Can We Legally Exclude a New Employee from PF Coverage if She Insists on Joining?

Dear Seniors,

A newly hired employee who was not previously a member of PF has joined our company. However, her basic plus DA exceeds 15,000. The management wishes to exclude her from PF coverage, but she is insisting on being a member of PF.

Please clarify: Can I reject her proposal to become a member of PF against her will? Is it legally permissible to do so?

Thanks,
SHREYA

If she was NEVER a member and now her B+DA salary is more than Rs. 15,000, then you are not obliged to cover her under the PF Act. Have you got PF Form 11 (revised) filled from her? You must get the form filled in from all employees and also new joinees, irrespective of the salary they draw.

Management and EPF Coverage

Management need not cover under EPF as her Basic+VDA (EPF Wages) are more than 15k. However, if she is very keen to avail such benefits, she may request the management to deduct both contributions from the end to avail the facility (i.e., it will be calculated on a maximum of 15k only).

15000 * 12% = 1800
(1800 EE + 1800 ER = 3600) Total of 3600 Rs. will be deducted from her salary.

1.15% admin charges have to be borne by the management, which is nominal; any management can say yes. This would be the right treatment.

PF Contribution Legality

Please give your opinion based on the PF Act. It is not allowed to deduct the employer's contribution from the member even if the member agrees. It is not about what is the right treatment, but what is legal. If a member is already an EPF member, as per Form 11 declaration, the employer has no option but to deduct PF. He must deduct it. If the member has wages above 15K and it is their first employment, the employer can treat them as an excluded member and not deduct PF. If the employer wishes to deduct PF, no EPS will be diverted, and all contributions will go to the employer's share.

Thanks,
Vidyadhar Bhat

Dear All, Many thanks for your valuable inputs regarding my query pertaining to coverage in PF if an employee's basic plus DA exceeds 15K. However, some Labour Law Advocates, as well as HR professionals, are of the view that the opportunity to avail PF benefits must be offered to all employees irrespective of their earnings. This has led to confusion on whether to provide her the opportunity to avail PF benefits or not.

Therefore, to stand legally, please provide the relevant section/circular which states that if an employee's basic plus DA exceeds 15,000 and they are not previously a member of PF, they shall be excluded from PF coverage. The management, at their discretion, may choose to cover such employees in PF or even exclude them.

Thanks,
SHREYA

The posts on this matter are incorrect.

The PF basically applies to everyone in an organization with more than 19 employees. The law allows employees to claim an exemption based on certain criteria (no existing PF account and basic + DA exceeding 15,000). The option is with the employee to claim the exemption, not with the management to force the exemption.