How Many Employees Are Needed to Start PF, and Are Trainees Counted?

Dear All,

Please tell me how many employees are needed in an organization to start PF? Does that number include trainees as well?

Thanks,
Shikha
OSSAGHO Corporation,
S.C.O. 6, 1st Floor,
Novelty Plaza, Opp. Park Plaza,
Ludhiana - 141001 (Pb.)

TEL: +91 161 2772775
+91 161 2772745
URL: [http://www.ossagho.com](http://www.ossagho.com)
E-Mail: [corphr@ossagho.com](mailto:corphr@ossagho.com)

The PF is applicable to all establishments that engage 10 or more employees. All employees drawing basic salary/wages up to Rs. 6500/- are included. In case the basic salary/wages exceed Rs. 6500/-, the employer is not bound to pay the employer's contribution towards PF. Employees can voluntarily contribute to the fund on their own (subject to company policy).

In the current scenario, normally PF-Employer contribution is a part of CTC, and the employer pays the contribution even if it exceeds Rs. 6500/-.

Thanks,

Dear Sir,

As per my knowledge, PF is applicable to establishments that employ 20 or more employees. PF contributions are deducted from the starting salary, regardless of the specific figure. Please correct me if I am mistaken.

Please clarify that PF is applicable for establishments having more than 10 employees or more than 20 employees.

Thank you.

Hi,

As per my knowledge, the PF will be applicable when the employee count reaches 20 as per the PF Act.

The PF Act applies to employers whose employee count is 20 or more. However, a newly set-up establishment is exempted for the initial three years.

Hi,

In the Factory Act, it is mentioned that:
• Min. number of workers
➢ working on any day of the preceding 12 months; and
➢ in any part of which the manufacturing process is being carried out
- 10 or more (factory run with power)
- 20 or more (factory run without power)

Please let me know if you need further clarification.

Dear HR folks,

Only for HR professionals - Don't you know even the basics of Acts applicable to an establishment? Amazing queries and answers. Where is the profession heading? Very, very unfortunate. If your university or institutes are not teaching all those basics which are important, at least read the basics.

Madan Mohan P. Raju GM - HR - BE

PF is applicable to manpower above 20, and if the salary structure is more than Rs. 760, only Rs. 760 is payable.

Dear Concerned,

Nobody is 100% perfect. At every step of our life, we come to know new things. In the case of my company, we are planning to start PF, and I am not very familiar with some concepts of it. If you are too good, then why did you join this forum? That means even you have some doubts. So you can't blame anyone. A man is a continuous learner.

Regards,
Shikha

Hi all,

Mr. Madan Mohan rightly said that this is a very basic question which can be referred to from the PF Act. Members can ask the difficult questions, which may be tough to handle practically.

K. R. Shanmugham
GM HR

Dear Mr. K.R. Shanmugam,

You have written so much about Mr. Madan Mohan. I think if you had written something related to this topic, I would really appreciate both of you. We are not here to show anyone down, but this site is for sharing and helping each other. I kindly request you to do the same.

Regards,
Shikha

Provident Fund (PF) is a statutory deduction to be done by employers as per the rules made by the Government of India. According to the PF rules, both the employee and the employer make a contribution to the PF fund of the employee. Every month, the contributed amount gets added to the balance of the employee. The PF contributions earn a fixed interest (9% p.a.) and accumulate over the span of service of an employee. The intention is to encourage employees to save for retirement, pension, etc.

In most cases, the Government (PF Board) collects this amount and keeps it in the employee's name. After an employee retires, all the contributions made by the employee along with interest are paid back to the employee. This is handled by the PF Board, and the employer or company has no role to play in it.

For example, if my basic salary is Rs. 100/-, then I should contribute Rs. 12 as my PF. This amount will be deposited into my PF account. Along with my contribution, my employer also makes a matching contribution of Rs. 12/- into my account. So, every month, my PF account increases by Rs. 24 (12 - my contribution, 12 - my employer's contribution) until the end of service.

Any salary revisions will automatically lead to changes in the PF contribution. However, if the salary changes are made to components that are not part of the basic salary, there is no impact.

According to the PF rules, all employees who draw a PF Basic of less than 7500 must contribute to PF. This is mandatory.

For employees having a PF Basic more than 7500, the deduction/contribution is voluntary. If they wish, they can opt for the deduction. Otherwise, there need not be any deduction (from both the employee and employer perspective).

However, in most companies, PF is applicable to all employees.

I hope this answers your question.

Thanks,

Nivya

Maybe they are just starting their career, or in certain companies, they promote accounts people to take care of HR. Those individuals may not have a basic understanding of the profession as it is entirely different.

Hi sir,

According to the PF Act, the company that has 20 or more employees will deduct PF from employee salaries. Some companies with 18 employees also deduct PF after obtaining a PF account from the PF board. 12% of the employee's basic salary will be deducted, and an additional 12% will be added by the employer. However, some companies do not contribute this full amount. For example, Reliance Store deducts 12% from employees but only adds 8% from the company side. This discrepancy may be due to the company's establishment and the contents of the act and memorandum. Employers sometimes make adjustments, so it is advisable to review your company policy.

