Under the EPF Act 1991, employers who fail to pay Employee Provident Fund (EPF) contributions face serious legal penalties, while employees risk losing crucial retirement benefits.
For Employers,Legal penalties including imprisonment up to 3 years for failing to register an employee and up to 6 years for failing to pay contributions or deducting but not remitting them. Fines up to RM10,000 for failing to register an employee and up to RM20,000 for failing to pay or remit deductions.
Additional Enforcement Actions (Section 46, EPF Act 1991) are asset seizure, bankruptcy proceedings, or passport confiscation in severe cases.
Financial Penalties (Section 45, EPF Act 1991) for late payment charges and dividend liabilities for unpaid contributions.
For Employees will loss of Financial Security like missing EPF contributions reduce retirement savings, affecting long-term financial stability. Disrupted Retirement Planning, the employees may face a shortfall in their retirement fund, making future financial planning harder and Possible Legal Action by EPF such as employees may need to report non-payment, leading to EPF investigations and enforcement against the employer.
Conclusion,Non-compliance with EPF contribution laws carries heavy penalties for employers and serious financial risks for employees, highlighting the importance of adhering to the EPF Act 1991.
