PF Deductions: Do We Have to Continue If the Previous Company Did?

Dear All,

Can you clarify one thing for me - is it compulsory to deduct PF if an employee's previous company was deducting his PF?

Regards,
Mausam

Dear Sharmaji,

Please obtain PF Declaration Form-11 from the Employee concerned immediately. Has the Employee withdrawn his PF Accumulation? What is the Basic+DA+VDA of the Employee concerned at the time of joining your Establishment?

Once an employee is covered under the PF Act of 1952, they will continue to be so even if their salary exceeds Rs. 15,000, the present wage ceiling under the Act. This means that once covered, the employee will remain covered even if their wages exceed Rs. 15,000 per month.

Supreme Court Ruling

The Supreme Court, in the matter of Marathwada Gramin Bank Karamchari Sanghatana Vs. Management of Bank [2011 LLR 1130], held that the employer need not pay provident fund contributions higher than the prescribed limit under the Act and Scheme, which is now Rs. 15,000.

Thank you.

There are multiple conditions applicable.

1. If your company is not covered under PF, you are not liable to deduct or pay PF for this employee.

2. If your company is under PF, then if the employee has an existing PF account at the time of joining your employment, you need to cover him under the PF scheme irrespective of what salary he has joined at.