Madhu.T.K
Industrial Relations And Labour Laws
Korgaonkar K A
Ba,llb,mpm,dir&pm,dll&lw,d.cyber
Srinivas M Venkat
Senior Provident Fund Consultant
+3 Others

Dear Seniors,
I am working with an IT company of current employee size of 18.
We are not registered under EPF as the basic salary of every employee is above Rs. 6500/-. But now as the ceiling is raised to Rs. 15000/- one of our employees is falling under this slab. As per my understanding, as we are below 20 in employee count we are not bound to get registered under EPF.
But, from the employee data base,I got to know that once we reached at 22 count but as no one was under 6500/- slab we didn't get registered.
From some one I heard that even if once the employee size reach 20 an organization has to be get registered under EPF, is it correct?
I read the Act and researched on this Cite but didn't get the answer.
Are we legally liable to get registered? Please advise.
Regards,
Riya
For the purpose of coverage, the number of employees is to be considered. While taking the number of employees, all employees whether on regular rolls or outsourced and engaged casually for a day should be taken into account. If you had 22 employees on any day, your firm will get covered effective from the date on which you had 22 employees.

Once your establishment is covered, you will have to cover your employees. For coverage of employees, of course, you can exclude employees whose basic salary are above Rs 6500 (now Rs 15000)

In case of coverage from an earlier date ( the date on which you had 20 or more employees) you will have to pay contribution, interest and damages on the contributions payable in respect of those whose basic salary were less than 6500.

If your Director is getting salary from the company, he should also be included in the number of employees for the purpose of deciding the date coverage. At the same time, if your is not a company but is a partnership firm, then the partners will not be come under employee and they can be excluded.

Madhu.T.K
Dear Riya ji,

You being HRD, you must know the basic law of PF.

Please bear in mind that the day on which you reached head counts 20 persons altogether including of out-source, contract labour, contractual, temporary, casuals, Naka labours etc. irrespective of their salary, you are liable for PF registration from such date and liable for due compliance under the Act. Your liability with interest, damages start from this day onwards even though strength of head counts falls below 20.

Employer is not liable for the persons who are 'excluded employees' within the meaning under the Act. Onus lies on employer to prove that a person is an 'excluded employee'.

If you prove that all the employees are 'excluded employees', your liability will be Rs. 7/- per month plus interest & damages.

On this topic there are several discussions in the past in this forum. You are requested to do research.

Our respectable Madhu ji has explained about Directors / Partners when they are taken into consideration while computing 20 head counts.
I reproduce a brief on EPF Applicability and benefits.You may decide and implement.

i) Every establishment which is a factory engaged in any industry

specified in Schedule 1 and in which 20 or more persons are

employed and

ii) Any other establishment employing 20 or more persons which

Central Government may, by notification, specify in this behalf.

(Infancy period of 3 years has been withdrawn by ordinance w.e.f.22-9-97)

iii) any establishment employing even less than 20 persons can be

covered voluntarily u/s 1(4) of the Act.

Eligibility

Any person who is employed for work of an establishment or employed through contractor in or in connection with the work of an establishment.

Benefits

Employees covered enjoy a benefit of Social Security in the form of an unattachable, unwithdrawable (except employees and employers contribute equally throughout the covered persons employment. This sum is payable normally on retirement or death. Other Benefits include Employes’ Pension Scheme and Employee’s Deposit Linked insurance Fund.

Penal Provisions

Liable to be arrested without warrant being a cognisable offense. Defaults by employer in paying contributions or inspection/ administration charges attract imprisonment up to 3 years and fines up to Rs. 10,000 (S.14.) For any retrospective application, all dues have to be paid by employer with damages up to 100% of arrears.

Benefits at a glance

1. Advance for Purchase of Dwelling Site.

2. Advance for Purchase of Dwelling House/flat.

3. Advance for Construction of a House.

4. Advance for Repayment of housing loan to State Govt. housing board or any other govt. recognised housing finance body.

5. Advance for IIIness viz. Hospitalisation for more than month, major surgical operations or suffering from TB, leprosy, paralysis, cancer, heart ailment etc.

6. Advance for Marriage of Self/Son/Daughter/Sister/Brother.

7. Advance for Post MatriculationEducation of Son/Daughter.

8. Advance for Damage to the property Due to Natural calamity (Flood Riot/Earthquake).

9. Advance for Member affected by cut in the supply of electricity.

10. Advance for Member who is physically handicapped.


The views expressed by Mr. Korgaonkaron, with regard to coverage of an Estt. or Facatory under EPF & MP Act is accurately correct. There are two patterns. One is Coverage of an EStt. or Factory under EPF Act and secondly eligibility of members to the Provident Fund. Once the Estt. engages 20 and above, the Estt. comes under the purview of the EPF Act, and then the employees will be enrolled to the P.F.members basing on their Basic + DA earnings, where the employees' salary exceeds Rs. 15000/- from 1.9.2014, (Prior to this the wage ceiling was Rs. 6500/-) will be excluded and the employees drawing P.F.wages below 15000/- will be enrolled to the P.F.membership. Even retired employees and employees above age of 58 years are also to be counted for the coverage purpose. The Directors are also will be taken into account for the purpose of coverage under Provident Fund Act.
[QUOTE=Srinivas M Venkat;2180895]The views expressed by Mr. Korgaonkaron, with regard to coverage of an Estt. or Factory under EPF & MP Act is accurately correct. There are two patterns. One is Coverage of an EStt. or Factory under EPF Act and secondly eligibility of members to the Provident Fund. Once the Estt. engages 20 and above, the Estt. comes under the purview of the EPF Act, and then the employees will be enrolled to the P.F.members basing on their Basic + DA earnings, where the employees' salary exceeds Rs. 15000/- from 1.9.2014, (Prior to this the wage ceiling was Rs. 6500/-) will be excluded and the employees drawing P.F.wages below 15000/- will be enrolled to the P.F.membership. Even retired employees and employees above age of 58 years are also to be counted for the coverage purpose. The Directors are also will be taken into account for the purpose of coverage under Provident Fund Act.
Dear Seniors,
One of my friend asked about PF registration formalities, he running his own Service sector related to Tally software .His total employee strength is 6 Employees. he voluntarily want to give PF facility to his employees ,so what is the procedure for Registration of PF in this case.Pls provide me information about this .
With Regards ,
Raghu
An establishment with lesser number of employees will be voluntarily covered with the approval of Central PF Commissioner only, I presume. Before proceeding make sure and confirm that he would follow guidelines and continue to cover irrespective of any financial crisis in future. This is because coverage by simple sense will always look sound but the commitments as an employer would be very high, say to the tune of around 13.61% of salary. We can not say that the salary would be fixed for ever but we should anticipate that there could be a notification even to include all earnings that the employee earns, though presently only basic and DA subject to a maximum of Rs 15000 are considered as salary. In the place of PF there can be a number of insurance or other schemes wherein the employee and the employer can contribute a sum every month and at the end of a certain period the amount accumulated would be available to the employee. Why don't you try any of these schemes for them?

For voluntary coverage, you may ask him to contact the local PF enforcement Officer to start with.

Madhu.T.K
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