Introduction: A Sudden Shift with Big Consequences
On August 1, 2025, India’s Employees’ Provident Fund Organisation (EPFO) mandated that Universal Account Number (UAN) allotment and activation occur exclusively through Aadhaar-based Facial Authentication Technology (FAT) via the UMANG app. The shift has triggered widespread EPFO FAT delays, crippling payroll and compliance for staffing firms.
2. Operational Chaos: Staffing Federation Raises Alarm
The Indian Staffing Federation (ISF), representing 1.8 million contractual workers across 135 companies, reported that over 1,000 new hires weren’t onboarded in the first two days—stalling payroll cycles and legal compliance.
Challenges cited include:
- Workers lacking smartphones or stable internet
- Inconsistent Aadhaar-mobile linkage
- Poor facial recognition conditions (lighting, camera quality)
- Digital literacy gaps across workforce demographics.
3. Broader Impact: Payroll, Compliance, and Employment Risk
- Delayed Salaries: Without UAN, employee PF contributions are blocked—critical for gig, MSME, and mobile labor sectors
- Compliance Deadlines: June 30 deadline for Aadhaar-FAT compliance puts employers at risk of penalties or service denial.
- Worker Rights: First-time earners risk deferred or rescinded job offers if unable to generate a UAN in time.
4. Operational Obstacles: On the Ground Challenges
- Mobile Number Issues: Many workers have outdated or unlinked mobile numbers, preventing OTP-based Aadhaar validation.
- FAT Usability: Workers aren’t trained to use facial authentication—distance, angles, or device disparity cause frequent failures.
- Employer Limitations: The new rule disallows employer-driven UAN creation, yet employers lack time and infrastructure to support FAT individually
5. Industry Response: Demands for Reforms
The ISF and other trade bodies request:
- Employee Portal Access: Allow employers to generate UAN for first-time joiners to keep payroll and PF contributions timely.
- Extended Deadlines: Six-month window proposed to educate workforce about FAT, especially for remote or low-literacy groups.
- Bulk UAN Generation: Reinstate flexibility for employers to process UANs in bulk initially, with FAT compliance phased later.
- Tech Support & Training: Strengthen UMANG app performance, raise server capacity, and offer multilingual training modules.
- Partial Exemptions: Offer simplified compliance for sectors with high workforce turnover (e.g., staffing, gig economy).
6. Implications: Trust, Workforce Stability, and Digital Equity
- Workforce Vulnerability: Gig workers and casual laborers may be pushed into informal employment due to bureaucratic friction.
- Employer Burden: HR systems strain under inability to automate onboarding, undermining trust in e-governance tools.
- Digital Divide Highlighted: The initiative underscores barriers in digital inclusion and equitable access.
7. Outlook: Navigating Forward
Mitigation strategies include:
- Implementing dual-track UAN onboarding while FAT compliance scales
- Enhancing app usability (offline modes, simplified UI)
- Phased rollout with pilot zones and feedback loops.
EPFO’s objective to secure UAN issuance is valid, but execution must be realistic—reinforcing access, not hindering livelihoods.
