Expanding PF Contributions: How Should We Handle the Inclusion of All Employees?

Our company is paying PF contributions to those whose basic salary is less than or equal to Rs 6500. From next month onwards, we will be including all previously excluded employees.

Proceeding with the Change

How should we proceed with this change? If we do not make these payments, they might assume we are defaulting on the payment. Please advise.

Thanks,
Rao

Merely because their wages go beyond Rs. 6,500 from next month onwards, they will not become excluded employees. They will continue to be members of the P.F., and the employer and employee contributions will, however, be restricted to Rs. 6,500. So you will have no respite from filing P.F. challans/returns.

Regards,
B. Saikumar
Mumbai

Thank you for your reply. I want to provide some more information. Currently, we are paying PF to two employees whose basic salary is less than Rs. 6,500. They are on their notice period. Once they leave, we won't have anyone whose basic salary is less than or equal to Rs. 6,500. Please guide us on how to proceed.

Thanks,
Rao

If all employees now covered under PF leave the company, and the remaining employees are excluded employees, you need not deduct or pay contributions in respect of them.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Once the two employees who are members of the P.F. Scheme leave and the remaining are excluded employees from the date of their joining your company, you need not pay any P.F. contribution in respect of those employees. However, the company shall take the following steps:

1. It shall collect their declaration forms in Form 11 and keep it on record.
2. It shall send a NIL statement in Form-5, which is a monthly return since there is no employee qualifying for the P.F. scheme.
3. It shall file a return in Form 10 every month denoting the details of employees who are leaving service.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

There is no mandatory requirement to deduct the PF, but if you wish, you can contribute by deducting the same as per the norms of PF. The amount of PF will be distributed to EPF on Rs 6500/-; the difference amount will be transferred to FPF.