Is PF & ESI Mandatory for Company Owners, or Can They Opt Out?

Dear sir,

My question is: Is PF & ESI applicable to the owner of the company, or can they be exempted?

It depends on whether your employer is on the payroll of the company. In that case, all statutory compliance needs to be taken care of.

Hi Sanjeev,

As per the Provident Fund Act of 1952, PF shall be applicable to all employees working with 20 or more employees in the organization. If the owner of the company is considered an employee, they must be treated as a member of PF.

According to the Employees' State Insurance Act of 1948, the mentioned eligibility criteria apply to this act. However, you can avoid the same if the gross salary exceeds 10,000/- per month. In such cases, those employees will not be considered under ESIC.

For more details, feel free to revert back to me.

Thanks & Regards,

Dear Sanjeev,

Your query is confusing and not clear. What do you want to ask? Please make it clear.

Thanks,
J. S. Malik

Dear,

If the owner's name is enrolled in the company records as a company employee, all rules and regulations will be applicable to him.

Tushar,

Rightly said, one addition: if the basic is above Rs. 6500/-, it is not mandatory to become a member of PF.

Dear Malik Sir,

I have one more question for you regarding PF applicability. If the factory and head office are located at different places, and the PF code is obtained from the head office location, is it acceptable? Can the PF inspector from the factory location inspect the factory even though the number is not registered under that area's PF commissionerate?

Please guide.

Regards,
Brijesh

Dear Sanjeev,

For the purpose of the PF & Misc. Provisions Act, the owner of the firm cannot be said to be an employee of the firm as a person cannot be both an employer and an employee. The ESIC is applicable to employees drawing a salary below Rs. 10,000. Since the owner does not draw a salary, he shall not be entitled to ESIC as well.

Regards,
Brijesh

If the owner is the proprietor of the company, PF & ESI are not applicable. You cannot enroll the proprietor as an employee of the company. Partners and directors of the company may contribute to PF.

Factory Coverage Under PF

Regarding the factory not covered under PF, you can include the factory details in the main code, and remittance may be started irrespective of the number of employees. When the PF inspector visits your area, you can show the Form 6 return copy and the list of covered employees. However, for ESI, you need to obtain a separate code number.

I hope this is clear.

Regards,
D.D. Narasimhan