Struggling with PF for Data Entry Operators? Seeking Alternatives and Advice from Seniors

Seniors, please advise. There is a firm with 200 data entry operators. On average, every month 10 people join and 10 people leave. Applying for PF is a challenge for all these employees. Is there any alternative? Appreciate your quick response.

Please elaborate on your question. Applying for PF pertains to becoming a member or submitting claims. What challenges are you facing?

Challenge of Opening PF Accounts for Short-Term Employees

The challenge is the opening of PF accounts for people joining the firm and leaving within a month or within a few weeks.

Thank you.

Every company faces this problem. We are in retail, and I encounter this issue often. You will be generating PF numbers at the end of the month. Therefore, if somebody leaves before that time, do not include them in your payroll. Instead, pay them in cash like you do for occasional workers.

However, if they leave after the payroll is processed, then you have no choice but to generate the PF. This responsibility falls on you.

Thank you.

If the gross salary is more than ₹6500 per month, employees have the option to opt out of the Provident Fund. Please collect a declaration from the employees at the time of appointment. If they are interested, collect FORM-2; otherwise, a declaration letter stating that they opt out of PF. Either way, it should be helpful to you.

Thanks

There is no alternative available to you except to comply with the Act. The Act clearly envisages that even if the employee works for a day, you have to cover them under the said Act. Further, if you are not covering employees under the Act, even though your establishment comes under the purview of this Act, when an inspection happens after 5 years, the Inspection Authority will ask for all documents. If they find that you have not been paying the employees' contributions, they will not only ask you to pay the same but also impose interest and damages after giving a 7A notice.

The problem you are facing is administrative in nature, but there is no other option to cover the employees who are working for even half a day.

Regards,
BV Sudhakar

Friends,

Yes, legally there is no solution. Even if an employee works for just one day, PF contributions must be made. However, there are practical difficulties. Some firms try to initially treat them as Probationers or Trainees, which are also subject to PF. Treating them as Apprentices also has its own problems. Due to this, a few firms, after discussions with PF Inspectors, try to manipulate their records by not showing them in the regular payroll, which is also not a legal process. Since they are not able to claim such contributions as part of the F & F settlement, employees are also at a loss. Ethically, recovering employees' subscriptions and not remitting or settling them is also incorrect, and it's a crime. No other option.

Regards,
Kumar.s.

Most payroll software includes a system for managing PF. There are standard forms that employees need to fill out on their first day, and a PF number is issued based on that information. If employees leave, you must file the relevant form to close the account. With the process now online, it will be easier. If needed, consider taking the help of a payroll processing firm to ensure the work is done properly.

Dear Bsbraghav,

You have 200 plus employees with you. The provisions of the EPF & MP Act are applicable to you. Even if any employee works for a single day, you need to cover him under PF, except if he is an excluded employee within the meaning under the Act. I will not advise you to not show any employee out of the payroll and pay him cash. Even if you pay cash and this cash is shown as salary/wages in your books of accounts, PF applies to it. If you outsource, you will not be exempted from the liability of PF. Even the provisions of the ESI Act are applicable to you. You need to pay as per Minimum Wage Rates and comply with all the labor laws applicable to you.

Mind well, you cannot escape from the liability of PF & ESI. This liability is from the beginning itself.

I agree with the views of Mr. Saswata Banerjee and Mr. Keshav. I would like to add that this is one of the main functions of the HR Department. The outgoing members can be advised to have the amount transferred upon joining a new establishment, instead of filling out a form for withdrawal and getting it attested by the previous employer.

Regards,
Chandok A.K.
RPFC (Retd.)
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