Is It Legal to Skip ESI and PF Deductions During a One-Year Probation Period?

Dear seniors,

I am working as a HR in manufacturing company. In my company we won't deduct ESI & PF for the candidates who are in probation period. In my company probation is one year. Is it legally right.


Thanks & Regards
Rekha

Dear,

I haven't heard of it before, but shockingly, I have to say this practice is illegal. Probation period can be extended with the discretion of the management. Please go through the company's standing orders, but the employer should deduct the ESI and PF because if someday any injury or event takes place, who will be accountable for that? If you are on the company's payroll or a contract laborer, these are legal implications one has to fulfill.

Regards,
Vipin:(

Dear Rekha,

Person working in any manufacturing, service, or any industry, if covered under ESIC and EPF, has to take care of both components from the very first day, no matter if he/she is casual, on contract, on the rolls, a trainee, or on probation.

It's illegal, and at the time of inspection, they may create problems. It's better to deposit all contributions with penalties.

Additionally, it's advisable to ensure all documents are in order, such as ESIC cards and other legal formalities.

ESIC Areas Covered: The ESI Scheme is being implemented area-wise by stages. The Scheme has already been implemented in different areas in the following States/Union Territories.

States Covered: All the states except Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh, and Mizoram.

FYI,

Surender Singh

Dear Mukesh ji,

Except Apprentice Trainees under the Apprenticeship Act are not covered under PF. However, any trainee taken on by the management should be covered. The responses provided by all friends are correct. PF/ESI will be applicable to all employees from the date of inception of their services. Consultants appointed by the management are also covered under the PF Act. (A consultant refers to any service consultant engaged in either technical or non-technical aspects. If the consultant firm is covered by PF, there should be no issues - refer to the LLR, 94 for further clarification).

Regards,
PBS KUMAR

Well, if you give an offer to an employee, that means he is on your payroll, and you have to deduct PF and ESI from his salary.

No relaxation in deduction of PF and ESI for probationers. Even if they worked for one day, you have to deduct and contribute PF and ESI.

Dear Rekha,

I have gone through your problem regarding ESI and PF deductions for Probationers. Please note that when your establishment is covered under ESI and PF, it is obligatory on your part to cover all employees except Apprentices under the Act. Even contract employees are also covered without any limit on the number.

Please ensure compliance with this requirement. Inspections from the ESI and PF authorities may result in significant penalties and requests for contributions. Non-compliance is considered a criminal offense, and your Managing Director or Proprietor may be liable for criminal prosecution, which could lead to penalties and jail time.

I urge you to take this matter seriously and ensure that all employees are covered, even retroactively, to avoid potential criminal prosecution. Feel free to reach out to me with any further queries via email or phone.

Email: himanshupathak@torrentpower.com
Phone: 09227233315

With regards,
Himanshu Pathak
Ahmedabad.

Under EPF, you are definitely covered. But in the case of ESIC, there is a catch here. You need not deduct ESI if the wages of the employee are above Rs 10,000 per month. To calculate the wages, you have to take into account the sum of the following factors:

i. All remuneration payable in cash to the employee.
ii. Payment for authorized leave of any type, legal strike/lockout.

Now, from the sum of the above, subtract:
iii. Contribution paid by the employer to PF pension fund, etc.
iv. Traveling allowance/value of traveling concession.
v. Sum paid to defray special expenses (like washing allowance).
vi. Any gratuity payable on discharge.
vii. Overtime wages.

Thus, the amount you get by the above calculation is greater than Rs 10,000 per month, and you need not pay ESI contribution for such workers (regular, probationers, or any). Hope this helps you.

Dear members,

I would like to point out that it is not compulsory to enroll in EPF if the wages fall above Rs 6500, as mentioned in the act. Even if the wages are below Rs 6500, it is not necessary to enroll if better facilities are provided by the corporation.

As senior members have rightly pointed out, it's illegal for a company not to deduct ESI & PF. It's a statutory liability, and anything that is unlawful is punishable.

Should PF deductions be made on trainees who are being paid a stipend? If yes, does a stipend of more than 6500/month make the deduction voluntary?

Dear All,

Minimum wages revised in Haryana w.e.f. 01.01.09 as per the notification dated 31.03.09:

- Unskilled category:
a) 3970.01
b) 4100.01

- Semi-skilled category:
a) 4230.01
b) 4360

- Skilled category:
4490.01

Regards,
Mukesh

Trainees from institutions not covered under ESI/EPF. This is with reference to trainees who come from institutions and carry a letter to that effect where the training is for a limited period as part of their curriculum.

Dear Rekha,
Please go through Esi Act 1950 Regulation 11 & 12 you will find your answer
Any how your answer is here As per ESI act you have start Deduction from the first day and inform to ESI under form 1 and PF form 2 with in 15 days
Better go and read clearly
Regards
Riyaz

The Supreme Court of India has clarified that "Apprentices" are "Trainees" and vice versa. The Standing Orders of a Company or the Model Standing Orders of the State followed by a company pending certification by the Labour Commissioner should specifically define the term "Apprentice-Trainee". If this aspect is taken care of, no subscription need be recovered from the trainees. This is the correct legal position.

A probationer is an employee appointed by the Company but placed on probation for a specific period before being confirmed.

S. Krishnamoorthy

Dear Rekha,

It is an illegal practice. For trainees and probationers, you have to deduct PF and ESI from the date of joining and also submit returns as per the act.

Govind

Hi Rekha,

This is illegal because any person who has worked in a company, either directly or as a contractor, is liable to be covered under PF and ESI as per the rules.

Thank you.

Regards,
Gautam

Hi Dear Rekha,

As per the government regulations and statutory acts of ESI and PF, you have to deduct and maintain the employer contribution from the date of the employee's joining.

I request you to refer to the PF Act and ESI Act for reference.

Regards,
Sudhakar

Dear S. Krishnamoorthy,

Does this mean we can use either the term "Apprentice" or "Trainee"?

We are in the service industry and do not hire apprentices. However, we plan to hire trainees for 2 to 6 months.

Would ESI/PF be applicable to them? Also, in case these trainees are taken on as confirmed employees after 2 to 6 months of training, when would they become eligible for PF/ESI?

Dear PBS KUMAR,

Can you please confirm whether Account consultants/Legal consultants will be covered under PF/ESI?

I agree with your view on Apprentice Trainees and the Apprenticeship Act.

rrtpan

Dear PBS Kumar,

Could you please confirm if the Account Consultant/Legal Consultant will be covered under PF/ESI? I agree with your perspective on Apprentice Trainee and the Apprentice Act.

It is mandatory to deduct PF & ESI for employees who are in their probation period. In the event this is not done, it is the liability of the employer to pay both contributions - of the employee & the employer for the past period.

Dear Rekha,

I am also working in a contractor company. Could you please tell me if we can recruit any GET? Additionally, are GET positions applicable for ESIC and PF? As per our client's requirements, we must deduct their ESIC and PF contributions. The answer will be either yes or no.

Could you also send me information on the Rajasthan Labour Act?

RK Vyas

Dear,

Your company has to cover PF and ESIC for the candidates who are on probation.

Regards,
Mist

Dear all,

It's correct that all employees are eligible to receive benefits of PF/ESI from the D.O.J. However, as per the Apprentice Act, apprentices are not eligible for P.F.

Thanks,
Majibul

Dear Friend,

All of us are well aware of the eligibility of ESI and EPF deductions. It is a compulsory responsibility for employers. It is truly an illegal practice and completely unacceptable.

Regards,
Raju
HR - Chennai:-P