Navigating PF Registration: Should Contract Employees Be Counted in the Total?

Query on PF Registration for Contract Employees

My company has 19 employees and 1 contract employee (whose PF is being paid by the contractor). So, my queries are:

1. Should we include the contract employee while going for PF Registration? If yes, why, as his PF is already paid by the employer?

2. If we should not include him, then is it voluntary for us to go for PF registration? Because it was compulsory when we had 20 or more employees. Please confirm if we should include the contract employee or not.

I am posting a query on this site for the first time; please help me. Expecting valuable replies from seniors.

Best Regards,
Meenakshi Kalra

PF registration is mandatory for an organization when it reaches a headcount of 20. The headcount should take into account both on-roll employees and contractors as well. In your organization's situation, since you already have 19 employees and 1 contractor, you should now go for PF registration.

However, the PF contribution for the contractor may not be required since it is covered through a third-party contractor.

Hope this clarifies.

Regards,
Srikanth

Thank you, Sir, for your valuable reply. We currently have 20 employees, including the third-party contract employee. If we exclude that person, we have 19 employees. I am unsure whether it is voluntary for us to proceed with PF Registration or if it is compulsory. Our employee strength has remained at this level since April '13. I am in a dilemma and would appreciate further insight on this matter based on your experience.

Thank you in advance.

Best Regards,
Meenakshi

PF Registration and Contribution Remittance

PF registration and PF contribution remittance are two different things. From the PF registration perspective, your organization needs to register for PF since you have reached a headcount of 20 employees. According to PF rules, you must consider all employees working for your company, whether they are on the payroll or are contractors. This is because your company is the principal employer for those contract employees.

Regarding PF contribution remittance, you are required to make PF payments for 19 employees only. The PF contribution for the contract employee will be paid by your contractors (third-party vendors).

Please ensure to collect the following documents:
- PF remittance challan
- PF online extract to demonstrate that the contract employee is registered under PF.

The PF department may inspect your office and expect you to maintain these documents.

Thank you.

It seems that you are not aware of the difference between a direct employee and an employee engaged through a contractor (for whom you are the principal employer). Please ask the contractor to open the PF account for the contract employee.

Regards,

PF Eligibility and Contract Employees

While calculating the number of employees for PF eligibility, all employees, including contract employees, are taken into account. Therefore, your company is legally eligible for coverage under the EPF. However, if the PF of the contract employee is paid by the contractor, there is no financial liability on you to pay his PF, but you are certainly eligible for coverage under the EPF Act.

So, for example, if the total number of employees is 20, the number of PF members will be 19. When you apply for a PF code number, please mention that Mr. X is a contract employee in 'the list of members' that you will attach with the application.

Regards,
Kapil

I agree with the views of Mr. Kapil. For the purpose of coverage, such an employee can be counted, but for the purpose of contribution, the employer has to ensure that the contractor is deducting and depositing the PF contributions every month with the RPFC. Please obtain the details of the PF code number of the contractor.

Regards,
AK Chandok
RPFC (Retd.)

In case the contract worker is engaged through a contractor who has his own PF Establishment Code and his own Labour License, the contract worker can be treated as belonging to a separate establishment for PF/EPS purposes. Otherwise, the contract worker becomes an employee of the principal employer.

Regards,
R. Krishna Murthy

Get registered with the PF department. Check that all of your employees are being paid above Rs. 6,500/-; you need not deduct and contribute to PF. Can anyone counter this statement, please?

Regards,
hrkpati

As per your query, your organization is eligible for coverage because the enforcement officer counts 20 employees, whether a few workers do their jobs through a contractor. It does not matter; what matters is that 20 employees are working on your premises. The PF Act states that for PF coverage, all staff, whether on a piece rate, daily wages, or through an agency, will be counted.

This is a fact.

I am a practitioner for the last ten years. If you have any queries, feel free to call me.

Regards,
Kashyap
[Phone Number Removed For Privacy Reasons]

Thanks to all of you for your valuable feedback. I would like to ask Mr. Hrkpati, after getting registered with the PF Department, how is it possible not to deduct and contribute to PF? We need to submit Form-11 on behalf of all employees. Is this possible?

Question About PF Registration

One thing I would like to ask Mr. Murthy is, while filling out the Performa for Coverage for PF Registration, should we not mention the contract employee's name, right? So, should I mention employment strength as 19 or 20?

Thanks,
Meenakshi

Thank you, Mr. Kapil & Mr. Chandok, for your valuable feedback. I would like to ask one more thing: while filling the proforma for coverage, should I fill in 19 or 20 for point no. 5 - employment strength? I had written 19+1 (contract employee). If it should be 20, then should I also add his details in point no. 12, which asks for employee details like name and father's name? Please clarify.

Best Regards,
Meenakshi