Can an Employee Reappointed to a Higher Role Still Get PF Benefits?

Hi,

Could anyone please brief me on the scenario where an employee resigns from the position of Data Entry Operator (with a gross salary of Rs. 12,000/-) on 31.05.18 and is assigned a new role on 01.06.2018 with a new gross salary of Rs. 25,000/- within the same establishment? The employee was previously a member of EPF in the establishment. Will he/she still be eligible for PF subscription in this new role? If yes, please specify the rule.

With regards,
Tirilee

Dear Babu Alexander ji,

You have provided the answer with full confidence, but it is incorrect. Once you become a member of the Provident Fund, you remain a member for the duration of your employment. If an employee becomes exempted upon rejoining with a salary above the threshold, why is there a need for Form 11?

Thank you.

PF Contribution and Exemption Criteria

I am confident. If the PF contributions were made on Basic wages and DA in the previous role when he was drawing, and once in the new role, if he starts drawing Basic Salary and Dearness Allowances exceeding 15 thousand and above per month, he will certainly be an exempted employee. However, if he opts for contribution on his own volition, management can continue to deduct PF at the same percentage, whereas management can restrict his contribution to Rs. 15,000/-. This is as per the Act. Form-11 is only information for the employee!

He must continue in PF with the ceiling limit of 15000/- for employer contribution because he is working in the same establishment and has just received a promotion in the company.

Thank you.

Dear Babu Alexander Ji, Happy to note that you are a retired person in your early 70s and still active in spreading, sharing, and enhancing the knowledge you have. May God bless you with good health and a long life. I am pleased to know that you are prepared to correct yourself. We learn from this kind of attitude. In fact, my answer to the query is there in post #3 above.

PF Act Applicability

Though the PF Act is applicable to those with Basic and DA less than the threshold limit, i.e., Rs. 15,000/- at present, there is a thumb rule that "Once a Member, Always a Member." You cannot be excluded from PF upon crossing the Basic and DA limit. Even if you join new employment and your Basic and DA exceed the threshold limit at joining, you cannot be excluded from PF since you were in PF with your previous employer. Form 11 is obtained from the employee at the time of joining to check his PF status for admission.

Enrollment in PF

An employee joining with less than the threshold limit is compulsorily enrolled in PF. If an employee joins with more than the threshold limit and was in PF with the previous employer, then enrollment in PF is mandatory. If the employee is not in PF with the previous employer or is a fresher with Basic and DA exceeding the threshold, it is not compulsory to enroll him in PF. However, if both employee and employer agree to PF contribution, enrollment is possible.

Current Query Scenario

In the scenario of the current query, where the employee continues employment with the same employer without any break, there is no question of stopping PF contributions because the salary crossed the threshold limit upon a change in assignment. Hope you appreciate my answer.

Dear All,

Multiple opinions have been given on the above discussion; however, I would like to share my view to clarify for everyone.

1. The PF department issued a gazette regarding PF Membership and Opt-out from PF, which is effective from 01.09.2014.

2. A member can opt out from PF if they newly join the organization after the above date and if their Basic+DA salary is more than 15,000/- per month.

3. If the above member wishes to become a PF member, their total contribution (24%) will go to the PF account. They are not eligible for a pension.

4. Regarding Tirilee-Praharaj's question, if the employee is already a member of PF and Pension from earlier days, after a promotion, they are still eligible for PF and pension. Please continue their membership in PF and pension; otherwise, your organization may face consequences if an audit is conducted by the PF office later on.

The views expressed are based on my knowledge and experience. If you need any support, feel free to contact me at [Phone Number Removed For Privacy-Reasons].

Regards,
Durga Prasad