Is It Correct to Exclude a 60-Year-Old Employee from EPF Coverage Due to Salary?

One employee joined our establishment at the age of 60 years. The member was not a pensioner. His salary is drawing 12000/-. (The member is not a pensioner, his age is above 58 years, and his salary is below 15000/-). So, I am not covered under the EPF Act. Is the above matter correct or wrong?

Dear Mr. Karthik,

You have confirmed that the age of an employee at the time of joining your establishment was 60 years. By virtue of age, such an employee becomes an "excluded employee" for the purpose of coverage under the EPF Act.

What was the rationale for recruiting an employee of 60 years of age?

Is the Rs12,000/- per month salary paid to senior citizen employees on par with the applicable minimum wages?

Please revert with your reply.

“Excluded Employee” has been defined in para 2(f) to mean an employee:
(i) who having been a member of the fund, withdrew the full amount of his
accumulations on retirement or emigration or
(ii) whose pay at the time he is otherwise entitled to become a member of the fund
exceeds Rs. 6,500.00 p.m(amended to Rs15000)
The employee was never a member of EPF earlier.
Therefore I opine that he is entitled to be a member of EPF
https://www.citehr.com/326837-can-we...whose-age.html

Dear Nathrao Sir, please peruse the following:

Age of Retirement as per EPF Act

Age of Retirement as per EPF Act: 55 Years

Age of Retirement as per EPS

Age of Retirement as per EPS: 58 Years (Presently enhanced to 60 Years with certain conditions). An employee aged above 58 years cannot become a member of EPS unless he was earlier a member of EPS for at least 10 years.

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the EPF Act”) is a very important social security legislation enacted to provide a kind of social security to industrial workers. As observed by the Supreme Court in Andhra University v. R.P.F.C. 1985 (51) FLR 605 (SC), it is a beneficent piece of social welfare legislation aimed at promoting and securing the well-being of employees.

Benefits Provided by the EPF Act

The EPF Act mainly provides for Provident Fund, Superannuation Pension, Family Pension, and Deposit Linked Insurance, which are primarily retirement or old age benefits. Though the provision for terminal benefit of a restricted nature was made in the Industrial Disputes Act, 1947 in the form of payment of retrenchment compensation, etc., the same benefit was not available to a worker on retirement, on reaching the age of superannuation, or voluntary retirement. Keeping in mind such benefits and to extend the terminal benefits to retiring employees, whether on reaching superannuation age or in case of voluntary retirement, the EPF Act was legislated.

As per your submission, he is not an excluded employee as mentioned by Mr. Nathrao. Therefore, the employee is entitled to PF. His EPS amount will also be deposited into the PF account. The PF Act or any court award (as far as my knowledge goes) has not specified the exact date of retirement. For instance, EPS contribution will not be required to pay after attaining the age of 58, but that does not necessarily mean it is the age of retirement. There are many organizations where employees retire after reaching the age of 60 or even older.

Rationale Behind Engaging Employees at the Age of 60 or Above

In India, many employees find it challenging to sustain their basic needs after retiring from their jobs, even with the assistance of EPS, PF, Gratuity, Leave pay, and any small savings they may have. The returns from bank interest are not as lucrative nowadays to support their retirement savings. Additionally, the average life expectancy is around 75 years, creating a social need for those who have the capability to earn to continue doing so. Some organizations, whether as part of their Corporate Social Responsibility (CSR) initiatives or due to specific skill requirements, engage employees even after their official retirement age. This becomes crucial in a scenario where there is unemployment among the younger generation, leading to a survival challenge where the older population is increasing while a significant portion of the younger generation remains unemployed.

I hope this clarifies your query.

Thanks & Regards,

S K Bandyopadhyay (West Bengal, Howrah) USD HR Solutions [Email Removed For Privacy Reasons]