Is there any new provision or circular issued by the PF Commisioner, whereby you need not pay PF contribution for employees who are employed through Contract and are paid Consolidated Salary amounting to Rs. 6,501 or more? Please clarify? Regards, SC
From India, Thane
45From India, Thane
Hi There is no new provision regarding payment of PF contribution on contract employees and whose salary is Rs.6501.00. Under Para 26 of Employee's Provident Fund & Misc.Provisions Act,1952 and rules framed there in , it is clearly mentioned that 1. Every employee who joins an organisation is required to become member of employees provident fund scheme, employees pension scheme and employees deposit linked insurance scheme subject to condition that his / her salary/ Wages should not exceed Rs.6500.00 per month. 2. Under Section 2 an employee has been defined as person employed for wages in or in connection with the work of establishment whether directly or through contractor. 3. From the above both the things are very clear a. To become member of statutory scheme salary / wages as defined under the act and scheme should not be of more than Rs.6500.00 per month. But there is further clarification that if an employee whose is already a member and his / her wages go beyond Rs.6500.00 after enhancement in same organisation or he / she joins new organisation with wages exceeding Rs.6500.00 per month , shall remain the member till he/she withdraws the benefits and and start as fresh employment for the purposes of EPF. On Joining every employee has to sign a declaration of past employment and membership of EPF on Form No.11 prescribed under the act, declaring that he / she was member of the scheme or not or has withdrawn the benfits provided under the scheme. b) person employed through contractor or employed on contract falls under the definition of employee. 4. Hence main thing is that if an organisation intentionally make salary of a person beyond Rs.6500.00 permonth with intention of not providing the benefits provided under the statutory scheme then the statutory authorities may object on that. If salary bifurcation is applicable for all employees and majority of employees are on regular basis and not on contractual basis, authority before initiating the legal action always apprise the company of their intentions. I hope the above is quite clear and will help you to sort out. For achieving proper implementation of any law, its objective is to be achieved. So objective here in this case is social security. Take decision on the above basis. Regards Anil Anand
From India, New Delhi
From India, New Delhi
Dear Mr. Anand. All employees irrespective of their Basic Amount must be given PF. What I knew was that any employee whose basic exceeds 6500/- the excess amount would go to EPF and not EPS, but every employee must have PF coverage. My Company is saying that it is not compulsory to give PF to employees whose Basic exceeds 6,500/- or gets consolidated salary exceeding 6,500/-. For eg we have recruited GM(HR) whose basic is 25,000 my Company is saying that we need not give him PF, but I am of the opinion that PF will have to be deducted as per provisions. Please clarify. Kindly treat as this as urgent. Warm regards, SC
From India, Thane
From India, Thane
Dear SC Your contentions are right that every new joined is to be made member of the EPF scheme but you see that you management is not willing bear burden of PF for the employees whose basic pay exceeds Rs.6500.00 In my previous reply I have mentioned that once a person become member of the statutory EPF scheme then he / she remains member till they withdraw their accumulations and start as fresh employment. So again please make use of FORM NO.11 prescribed under EPF & MP Act,1952. Your management is right to the extent that if basic pay is of more than of Rs.6500.00 permonth EPF deductions re not to be made from the salary. These employees are covered under the act but are not eligible for membership of the scheme as per statutory provisions resctricting to membership upto Rs.6500.00 per month. As far as consolidated salary part is concerned, if company is just intending to take undue advantage of Statutory provisions then that need to be resolved. Enforcement authorities under the act simply check that why certain employees are being paid as consolidated salary and at the same time other system of bifurcation is also prevalent. If company has justifiable reasons for the above , enforcement agencies will accept the practice being adopted in company. EPF deduction is mandatory only if, a person is already a member otherwise if per month basic pay or wages as defined under the act ,exceeds Rs.6500.00 per month , there is no need to deduct and deposit the contribution towards EPF. Try to make your management aware of other benefits provided under the scheme i.e Pension scheme and insurance. No employer can provide benefits to the extent being provided in the statutory social security scheme like EPF. I beleive they are not fully aware of the benefits and want to avoid extending benefits to employees due to misconception of delay in withdrawal by employee or transfer of same from one employer account to other employer account. You as a HR person need to make them aware of benefits provided under the scheme and protection to employer in case of any mishap with employee. Explain the benefits to your management and then enforce your contentions. I hope this will help you. Regards Anil Anand
From India, New Delhi
From India, New Delhi
