Is It Really Mandatory to Rejoin EPF If You Were a Member Before? Seeking Clarity

Hi, is it mandatory to register for EPF? I do not want to participate in EPF, but my company is saying that it is mandatory because I was a member in the past. I was a member of EPF and withdrew the money in 2012. Since then, I have not registered as a member.

EPF is a social security scheme stipulated by the Indian Parliament for the benefit of the employees' community. Equal contributions are paid by the employer at par with the employee. Hence, it is the best saving scheme among those we have ever experienced. Why are you against this scheme? Kindly explain.

Regards,
Abbas.P.S

I agree with Abbas. However, the answer to your question is as follows: You withdrew your money in 2012 and settled your PF account. In my opinion, your current status is that you are not a member of EPF.

Thank you, Abbas, for your reply. The employer will deduct the whole EPF amount from my salary, including both my and the employer's contributions. I have been working with them for the past 2 years with EPF, and they are forcing me to take EPF, which is why I am against it. Additionally, I have my own personal PF account.

Employer Deductions and EPF Compliance

The employer cannot deduct the employer's contribution from the earned wages of employees. You may download the salary slip or bank account statement showing deductions and can lodge a complaint through EPFO. Your lawyer may opine that you can lodge a criminal complaint too.

I once responded to you on your first query. After reading your second query together with the first one, based on my understanding, I would like to say as follows:

Current PF Status and Legal Obligations

Your present status is that you are not a PF member. According to the recent amendment in PF Law, which came into force on 01.09.2014, if your Basic salary, i.e., Basic + DA component, is less than Rs. 15,000/- per month, PF is mandatory for you. You have no option, and your employer also has no option but to cover you under PF. Your employer is liable to deduct your contribution from your monthly salary and remit it into your account along with his share (at an equal contribution amount as deducted from your salary).

It seems to me that you are trying to convey in your second query that you have been working with the employer for the last 2 years with no PF, and now your employer is insisting on PF.

As mentioned above, if your Basic is less than Rs. 15,000/- as of 01.09.2014, your employer is legally obligated to include you under PF, and you cannot object to it.

Employer's Contribution and CTC Restructuring

Now, the question of the employer's share arises. I am certain your employer will not deduct his share from your salary as well. It appears to me that your employer is restructuring your CTC by incorporating the cost of his contribution to your PF account in it. Whether this practice is correct or incorrect is a matter of debate, and the answer lies in the power or influence you possess.

I invite other knowledgeable members to share their perspectives on this matter.

Thank you, Korgaonkar, for your reply. My basic salary is above ₹15,000. My employer said that he will restructure my CTC so that he can deduct his contribution from my salary. Can he do it legally?

If your basic salary is more than ₹15,000 per month, then you cannot be forced to join the EPF scheme. You can join if both you and your employer agree on extending EPF benefits to you. No employer can deduct their share from the employee's salary. If they are planning to restructure your CTC, make sure your take-home pay is not affected, and you receive other benefits in the same manner as you currently do.

Thank you.

Regards

Dear Onairsam, I appreciate the email posted by Sh. Keshav Korgaonkar, who has fully explained the position regarding your query. I agree with him that, according to the recent amendment, the basic wage ceiling under the Employees' Provident Fund Scheme has been raised to Rs. 15,000 from the existing Rs. 6,500 per month. There are two distinctive categories of employees:

Categories of Employees Under the Provident Fund Scheme

(i) Where a person is enrolled as a member of the Provident Fund when he was drawing a salary less than Rs. 15,000, but subsequently, his salary exceeds Rs. 15,000. In that case, he will continue to be a member of the Provident Fund at all times, but the employer has the option to restrict his contribution to the Fund to the amount payable on Rs. 15,000 per month. Thus, the contribution beyond Rs. 15,000 is at the discretion of the employer, but once he extends the benefits, he cannot withdraw the same at a later stage.

(ii) A person appointed on a salary exceeding Rs. 15,000 and has not been a member of the Fund earlier will not be liable for the benefits of the scheme under the Provident Fund since he will be termed as an 'Excluded employee'. Of course, if the employer and employee both agree, there is no bar to enrolling an employee as a member under the Provident Fund.

Thus, in view of the above, you are to assess yourself as to which category of employees you belong.

Regards,
BS Kalsi