Dear Ranjit,
If an establishment is covered by EPF and is not exempted otherwise on account of better facilities being provided to the employees in respect of retirement benefits than what has been provided under the Employees Provident Fund and Miscellaneous provisions Act and by the EPF organisation, it is mandatory that contributions at the prescribed rates should be paid by the employer in respect of those employees who are already members of EPF and those whose salary (basic + dearness allowance) does not exceed Rs 6500.
Certainly, an employee whose salary exceeds Rs 6500 right at the time of his joining the establishment shall be excluded from coverage. It is not mandatory that he should be excluded but if both of them agree to be covered, he can also be included as a member.
An existing member employee will continue to be covered by EPF even if his salary exceeds Rs 6500. Similarly, a new employee who was earlier a member of the EPF when he was with some other employment which he left but has not withdrawn his then PF accumulations should also be considered as an 'existing member' and he should be covered in the new establishment even if his salary exceeds Rs 6500.
In respect of those member employees who are drawing more than Rs 6500, the employer can restrict his share of contribution to the prescribed rate of 12% + admin etc on Rs 6500. Here also, it is not mandatory to restrict so but if the employer wishes to contribute on the whole of qualifying salary he can do so.
Regards,
Madhu.T.K