Navigating PF Act Exemptions for Migratory Labor in Construction: Can It Be Done?

Exemption from PF Act for Migratory Labor

We are associated with the construction industry and deal with migratory labor. Can we exempt the worker from the PF Act if we show his PF-able salary as more than ₹6,500? Please advise on filling out FORM-11 and taking voluntary exemption from contributions, as the company would not have to contribute.

Regards,
Ashish
Sr. HRD

It is not possible to get an exemption under EPF as it is a statute. It is better to consult a good labor lawyer on this.

Exemption from EPF Deduction and Contribution

If an employee is receiving a basic salary of more than ₹6,500 right from the time of employment and was also not covered under PF in their previous employment, such employees can be exempted from EPF deduction and contribution.

Regards,
Kamal

For Employees

For New Entrants:
Enrolment: An employee is eligible for membership from the day they join the covered establishment. If the employee's emoluments exceed Rs. 6,500/- per month, they have the option to join the Scheme(s) with the consent of the employer. Declare previous employment details, if any, in Form No. 11 to the employer.

For Employees

For New Entrants:

- **Enrolment:** An employee is eligible for membership from the day they join the covered establishment. If the employee's emoluments exceed Rs. 6,500/- per month, they have the option to join the Scheme(s) with the consent of the employer.

- **Declaration of Previous Employment:** Declare previous employment details, if any, in Form No. 11 to the employer. In Form 11, include the details of the employee's previous employment. It should be filled out and signed by the employees and filed as an office copy. Form-11 is provided free of cost at the EPFO office. Fill out the form when the employee joins your organization.

This is for your information.

I would like to illustrate the definition of Sec 2(ff) and 2(fff) of EPF & MP Act, 1952.

"Exempted employee means an employee to whom a scheme or the insurance scheme, as the case may be, would, but for the exemption granted under sec 17, have applied."

"Exempted establishment means an establishment in respect of which an exemption has been granted under sec.17 from the operation of all or any of the provisions of any scheme or the insurance scheme, as the case may be, whether such exemption has been granted to the establishment as such or to any person or class of persons employed therein."

While deciding about exemption under Sec.17 of EPF Act, PF authorities definitely test the application to determine whether the proposal offered is better than the Scheme.

The Supreme Court in Cemindia Co. Ltd Vs Bachubhai N. Raval (1998 (1) LLJ Page No.138) held: Any establishment that carries on an activity which is part of the building and construction industry should naturally be exempted from the operation of the act because the expression "building and construction industry" collectively refers to all activities connected with the industry.

In your case, in my opinion:

• If your company is already covered under the EPF Act, you cannot escape from the legal obligations (EPF Act). Migratory labor will also be covered under the EPF Act.

• If you seek exemption for a specific class of employees by demonstrating wages above the prescribed limit (>6500), it will be permissible under the law, provided they were not covered by PF in their previous employment.

• Under the protection of the "Building and Construction Industry," you can apply for exemption.

Contrary to the above, please let me know.

Regards,
D. Pannerselvam

If he is already a member of P.F. and contributing to PF, you have to continue his PF membership by restricting his contribution to ₹6,500/-. If he is a new person drawing above ₹6,500/-, you can exempt him from membership. It is valid in law.

Regards,
D. Gurumurthy
LL, HR & IR Consultant

Understanding Form 11 and Excluded Employee Status

Form 11 is used to declare that the employee is an "Excluded Employee" if they withdraw more than Rs. 6500/- and meet any of the following criteria:

- Have withdrawn the amount of their Provident Fund/Pension Fund.
- Have never drawn any superannuation benefits in respect of past service from any employer.
- Have never been a member of any Provident Fund and/or Pension Fund.
- Are not drawing a pension under EPS 95.
- Are not a holder of a scheme certificate.

If an employee's basic wages are more than Rs. 6500 and they fall under any of the above categories, with mutual agreement between the employer and employee, they may avail the benefit of non-coverage under PF as an Excluded Employee. Please do not confuse this with Exemption; it is different from exclusion.

Regards,
Sridharan J

With a contractor having 150 workers employed, when submitting the RA Bill, he includes the PF Challan for 40 employees only. The remaining employees are exempted from PF contributions according to his statement. What documentation is needed to clarify the exemption of the remaining employees from the PF Act, as per the statute?