Major EPFO update: New FAT rule delays payroll, UAN generation; are you impacted?
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The Indian Staffing Federation (ISF), which represents more than 1.8 million contract workers across 135 member companies in the country, has expressed urgent concerns regarding a recent mandate from the Employees' Provident Fund Organisation (EPFO) that requires the use of facial authentication technology (FAT) through the UMANG app for generating Universal Account Numbers (UANs).In a recent circular, the Employees' Provident Fund Organisation (EPFO) announced that, starting August 1, 2025, all allotment and activation of Universal Account Numbers (UANs) should be done through the UMANG app using face authentication technology (FAT).The EPFO assigns the Universal Account Number, commonly referred to as UAN. The UAN serves as a unifying identifier for the multiple member IDs assigned to an individual by different establishments.Also read: EPFO UAN generation: Only EPF members can generate PF Universal Account Number now on Umang application In a press release on August 5, 2025, the Indian Staffing Federation (ISF) underscored that the change regarding the FAT rule has already stalled onboarding for more than 1,000 candidates in just two days, disrupting payroll cycles and compliance timelines.Here are the challenges faced by staffing companies that created immediate hurdles in UAN generation, and the solution suggested by ISF:Staffing companies employ a significant number of temporary workers, which is characterised by frequent onboarding and departures. The mandatory FAT for KYC updates requires each worker's participation, making coordination across locations difficult. Many lack smartphones or reliable internet, causing UAN delays that disrupt salary payments and PF contributions, especially in MSMEs and high-turnover sectors.The restriction on employer-led UAN creation without Aadhaar seeding, coupled with the FAT rule, slows bulk onboarding, delays PF credits, and jeopardises compliance. It also reduces employee trust by preventing timely access to EPFO services and EPF registration.The FAT system relies on digital infrastructure, which is often inaccessible to contractual workers in remote areas or those unfamiliar with digital platforms. Technical glitches, such as facial recognition failures or server downtimes, further delay compliance.The EPFO's deadline for Aadhaar seeding and FAT compliance (e.g., June 30, 2025, as per recent updates) is challenging for staffing companies managing thousands of employees. Non-compliance risks penalties or withheld PF contributions, which could adversely affect both employers and employees.If an employee fails to generate a UAN via UMANG due to technical or awareness barriers, it may delay compliance with PF onboarding requirements and may lead to the denial or delay of employment offers, especially for first-time earners.As per the ISF press release, 'Many workers do not have updated Aadhaar mobile numbers or face biometric mismatches, making facial authentication infeasible in practice. Successful facial authentication relies on camera quality, lighting, and stable network access—factors not uniformly available across all work locations.'To address these challenges while aligning with EPFO's objectives, ISF has proposed the following:For first-time employees without a UAN, employers should be allowed to create it through the employer portal to enable timely PF registration and ensure compliance.A six-month window for digital onboarding and FAT awareness is proposed. Since financial incentives (such as ELI-based benefits) are available only after six months of PF membership, this period can be used by employers to:• Educate employees about EPFO, UAN, and the UMANG app.• Facilitate FAT registration with proper support and communication.According to the ISF press release, 'Reinstate the flexibility for employers to generate UANs in bulk without mandatory FAT or Aadhaar seeding at the initial stage, as permitted earlier. This would enable staffing companies to comply with PF contribution timelines while gradually completing FAT requirements.''Offer dedicated technical support for FAT-related issues and ensure the EPFO portal is equipped to handle high volumes of authentication requests without disruptions. Additionally, provide multilingual training resources to educate contractual workers on the FAT process.Consider partial exemptions or simplified compliance procedures for staffing companies and industries with high workforce turnover, balancing security needs with operational realities,' ISF added
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