Dear Anil, I would like to bring the following explanation for PF. The PF Act is the Parent which have two Offsprings EPF and EPS. PF Act states that an exempted employee is an employee to whom a similar Scheme is applicable and the same has been approved by EPFC. Nothing more is said regarding exemption. The EPF one of the offsprings says regarding Rs 6500 Limit. Hence I feel that exemption cannot be decided on basis of a EPF like any borering State in Inia cannot redefine it's International Boundary which can only be one by the Central Government So, I feel that upto 6500 you must deposit as per provision i.e 8.33% EPS and 3.67% EPF. The amount in excess of 6500 goes to EPF. Clarify if I am wrong. Warm Regards, SC
From India, Thane
From India, Thane
Dear SC Yes you are right. PF act is parent act and is better known as Employee's Provident Fund and Misc.Provisions Act,1952 Instead of two it provides three types of benefits 1.EPF [ Employees Provident fund(1952)] 2.FPS [Family Pension Scheme(1995)] 3.EDLI [Employees Deposit Linked Insurance Scheme(1976)] It is clearly mentioned under para 26 of the scheme that every new joined employee is required to become member of the scheme. If salary of new joined employee exceeds Rs.6500.00 per month then he/ she is not eligible for the membership of all above mentioned three components of the parent act. Further to enroll a employee whose salary exceeds Rs.6500.00 per month as member of the statutory EPF scheme, it is at the discretion of the management to extend the benefits. Such contentions of a employer are supported under the act and employee cannot challenge the same , until he/ she declares at the time of joining the organisation that he/ she was never member of the scheme or was member of the scheme but has withdrawn the benefits on ..... Number of organisations are contributing on full salary / wages and at the same time number of organisations are restricting contributions upto maximum of Rs.6500.00 per month salary. You are right , under FPS contribution rate is 8.33% of salary/wages subject to maximum of Rs.541.00 i.e 8.33% of Rs.6500.00. In this case if employer is contributing on higher salary then balance of employer contribution exceeding Rs.541.00 per month will be diverted towards EPF component. Third component is EDLI( Employees Deposit Linked Insurance Scheme). Under this the contributions are being paid by employer @ 0.50% of Rs.6500.00 or of less salary on which EPF deductions are being made. Benefits under the scheme are available in case of death of member during the service. There is no question of boundary. All three components are applicable on maximum salary of Rs.6500.00 per month. If you employer wants to restrict the same upto that there is nothing which can be termed illegal. I agree that by doing this employer will reduce the benefits being previously provided to employee and there may or may not be resentment among the employees. If this situation comes, you can suggest of putting the balance amount ,worked out after contributing maximum Rs.780.00 per month towards EPF into salary thus keeping present per employee cost to company unchanged. I can very well understand your thinking on the above but you know if employer wants to resctrict its contributions as per legal norms , none else is authorised to challenge this right of employer. Benefits provided under the FPS and EDLI are restricted upto a maximum salary of Rs.6500.00 and employee can contribute voluntarily towards EPF subject to deductions allowed from salary / wages under Payment of Wages act. I hope this is quite clear. Regards Anil Anand
From India, New Delhi
From India, New Delhi
Dear Anil, Here the PF office has this to say, i.e , if the employer is registered under PF, then it must give PF to all irrespective of the amount Rs. 6,500/-. The exemption is applicable only if an employee whose Basic Pay is more than Rs 6500 gives an undertaking in writing that he/she does not want to be a member of PF and no deduction and/or contribution should be made from/on his Salary relating to PF. Please clarify if I am wrong. Regards, SC
From India, Thane
From India, Thane
Dear Anil and All, My company changed its name and registered fresh under companies Act recently.We formed a new company with diverse functions. We have 40 employees. Pls clear my doubts....(I am sorry if i am repeating the earlier questions again...) 1) What are various statutory contribution of the employer to the employees? 2) What are the statutory contribution of the employees for various schemes. Regarding employers contribution: The areas i know is a) ESI--- entitiled for employees who get less than Rs.7500/ pm. b) PF- entitled for those employees who get less than Rs.6500/pm c) Gratuity-Those employees who completed 5 years of service 3) Bonus-( is it applicable to my company as we registered only now) When shld we give the bonus to employees. 4) Is there any other statutory provisions which the employer has to pay. 5) What are the other statutory provisions for employee contribution? Where all should we register our names? how to go about it? Who is the concerend person. Pls Guide i dont want any legal problems to occur bcoz of my ignorance. Who will be the best person to guide on such statutory provisions? lawyers or Income Tax people, or who?
From India, Madras
From India, Madras
Hi, My PF applications has been processed by the concerend PF office and the cheque has been sent to my bank. The bank says it has not received the cheque while speedpost has confirmed the delivery of the same. My first question is that in such a situation, can the cheque/ payment instrument be mis-used? Secondly, how do I address this situation. Thanks & regards, Amit
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