Is Our Small ITES Company Subject to the PF Act Once We Hit 20 Employees?

Hi,

Ours is an ITES company with fewer than 20 employees, and the basic salary of all the employees exceeds Rs. 6500/-.

I would like to know if our company will be covered under the PF Act if the number of employees reaches 20 or more with a basic salary of all employees exceeding Rs. 6500/-.

Thank you.

When your number of employees reaches 20, your establishment will be covered by EPF because the total number of employees is counted for coverage, not the salary. Specifically, only those employees whose salary does not exceed Rs 6500 will be covered, and contributions need to be remitted for those employees.

For PF coverage, all employees, whether directly employed or through contractor(s) and casual laborers, will be included in the count. Therefore, if on any day the total number of employees engaged is 20 or more, PF coverage will commence from that day onwards. Verification will be based on the attendance report at the security gate by the Enforcement Officer.

Regards,

Madhu.T.K

Thank you, Madhu.

But as per my information, there was a provision in the PF Act where employees with a basic salary exceeding Rs. 6500 can request the employer for non-deduction of PF. Is this provision still in force? If yes, what are the responsibilities of the employer, and does the employer need to register under the PF Act when all the employees make a declaration for non-deduction of PF.

I believe I have explained the matter. To repeat, if your establishment employs 20 or more employees, your establishment will be covered and as such, your establishment should be registered. If no employee draws a salary (Basic + DA) below Rs 6500, nobody will become a member of EPF. In such a case, no contribution becomes payable but a nil return will have to be sent every month to the concerned PF Office.

Regards,
Madhu.T.K

If a total of 20 employees are working in any manufacturing industry, with 15 employees earning a salary less than Rs. 6500/- and 5 employees earning a salary greater than Rs. 6500, then will the provident fund (P.F.) be applicable or not?

Coverage Under the EPF Act 1952

For coverage under the EPF Act 1952, employees both above and below ₹6,500 will be considered. The calculation of PF contribution will be based on the amount up to ₹6,500.

Regards,
SDP

If your employee is drawing a basic salary of more than 6500, there is an option for them to be included in the PF with a minimum ceiling of 6500/-. If the employee is drawing more than the minimum PF ceiling and is interested in being a PF member, they can opt for the PF with a minimum ceiling of 6500/-. Otherwise, they can fill out Form 11 and declare that they are not interested in opting for PF.

Regards,
Manju