Concerned About PF Compliance for Non-Payroll Workers? Seeking Advice on Exemptions

Dear All,

We are an IT company with around 30 employees, and we are registered with the Provident Fund (P.F). We have a sweeper who is not on the payroll and comes to the office twice a day. We pay him cash per month, and we do not provide P.F for him. Will there be any problem if the P.F authorities come to know about it? How can we exempt him from the P.F?

Please advise.

You are not supposed to exempt a casual employee. All those exempted from the operation of the EPF Act are those drawing a salary (at the time of enforcement of PF to the company or at the time of joining) of above Rs 6500. A sweeper may be doing a part-time job, but he should be covered under the EPF and ESI.

Regards,
Madhu.T.K

Dear Madhu,

If we pay him around Rs. 1500, then is he still covered under P.F.? Is there any way to exempt him from P.F.?

Thanks.

With Best Regards,

Urmila Gupta.

There is no lower limit. In order to get him excluded, he should be given not less than Rs 6,500. Otherwise, he should be covered to avoid penalties/damages.

Regards,
Madhu.T.K

Hello,

Even if you pay him more than Rs. 6500 per month and if you cover other employees drawing more than Rs. 6500 under PF, then you need to cover this person as well. However, you have mentioned that he comes and does work once every two days. Prepare a voucher paid to Mr. towards cleaning expenses, and get it signed every time he comes. You are paying him Rs. 1500, and he is expected to come 10 times a month. Every time he comes, prepare a voucher for Rs. 150, and if possible, pay it to him then and there. Do not book it anywhere as wages.

Legally, you will not have any issues. As of now, PF authorities will not pose any problems. Even in the future, this will be raised as an issue.

Siva

Siva is right. But EPF officials can inspect the books of accounts and any voucher in which 'labour' is involved can be booked as paid to an employee - whether part-time or full-time - and on the basis of that, the employer can be summoned under Section 7A of the Act to produce the books of accounts. Though PF authorities are not very concerned about such vouchers, ESI officials will charge it. Therefore, voucher payment without any proof of employment may be taken as a temporary arrangement. I believe so in the light of my experience in Kerala. I don't know whether the authorities are flexible and practical in other states.

Regards,
Madhu.T.K