Can Managers Opt Out of PF Contributions if Their Salary Exceeds Rs 6500? Seeking Expert Advice

Hi all,

Let me introduce myself... I am Sandeep, who has joined as an HR professional in a pharmaceutical company in Hyderabad.

In our organization, there are a few managers who want to exempt themselves from the Employees' Provident Fund (PF) by stating that their wages (basic) exceed Rs 6500, and they do not wish to contribute to the PF.

Previously, there was no PF scheme in place. However, the management has recently decided to implement PF contributions for all employees, irrespective of their wages, in a uniform manner across all employee categories.

Now, my queries are:

1. Is it mandatory, as per the law, to entirely exclude Manager X, whose basic pay has now been fixed at Rs 10,000, from PF contributions?

2. Should we cap his wages at Rs 6500 and contribute 12% of the employee's and 12% of the employer's share based on this amount?

3. Should we deduct the employee's share of 12% from Rs 10,000 and restrict the employer's share to Rs 6500 (i.e., Rs 541 to the pension fund and Rs 239 to EPF)?

4. Should we deduct the employee's share of 12% from Rs 10,000 and restrict the employer's share to Rs 6500 (i.e., Rs 541 to the pension fund and the remaining Rs 659 to EPF)?

Does the PF act provide employees with the authority to exempt themselves from PF contributions?

I kindly request all experts and professionals to share their opinions and insights on the above matter.

Looking forward to your response.

Sandeep,

About PF, what I know is:

1. Below 6500 (basic), PF is mandatory.
2. Above 6500 (basic):
- PF can be calculated on actuals (i.e., 12% of basic).
- You can freeze the PF amount: If the actual PF amount is greater than the frozen amount, then the frozen amount will be deducted.
- If the PF is calculated on actuals, then please do not include Special Allowance in your breakup, as the actual PF is calculated on it as well. You can replace Special Allowance with uniform allowance.

Hi all,

I am awaiting a response from all of you. Also, there is a clause: if wages are > 6500/-, say 10K, PF contribution has to be made with mutual consent from the employer and employee on 10K. What happens if the employee does not agree to it?

If your company is implementing the PF for the first time, deducting PF for those drawing basic salary more than 6500 is not mandatory. However, the policy has to be uniform in the organization. If you deduct, the PF & EPF will be calculated on 6500/- only.

Verification of UAN for Workers

My contractor gives a salary of more than 15,000 INR to all workers. He wants to show them as exempted in PF. However, the company asked for proof of exemption or whether the worker does not have a UAN from before. How can I verify online that the worker does not have a UAN?