Employee Provident Fund & Trust Fund (EPF & ETF) – What you need to know

Employee Provident Fund & Trust Fund (EPF & ETF) – What you need to know

Employees Provident Fund (EPF) was established by Act No. 15 of 1958. The contributions are made to this fund on regular basis. Its purpose is to help employees to save a fraction of salary every month. The fund can be used in an event that the employee is no longer fit to work or at retirement.

Employers have to remit every month to the Central Bank, an amount equal to 20% of the employee’s total earnings to the Fund. The Employee’s contribution is 8% and the Employer has to contribute an amount equal to 12% of the employee’s total earnings. Contributions should be paid on the total earnings of the employee. Total earning includes salary, wages or fees, cost of living allowance, holiday

Payments, food allowance, similar allowances, the cash value of food provided by the employer. But it excludes overtime payments. Payments for work done during normal working hours on weekly holidays, Poya days or public holidays should also be considered as earnings for the computation of EPF contributions.

An employee is entitled to membership in the EPF from the first day of his employment. It is the Employer’s responsibility to enroll the employee in the EPF. The nature of the job is irrelevant. All employees should be registered whether they are permanent, temporary, casual, shift workers, apprentice. Employees working on piece rate, contract basis, commission basis, work performed basis or any manner what so ever are eligible for membership.

An employer of even one employee is legally bound to pay contributions to the Fund starting from the first day of employment. All employees should be registered by submitting the relevant registration form called “A”, “B”, and “H”, whether they are permanent, temporary, apprentices, casual or shift workers.

The following steps are required to get registration with EPF.

1. On recruitment of the first employee and before the end of 14 days, the employer must complete the “D” form in duplicate and post under registered cover.
2. This form should be posted to the Labour Office located closer to his business premises.
3. The Commissioner of Labour will promptly send to the employer a registered number.

Documents to be maintained by the employer

i. Payroll information, cheque roll information, extra allowance information, labour registry
ii. Attendance information
iii. Proof of payment of benefits (Central bank receipts, Cheque numbers, Registered post receipts etc.)
iv. Third copy of the “C” certificate

Steps to be followed to make EPF Payments

1. Assign EPF membership numbers for employees in numerical order.
2. Calculate contribution of each employee (minimum 8% from employee and 12% from employer) according to their total earnings for the particular month.
3. A copy of a form called “C” form must be filled in triplicate and the original copy should be posted under registered cover with a cheque or a money order for the total monthly contributions in favor of Superintendent, EPF.

Important Points to Consider

· When a new employee (member) is recruited, details should be included in the “Form-C” of the particular month.
· Contributions sent without C Forms are not credited to the Employee’s account and will lead to complications and penalties.
· Relevant monthly contributions should reach EPF before the expiry of the last working day of the following month. If not, a surcharge will be imposed on the employer according to the delay.
· Surcharges for failure to effect payment to Employees’ Provident Fund on due date

01 day – 10 days – 5%
10 days – 01 month – 15%
01 month – 03 months – 20%
03 months – 06 months – 30%
06 months – 12 months – 40%
More than 12 months – 50%

Employee Trust Fund

An employee is entitled to ETF from the first day of his/her employment irrespective of whether he/she is permanent, temporary, apprentice, casual or a shift worker. Similarly, employees working on piece rate, contract basis, and work performed basis of any manner are also eligible for membership. Employer has to contribute an amount equal to 3% of the employee’s total earnings.

Steps to obtain Employee Trust Fund registration

The ETF does not have a separate registration procedure for making contributions. ETF contributions should also be made through the EPF registration number. For the purpose of ETF payments, Employers having over 15 employees should complete Remittance Advice R1 and employers having less than 15 employees should complete Remittance Advice R4 and make the payments accordingly. If payment is to be made by cheques/ Bank Drafts, ensure that they are crossed and made payable to ETF Board. Payments by Money Order should be made favoring “Employees’ Trust Fund”. The monthly contributions must reach the ETF Board on or before the last working day of the following month. Otherwise, the employers will be liable to pay surcharge.

Get Free Consultation

Even though everything is laid out here, you still may want some help setting up & managing payroll for your staff, this is something we do over at Simplebooks.

Feel free to contact us, one of our team members will get back to your shortly.

The type of forms Mentioned in this article

(A) Form: for employee’s details
(B) form: for certify the membership
(D) form: the particulars of employees
(H) form: for nomination on behalf of the member

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8 Comments

    1. Hi Shiv,Thank you for reaching out to Simplebooks, Different Tax tables are applicable for PAYE Tax based on their Citizenship and residency status, So I kindly request you to send us an email on the Citizenship and Residency status and the Sources of Income so that we can advice you better on how the Tax tables and Tax rates that will affect you.

  1. With regards to a contract based agreement, do you get paid EPF & ETF?
    Suppose an all-inclusive salary LKR 440K per month, what would be the take home pay please after all the deductions (Tax, EPF, ETF)?

    Thank you!

    1. Hi Rifth, Thank you for reaching out to Simplebooks, with regards to the above question It would be best to drop us an email and our Payroll team will get in touch with you.

    1. Hi Nadee. Thank you for reaching out to Simplebooks,with regards to the above Question, If the company is registered for EPF, ETF and not contributing EPF ,ETF to the department. The department will notify the Company on the due EPF and ETF payemnts and will impose a penalty charge.

  2. Hello
    I have been employed by an rent a car company in Ratmalana. In 2002 He did not register me with EPF. si left the company. At that time i asked the company owner about the EPF. he said he will check and let me know.
    Now it is almost twenty years, he did not pay. I sent a email, but he has not replied.

    What can I do about this.
    Henry

    1. Hi Henry, Thank you for reaching out to Simplebooks, with regards the above matter our payroll team will get in touch with you via email.

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