Can I Voluntarily Cover a Director's Personal Staff Under ESI & PF? Seeking Advice!

I am a contractor in XYZ company registered with ESI & PF compliance. In that company, one director is asking me to provide coverage for his personal driver and peon under ESI & PF on a voluntary basis. Is it possible or not?

The director pays salaries directly to the driver and peon, and the ESI & PF amounts are paid to me. I have to deposit that amount in the ESI & PF account along with my employees.

You can pay the PF voluntarily, but in ESI, there won't be any voluntary option. PF voluntary means a person's contribution period towards the Pension Fund becomes nil, and his EPF will be paid. Say, for example, if Raj's basic pay is 6500, then his PF (Employee Contribution) = 780, EPF (Employer Contribution) = 780, and the Pension Fund becomes 0. Moreover, this voluntary contribution is applicable for a person who crosses the retirement age.

Regards,
Vinay Kumar

If the driver and peon are not your employees directly, how can you pay their employer contribution? If the director is giving both contributions from his pocket, how can you account for that in your books of accounts? If possible, bring them on the payroll and start deductions; otherwise, consider opting for some private pension schemes through a bank along with a medical policy.

Bringing outsiders under the purview of ESI and PF in this manner could create numerous problems during inspections when contributions are verified and compared with attendance registers, payroll, and balance sheets. Please explain this to your director.

All the best,

Regards,
S. Sethupathy
Excellent HR Services

Please advise your director that if his driver and peon have to be covered under the PF and ESI, they have to be brought onto the company's payroll. Then, you can cover them statutorily. However, the consequence is that they will be entitled to all the benefits like any other employee of the company. Once covered, you cannot remove them from the coverage unless one resigns or retires.

Regards,
Gem