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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
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

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
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
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
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
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
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
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
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
From India, Gurgaon
Dear Mr. Rajan,
We are PF and ESI Consultants in New Delhi for last 10 years.
In response to your query, in simple terms I can expalin it.
Please note, there is no need to Deduct PF 'ONLY IF THE TRANEE / APPRENTICE IS SPONSORED BY SOME GOVT. ORGANISATION / INSTITUTE ETC.' for example is a person is studying in some Govt. Institution and joins you as apprentice through that Institute / organisation, in that case PF is not deductable.
In all other cases PF is Liable to be deducted no matter whatever is the nature of work (full time / part time / tranee etc.).
Regards,
Kapil...
From India, Delhi
Dear Kapil,
Thanks for your post.
What is your suggestions regarding ESI to trainees? I know they are eligible for both PF and ESI but I don't have any documentary evidence to prove it. Can you please reply me with all details.
Thanks & Regards
Debajyoti
From India, Gurgaon
Yes only who are under apprenticeship, they are not eligible for EPF. rest all other all eligible for EPF.
If we consider for petty work taken on contract, they deamad for pf and ESi why not for trainees.
shankar karnam
From India, Bangalore
Hi Friends
Want to if ESI is applicable to a software company. Though most of our employees are drawing more than 10K, about 4-5 fall below that cut-off (including all allowance, except Conveyance & medical reimbursement).
Help me out figure whether we need to register under ESI. To add, we have a medical insurance cover for all employees.
regards
Jeena
From India, Bangalore
Hi Jeena, If there are only 3-4 persons eligible for deduction of ESI, and if there is no chance of increase in near future, Just increase their salary to finish ESI obligation. thanks Debajyoti
From India, Gurgaon
Dear Devjyoti,
It has been decided by the courts that trainees are not employees and are not covered by
the EPF Act. The court has held that stipend paid is not wages. It must be noted that
trainees were recruited under a particular Training Scheme and there was no guarantee of
employment after completion of the training period and that they were not entitled to
other benefits, which were available to other permanent employees.
These aspects have
been decided in Sri Rama Vilas Service Ltd. V RPFC 2000 I-LLJ-709(Mad) and
Gandhi Vinita Ashram v PFC 1996 (1) CLR 1140 (P&H).
Regards,
Capt Vikas Pareek
From India, Delhi
Trainee and apprentices are covered under the act unless the company has a certified standing order. Then with respect towage limit if 6500 is concerned . the act is very clear all employees would be covrred till 6500. Over and above the same it becomes optional whether to contribute than 6500 or not. But mere fact that an employee or trainee receives more than 6500 will not make him exempted.
For eg if an employee is paid 7000. Employer and employee would be liable to contribute till 6500 . it is mandatory. But for the remaining 500 alone it becomes optional. So there is no question if exempting trainee or employee just because he or she is paid more than 6500.
From India, Chennai



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