Supreme Court Orders ₹1 Lakh for Affected Daily-Wage Workers and Interest on Delayed EPF and Wage Dues

Delayed payment of EPF dues attracts statutory interest under Section 7-Q of the EPF Act, 1952, from the due date until actual payment. This liability arises by operation of law, does not depend on a contractual agreement, and is not extinguished merely by subsequently paying the principal amount

When wages and provident fund dues remain unpaid for years, employees lose more than access to money. Their household expenses, retirement plans and financial security are affected, often at a time when they have little ability to earn elsewhere. This was the background to a prolonged dispute involving employees of five erstwhile State-owned corporations in Bihar and Jharkhand. Following Bihar’s reorganisation in 2000, the allocation and settlement of liabilities between the two States remained unresolved for years. Employees and their families continued waiting for salaries, provident fund amounts and retirement benefits. A committee headed by former Supreme Court judge Justice Dinesh Maheshwari examined these claims. The Court’s earlier order of 29 May 2026 settled several issues, while leaving certain questions concerning remaining claimants, compensation and interest for further consideration. In its final judgment, the Supreme Court directed Bihar and Jharkhand to provide the following relief: Particulars Relief directed Affected daily-wage workers A one-time payment of ₹1 lakh each, additional to amounts already determined and disbursed. Delayed EPF dues 12% simple interest per annum, where Section 7-Q applies. Delayed wages and other non-EPF monetary dues 6% simple interest per annum. Period for calculating interest From the date each amount became due until its actual payment. Untraced or unverified employees and legal heirs 12 months from the judgment date to approach the designated nodal officers with documents for verification. The claims brought before the nodal officers must be verified before the amounts found payable are released. For employers, the EPF interest issue deserves close attention. Section 7-Q of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 provides for simple interest on delayed payments. It specifies 12% per annum, or a higher rate prescribed under the Scheme within the statutory limit, calculated from the due date until actual payment. For liabilities governed by this provision, paying the overdue contribution does not, by itself, settle the interest arising from the delay. A review of old EPF liabilities should therefore check both the principal amount and the payment history. Consider a simple example. If ₹1,00,000 in EPF dues remains unpaid for exactly two years and attracts 12% simple interest, the interest would be ₹24,000. The total would become ₹1,24,000, excluding any separately applicable damages or other liabilities. Actual calculations must account for the relevant due dates and payments made. There is, however, an essential limitation to this judgment. The Court expressly stated in paragraph 60 that the relief arose from the peculiar circumstances of this case. The ₹1 lakh award and the other reliefs cannot be treated as a general entitlement in every employment dispute. The judgment disposed of this petition; it did not prescribe an identical compensation formula for other cases. Employers reviewing historical liabilities should prepare an employee-wise statement showing what was due, when it became payable, what has been paid and what remains outstanding. EPF contributions, interest, wage arrears and terminal benefits should be examined separately because their legal treatment may differ. Before a closure, restructuring or settlement exercise, unresolved claims should have a named person responsible for follow-up, supporting records and a clear completion date. This gives management a more reliable picture of its obligations and helps employees obtain the amounts lawfully due to them.