raghavanrajan Started The Discussion:
Dear Friends,
As I know, EPF is applicable to all employees drawing salary less than Rs 6,500/-.
Recently we have recruited one Diploma Engineer Trainee with a consolidated stipend of Rs 11,000/- per month for six months, thereafter based on his performance he will be absorbed. My management says there is no need to deduct EPF for this person as he is only a trainee. it is pertinent to mention here that PF is deducted for all staff of our company irrespective of their salary.
When I contested them that only the trainees who are taken under Apprentice Act are exempted from EPF, my boss says I am wrong.
Can any one of you with your vide experience be able to clarify with authority whether the trainees drawing stipend are eligible for EPF or not.
Regards,
R.Rajan
11th January 2007 From India, Mumbai

Hi, Rajan, As [er my knowledge and with the view of Enforcement officer of PF you are cent percent correct. As once I have discussed with EO when I have faced for it. rrtpan
12th January 2007
Thank you rrtpan. I expect some more comments and information from our respected members. If any one of you could provide the authority for the same, I can be able to apprise my management.
Regards,
R.Rajan
12th January 2007 From India, Mumbai
Dear Rajan,
Very recently the slab for ESI deduction was increased to 10000. So you need not deduct ESI from the new trainee.
[/i]The Act was originally applicable to non-seasonal factories using power and employing 20 or more persons; but it is now applicable to non-seasonal power using factories employing 10 or more persons and non-power using factories employing 20 or more persons.
Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatre, road motor transport undertakings and newspaper establishment employing 20 or more persons.
The existing wage-limit for coverage under the Act, is Rs.10,000/- per month (with effect from 1.10.2006)."[i]
So, every person whether Trainee or part time employee or anyone Except one appointed by Apprentice Board is covered under this Act.
your boss is right that, ESI is not to be deducted from his salary-because his salary is more than the Wage-limit for coverage.
Thanks & Regards
Debajyoti
12th January 2007 From India, Gurgaon
Dear Debajyoti,
I think you have replied keeping in mind my question relates to ESI. Anyhow thanks for your information.
Can you throw light on Employee Provident Fund (EPF) for which I require clarification?
Regards,
R.Rajan
12th January 2007 From India, Mumbai
Hi
AN APPRENTICE IS CONSIDERED TO BE APPRENTICE UNDER THE APPTENTICE ACT WHEN IT HAS BEEN DEPUTED BY THE BOARD OR AUTHORITY UNDER THE SAID ACT.
UNDER THIS SITUATION EPF IS NOT APPLICABE TO THE APPRENTICE AND NO DEDUCTION WOULD BE MADE IN THIS BEHALF.
HOWEVER IF THE TRAINEE DOES NOT COME UNDER THE MENTIONED SITUATION THAN HE WILL BE TREATED AS THE USUAL EMPLOYEE AND IS LIABLE FOR PF & ESI.
AS YOU MENTIONED THAT HIS TOTAL STIPEND IS RS. 11000.00 SO IN THIS CASE YOU CAN SHOW ITS BASIC SALARY MORE THAN 6500.00 AND GET PF FORM NO. - 11 SIGNED BY HIM AND THAN YOU CAN AVOID HIS PF DEDUCTION.
THANKS
ADITYA
13th January 2007 From India, Delhi
Dear Rajan, I think Aditya has already cleared your queries. If you don’t want to pay him PF, then you need to show his basic salary(+ DA) Rs. 6500 or more. Regards Debajyoti
15th January 2007 From India, Gurgaon
Ranjan...employees who are paid stipen are not covered under ESI or PF Act.
Logic is simple...Companies Deduct certain % as contribution towards ESI or PF on the Basic salary. When there is no bifurcation...means when you are paying a lumsum amount...you can deduct either.
Regards
Sanjeev Sharma
16th January 2007 From India, Mumbai
Hi ,
If the basic salary is above 6500/- p.m then you need not deduct P.F .
If you have appointed him as an apprentice then you need not have to pay P.F.
If you have taken him as trainee though it for a period of 6 months then still you have to deduct P.F.
Regards,
Niranjan
16th January 2007 From India, Hyderabad
Hi All,
I want to express my disagreement with Mr. Sanjeev Sharma.
As per my knowledge is concern ESI is paid on total salary (or whatever the name may be) and not on Basic + DA.
"Nature of Work" has a great importance in calculating Applicability of ESI of Employees.
If a person works within the premises of an organization (Full time/Part time), and collect his compensation in his name (even if stipend -not in the mane of a firm/company), Employer must deduct ESI from his remuneration.
Thanks
Debajyoti
16th January 2007 From India, Gurgaon

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