Can We Exempt a 60-Year-Old Employee from PF and Only Cover ESI Benefits?

Dear All,

I have come across a situation where a 60-year-old person, with no dependents, has approached for a job. We are interested in hiring him, and his pay will definitely be less than Rs. 15,000. I need clarification on whether we can exempt him from PF and only cover him under ESI so that he can avail benefits under the ESI Act. I request your suggestions and information on the provisions of both acts.

Thank you.

Yes, you can cover him under ESI. Coverage of employees under EPF above the age of 58 is not mandatory. Even if they are covered, they can be covered only for PF and not for pension. Hence, my advice always is not to cover any employee above the age of 58 under PF.

Of course, irrespective of age, coverage under ESI is mandatory.

T. Sivasankaran

He can be covered under ESI. If he is not an excluded employee, he can also be covered under EPF. But not under the Employees' Pension Scheme.

You have to provide coverage to the employee under PF and ESI. However, since he is 60 years old, he will be covered under EPF only. The Pension scheme will not be applicable to him.

Thanks,

Aparajita Banerjee

Dear All,

Due to the employee's age factor, is it mandatory to cover them under PF? Kindly clarify.

Excluded Employee and Provident Fund Coverage

Age is not a factor for PF coverage. There is a term called "Excluded Employee" under the Employees' Provident Fund Scheme, which states that an excluded employee means someone who, after being a member of the Fund, withdrew the full amount after attaining the age of 55 (possibly recently amended to 57 years of age), or an employee whose pay at the time of joining exceeds Rs. 15,000 per month, or an Apprentice. If your case satisfies any of the above conditions, then the employee is an excluded employee; otherwise, they will be covered under PF.

Thanks and regards,
S K Bandyopadhyay
USD HR Solutions
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Mr. S K Bandyopadhyay,

Thank you for your opinion. However, he is 60 years old, will be drawing a salary of 12000/- per month, and has never been an employee in the past. All these years, he has been self-employed, but due to some circumstances, he now seeks employment.

Kind regards,

Dear Mr. N Mohan,

I would suggest that if he is already at the age of retirement and the organization needs his expertise, he can be appointed as a "retainer/consultant". In that case, he can receive monthly remuneration by producing a bill. The organization is not obliged to pay any retirement benefits in such cases.

Thanks,
Mona

Dear Mr. N Mohan,

The best advice is to appoint him on a consultancy basis so that you do not have to comply with any statutory acts. Also, he will receive the full amount after IT deduction.

V. D. Patel