Navigating PF Opt-Out: Can Companies Legally Enforce Their Own Policies?

Opting Out of PF: Employee Rights and Company Policies

I had a query regarding opting out of PF.

[I] As per the rules, a new employee joining a company can opt out of PF if:

- Their basic + DA exceeds ₹6500/-
- They submit Form 11, which is a declaration by the employee that they have not been a member of PF, have withdrawn their PF accumulations, or are a PF Pensioner.

In such a scenario, can an organization refuse the employee from opting out of PF, stating that regardless of their basic salary, all employees are compulsorily covered under PF? Can an organization state that as per company policy, all employees come under PF?

Second Scenario

[II] If an employee joins a new company and wants to continue with PF, and the organization refuses, stating that all their employees draw a basic salary beyond ₹6500/-, and the new employee is also given a salary breakup with basic exceeding ₹6500/-. As a policy, they do not provide PF to employees drawing more than ₹6500/- basic. Is this legal? Can an employer avoid the PF Act?

Basically, the question is whether in cases of opting for or out of PF, can the organization refuse as per their set policies and procedures. Kindly guide.

Can the seniors guide me on this one? I need to know whether an employee willing to opt out of PF by submitting Form 11 can be refused, stating that as per company policy, the option is not given to employees, and they have to continue with PF.

Scenario 1: If he was a member of PF before (organization), then he cannot be excluded from PF. If he was not a member of PF before, then he can exclude himself. The employer cannot insist on it.

Scenario 2: If he was a member of PF before, then the employer cannot exclude him. If he was not a member before, then only with the consent of the employer, he can contribute to PF.

Hope this is clarified.

Dear Members,

I have a query regarding opting out of PF.

Scenario I: Opting Out of PF

As per the rule, a new employee joining a company can opt out of PF if:
- Their basic + DA exceeds 6500/-
- They submit Form 11, which is a declaration by the employee stating that they have not been a member of PF, have withdrawn their PF accumulations, or are a PF Pensioner.

In such a scenario, can an organization refuse the employee from opting out of PF, stating that irrespective of their basic salary, all employees are compulsorily covered under PF? Can an organization state that as per company policy, all employees come under PF?

Scenario II: Continuing with PF

If an employee joins a new company and wants to continue with PF, but the organization refuses, stating that all their employees have a basic salary beyond 6500/- and the new employee's salary breakup shows basic exceeding 6500/-. As a policy, they do not provide PF to employees drawing more than 6500/-. Is this legal? Can an employer avoid the PF ACT?

The basic question is whether, in cases of opting for or out of PF, can the organization refuse as per their set policies and procedures. Kindly guide.

Scenario 1: Personal Experience

Honestly, I have not handled any such incident in my career and hence never bothered to study this aspect. The question is logical, and the choice of opting out must be exercised by the employee if their salary is above Rs 6500 pm. However, I will recheck and get back.

Scenario 2: Industry Practice

When a new employee joins and if their basic salary is above Rs 6500/- and if the organization has not been covering other employees drawing more than Rs 6500, then the new employee also will not be covered, irrespective of the fact that they were a member in the earlier organization. The act is clear about this, and this is being practiced in all companies where they cover employees with Rs 6500 basic or less.

Regards,