Starting a Small Electrical Firm: Do I Need a PF Code for Less Than 20 Employees?

I have started a new sole proprietorship firm as a licensed electrical contractor with a number of employees below 20. Some companies are demanding the PF code number. Will I be eligible for PF code registration? How? What are the documents required for PF registration?

Safelec

Dear friend,

As per the PF Act, if an establishment has 20 or more employees, then it is to be covered under PF.

APPLICABILITY OF EMPLOYEES' PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT '1952

The Employees' Provident Fund and Miscellaneous Provisions Act 1952 applies to the whole of India except Jammu & Kashmir. Employees' Provident Fund and Miscellaneous Provisions Act 1952 is applicable to: Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by the Central Government in the Official Gazette. (List of Industries/Establishments) Employing 20 or more persons. Cinema Theatres employing 5 or more persons.

If you are covering them under PF/ESI, then the establishment giving a contract to you will deduct PF/ESI as the principal employer. To avoid this, if you cover them, it is a good motivation for your employees also, is it not? See the website EPFO for further information.

Provident fund coverage (registration) can be done with fewer employees (less than 20). As you said, you are a licensed contractor and are losing business because companies are asking for PF and ESI code numbers.

I advise that you can get the registration for PF voluntarily. However, once you get the registration, then you cannot back out until your establishment is completely wound up. For ESI, you need to have 20 employees, and since you are a contractor, you have to show at least 3 to 4 contracts on hand.