Should We Deduct PF from Stipends for New College Graduates? Seeking Advice

Respected all, we have appointed 30 people (fresh passouts from college) and are paying them remuneration as a stipend. Should PF be deducted on this?

Regards,
Naresh

You can't avoid PF. If you do, then all the corporates and business houses will recruit freshers only from campus en masse.

I feel you should first understand what a stipend is, what PF is, what employment entails, and the relationship between an employer and an employee. If you browse all those topics in this forum or on Google, you may get answers to all the above. However, I am providing you with some links with the hope that you will gain some insight. The links are as follows:

- [Link 1](https://www.google.com/url?q=https://www.citehr.com/448524-questions-asked-direcotor-pf-esi.html&sa=U&ei=JAKwU9SxI I61uASjnYHIBQ&ved=0CAYQFjAA&am p;client=internal-uds-cse&usg=AFQjCNEUP3TpThNTu2F_xboIc66Gbl VeUw)
- [Link 2](https://www.google.com/url?q=https://www.citehr.com/447790-pf-contribution-trainee.html&sa=U&ei=JAKwU 9SxII61uASjnYHIBQ&ved=0CAoQFjAC&am p;amp;client=internal-uds-cse&usg=AFQjCNHHz2dulPTVsnCkveu7LD49eb 3jHA)
- [Link 3](https://www.google.com/url?q=https://www.citehr.com/447790-pf-contribution-trainee.html&sa=U&ei=JAKwU 9SxII61uASjnYHIBQ&ved=0CAoQFjAC&am p;amp;client=internal-uds-cse&usg=AFQjCNHHz2dulPTVsnCkveu7LD49eb 3jHA)
- [Link 4](https://www.google.com/url?q=https://www.citehr.com/448975-pf-esi-interns-projec-work-students.html&sa=U&ei=JAKw U9SxII61uASjnYHIBQ&ved=0CA4QFjAE&a mp;amp;client=internal-uds-cse&usg=AFQjCNEgagqUCyXOoRZtlXbodq8hmP _3tg)

Regards.

Apprentices and EPF Contributions

If the persons are apprentices under the Apprentices Act or under the standing orders of the Company, they are not considered employees, and the stipend paid to them will not attract EPF.

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

You have not written clearly. You said that 30 people freshly graduated from colleges are appointed. However, the category of work has not been mentioned. You stated that you are paying remuneration as a stipend. This statement is incorrect. Please consider whether you intend to pay them as a stipend; if so, they must be appointed under the Apprenticeship Act and receive a stipend as stipulated by the Government for different trades. In such a case, the Provident Fund does not apply. If they are appointed under normal service conditions, your payment as remuneration will definitely attract the Provident Fund.

Whatever payment you are making, be it salary, remuneration, honorarium, stipend, or retainership, each term has its own definition depending on the category of service. You cannot simply choose any term you prefer. Each word must have its own meaning within the purview of the law.

Regards,
Adoni Suguresh
Sr. Executive (Pers, Admin & Ind. Rels) Retired
Labour Laws Consultant

Please refer to the Apprentice Act, which clearly states who is eligible to receive a stipend without any deductions. This is both a contractual and statutory obligation outlined in Section 13 of the Act, requiring employers to pay every apprentice a stipend during their training period at a rate not lower than the prescribed minimum. The specific stipend rate will be specified in the contract. Employers must make these stipend payments at regular intervals and adhere to prescribed conditions. It's important to note that apprentices should not be compensated based on piece-work, nor should they participate in any output bonus or other incentive schemes.

Thank you.

[QUOTE=korgaonkar k a;2160201]Dear Naresh ji, you can't avoid PF. If you do, then all the corporates and business houses will recruit freshers only from campus en masse.

If the organization does not wish to extend the benefit of PF on the grounds that the freshers are not employed but are given a training opportunity, you have to seek an exemption in writing from the CPFC.

Seniors, please comment if this is correct.

Regards,

Please read para 2(f)(iv) of the Employees' Provident Fund Scheme, 1952, and the explanation below instead of beating around the bush.

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