Can My Company Force Me to Contribute to PF Even After Opting Out? Seeking Advice

Hi, I am working in Nagpur, Maharashtra, in a real estate company. I have been working here for the last 8 months, and I am a confirmed employee of the company as my probation period has ended.

Issue with PF Deduction

My problem is that 2 months ago, the company registered for a PF account and wanted everyone to deduct PF, but a few, including me, refused. Since my basic salary is above 6500 INR, I opted out by filling Form No. 11. Now, 2 months later, we have been informed that starting from the month of April, the salary will be deducted with the PF amount. Both contributions will be taken from the employee only, meaning the company will not bear any contribution, and it is compulsory for everyone to deduct it.

I want to know if a company can do this, and if yes, how can I deny the situation and prevent them from implementing it.

Employers can deduct only employees' contributions, i.e., 12% (Basic + D.A), if the PF Act is applicable to the organization. However, the contribution of the employer can't be deducted from the employees' salary. The maximum contribution that an employer is bound to make towards PF is Rs 780/- per mensem.

Understanding Form 11

Form 11 is a declaration made by an employee taking up employment in which the Employees' Provident Fund and Family Pension Fund Scheme are in force. It absolutely doesn't say that you can opt out of PF.

- It is a form mentioning a simple declaration stating whether he is a member of PF or not.
- If he has not withdrawn his PF from the previous employer and his salary is more than 6500/-, he would still remain a member of PF.
- In case the employee has withdrawn his PF from previous employment and still seeks, he is not entitled to PF Exemption.
- If an employee has joined services with a basic + DA of 6500/- or more, he still can be exempted by filling Form-11.

Employer and Employee Contributions

As I said earlier, the contribution should be equal:
- Employee – 12% (of Basic + DA & Food concession allowance & retaining allowance, if any)
- Employer – 13.61% (of Basic + DA & Food concession allowance & retaining allowance, if any)

Calculation:
{13.61% is 3.67% (PF) + 8.33% (Pension Scheme) + 1.10% (Admin. Charges of PF) + 0.5% EDLI + 0.01% (Admin Charges of EDLI)}

No, the company, in any case, cannot do this, and you may speak to the concerned HR regarding the same.

Regards

The details given by you are sketchy. A comprehensive advice cannot be given based on such sketchy info. However, assuming that you joined the company afresh (that is, you were not employed earlier and contributing to EPF and even if contributing has closed your EPF account before joining this employment) with a pay of more than Rs 6500, you fall under the category of exempted employees as defined in Para 2 (f) of the EPF Scheme, 1952.

In case you want to become a member of EPF even though you are an excluded employee, you have to give a joint declaration along with your employer. Once such a declaration is given, the employer has to contribute his share. He cannot make you contribute the employer's share also. This is against Para 31 of the Scheme. Para 31 reads thus:

"Notwithstanding any contract to the contrary the employer shall not be entitled to deduct the employer's contribution from the wage of a member or otherwise to recover it from him.".

Dear Azhar ji,
The response by Bpugazhendhi is very correct and appropriate one. It seems from this response Bpugazhendhi has Thorough knowledge of PF Law. I only add to his response that the title of Para 31 is very clear on your query. It says: Employer's share not to be deducted from the Members.