Is It Legal for Employers to Stop Contributing to PF After a Year? Seeking Clarity

Hello All!

It is optional for the employer to deposit the PF over Rs. 6500 basic salary, even if the employee is willing to continue with the PF deduction. I wanted to confirm, is it okay for the employer to stop contributing its share if he has been sharing for the last 1 year, and now he realizes that he doesn't want to continue with his share. Please let me know if this can be done, and if this is legal.

Thanks & Regards!

Dear Rupali,

As per the Employee Provident Scheme 1952, the basic contribution of PF is 12% on Basic salary. The contribution must be from Employee and employer.

The employer can't stop PF processing.

The usual practice in the industry is that PF contributions of the Employee and Employer will stack up in the CTC only.

It is optional for the employer to deposit the PF over Rs. 6500 basic salary, even if the employee is willing to continue with the PF deduction. I wanted to confirm, is it okay for the employer to stop contributing its share if he has been sharing since the last 1 year, and now he realizes that he doesn't want to continue with his share. Please let me know if this can be done, and if this is legal.

Thanks & Regards!

Dear Rupali,

EPF is not like ESI. If the person has been receiving EPF benefits since last year and their salary increases above the limit, the employer still cannot stop contributing to it. In the case of ESI, if the employee's salary exceeds the limit, the employer is not required to contribute after the contribution period.

However, with EPF, once the deduction begins, the employer must continue contributing until the employee resigns. The employer only needs to contribute up to the ceiling of Rs. 6500, even if the salary is higher. For example, if the employee's EPF salary is Rs. 7500, the employer only needs to contribute Rs. 780, which is 12% of Rs. 6500.

I hope this is clear to you now.