Is a New Employer Required to Provide EPF Benefits if Salary Exceeds 6500?

EPF Scheme and Salary Change Query

If an employee was a member of the EPF Scheme with their previous employer and their salary was under ₹6,500, but upon changing employers, their salary exceeds ₹7,000, is the new employer obligated by the act to provide EPF benefits? This is in the context of an employee who has withdrawn their PF.

Regards,
Vinay Kumar
Officer - HR
DSC Ltd.

There is no claim for the employee to enroll in PF in the present job. At the same time, if the employer and employee wish, contributions to PF may be paid either on a salary of Rs. 6500 or on the actual salary.

Regards,
Abbas.P.S

Although this is the rule that once a member will always be a member of the PF scheme, as in your example, you stated he changed the organization and his salary is more than ₹7000/-. If he has settled his account with the PF department and withdrawn his PF amount, then you can put him in the category of exempted employees. In that case, you need to get a signed Form 11 from him.

This is the correct answer to the request and doubt you had. I hope it clears all your doubts.

Employer's Obligation for PF Enrollment

Whether the employee has settled or withdrawn the previous PF or not, the new employer has no obligation to enroll him in PF in the next service since his salary is above Rs. 6500.

Regards,
Abbas.P.S

Dear Sir, Could you please let me know the section, subsection, and clause specifying such rules in the EPF & Misc. Provisions Act 1952, so that I can present it before the management.

With regards,
Vinay Kumar

Whether the employee has settled/withdrawn previous PF or not, the new employer has no obligation to enroll him in PF in the next service as his salary is above Rs. 6500. Abbas.P.S

Employer's Obligation for PF Enrollment

Dear, this is the obligation of the employer to enroll a new employee even if he is earning more than Rs. 6500/- if he is already a member of the fund. Please refer to paragraphs 26 to 28 of the PF scheme.

Ceiling Limit for Salary Deduction of P.F.

The ceiling limit for salary to deduct the P.F. is Rs. 6,500 (based on basic salary only). If anyone earns more than the above limit, P.F. will be deducted at Rs. 6,500.

Provident Fund Contribution Guidelines

As stated, the wage/salary ceiling limit for PF is Rs. 6500/-, and it is a statutory compliance to deduct 12% on Basic + DA + retaining allowance, if any, from the employee's pay. An equal share of the amount has to be added to the total contribution (24%) in the initial service of the employee. The following points are answers to your arising questions:

1) It is not obligatory on the part of the employer to cover employees whose wages/salary is above the ceiling limit of Rs. 6500/-.

2) Management's Contribution Options
a) Management may restrict to a 12% contribution on Rs. 6500/-.
b) Management may contribute over and above Rs. 6500/- also.

3) If an employee's salary exceeds the ceiling limit for covered employees, he/she will enjoy the benefit till retirement/date of leaving, subject to point no. 2.

4) If the employer does not want to contribute over and above the ceiling limit for covered employees, the employee may contribute more towards his contribution as a voluntary provident fund.

Regards,
Chandru

Dear essykkr,

I agree with Abbas P.S. that by virtue of sub-para (ii) (f) of para 2 of the scheme, the new employer of such an employee would enjoy the provision and keep him away from the membership as an excluded employee when his basic salary exceeds Rs. 6500/-. What you are stating is in sub-para (i) (f) of para 2 of the scheme. When an employee is a member of EPF and by enhancement exceeds the limit of 6500/-, he should not be excluded from the ambit of the act, and the employer could enjoy the provision of the ceiling of Rs. 6500/-.

However, the member of the EPF would be excluded from the ambit of the act on receiving a basic salary more than 6500/- in a new organization.

Regards,
KIRAN KALE

Mr. Vinay Kumar,

With reference to your above note,

Point 1: If an employee joins a new organization, generally, they take the willingness of contribution of PF Remittance when the salary/Basic+DA is more than Rs 6500/-. Generally, if any employee is willing to have PF deducted, they may not require a willingness form. If he is not interested in having PF deducted, at this time, a willingness form is required for not being interested in PF contribution. This form is helpful when PF authorities ask related queries. If there are any grammar mistakes or communication problems, please ignore.

Regards,
Sarma
[Phone Number Removed For Privacy Reasons]

It is not mandatory for the present employer to provide you with PF benefits if your current salary exceeds Rs. 6500 per month.

Regards,
S. Rangaprasad

Dear, this is the obligation of the employer to enroll a new employee even if he is earning more than Rs 6500/- if he is already a member of the fund. Please go through paragraphs 26 to 28 of the PF scheme.

Section 26: Retention of Membership

Section 26 deals with the retention of membership, and Section 28 deals with the transfer. Accordingly, membership will be retained until the payment of deposit/withdrawal of PF. Also, it can be transferred to be clubbed with a new account. These are all related to an existing account. However, our discussion is about opening a new account. For the new employer, those who earn more than a monthly salary of Rs. 6500 are excluded employees, and there is no obligation to enroll an excluded employee in PF.

Section 26A: Clearing Doubts

Section 26A stipulates that any doubts in this have to be cleared by the Regional Commissioner. If you still have doubts, kindly contact the RPFC.

Regards,
Abbas.P.S

You all mean to say that if the basic salary is less than or equal to 6,500 Rs. per month, then PF will be deducted, i.e., compulsory. When the basic salary is more than 6,500 Rs. per month, then it's the employee's choice to deduct PF. Comments, please...