Can We Stop EPF and ESIC Contributions When Salaries Exceed Exemption Limits?

I am the proprietor of a security agency. We provide guards to government entities. An independent department of the GOI decided on the salary structure of the guards. Recently, the independent department published the structure where EPF and ESIC for employees beyond a gross salary of 15,000/- and 21,000/- respectively was indicated as 'Not Applicable'. In the earlier structure, it was indicated as 'As Applicable', and hence we were drawing the same from the Principal Employer and depositing it.

Query on EPF and ESIC Applicability

Hence, the query is, can we stop the EPF and ESIC abruptly based on the laid-down salary structure, and if so, what actions are to be taken based on the fact that they have exceeded the exemption limits? Or is it that once an employee gets the benefit of EPF and ESIC, he continues to get it even if his gross crosses the exemption limits of 15,000 and 21,000 respectively?

Clarification on EPF Limit

The second query is on the EPF limit. Is EPF not applicable to those drawing a salary beyond the limit of 15,000; or is it that irrespective of the salary, EPF contribution is restricted to 15,000/-? Which of the two statements is correct?

Employees whose gross salary is above Rs 21,000/- do not come under the purview of the ESI Act. However, during the contribution period, i.e., April to September/October to March, if an employee's salary crosses the coverage limit of Rs 21,000/- per month, contributions should be remitted until the completion of the relevant contribution period. Thereafter, such employees go out of the purview of the ESI Act.

Regarding EPF, the present coverage limit is Rs 15,000/-. Employees who are becoming EPF members for the first time can be excluded from coverage if their entry-level EPF wages are above Rs 15,000/- per month. However, if an employee was earlier an EPF member, has not withdrawn his PF amount, and joins your establishment, you have to cover him under EPF and remit contributions until the coverage limit of Rs 15,000/- per month.

You have to obtain EPF Declaration Form #11 from all employees and initiate action for coverage/exclusion based on the information provided in Form #11.

EPF and ESIC slab has been increased to 21,000; those whose salary is less than the slab are mandatory to contribute to their PF and ESI. It is a statutory rule passed by the individual and central government.

Hope this answer helps you.

Dear Anamika,

Can you please clarify your statement - EPF slab has been increased to Rs. 21,000. Is it Rs. 15,000?

Thank you.