Understanding Form 11: Do High-Salary Employees Need to Submit It for PF Compliance?

Dear All,

Is it necessary to submit Form 11 under PF rules for those employees who are not covered under PF as their basic salary is above Rs. 6500/-? Is it necessary to submit Form 11 if a new employee joins the company with a basic salary above Rs. 6500/- and the company is not willing to cover them under PF? Please share your knowledge as it is crucial due to a PF inspection conducted in our company.

Thanks,
Shiv Kumar

Hi Shiv,

Yes, it is necessary to get Form 11 filled and duly signed, but it is not to be submitted to PF. It is for the office records and useful if any inspection takes place.

Regards,
Harshad

Dear Harshad,

Thank you very much for your reply. I have one more question. If someone was previously a PF member in another company but has now joined our company and is receiving a basic salary above Rs. 6500, and we do not have a policy of providing PF benefits to employees earning above this limit, is it compulsory to continue that particular employee in the PF role?

Please respond at your earliest convenience.

Thank you,
Shiv

Hi Shiv,

The person should withdraw his earlier PF; then in the new company, he need not be covered under PF.

Regards,
Harshad

In that case, it is not compulsory to deduct the PF if PF applicable salary is >6500/-

Regards,

Jony_M

Dear Jony,

I'd like to add that what you have said is partially correct. There is a technical hitch involved in the situation as mentioned in the example. If someone who has earlier worked for a company where he was a member of EPF (no matter his basic was less than or more than 6500) and he joins a company where EPF is applicable before completing the two months period. Then in this case, technically the employee cannot withdraw his EPF accumulation because his EPF membership is treated as continued (though he is now in a separate company).

If you see the Form-19, there is a declaration and the employee signs when he fills up the withdrawal form, stating that he has not worked in an establishment for at least two months where the EPF Act is applicable. Hence, suppose he leaves the company in Dec and joins the new company say in Jan- or even in Feb, technically he is re-employed in a company where the EPF is applicable so if he fills up the withdrawal form he'll sign the "technically wrong" declaration and hence he cannot withdraw his EPF.

Further, please refer to the definition of the excluded employee in Para 2(f) Part(i) and (ii) of the EPF Scheme. According to it, the excluded employees are categorized in two categories. The first are those who have retired as per age or as per infirmity or left service before migrating from India for service abroad. (now a third category has also been added that of an expat (international workers of those countries with which India has signed the "totality agreement")). While the second category is of those who are otherwise entitled to become a member but their pay is more than Rs.6500/-.

Now a narrow clarification of this definition only a "fresh" employee who is otherwise entitled can only be left out when his basic is more than 6500, but in our case, the employee is already a member of the EPF Scheme and hence he is not a "fresh" case, therefore he cannot be held to be in the Part (ii) of the Para 2.

So, in my view, the following conclusion is drawn, that an employee cannot "theoretically" withdraw his EPF accumulations (practically there is nothing like it, there is no check at the EPF office end with regard to who is going out and who is going in - I have seen cases where the employee resigns from service in Aug and joins the next month and submits the withdrawal form and gets the settlement of their old account) and hence cannot remain out of the EPF Scheme in the new company.

If someone has a different opinion/suggestions, please share.

Best Regards,

Amit Kumar

In my view, which is also the view of PF commissioners/offices based on several interactions:

1. Irrespective of the salary of the employee, the organization has to contribute to PF except:
- The number of employees is less than 20 (which would soon become 10)
- The company runs an approved PF Trust
- The employee is above the declared retirement age

The only option available to the employee (remember it is the employee's choice) is to restrict his contribution equivalent to Rs 6500 even if his basic plus DA is beyond 6500.

Form 11 has to be submitted for all employees in the organization.

The organization cannot have salaried employees with exemption to PF subscription in their role for PF purposes. If I recollect correctly, earlier only promoter directors were excluded from this. I am not sure if that is still true.

Dear Friend,

Thank you for all your suggestions. I have now come to the conclusion that Form-11 is compulsory, and I will proceed accordingly. Once again, thanks to all.

Shiv Kumar

Could you please inform me if we can implement this for the workmen working at various construction sites? For employees, we are paying the labor more than Rs. 6500. We can demonstrate that the same labor is exempt from PF coverage with the support of Form 11.

I am looking forward to your kind advice in this regard.

Thank you.

Best regards,
SM

If a new employee is enrolled with a salary of Rs. 12,000, the company deducts only ESIC and states that PF is not applicable for that employee. Is this right or wrong?

Regards,
Raj.

I require a copy of the written PF exemption rule for Rs. 6500, showing a clear picture of whether PF deduction is applicable - yes or no.

Regards,
Raj.

Handling PF Participation for Employees with High Basic Salary

In our institution, we have staff with a basic salary above Rs. 6500. We pay the PF amount to the PF office. However, some staff members do not wish to participate in the PF scheme. How can these staff members be exempted from participating in PF?

If they are not a member of EPF, they can submit an application along with FORM 11. Alternatively, if they need to withdraw the previous PF amount and have been unemployed for a minimum of 2 months or have not been a member of EPF in the last two months, they may apply for the same.

Thanks,
SM

Please check with the PF authorities regarding Form II exemption. This exemption is only applicable to freshers whose salary is above Rs. 6,500. For experienced candidates, if they had PF contributions in their previous company, the current company is required to pay a minimum of Rs. 780 + Rs. 780 as contribution, regardless of the actual basic salary, which may exceed Rs. 6,500.

I would appreciate any suggestions on this matter.

Best Regards,
Karthik