As per my knowledge, if I am mistaken, please correct me.

Thank you.

Thanks K2s.

One more point regarding the relationship between IT and PF: According to Indian tax laws, any contribution made by the employee towards PF can be considered an investment under Chapter 6. This can help reduce the tax liability of the employee while offering a decent return on investment.

Thanks,
Nivya

Hi,

I have observed the discussion. I have one doubt. It is clear that a company can include the employees into the PF Act once the employee strength reaches 20. But my question is, should all the employees be permanent, or there may be trainees among the 20 employees?

Thank you.

Hi,

The question arose because, as per the PF Act, trainees are exempted from the PF facility.

Hi Raj,

According to me, the number 20 represents employees and not trainees. Trainees are not permanent members of an organization, so the 20 employees only include employees. Please correct me if I am wrong.

Regards,
Shikha

Hi,

Thank you, Sikha, but my question remains unsolved. Based on your words, do all 20 employees have to be permanent? And can a company start PF deduction as soon as it begins operations with 20 permanent employees?

Hi!

The answer to your question is that the service duration of trainees is fixed, like 3 months, 6 months, etc., and they are paid a stipend, not a salary. However, PF is deducted on the basic salary, so trainees are not included in the number of 20 people.

If you want to add something to it, please do so.

Regards, Shikha

Dear HR Professionals,

Please let me know, when can an employee withdraw his PF? Is it possible for him to withdraw the money during his tenure, or can he withdraw it after his relieving?

Regards,
Shikha

Dear KS2,

Here are some PF-related answers for you:

01. Applicability - 20 or more
02. Salary range - Rs. 6501 (whatever your salary)
03. Contribution - Employee - 12%, Employer - 12%, PF Admin charges - 1.10% on total wages, EDLI - 0.50%, EDLI Admin Charges - 0.01%, total - 13.61%

During the latest inspection in our office, the PF Enforcement officer informed us that for those drawing more than Rs. 6500/-, a ceiling of Rs. 780/- will apply (above this amount, deductions can be made based on the employee's willingness and company policy). If the salary is less than Rs. 6500/-, a 12% deduction should be made.

If you have any queries, please call me at 09944706404.

Also for seniors, we came to this site to learn. Please do not criticize us for asking basic or in-depth questions. Instead, kindly share your knowledge to help us become experts.

Regards,
Eswar.K

Dear Eswar. K,

Thanks for your reply. I think you have explained beautifully and rightly said in the last. Really nice to see your reply. My doubts are very clear now. For any further queries, I will definitely contact you.

Regards,
Shikha

Dear HR Professionals/Beginners,

Please tell me, is it possible to start PF in a company with a strength of less than 20? I have seen the same thing in some companies.

Regards,
Shikha
OSSAGHO Corporation,
S.C.O. 6, 1st Floor,
Novelty Plaza, Opp. Park Plaza,
Ludhiana - 141001 (Pb.)
TEL: +91 161 2772775
+91 161 2772745
URL: http://www.ossagho.com
E-Mail: [Login to view]
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Dear Mr.Madan Mohan,
It is good that at least you felt that If our university or institutions are not able to provide us a practical Scenario,and i feel that practical experience teaches much more than Reading Books at same time i agree we should have book stuff but practical experience can be given by u Sr.Hr's i guess.
And in larger companies it is difficult to learn every thing where all the HR stuff is not teached .so please try to understand the new comer's questions and dont get irritated , just try to guide us with at least the posting date where we can find the data. The thing is every month a new joinee comes up with the same question and some times some seniors get irritated but many they patiently guide us.we jr's are thankful to all of u.
so i think u will help as well as guide us.
Regards,
Ashwitha.

Dear Ashwitha,

I truly agree with you. Our seniors should help us to clarify our doubts and not demotivate us by saying that we have not learnt anything. There is always a beginning to everything. Nobody reaches the top at the starting only. We learn a lot from each other.

Regards,
Shikha

Dear HR Professionals and starters,

Please provide more information on Provident Fund (PF).

Regards, Shikha

Dear friends,

My company was started with 15 employees from 2008 to April 2010. The count increased to 30 employees in May 2010. I want to know whether PF will be applicable from 2008 onwards or May 2010 onwards. Please give me a solution regarding this.

EPF Applicability in Private Establishments

EPF is applicable to all private establishments having 20 or more workers and central government-notified establishments with 20 or even fewer workers. Contract labor is eligible. Temporary employees, trainees, and apprentices are not eligible. The EPF applicability for any new establishment starts only after 3 years. The minimum salary for EPF eligibility is 5000 Rs. per month.

Eligibility for EPF Coverage

A company that started 3 years ago, and an employee who just joined, becomes eligible for EPF coverage from the date of joining. The EPF pension scheme is applicable to employees up to 60 years of age only.

Hi to all,

I went through the discussion. My doubt is, in my company, we are 15. Can PF be applicable?