Is a New Employee Over 60 Eligible for PF Deduction? Seeking Guidance on Handling This Situation

Dear Seniors,

One employee who is above 60 years has recently joined our company. Is he eligible for PF deduction? We are saying we cannot deduct, but he is saying he wants his PF to be deducted. Please help.

Thanks & Regards,
Shilpi Kar

Hi Shilpi,

First of all, could you clarify what the retirement age is in your company? Once I have that information, I will be able to comment on this issue.

Amitava
9830990154

Hi Shilpi,
In that case, you have two options. One is to hire the person on a consultant basis, in which case there will be no PF deduction (he will not be on your company's payroll). If the employee wants to contribute towards PF, in that case, his full contribution will be towards PF (if he doesn’t withdraw his full amount from the PF Department), and there will be no deduction towards the Pension fund. If you have any other queries, let me know.

Thanks,
Mahendra
Sr. Executive HR
Dr. LalPathLabs
[Phone Number Removed For Privacy Reasons]
Regards

Dear Shilpi, It is not a question of the normal retirement age for that particular person, who has been appointed at the age of 60. Here, you will have to see the conditions prescribed in his appointment letter, whether he has been appointed as a consultant or on a regular basis to go beyond the 60th year of the normal retirement age with a special resolution of the company board. If he has been appointed as a regular employee, the terms of his retirement would also be outlined in the board resolution or the appointment letter beyond the age of 60 years. In that case, you will have to deduct PF subscription in fulfillment of the rule of the law.

Regards,
PS Dhingra
Vigilance & Transformation Management Consultant
Dhingra Group of Management & Educational Consultants
New Delhi

PF Deduction Eligibility

PF deduction has nothing to do with the status of the employee. Whether a person is casual, temporary, confirmed, or on a contractual basis, they need to be covered provided:

1. If their Basic plus DA is ₹6,500 or less.
2. If their age is less than 58 years.

Condition 1 can be diluted by companies to extend the benefit to all employees. Once it is diluted, companies cannot restrict this to select individuals.

Condition 2 can be diluted on a case-to-case basis. A person taken on a contract basis after 58 can be extended this benefit. However, the pension will not be applicable, and the entire deduction shall be credited to the PF account.

It is purely based on an individual contract. If an employee, whether appointed on a contract basis or on confirmed rolls, has an appointment letter stating that they would be covered for PF, then you need to extend the benefit. If there is no mention, the employee cannot seek any remedy as the PF Act does not cover them, and there is no violation by the company. They can raise this issue only under the Contract Act. If they can prove that there was some mention somewhere, then they are eligible. Otherwise, they will not be covered.

Regards,
T. Sivasankaran

Sorry to correct you, but the coverage of employees under PF, ESI, etc., employment laws does not depend on their individual contract. If an employee is appointed on a contract basis or permanently, then they shall be covered under all applicable employment laws. Even if an organization enters into a contract with only a two-line agreement stating "you are appointed as so on so," whether on contract or permanent, they will automatically be covered if fulfilling other conditions. It does not matter whether there is a specific clause regarding "PF or other Employment laws applicability." It becomes applicable as soon as someone joins the organization, and the company shall be responsible for all these.

As per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, an employee automatically ceases to be a member of EPS (Employees Pension Scheme) after turning 58 years old. However, you can still deposit the Provident Fund amount (excluding the Pension Fund amount).

An employee can continue to be a member of the PF but cannot be a member of the Pension Fund after turning 58 years old. Please review the Contract/Offer/Appointment Letter of the employee, and if there is no clause regarding PF, you should not enroll them in the PF. If you still wish to enroll them only under PF (excluding the Pension Fund), you may do so with a written request from the employee concerned and approval from the authorized reporting officer of your esteemed organization.

Thank you.

Regards,
Soumya

Eligibility for Provident Fund Deduction After 58 Years

As per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, an employee automatically ceases to be a member of EPS (Employees Pension Scheme) after 58 years. However, you can still deposit the Provident Fund amount (including the Pension Fund amount).

An employee can be a member of PF but cannot be a member of the Pension fund after 58 years.

Dear esskrr,

I have mentioned the same. Please read once again my reply. I never said the coverage can be based on status. There is no correction. In fact, you have also expressed the same viewpoint.

T. Sivasankaran

After reading the earlier communication, the following comments are noted:

Clarification on PF Act and Age Clause

In the PF Act, the clause regarding age is not mentioned. The age of 58 years is only applicable for the Employee Pension Fund (EPF). In this case, we need to refer to the terms of his appointment order. Furthermore, if he is appointed as a consultant but is working full-time with the organization, the PF Act is applicable as he is exclusively employed by your organization.

Regards,
Devang Shah
Personnel Officer
Gujarat State Electricity Corp. Ltd.
KLTPS, Panandhro
M- [Phone Number Removed For Privacy Reasons]

The retirement age is different, and the willingness to contribute towards the PF subscription is also different. We should not underestimate the survival age. In this regard, he has the full right to protect and secure the rest of his life. So there must be a provision and clause to contribute towards PF subscription, and he must be supported.

Thanks,

Ranjit Kumar
HR Officer

Hi,

Can anybody confirm whether a person working on a temporary basis will receive PF benefits? Is it compulsory to deduct PF from contract laborers?

Thank you.

You need to pay the complete 24% in one single account, i.e., PF. Hope you know that PF has two components: 1. PF 2. Pension. 12% of the employee's contribution goes to the PF account. The employer's 12% contribution is broken down into 3.67% for PF and 8.33% for Pension, making up the total 12% employer PF contribution.

If any employees are 58 years old or above, then the 12% employee contribution will remain the same. However, in the employer's contribution, the Pension account contribution will be diverted to the PF account. In the PF statement, the pension contribution for this employee should be marked as zero.

For any further clarification, please feel free to reach me at [Email Removed For Privacy Reasons].

Regards,
Gopal