Dear Seniors, I am Rohit Sharma working as HR Officer in Defence based company. Seniors, we are actually licensed to manufacture arms and ammunition. And for some time now I am facing some issue on which I need your opinion, so how can I handle this situation. I have joined this organization as a fresher in 2023 and have been looking after the HR related activities in the company for the last 2 years. I have no seniors in my HR department, but I report to my MD and a senior manager who is basically from a design background. As we know that PF deduction is mandatory in any organization which has more than 20 employees. But still my company is not deducting the PF of any employee. Currently we have the manpower of more than 100 people, and from 2021 our company has the manpower of more than 20 people. So basically, our company's PF liability was from 2021.
The MD of our company made a rule that if any employee whether a fresher or experienced joins our company, we will keep his basic salary above 15000 to avoid PF limit. As per salary structure we have only one component Basic Salary, there is no HRA, DA or any other allowance in it. I have raised this issue many times with my MD that sir, we are not in legal compliance because we are not contributing to PF. I have also told them that for a fresher who has never worked before and has never had a UAN number, it is ok for them if we keep their basic salary above 15000, as the employer is not flexible in making contributions to PF. But in case of employees who previously worked in some other company where they have a PF account, we have to continue contributing to their PF account as it is mandatory, even if their salary is above Rs 15000 or Rs 50000.
I have also shown them the Form 11 declaration which the employee has to fill when he joins the company, and I have also told him the purpose of that form. But still they stopped me from taking that declaration form from any employee. I have also told them that if any complaint is made in this regard by any employee in the PF office or if any PF inspection is conducted in our company, then we may have to face huge liability in future. But still their answer is that we are not doing anything wrong because we are giving salary above Rs 15000 to every employee. Except PF we are following all the compliances like we are paying for ESI; we are paying for EL and even our company pays bonus at the rate of 20% on basic salary. But when it comes to PF, I don't know what they think. Please suggest what action I should take.
From India, Shimla
The MD of our company made a rule that if any employee whether a fresher or experienced joins our company, we will keep his basic salary above 15000 to avoid PF limit. As per salary structure we have only one component Basic Salary, there is no HRA, DA or any other allowance in it. I have raised this issue many times with my MD that sir, we are not in legal compliance because we are not contributing to PF. I have also told them that for a fresher who has never worked before and has never had a UAN number, it is ok for them if we keep their basic salary above 15000, as the employer is not flexible in making contributions to PF. But in case of employees who previously worked in some other company where they have a PF account, we have to continue contributing to their PF account as it is mandatory, even if their salary is above Rs 15000 or Rs 50000.
I have also shown them the Form 11 declaration which the employee has to fill when he joins the company, and I have also told him the purpose of that form. But still they stopped me from taking that declaration form from any employee. I have also told them that if any complaint is made in this regard by any employee in the PF office or if any PF inspection is conducted in our company, then we may have to face huge liability in future. But still their answer is that we are not doing anything wrong because we are giving salary above Rs 15000 to every employee. Except PF we are following all the compliances like we are paying for ESI; we are paying for EL and even our company pays bonus at the rate of 20% on basic salary. But when it comes to PF, I don't know what they think. Please suggest what action I should take.
From India, Shimla
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HC All - Trainees not covered for PF -2010.pdf
PF Ledger.xls