Navigating EPF: Do We Need to Enroll All Employees or Just Some? Seeking Advice

Dear Seniors,

Our company has around 60 employees, with less than 30 employees covered under PF. When we enrolled in PF in April 2014, the company gave the option to employees to register or not. Now, the questions are:

1. Is it mandatory to cover all employees under EPF?
2. If not, is there any declaration form that needs to be collected from employees?

Looking for suggestions.

1. It is statutory to cover all employees under EPF.
2. This issue does not arise.

If the employee has a basic salary of more than 15,000 INR, then he/she can opt out of the PF scheme by filling out the necessary form.

Jagat Sir,

My senior told me to collect declaration forms from the employees who do not want PF. Kindly provide some more information.

Dear Preeti,

Only a few of the employees have a basic salary above 15k. Kindly share the declaration form with me.

Dear Madhushree,

For your clear understanding, a company that has 20 or more employees earning below Rs. 15,000 must register for PF as it is mandatory. If your company employs 60 individuals, with only 15 earning below Rs. 15,000, then your company is not eligible for PF. The company becomes eligible for PF only if more than 20 employees earn below Rs. 15,000.

It is optional for an employee earning more than Rs. 15,000 to register for PF; the decision to register or not lies with the employee.

I hope this clarifies the information for you.

Dear Archana,

I have checked the details of our employees' basic + DA. Nineteen employees are drawing less than 15k basic. Within that group, some are registered with PF, while others are not. As an HR professional, could you kindly suggest the appropriate action I should take?

Thank you.

Dear Madhu,

It is the employer's responsibility to ensure that all employees earning less than 15K are registered in the PF system if the company's headcount exceeds 20. This is mandatory and not voluntary. Registration is only voluntary for employees earning above 15K.

If the total employee strength is 20 or more, and even if one employee's wages are less than ₹15,000 (Ceiling Limit), then it is mandatory to enroll with the PF & ESI if that area is under coverage. I hope now even the employees whose wages are above the ceiling limit have to be covered.

If the employees' wages are above ₹15,000 and if they don't have PF coverage earlier, then the entire contribution of 12% of EE and 12% of ER should be contributed to the EPF account only. For those employees, there won't be EPS.

Thank you.

Clarification on EPF Coverage Requirements

There is no provision in the EPF Act stating that only if a company has twenty or more employees with a salary not above Rs 15,000 per month, it needs to be covered under EPF. This concept is incorrect.

Please refer to Section 1(3) of the Act, which clearly states that an establishment having 20 or more 'persons' employed is liable to be covered. The word used is 'persons,' not 'employees.' The Rs 15,000 criteria come into play when considering who qualifies as an employee.

Therefore, if the establishment employs 20 or more persons, irrespective of their salary, it is liable to be covered under EPF.

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

The EPF Act clearly stipulates that if an establishment employs 20 or more employees, it is mandatory for the employer to obtain coverage under the Act. In this connection, your attention is drawn to Sec 1(3) of the Act. It has no connection with the salary of employees. Employees who receive a salary not exceeding Rs 15,000 per month (only basic & DA) shall be covered under the EPF Act. Those who earn a salary exceeding Rs 15,000 per month (only basic & DA) at the time of registration will be outside the scope of the Act and considered excluded employees. If you have any doubts, please revert.

Thank you.