Understanding PF Requirements: Do We Need 20 Employees in One State to Register?

I am working in a manufacturing company with our Head Office in Indore (M.P.), where we have 15 employees. We have appointed residential sales representatives in various locations across India, such as Bangalore, Chennai, Baroda, Delhi, Kolkata, etc.

Overall, we have 30 employees in our company. Additionally, we have a plant in Kanpur (U.P.) where workers are appointed through a contractor, thus HR activities for these workers are not under my purview.

Provident Fund (PF) Requirement Query

My query pertains to the requirement for Provident Fund (PF) purposes. Is it necessary to have 20 employees in a specific state to register for PF, considering we have executives in different states?

Your assistance on this matter would be greatly appreciated.

Regards,
Sapna

Regarding ESI and PF as central acts, they will oversee the total strength of the organization regardless of location. You should consider the total workforce across all of India.

I have a doubt regarding PF. Can the PF (employer contribution) be deducted from the CTC of the employee? If so, can we mention the column as PF (Employee and Employer contribution) in the payslip or salary breakup? Please explain in detail. Please help me.

Attribution: https://www.citehr.com/21732-ceiling...#ixzz37WLkPxiW

Is a proprietary firm also eligible to register for PF?

Regards,
Sapna

Yes. Any firm, whether proprietorship, partnership, or limited companies, is eligible for ESI and PF benefits. Please let me know if you need further assistance.

Yes, if it's a proprietorship, private limited (Pvt Ltd), or limited (Ltd) company, it should be registered with the Provident Fund (PF) if your organization has 20 or more employees.

I have one more query: What is the legal punishment if a company does not register for PF? Could you please provide me with any supporting information for the same?

Regards,
Sapna

If it is not enrolled, the organization may have to pay the contributions of both the employee and employer from the day of applicability, along with interest and penalties.

Legal Punishment Under the Employees' PF & Misc. Provisions Act, 1852 & The Scheme

Legal punishment under the Employees' PF & Misc. Provisions Act, 1852 & The Scheme is as follows:

a) Damages: As charged as per scheduled rate.

b) Penal Provisions

- Liable to be arrested without a warrant being a cognizable offense.
- Defaults by the employer in paying contributions or inspection/administrative charges attract imprisonment up to 3 years and fines up to Rs 10,000 (Section 14).
- For any retrospective application, all dues have to be paid by the employer with damages up to 100% of arrears.

In the case of any companies in the capacity of a Proprietorship Firm, Partnership Firm, Pvt Ltd, or Ltd, employing 20 and above employees will be required to obtain PF registration under the aforesaid Act.

Regards,
Sibabrata Majumdar
Management Consultants Legal & HR
[Email Removed For Privacy Reasons]
Kolkata

If your strength on any day exceeds more than 20, including your own employees and contract employees, then your establishment should be registered with the Enforcement Officer, EPFO under the Provident Fund Scheme. This strength is inclusive of all branches whose names appear on the rolls of the Company. You can maintain the consolidated account at your HO level in Indore and receive all the input from your respective units. If you want to manage unit-wise, then you have to obtain an establishment code from the EPFO of the respective state, regardless of the strength.

Legal Consequences

Regarding your query about legal consequences, the law is designed for the benefit of the employees, serving as a way to save for their future, commonly known as BHAVISHYA NIDHI. It is the employer's duty to implement the laws not only in the interest of their establishment but also in the interest of the employees.

Non-implementation of the scheme will definitely attract the penal clause stipulated in the Provident Fund Scheme, 1952. During any inspection by the Enforcement Authorities, non-compliance will result in the obligation to pay the contributions from the retrospective dates of employees joining the company. In such a case, both the employees' and employers' contributions, along with interest and penalties, must be borne by the employer.

I hope you have found the answers to your queries. If you have any doubts, feel free to write in this thread or reach out to any of our experts in this thread.

Regards,
Adoni Suguresh

Sr. Executive (Personnel, Administration & Industrial Relations) - Rts
Labour Laws Consultant

Dear Sir/Madam,

I received information through a reference that if all employees are receiving a salary above ₹15,000 per month, the organization is not required to register for the Provident Fund (PF). Is this information accurate? In our company, only 2 members are being paid below ₹9,000 per month, while the rest are earning above ₹15,000 per month.

Regards,
Sapna

Irrespective of any salary, if the overall strength of your establishment, including all your branches, exceeds 20 employees, your establishment is required to register under the Employees' Provident Fund Scheme, 1952. Employees who are currently earning below Rs. 9,000/- are subject to a ceiling of Rs. 6,500/- (which is proposed to increase to Rs. 15,000 per month). For salaries exceeding Rs. 15,000 per month, you can impose the ceiling. However, in any case where the employee strength exceeds 20, you are required to apply for registration and obtain your establishment code from EPFO.

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

Dear Sir/Madam, I have gone through one thread related to PF matters, and in that thread, seniors suggested that if an employee's basic salary is more than Rs. 6500, PF becomes optional for the employees.

In our company, all the executives have a basic salary exceeding Rs. 6500. In this scenario, are we still eligible to register for PF? I am confused; please advise.

Regards,
Sapna

Provident Fund Deduction Requirement

I want to know, is it compulsory to deduct PF from any firm or industry that has 20 or more workers? And what if they are not doing the same?

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I have corrected the spelling, grammar, and punctuation errors in your text. I have also added a line break between the paragraphs for better readability. Let me know if you need any further assistance.

Employees' Provident Fund Scheme Compliance

Any establishment engaging 20 or more individuals on any given day is covered under the Employees' Provident Fund Scheme, 1952. Both employees' and employers' contributions are to be deposited with the EPFO. It is the employer's responsibility to register with EPFO, obtain an establishment code, and commence deductions from the date of registration at the very least. Failure to do so may result in the employer being held liable to pay both sides' contributions from the retrospective dates of the employees' joining, in addition to penalties and interest, during any inspection by the EPFO Enforcement Officer.

Violations of laws or failures in implementation will certainly attract penal clauses not only within the PF scheme but also across all labor laws. If you are knowingly evading scheme implementation, be prepared to face the consequences. Avoid reaching that extent and ensure the scheme is implemented.

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

Dear Sir,

Please guide me on PF opt-out options.

Regards,
Sapna Khirwadkar