How Can We Convince Employees to Embrace PF Contributions for Long-Term Benefits?

Hi Seniors, Happy Navratri! I have a small query related to my friend. My friend has just joined the banking sector. Her company is a decade-old organization. They are not deducting PF as the employees were not willing to contribute to PF. Now, as the organization is growing in size, the management wants to start contributing towards PF. She wants to know the best way of convincing employees to contribute towards PF as everyone wants a higher take-home compared to PF accumulation in their account. It seems like a strange concern. I suggested discussing the long-term benefits of PF, but it's not working out. I would like to request your valuable advice on this matter.

Best regards, Kriti

If the number of employees is more than 20, they have to deduct PF and can always convince the employees by stating that it's also part of their salary going towards the PF fund. Employees can get it back, and it is also mandatory as per the Government rules. Another way would be to reduce the Basic component a little so that the PF contribution is less.

Regards,
Kannan R

If the number of employees is more than 20, then it is mandatory to cover the organization under PF and to deduct the contribution of employees. To reduce the burden of the contribution, you can split up the salary structure for Basic Wages. You can convince employees as they are receiving the same contribution from the company in their PF fund.

Regards,
Sanjay Mulay

Thanks a ton for the quick response. I did tell her the same thing - how can you not have a PF account? But it seems that there is a provision in the PF Act. If all the employees of the organization give this in writing 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 raise their voice against this; else the organization will be bound to contribute to PF.

Also, employees say that they want to invest on their own. But I was just thinking of suggesting that employees can use the PF balance for taking a loan. In case of death or disability, there are some benefits for employees' family members (but I am not too sure about these details). I would be glad if you could help me with this.

Thanks in anticipation.

Regards,
Kriti

If the Basic + DA for all these employees is more than Rs. 6500 and they have never made PF contributions 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 not prevail, it is mandatory for the employees to make PF contributions.

The loans availed on PF come at a later stage after they have made PF contributions over a period of time. You can check those details on epfindia.com.

Hope this information meets your needs.

Regards,
Kannan

Thank you for the post. It makes a lot of sense. Yes, most of them joined this organization as freshers, so there was no point in having a previous PF account. There seem 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, I will try to look on the PF website. Thanks again.

Best regards,
Kriti

If they are freshers, I am sure their Basic + DA would be less than 6500 for most of them, and they can be included in PF as a mandate. Do they have any consultant who deals with statutory matters in the company? If so, they can ask for his advice as well.

Regards,
Kannan R
[Email Removed For Privacy Reasons]

There is no need to ask any employee in this regard because it is a legal and compliance requirement. You can start by simply informing all employees through a circular or proclamation about the implementation of this rule.

Regarding benefits, you just need to visit the EPF official website and study carefully. There, you will find all the information about employee benefits. If your management is prepared and understands the legal and necessary requirement to implement this in your bank, then I would say there is no need to ask employees about it.

Benefits of Provident Fund (PF)

PF is one of the best tax-saving instruments, and it carries a good percentage of interest. Explain to the employees about its merits.

Regards,
Pon

Sure, thanks. It's just that the organization is too employee-friendly, so they do not want to put it forward as an "obligation" but as a joint decision. Since the company is set up by freshers, the employees have also graduated along with the organization. That's where the problem seems to be. But in any case, your point has value. I will tell my friend accordingly.

Best regards,
Kriti

Hi Pon, I did tell her the same thing  that the employees can save taxes on the PF contribution without declaration as it is generally declared at the organization's end 

Thanks again.

Regards, Kriti

Addressing Employee Concerns About EPF Contributions

See Kirti, what if an employee refuses this change? Everyone wants to get their complete salary in hand, although we all know that EPF is similar to a savings and secure account. Additionally, the pension scheme comes under this, which is certainly a benefit for all employees. I have never said that you need to present this as an obligation; it is not an obligation but a necessary action according to the act, which is a legal requirement too. I don't think your employees are unaware of the EPF benefits, legal compliance, audits, or policies, as these fall under HR Audit, which is also crucial for your organization or bank.

You need to communicate and write to them wisely. Do mention that it is a compulsory requirement. You can also refer to the EPF rules (Compensation Act).

Secondly, I would suggest not only implementing EPF but also ESIC and discussing this with your Bank Management.

Have you recently tried speaking to your employees about this? If not, then you must do so, but in a friendly manner. However, you and your organization must consider this seriously.

Regards

Sure, Anil. I will recommend your point to my friend. Now it's her call how she wants to take it forward.

Regards,
Kriti