Is It Fair for Companies to Deduct Provident Fund Contributions During Probation?

Is it right if a company deducts the employee and employer contribution of Provident Fund from the employee's salary during the probation period? Is there any law that disputes this?

Hi Nina,

As per law, both the employer and employees have to contribute the same 12% to the provident fund. If an employer is deducting the entire PF contribution from an employee's salary, it is against the Act, and the employee can file a complaint with the PF Appellate Tribunal.

Regards,
Amit Seth.

Hi Amit,

Here, the question put by Nina is if the company deducts PF of the employee during his/her probation period, then is it right?

Nina, as per my knowledge, PF deduction starts with PF registration provided all conditions are fulfilled. It has nothing to do with the probation period.

Correct me if I am wrong.

Regards,
Chaitali

Hi Nina,

EPF is a social security measure that helps employees for their future. However, there is no provision regarding the contributions to EPF during the probation period. In my opinion, contributions during the probation period are necessary.

Regards,
Mohan

Hi Chaitali,

Actually, you have taken it in the wrong way. Nina is asking if the employer is deducting the whole 24% PF contribution from the employee's side, which is illegal and against the Act. Yes, you are very correct that the contribution starts from the probation period too, and that is legal. There is no issue in that.

Regards,

Amit Seth

Hi,

I want to confirm whether it's specifically stated in the act that Provident Fund deduction and contribution are applicable to probationers/trainees. What is the general industrial policy regarding PF for probationers/trainees? Can someone please help me out with this?

Thank you.

Hi,

Yes, it's applicable to probationers/trainees only if they are salary-based. If they are on a stipend, then it's not applicable.

Regards,
Amit Seth.

Hi,

PF is deducted from the first day an employee joins the organization except for the Apprentice. Many organizations negotiate salaries based on CTC (Cost to the Company), in which case the intention is to inflate the figures, and both contributions are reflected. Therefore, if this has been done, there is nothing wrong. If not, it must be brought to the management's notice.

Regards,
Subrato

Hi Nina,

I'll divide your query into two parts:

One - Is deduction of the employee's share legal?
Yes, according to the EPF Act, the employer has to deduct the employee's share from the pay.

Second - Can the employer deduct the employer's contribution from the pay?
No, the employer cannot deduct the employer's contribution from the pay, whether the employee is on probation, temporary, or permanent basis. It is a violation of the Act. Please refer to Section 31 of the EPF Scheme 1952.

Hope this clears your confusion.

Regards,
H. R. Shah

One person here has stated that if your employment letter shows a certain salary amount as CTC (cost to company), in that case, an employer can deduct his share of PF from the CTC. Is that true?

Mr. Subrato has raised an interesting point. I would like to get clarifications on it. If the salary is given as CTC, then is the employer eligible to deduct the PF share of his contribution from the employee's CTC?