Is It Legal for an Employee to Refuse PF and ESI Contributions? Seeking Advice from Peers

An employee comes under PF and ESI limitations, but he is not willing to contribute to it. Is it legal? I hope my friends will help me find a solution.

Regards,
ANU

Please understand that it is a law and cannot be relaxed for anyone's willingness. If an employee is working and receiving a salary, even daily wages, they should be covered under PF & ESI as applicable to the Act. So, please do not entertain such employees.

Regards,
SIDMAN

The Employees' Provident Fund and Miscellaneous Act 1952 and Employees' State Insurance Act 1948 are Social Security Legislations. It is the obligation of the society/authorities to ensure that these legislations are being implemented. The willingness of an employee is immaterial in this regard.

Regards,
Abbas. P. S.

Please note that, as of now, if an employee's basic salary + DA is above Rs. 6500/-, then there is no need to enroll him as a member provided he is not an existing member. As far as ESI is concerned, if the total monthly salary is Rs. 15,000/- and below, then he has to be a member.

Trust you have understood. If you have any doubts, please post your comment to me.

Thanks & regards,
Gopalakrishnan
Head HR

Mr. Abbas and Mr. Gopalakrishnan have stated the facts relating to your query. To add one more point, even as an employer, you do not have the option to exclude members. If the scheme promoted by you is far superior to the Act, then you need to convince the authorities and seek exemption. However, this is far from reality because all the social legislations are formulated by the government considering the best benefits that can be provided to individuals. In short, you have to abide by the law, and neither the employer nor the employee has a choice if they are covered under the provisions of the respective acts.

Regards,
M.V. Kannan

My above posting is in response to the query regarding an unwilling individual to contribute to EPF & ESI. If employees are provided with better facilities than ESIC, at the request of both the employer and employees, such organizations may be granted exemption from the operation of the ESI Act.

For the existing exempted organizations, the time to apply for exemption was a minimum of one month before the expiry date. Now, after the 2010 amendment, this period has been extended to three months.

Key Notes from TAXGURU

I would like to quote from the Key Notes published by TAXGURU, the leading tax consultant website, on 3rd September 2010 regarding this matter:

"9. Exemption of a factory or establishment or class of factories or establishments from the operation of this Act will be granted only if the employees in such factories or establishments are otherwise in receipt of benefits substantially similar or superior to the benefits provided under this Act. It has also been provided that the application for renewal of exemption shall be made three months before the date of expiry of the exemption period, and a decision on the same will be taken by the appropriate Government within a period of two months of receipt of such application. (new proviso added to section 87 of the Act)

10. Exemption granted to a factory or establishment from the operation of this Act shall be prospective and not retrospective as per section 91 of the Act."

Regards,
Abbas.P.S

Mr. Abbas is right. As an employer, you cannot leave it to the discretion of an employee. If, as per the act, an employee should be covered under the provisions, he/she cannot deny the same.

Regards,
Shivendra

Please provide the process/procedure to get an exemption from ESIC: "With the request of the employer and employees, such organizations may be granted exemption from the operation of the ESI Act."

Regarding PF Enrollment

We can enroll employees whose basic salary + DA is more than Rs. 6,500 under the condition that the employer is willing to pay an administration charge for the same. For this, a voluntary undertaking needs to be submitted to the PF office with the attestation of the employer.

Thanks
Regards

What is the procedure to get an exemption from the ESIC Act? Please explain in detail.

Regards,
Radha

Statutory Obligations for Employers and Employees

It is a statutory obligation on the part of both the employer and the employee. One cannot avoid it if the employee desires to be a permanent employee to avail benefits like Bonus, Gratuity, encashment of earned leave, etc., including PF and ESI.

On the other hand, the employer is liable for prosecution for not extending the benefits to this individual. Please note and advise accordingly.

Regards

Hi All, I have one question for all of you. I'm working in a company that is into RPO operating in Hyderabad. Here, management has stopped providing PF and ESI to the employees and is not even following the statutory rules of Indian legislation acts (Factories Act). Is there anything I can do to protect our interests in the company? Please suggest to me on this issue.

Thank you,
Arun

An employee comes under PF and ESI limitations but is not willing to contribute to it. Is it legal? I hope my friends will help me find a solution.

Statutory Requirement Under EPF & ESI Act

It is a statutory requirement under the EPF & ESI Act that if the company is covered under EPF or ESI or both by exceeding the quantity of total employees mentioned in the respective Act, it is necessary that the employee should be covered under EPF & ESI.

Thanks & Regards,
N. RANGARAJAN

As per the law, it is compulsory, and my suggestion is to call him personally to your chamber to explain the advantages of contributing to PF and ESIC. Make him understand that it will be very useful in the future; for example, he can get a loan in the future from PF when needed, and the medical and other benefits of ESIC for him as well as his family. I hope that if you go ahead with this suggestion, you will be successful.

Clearing the doubt and helping to get rid of the obstacles in mind will enable everyone to cope with the situation and understand undisturbed.

With regards,

Dharaneesh Kumar.V HR/Admin Executive

Mr. Gopalakrishnan is correct, i.e., ESI is mandatory if he or she is receiving Rs. 15,000 or less as gross salary, and PF is optional if the salary is greater than Rs. 6,500 (Basic + D.A).

Regards,
Lalit Papnoi

Manager HR

Here, the matter of an individual within the wage limits for coverage is being discussed. Whether an individual can refuse to subscribe to the EPS/ESI.

The answer is a BIG NO. If an organization is covered under EPF/ESI, there is no escape route. The onus is on the employer. The employer will face consequences in case of any violation of the law.

Dear All,

Congratulations to all of you for sharing the best information on the captioned subject. Rules are made for the betterment of society. It is in the interest of all to abide by its guidelines. People often think of short-term gains by avoiding contributions to EPF/ESI. We should make them aware of the benefits and social security it provides.

Thank you,
Harmit Singh Arora