Understanding EPF Act Coverage: What Happens When You Employ 20 or More People?

Coverage of Establishments Under the Act

The coverage of establishments under the act (applicability) becomes mandatory when you employ 20 or more persons, regardless of whether all of them are drawing basic pay + DA in excess of Rs. 6500/- per month.

Hi, the applicability of the act does not depend on the salary; it depends on the number of employees, specifically 20 or more. If there are more than 20 employees, registration is mandatory.

The act of applicability does not depend on the salary; it depends on the number of employees, specifically 20 or more. If there are more than 20 employees, then registration is mandatory.

Responsibility for Contribution

However, who is responsible for contributing? It is noted that all employees have high Basic/DA and have not opted for coverage. In such a scenario, what should the employer do? This is a newly established enterprise.

Regards

You have to register your organization under EPFO and may file a monthly return as zero because no one is an EPF member as of now in your case. Ensure everyone's basic pay is beyond the ceiling limit. Also, get Form-11 filled up by all members to comply with the said Act.

The Employees' Provident Fund Scheme, 1952, and Employees' Pension Scheme, 1995, shall be applicable to industries, factories, shops, etc., where the number of employees exceeds 20 or more on any one day, including staff and workers, whether direct or indirect. The salary is not a criterion for eligibility, but if the number of employees exceeds the specified limit, then the act will be applicable. You can approach your nearest Provident Fund Office, contact the Enforcement Officer, get it registered with them, and then they will allocate you an establishment code. You can assign the account number from your office to all the members whose names appear on the payroll. There is no need to wait for any eligibility period. Previously, there was one, but now the employee is eligible to become a member from the date of joining duty. If you have any doubts, feel free to ask in this thread.

Regards,
Adoni Suguresh
Sr. Executive (Personnel, Administration, & Industrial Relations) Retired
Labour Laws Consultant

Yes, it is mandatory. Persons drawing a salary below Rs. 6,500/- will become PF members. Persons drawing more than Rs. 6,500/- will also become members of PF if they are not already enrolled.

For other individuals earning above Rs. 6,500/-, it is advisable for the employer to extend the benefits, subject to the ceiling wage of Rs. 6,500, as PF is a welfare legislation that offers various benefits to its members.

Apart from the above, I would like to know whether a peon is receiving more than Rs. 6500 as his/her basic salary. Secondly, what about an employee joining you who is already a member of the PF and would like to transfer his/her account to the new one?

Irrespective of any designation, every employee is eligible to contribute to the PF, from a Peon to a General Manager, subject to a ceiling. Some organizations do not adhere to this ceiling and extend the PF deduction, for both employees and employers, at 12% on Basic and DA.

When an employee joins your company, you can have them fill out Form No. 11 to start the deduction towards PF. To transfer their PF amount to an existing PF account, you can apply using Form No. 13. Nowadays, this process is very easy as it is available online for easy access.

Regards,
Adoni Suguresh
Sr. Executive (Personnel, Administration & Industrial Relations) (Retired)
Labour Laws Consultant

Please let me know if you need any further assistance.