Are PF Deductions Required for Management and Graduate Engineer Trainees in Different Units?

Hello all,

I have some questions.

1. Are PF deductions applicable to candidates who have joined an organization as Management Trainees and Graduate Engineer Trainees?
2. If not, then why?
3. Can an organization exempt itself from PF regarding Management Trainees and Graduate Engineer Trainees?
4. Is it possible for an organization to pay PF (and deduct accordingly) to certain Management Trainees and Graduate Engineer Trainees pertaining to a particular unit/plant of an organization and not pay to others (i.e. MTs & GETs) posted at other units/plants?

Please shed some light on this matter as it is being practiced by a PSU.

Thanks,
SUMIT

If the management training program is as per the certified standing orders of the establishment, then these trainees will be excluded from EPF. Similarly, if the stipend payable to these management trainees is more than Rs 6500, then they also become excluded from EPF.

Regards,
Madhu. T.K

Sir,

The PSU doesn't yet have the Certified Standing Orders. The stipend is above 6500. However, the MTs and GETs placed at one of the units of the organization are being included in EPF, whereas all other MTs and GETs posted at other units aren't being included in EPF. Is that permissible, or is it an error on the part of the management?

Regards,

If, at all, the position of management trainee falls in the role grade of an organization, the employee/trainee would be eligible for EPF, and the contribution would be deducted from the salary irrespective of whether the pay is above 6500.

If the stipend at the start of training is more than Rs. 6500, then there is nothing wrong in excluding them from EPF. The management is not wrong.

Regards, Madhu.T.K

Dear Sir,

Please clarify if, until now, our company has been following the pattern of 12% contribution from the employee and 12% from the employer.

1. If we seek exemption for employees with a basic salary exceeding 6500, should we deposit the PF based on the 6500 basic salary for these members, or is there no need to pay any PF for these employees?

2. What is the procedure to implement this new practice?

Regards,
Manoj

The Hon'ble Supreme Court in RPF Commissioner, Mangalore Vs. Central Arecanut and Coca Marketing and Processing Co. Op. Ltd., Mangalore (2006) LLR 263 held that a Trainee in an Establishment covered under the Industrial Employment (Standing Orders) Act will be excluded from the Provident Fund Act.

The Establishments who have already covered trainees appointed under Standing Orders (Certified or Model) may continue to cover such trainees under the Act until their tenure of training expires.

By this latest decision of the Hon'ble Supreme Court, the issue relating to coverage of trainees under EPF Act has come to a finality. It may be further noted that only trainees appointed under the Apprenticeship Act or under the Standing Orders are excluded from the definition of "Employees" under the Act. Only those trainees who meet the criteria laid down as above are excluded from the applicability of the Act. Those who do not meet the criteria as stated above and who have been branded as trainees for convenience are not excluded. Further, the individual letter of engagement of a Trainee should refer to the scheme and clearly reflect the provisions of the scheme.

Hope this clears the doubt of my HR friends.

G.K.Manjunath, HR Manager

Dear All,

Please advise if it is possible to set financial targets in the appointment letter.

Regards,
Santosh

With great respect, I beg to differ from the opinion given above. 6500 is only an upper limit. Nowhere does the act state that above 6500 the employee is exempted. 6500 is the upper limit; beyond that, it becomes optional for both the employer and the employee. Correct me if I am wrong.

I have not said that persons with a salary of more than 6500 are exempted employees, but I have said that they can be an "excluded" employee. There is a difference between an exempted employee and an excluded employee. An employee is excluded from PF coverage when their salary at the time of joining the company exceeds Rs 6500, or when they join a company while receiving a PF pension (not any government, defense, or Railway pension), or join after withdrawing their PF accumulations after attaining 50 years of age, or if they are an apprentice engaged under the Apprentice Act or under the certified Standing Orders of the company.

Regards,
Madhu.T.K

Please read the post carefully and understand what I have written. If an employee's salary at the time of joining is more than Rs 6500, he shall be an excluded employee. At the same time, if that employee has been a PF member in his previous/earlier employment but has not withdrawn it on leaving that employment, he will not become an excluded employee just because he is a new employee in the present organization. This is because he is an existing member (he still exists to be a member of PF because he has not withdrawn the PF). This is the reason why we should take a declaration in Form 11, in which the new employee declares whether he was a member of PF and, if so, whether he had withdrawn it or if he has never been a member of PF, and so on.

Understanding Excluded Employees

Now regarding excluded employees, the member is advised to go through the definition of an excluded employee under Scheme 2 (f) of the Employee Provident Fund Scheme and relate the same with what I have written in the earlier post. While reading the definition and posts, please read word by word. I have written very specifically that it is excluded and how a person becomes excluded, and in the context of salary, I have conspicuously written "at the time of joining," meaning an employee once covered will continue to be covered irrespective of any increase in salary above 6500.

Regards,
Madhu.T.K

Hello everyone,

Please check the attachment regarding the EPF exemption for trainees. It might be helpful.

Thank you all.

The post is old, and by the time, the salary ceiling has increased to Rs 15,000. Therefore, wherever the mention of Rs 6,500 has been made, please consider it as Rs 15,000.

Madhu.T.K

Applicability of PF Deductions for Trainees

Yes, it is applicable to management trainees because the notification clearly states that trainees who come from any institute to complete their industrial training or on-the-job training for a certain period are not considered employees under the act. These students come for fixed-time training ranging from 15 to 45 days and then return to their college to complete their course.

However, Graduate Engineer Trainees (GET), Diploma Engineer Trainees (DET), or any other management trainees appointed according to standing orders or the HR manual will be considered employees. GETs and DETs join after completing their courses, aiming to begin their careers. After their training period, they may either be assigned to a specific designation or released from the company, but they do not return to their institute.

In my point of view, management trainees fall under the category of workers rather than apprentices. Therefore, the laws of EPF/EPS are applicable to them. As far as PSUs under the government are concerned, the facility of EPF/EPS is available to management trainees.

Thanks & Regards,

Sumit Kumar Saxena

Dear Friends,

Greetings of the day!

In my opinion, if you have hired an Engineer/Trainee under the Apprentice Category and have completed all the formalities as per government norms, you can get PF exemption. If your company is not registered under the Apprentice Act and you are hiring as a Trainee, then you need to deduct PF.

We do not have to deduct PF from Apprentices.