Can We Legally Skip ESIC and EPF Deductions with a Stamp Paper Agreement?

Could you please help us with an answer? An employee receiving 12,000 per month for one year. Can ESIC and EPF not be deducted from his salary if an agreement on stamp paper is taken stating that ESIC and EPF should not be deducted? Will this be as per the law?

1. Sir, contributions under the ESI Act, 1948, EPF & MP Act, 1952, are statutory in nature and are not optional. Non-deduction, i.e., non-payment of contributions under the above Acts, is an offense punishable under the said Acts.

2. Any undertaking or affidavit that violates any statutory law is void ab initio, illegal, and has no force in law.

Dear Vishwas,

EPF and ESI are statutory. Accordingly, coverage and subsequent contributions are mandatory in any circumstances. Hence, the statement of an employee for non-contribution is illegal.

Abbas.P.S

ESI and EPF are statutory benefits for employees; no one should decline these benefits based on personal preferences. Moreover, the agreement you have made on stamp paper is invalid. Try to explain to them the benefits of ESI and EPF first. No insurance company can provide benefits like ESI does, and no corporate hospital offers treatment like ESI. Millions of insured persons and their families are treated by ESI. It is obligatory to adhere to the statutes; otherwise, you will face consequences in the future.

Seniors, please correct me if I am wrong.

Best Regards,
Ravichandra Paanem

The stamp paper agreement is not valid as per law as ESI and PF are statutory benefits for employees if the establishment is covered under the ESI Act and EPF Act. Please check the applicability to your establishment by referring to the acts.

If an employee's gross salary is less than ₹15,000, they should be covered under ESI, and if the basic salary is less than ₹15,000, they should be covered under PF. The deductions should be done accordingly irrespective of your stamp paper agreement; otherwise, the employer will be penalized by the concerned authorities.

Thanks and Regards,
Prathap
Senior Executive-HR
Narayana Health

Hi Vishwas,

There is no law that will entertain such things. The employee shall be enrolled in ESIC & PF. Also, note that, to the best of my knowledge, no agreement shall stand on employment; no agreement will be valid.

Both matters are different, but in this situation, this is unfair practice. For ESIC, a person getting a salary less than 15000/- (without W.A) must be an ESIC member, meaning ESI covered. For EPF, a person receiving a salary with more than 15000/- basic can submit a declaration form No. 11 and choose not to be a part of EPF (if he was not a member of EPF or EPS earlier in life).