How Can My Friend Avoid Salary Deductions While Complying with ESI and PF Rules?

Salary and Deductions

Salary = 12k. The establishment says it has to deduct PF = 12% and ESI = 0.75% from our salary as it's the rule. The rest will be paid. A friend says she does not want any deduction, regardless of whether the establishment provides ESI and PF. The establishment insists that deduction is mandatory by law.

Proposed Solutions

The friend suggested increasing the salary to ensure she receives 12k in hand, but the establishment cannot afford it. When asked to proceed off the record, the establishment declined.

Seeking Advice

Is there a way for the friend to join this establishment while meeting both her and the establishment's requirements?

In India, the Employees' Provident Fund (EPF) and the Employees' State Insurance (ESI) are mandatory deductions governed by law for eligible employees. It is crucial to understand that these deductions are statutory requirements that both the employer and employee must adhere to. Here are some practical steps and considerations for the friend and the establishment:

Options for the Friend:
🔹 Understand Legal Obligations: Explain to the friend the legal mandate behind PF and ESI deductions, ensuring clarity on why these deductions are non-negotiable.
🔹 Negotiation: Encourage the friend to discuss alternative benefits or perks with the establishment if a higher take-home salary is not feasible.
🔹 Financial Planning: Assist the friend in understanding the long-term benefits of EPF and ESI contributions for retirement and healthcare needs.

Options for the Establishment:
🔹 Education: Educate the establishment on the legal requirements and implications of non-compliance with PF and ESI regulations.
🔹 Alternative Benefits: Explore offering non-monetary benefits or incentives to compensate for the inability to increase the salary.
🔹 Flexibility: Consider providing flexible work arrangements or additional leave options to enhance the overall compensation package.

Potential Solutions:
🔹 Seek Legal Advice: Consult with a legal expert to explore any potential legal avenues or exceptions that could apply in this specific scenario.
🔹 Customized Agreement: Draft a customized agreement that outlines a unique compensation structure tailored to meet both the friend's preferences and the establishment's constraints.
🔹 Transparency: Foster open communication between the friend and the establishment to find a mutually beneficial solution that aligns with legal requirements.

By approaching the situation with a blend of understanding, negotiation, and legal compliance, it is possible to find a middle ground that satisfies both the friend's preferences and the establishment's obligations.