Rehiring Employees: Do We Need to Reopen Their PF/ESI Accounts or Is There Another Way?

Hi, if workers leave the organization and join again, do we need to open their PF/ESI account again? What is the other solution? Please reply.

Regards,
Parul

Hi Parul, you do not need to open a separate account for ESIC because now you have one online number. For PF, you will need to obtain a new number from the new organization you have joined since PF online is still under process.

Regards

First of all, thank you for the reply. The issue at hand is with workers who join the company and then leave after some time. They withdraw their money and, after a while, return to join again. This cycle repeats, requiring their accounts to be reopened each time. What could be the best solution for this situation? These workers seem reluctant to understand the challenges we face in maintaining consistent records for the same individuals.

As and when a new employee joins your organization, and the new joiner is your ex-employee covered under statutory compliance, certain points should be considered. If the earlier EPF account is not settled, then the same will be continued. However, if it is settled, then a new account will be awarded accordingly.

Regarding ESI, now it is completely online, and the IP Numbers do not need to be changed; hence, the same ESI Number can be continued. If the account was already settled at the time of leaving the job last time, then the individual will be treated as a new employee, and all other benefits will also be calculated from the new date of joining.

I hope this information will be helpful to you. Cheers.

First of all, thank you for the reply. The issue at hand is that workers join the company and then leave after a certain period. They withdraw their money, and after some time, they come back and join again. Consequently, the process needs to be repeated, meaning their accounts will be reopened, and this cycle continues. What could be the best solution for this? These workers are not prepared to understand all the problems we face while maintaining the same person's records.

Managing PF Accounts for Rejoining Employees

In your situation, it is crucial to determine whether their old PF account is still active. As long as they have not withdrawn their PF amount, the same account can be continued. If they have chosen to close their account by withdrawing their PF amount, there is no possibility of continuing the closed account. If, when leaving your organization, they have not closed their PF account and it remains open when they rejoin, they can continue with the same old PF account. Otherwise, a new PF account with a new number must be opened.

Advice for Employees on PF Account Management

It is essential to advise those who are leaving not to withdraw and close their PF accounts. Instead, they should be encouraged to transfer to a new employer or keep the account open temporarily. This is more beneficial for them as past service is necessary to qualify for the EPF Pension, which requires a minimum of 10 years. Closing PF accounts with each job change will hinder their eligibility for a pension, which is only available upon reaching the age of 58 years.

I hope this information is helpful.

Best regards

As per ESIC & EPFO, a company shouldn't open new accounts for employees if they have an existing account.

When an Employee Leaves Your Organisation

a) As per ESIC, the same number can and should be carried forward to any other ESIC-covered establishment.

b) As per EPFO, an employee is not allowed to withdraw funds unless they remain unemployed for a minimum of two months from the last working date. So if any employee rejoins within two months, it's simple for you to retain their existing PF number.

Benefits of Retaining the Same PF/ESIC Number

Explain to them the benefit of retaining the same PF/ESIC number. For example, when they need to apply for a disability claim or sickness claim, ESIC takes into account their average salary for the last x months. Also, the full claim can be availed only if the IP has been contributing for 6 months continuously. Similarly, for EPFO, inform the employees that the fund in the account is eligible for interest every year, and if they withdraw, their opening balance and interest amount earned is lower. Most importantly, in case of any untoward event and claim of pension, EPFO also considers the last x months of the average salary.

You can make the employees more aware of ESIC & EPFO benefits by putting up circulars on the notice board. The following links will help you educate your employees on the benefits:

Epfo (Govt. of India) - Epfo (Govt. of India) & ESIC.NIC.in

Regards,
Deena Jagasia