Is It Necessary to Deduct PF & ESI for Our New Company with 35 Employees?

Dear All,

We have started an organization as a Pvt. Ltd. company, with 35 employees who have been working for the past 2 months. Is it mandatory to deduct PF & ESI from their salary?

Please share your valuable feedback!

Thank you.

Yes, it is mandatory to take the code of PF & ESI (Registration). If an employee has a salary below Rs. 15,000/- (Basic + DA) per month, PF needs to be deducted. If an employee has a salary below Rs. 15,000/- (Gross) per month, ESI needs to be deducted.

Thanks,
Sandeep

Yes, it is indeed mandatory to take PF code and ESI registration for your employees. Get the needful done through a professional; it will not cost you the sky, and your employees will appreciate your move.

Dear Mr. Sourav,

And one more question: If we register with PF & ESI, can we pay the last 2 months' PF & ESI deductions? If so, how can we deduct the employees' deductions for the 2 months? They will suffer a lot!

PF and ESIC are mandatory statutory compliance requirements that need to be fulfilled. As mentioned, you must register your company with PF and ESIC Authorities and pay the contributions as per the scheduled timelines.

For PF, refer to the EPFO site. For ESIC, visit the ESIC site online to learn more.

Any organization having a minimum of 20 employees on the payroll must be registered under the EPFO Scheme. As you mentioned, there are 35 employees, so it is mandatory to enroll your organization under the EPFO Scheme.

Any organization with employees whose salary (Basic + DA) is less than 15,000 per month must be covered under the ESI Act.

If you are seeking professional help to get the registrations, you can email me at [Email Removed For Privacy Reasons]. I can connect you with a professional corporation that provides such services.

Regards,
Ramu

As you have 35 employees, it is advisable to deduct PF/ESIC to avoid any further legal problems.

Narendra

Mandatory PF and ESIC Contributions

You are required to pay PF and ESIC from the day you have 20 or more employees. Since the process of getting a PF code and ESIC code was long and complex, there was a procedure to pay backdated amounts after you received a number. Now, the process is very simple, so you will get your codes within a week, and you need to pay the amounts with interest. You are allowed to deduct the arrears from employees. However, since it will cause hardship for them, I suggest you deduct it in installments, spread across 4 months.

PF and ESI Facilities for Employees

Is it right if a 50-year-old company, having more than 150 employees altogether, provides PF and ESI facilities to some of the employees who are older and have a salary of more than ₹25,000 per month on basic pay, now increased to more than ₹30,000 per month at 12.5% of the basics, while nothing is being given to the employees whose basic pay is just ₹15,050?

In this case, many employees are receiving PF employer shares of up to ₹4,000 per month, while many are receiving nothing even though they have been employees for more than 2-3 years.

Is it legal, right, or as per the employer's wish?

Firstly, I think you should have put this as a separate post instead of including it here.

Secondly, you need to familiarize yourself with the PF Act and scheme. Exemption from PF is determined by eligibility at the time of joining the company. Once PF is provided, it continues regardless of how high the salary may increase. Therefore, older employees who had a salary of less than ₹6500 upon joining will continue to receive PF, while new employees with a salary above ₹15000 will not.

Hello Everyone,

Greetings! If a company is registered under the Factory Act 1948 and the company wants to withdraw PF and ESI, the company has only 3 laborers for the past 2 years. Can the company withdraw the PF and ESI? How can the company proceed with this? Please let me know.

No.

Once the company is under PF, it will continue to be under PF.

I fully support the views expressed by my learned friends Ramu Kikatha and Saswata Banerjee. You can deduct the employee's share only from the wages for the month being paid, not for the previous month. However, the employer has to pay both the employee and employer shares. If the inspector gives permission in writing, the consent of the employees is also required for the deductions for the past months.

Thanks and regards,

Regards