Is It Necessary to Enroll Employees in Both PF and ESI Based on Their Salary? Seeking Your Views

Dear All,
PF
1) an employee has to be enrolled to the PF account if his salary is 10,001 & above
2) If the employee's emoluments exceed Rs. 6,500/- per month, he has the option to join the Scheme
3) Rate of contribution 12% of employers share & 12% of employees share.
4) out of employer's share of Provident Fund contributions 8.33% of the total wages limited to Rs. 6500/- per month is credited to the Pension Fund
ESI
1) For employees with 10,000 and less than 10,000 salary
2) 4.75% of employers contribution and 1.75% of employees contribution from the salary
3) if the employees daily wage is less than Rs 70 then he is exempted from his share of contribution but the employer has to contribute his share.
Now my doubt here is that is it necessary to enroll an employee for both PF & ESI or it is enough if he is enrolled to either of the two as per his salary.
Please send in your views.
Regards
Umama

Hi,

PF and ESI are two different statutory compliances. If an employee falls under both categories, i.e., basic is less than 6500 and gross is less than 10,000, then he needs to be covered under both PF as well as ESI.

Hope this clears your doubts.

Thanks & Regards,
Parikshit

Hi Citehr Gurus,

Please clarify my doubts...

And one more thing I want to ask is, can the decision be left to the employee whether to get enrolled in the ESI scheme? Or is it mandatory for the employer to include the employee, whether he is interested or not?

Please send in your valuable comments.

Regards,
Umama

PF
1) an employee has to be enrolled to the PF account if his salary is 10,001 & above
2) If the employee's emoluments exceed Rs. 6,500/- per month, he has the option to join the Scheme
3) Rate of contribution 12% of employers share & 12% of employees share.
4) out of employer's share of Provident Fund contributions 8.33% of the total wages limited to Rs. 6500/- per month is credited to the Pension Fund
I had PF applicable to me even when my gross salary used to be Rs.1500, Rs.5500 ...
So please clear the PF concept from someone in legal....

Hello,

As per Indian law, PF and ESIC are mandatory for an employee. They are two different laws, and both must be followed.

In one of your queries, you asked whether it can be left to the employee. The answer to the above is "NO." Regardless of the employee's choice, it is the employer's prerogative to deduct the PF and ESIC. The law holds the employer at fault if employees are not covered under PF and ESIC.

Additionally, do not forget about other statutory requirements, including:
1. Minimum Wages
2. MLWF (Maharashtra Labour Welfare Fund)
3. Gratuity - though not mandatory to be deducted, it is mandatory to be paid.

If you need further clarification on this matter, feel free to ask.

Thanks and warm regards,
Vikas

Hi,

I am not clear on the PF deduction from the employee's salary of Rs 6500/-; if he is not interested, can we remove it or not? Could you please give me clarification?

Regards,
Prami

Dear Ravishankar,

As Parikshit has said, if the basic salary is less than Rs 6500 and the gross salary is less than Rs 10,000, then it is necessary for the employee to be enrolled in both PF and ESI.

For example:
Gross - Rs 5000
Basic (35%) - Rs 1750

I hope this clarifies your doubt. :)

Regards,
Umama