Contract Labor and PF Deductions: How Should Employers Handle Workers' Concerns?

What should be the employer's legal position if the contract labor do not want deduction of PF from their salary? The point of view of labor is that they do not want to go through the painful process of collecting the PF and would rather get their full wages now.

Principal Employer and Contractor Responsibilities for PF Contributions

It is the duty of the Principal Employer (PE) as well as the contractor to deduct contributions and deposit the same with the Regional Provident Fund Commissioner (RPFC). If the contractor has a Provident Fund (PF) code, it should be used; if not, the PE code should be utilized.

However, if the employees are new joiners, freshers, and are receiving more than the salary coverage provided in the Act (Rs 6,500/-), they may be excluded and fall into the category of excluded employees. In this case, the contractor or PE needs to request Form 11 from them with a tick mark indicating that they have never been a member of the PF fund and do not wish to be.

Thanks. But what happens if a laborer with a salary of less than 6500/- does not want PF to be deducted from their wages, and as a result, the employer ends up paying a 24% contribution just to meet the requirements of PF rules? Under what rule or by what method do we officially convince the PF department that the laborer does not want PF deduction?

There is no other way but to cover such employees. To be on the safer side, do not engage such kinds of employees. You may instruct your contractor not to engage him in your establishment. As far as possible, give contracts only to contractors who possess PF and ESI registration.

Regards,
Madhu.T.K