Navigating EPF Rules: Are Our Daily Rate Employees Really Exempt from PF?

Dear Seniors,

We are having the EPF hearing next week. I would like to know your opinion on the following circumstances.

EPF Exemption for Employees Earning Above 6500

As per the EPF Act, those who are drawing more than 6500 basic pay from the date of joining may be exempted from EPF with the discretion of both the employer and employee. We are interior decorators, and the basic pay of most of our contract employees has been above 6500/- from their date of joining. Therefore, we have not deducted PF for those individuals.

To comply with the labor inspector's view, we convert the monthly rate to a daily rate and display the daily rate in the prescribed column in the wages register as per the Contract Labor Act.

EPF Enforcement Officer's Comment

The EPF Enforcement Officer has commented that when the daily rate is shown, the employee is covered under PF, even if their monthly basic pay is more than 6500, upon multiplication by 26 or 30. In the appointment order, we have only shown monthly wages.

Hence, I request your valuable comments on this case. Your prompt reply in this regard will be highly appreciated.

Regards,
raaghav

Contract Labor's PF Liability and EPF Coverage

Firstly, your contract labor's PF liability shall be shifted to the contractor with whom only you have a legal relationship. Being a Principal employer, your responsibility is only to ensure that the employees engaged by the contractor have been covered by EPF and the contractor has remitted the contributions due in respect of them.

In your case, I understand that your contract is a sham and is just for namesake. If you have given them "appointment orders," that itself is proof to show that you have direct control over the employees.

Secondly, if the daily-rated employees are given a salary for the days off, then it should become 30 days, and perhaps their monthly salary may exceed Rs 6500. If so, you can exclude them from EPF. On the other hand, if it is strictly a daily rate and the sum of it comes to less than Rs 6500, there is no question of them being excluded from PF. In this circumstance, it would be safer for you to say that they are directly employed (as the appointment orders say so) and avoid showing the other record (I don't know what register it is) being maintained for the Labor Officer, the authority under the Contract Labor. Review the matter of the contract and get back.

Regards,
Madhu.T.K

What I understand is that those who are drawing more than Rs. 6500 per month are also eligible for EPF, but the ceiling is Rs. 6500 per month. Is the contractor's responsibility limited to that extent? Please clarify.

Samba

Issue with Daily Rate Workers and PF Compliance

As per our company report about these employees, the issue is that since they are daily rate workers, they do not work for all the days in a month. Their average number of working days is 17 days in a month. Therefore, in the wage register for all the months, their basic salary will be less than 6500. However, as per their appointment order, their basic salary is more than 6500.

In view of the above circumstances, the PF authority is making a comment stating, "you are liable to pay for these wages too."

Please comment on this.

Regards,
Raaghav

My petrol pump firm has a limit of 17 employees. The PF officer has provided me with a showcase for EPF coverage. What can I do?

Thank you.