Initiate PF For Employees

Hi Seniors,
Happy Navratri !!!
I have a small query related to my frined. My friend has just joined in a Banking sector. Her company is a decade old organization. They are not deducting PF as the employees were not willing to contribute in PF. Now as the organization is growing in size, the Management wants to start contributing towards PF.
She wants to know, what is the BEST way of convincing employees to contribute towards PF as everyone wants higher take-home compared to PF accumulation in their account.
Strange but it is a concern. I suggested to talk about the long term benefits of PF but its not working out.
Would request you to please provide your valuable advice.
Best regards
Kriti

Hi Kriti,
if the number of employees is more than 20, they have to deduct PF and can always convince the employees stating that its also part of their salary going towards PF fund and they can get it back and also mandatory as per the Govt rules.
The another way would be to reduce the Basic component a little so that the PF contribution is less.
Regards
Kannan R

Hi Kirti,
if number of employees are more than 20 then it is mandatory to cover the organisation under PF and to deduct the contribution of employees. to reduce burden of the contribution you can split up the salary structure for Basic Wages,
you can convince employee as they are getting same contribution from company in their pf fund.
Regards,
Sanjay Mulay

Hi Mr. Kannan & Sanjay,
Thanks a ton for the quick response.
I did told her the same thing that how can you not have a PF account but it seems that there is a provision in the PF act that if all the employees of the organization give this in writting that they do not want to contribute towards Pf then it is accepted by the PF authorities. The only catch is that not even a single employee should not raise his voice against this, else the organization will be bound to contribute in PF.
Also, employees says that they want to invest on their own. But I was just thinking of suggesting on the ground that employees can use PF balance for taking loan or in case of death or disability there is some benefit to employees' family members (but I am not too sure in these lines). Would be glad if you can help me with this.
Thanks in anticipation
Regards
Kriti

Hi Kriti,
If the Basic + DA for all these employees is more than Rs. 6500 and they have never made PF contribution in their previous companies, then it is possible for them to avoid PF payment provided they give a Form-11 filled in to the employer. If the above condition does nt prevail, it is mandatory for the employees for the PF contribution.
The loans availed on PF comes in a later stage after they make PF contribution over a period of time. You can check those details on epfindia.com
Hope this would suffice your needs.
Regards
Kannan

Hi Kannan,
Thank you for the post.
It is making a lot of sense. Yes most of them joined this organization as fresher so was no point in having previous PF account.
There seems to be so many twists and turns here.
This was the reason I was checking on telling her to focus on the benefits of having a PF account.
Sure, will try to look in PF website.
Thanks again
Best regards
Kriti

Hi Kriti,
If they are freshers, then am sure their Basic + DA would be less than 6500 for most of them and can have them included in PF as a mandate.
Do they have any consultant who deals with statutory in the company. if so, they can ask his advice as well.
Regards
Kannan R
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Hi Kriti, There is no need to ask any employee in this regard bcz it is a legal and compliance requirement and you can start with just informing to all employees by a circular/Proclamation of implementation of this rule.
About benefits you just need to go to EPF official website and study carefully. There you will get all the information and employee benefits but if your management is ready and have realize this legal and necessary requirement to implement in your bank, again i wud say there is no need to ask employees about it.

PF is one of the best tax saving instrument and it carry a good % of interest. Explain to the employees about its merits.
Pon

Hi Anil,
Sure, thanks. Its just that the organization is too employee friedly so they do not want to put it forward as a "OBLIGATION" but as a joint decision. Since the company is set up by freshers so they employees have also graduated along with the organization.
Thats where the problem seems to be. But in any case, your point is having value. I will tell my friend accordingly.
Best regards
Kriti