaken cost-saving measures such as layoffs and giving up office space.
Amid a long-delayed funding round and negotiations with lenders over debt obligations, Byju’s also gave up its biggest office space in the country. The company has already laid off more than 2,000 employees and shifted a significant part of its workforce to contract basis. As of September 2022, Byju’s had nearly 60,000 employees on its payroll.
Throughout this year, Byju’s has been grappling with various issues, including disputes with lenders, resignations of directors and its auditor, and scrutiny from government authorities like the EPFO and Enforcement Directorate (ED). It is also reportedly facing a probe from India’s Ministry of Corporate Affairs (MCA).
Recently, employees of Byju’s Tuition Centers (BTC) expressed backlash over nonpayment of variable pay and other incentives. However, after an emergency townhall on July 22, the company agreed to pay incentives from the next month and assured that variable pay would be remitted in the following quarter. Byju’s also assured BTC employees that there would be no layoffs within the vertical.
In March of the previous year, Byju’s achieved a significant milestone by raising an $800 million round at a $22 billion valuation. However, the company faced challenges, including the resignation of its auditor and the departure of three key investor board members. For the financial year 2020-21 (FY21), Byju’s reported substantial losses of over Rs 4,500 crore, despite online learning companies experiencing growth during the pandemic.
The EPFO is a statutory authority that reports to the Ministry of Labour and Employment. It is responsible for administering the Employees’ Provident Fund Scheme, which is a retirement savings scheme for employees.
The EPFO has powers to take action against companies that fail to make PF payments. The company can be fined up to 50% of the PF dues. In addition, the company’s directors can also be held liable.
The failure of BYJU’s to make PF payments is a worrying sign. It raises concerns about the company’s financial viability. The company has been facing financial challenges in recent months. In April, it laid off 1,500 employees. It has also been forced to sell assets to raise cash.
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