Understanding PF Rules: How Do Freelancers and Short-term Contracts Affect Eligibility?

Please clarify if the company is a service industry having a lot of freelancers and employees on short-term contracts.

The figure of 20 relates to permanent employees, or does it include others as specified above?

Freelancers are either paid per assignment or for a specified period.

Does an employee have to put in a minimum number of days/months of service to avail PF benefits?

Are outsourced people like security guards and office boys to be counted when considering the total number of employees?

If the total employees, excluding outsourced ones, exceed 20 in number but all are getting above Rs 6500/- per month, is PF registration still mandatory?

Your feedback will be very useful.

Thanks,
signetcomm

For PF coverage, all employees, whether on direct roll or outsourced, will be counted as employees. Therefore, if the total number of employees, including security personnel, casual laborers, and fixed-term contract employees, exceeds 19 (becomes 20), then PF is covered. It is the total number of employees and not the number of employees drawing Rs 6500 that is counted for coverage. If you have 20 or more employees, and out of which only a few are drawing a salary of less than Rs 6500, then the company will be covered, but PF will be applicable only to those employees whose salary is less than Rs 6500.

PF is applicable to an employee from day one of his joining.

Regards,
Madhu.T.K

1. Thanks, but tell me about freelancers - how can you count them? Somebody is there for 10 days, while the other is there for 3 months. It depends on the assignment.

2. Is PF applicable during:
1. training period
2. probation period

3. Few organizations used to keep people for a maximum of 3 months or so, and then used to replace them with a new lot to avoid PF hassles - is that true?

Regards,
Signetcomm

If freelancers are paid a salary from the establishment, then they are also covered by PF. All trainees, except those appointed as Apprentices as per the Apprentice Act, 1960, and those who are engaged as per the certified Standing Orders of the establishment, are covered by PF. PF is applicable to an employee right from day one of joining, and therefore, PF should be deducted during the probation period as well. By appointing employees for three months, you cannot avoid PF coverage. Certainly, there was an initial protection where an employee would not be covered for the first three months of joining, but this was omitted around twenty years ago!

Regards, Madhu.T.K