Is It Legal for Employers to Exclude Corporate Staff from EPF Enrollment? Seeking Advice!

I work for a manufacturing company with a 6000+ employee base. More than 5000 employees fall under the worker category at the factory, earning salaries ranging from Rs. 6500 to Rs. 10000. The remaining approximate 500 employees, including myself, are at the Corporate Office level. The EPF is provided for factory workers but not for corporate staff. Employees joining the organization at the corporate level are asked by the employer/HR team to sign a pre-formatted document specifying not to enroll in PF.

Legal Inquiry Regarding EPF Enrollment

Is it legal or illegal for the employer to do this? Employees at the corporate level have been working in this situation for a long time. I am looking forward to advice on this matter and would highly appreciate a prompt response.

Thank you.

It is illegal if they are asking you to sign the pre-formatted form. As per the EPF Act, you need to submit your declaration in Form 11 prescribed under the EPF Act.

Declaration Requirements Under Form 11

In this form, you have to declare the following:

- (a) I was last employed in M/s……………………………… (Name & full address of the establishment) and left service on……………….. [Prior to that, I was employed in] ……………… from ……………… to ………………

- (b) I was a member of ……………… Provident Fund and also of the Family Pension Fund from ……………… to ……………… but not ……………… My account numbers were ………………

- (c) I have/have not drawn any superannuation benefits in respect of my past service from any employer.

- (d) I have/have not drawn the amount of my Provident Fund/Family Pension Scheme.

- (e) I have/never been a member of any Provident Fund and/or Family Pension Scheme.

If your declaration is that you were not covered under the PF with your earlier employer or you were covered and withdrew your PF and EPS before joining this establishment, and now you are getting a salary of more than Rs. 6500 as basic, then PF is not mandatory. Otherwise, they will have to enroll you as a member of EPF.

Regards,
Sanjeev Kwatra

Mr. Sanjeev has rightly pointed out the provision vis-a-vis the membership requirement of the EPF Scheme. What your HR Department is trying to achieve is a logical exclusion from the PF Membership, which was more common in earlier times when employee wages were much lower. Back then, it was not a preferred tool for retirement due to the absurdly low returns. They are attempting to take advantage of these provisions to reduce costs.

Anyhow, can you share the pre-formatted letter they are trying to have signed by the new employees (please hide the company’s name for obvious reasons) to check if it would be valid if contested by the Department or an employee (who has denied membership) based on this incorrect declaration? The law requires the employer to decide on the employee's EPF membership based on the declaration made in Form-11. If employees do not declare anything about their previous membership or being denied the same (as your HR is doing), there is little that can be done because the company, when challenged, will rely on the declaration they are obtaining by hook or by crook.

I don’t think much can be done in this scenario because the company will always have the upper hand to use these provisions to its advantage.

Sincerely,

Amit Kumar

EPF Signature Legality

It is illegal to get a signature on any form other than Form 11 under EPF. If any employee declares that they were earlier a PF member and have not withdrawn the PF accumulation, they shall be covered under EPF if the company is covered by the EPF Act.

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