Salary above 15000 - Is it mandatory to give him PF or Is it not?

If a new joiner previously had PF and withdrew his entire PF amount, and then joined a firm at a higher salary above 15000, is it mandatory to provide him with PF contributions, or is it not required since he has already withdrawn his entire PF balance and is now at a higher salary level? The firm is not inclined to offer voluntary PF contributions.

There is a concept under PF & Misc. Act and regulation known as "Excluded Employee". In this case, if the employee joined the organization while being a member of EPFO but was wrongly declared in Form-11, resulting in the new employer excluding the employee from PF coverage, then it is illegal.

If the employee settles all his dues (PF & Pension) and closes the account before joining a new organization with a salary exceeding 15,000/- per month, the employee should be considered an excluded employee and does not need to be covered under EPFO.

S K Bandyopadhyay (WB, Howrah)

I have a different opinion based on my experience, though it was not exactly similar. The EPF (MP) Act 1952 mentions nothing about an employee who has already settled his account, as to whether his account can be reopened or not. Indeed, it clearly states that even if the employee has crossed the salary ceiling fixed under the Act, yet he continues to be covered. Once a member, always a member, that is the principle. So even if the account is closed and settled, that does not prevent the account from being reopened. At least it is very clear that if the salary is within the ceiling fixed, the account can be reopened. So the same would apply even if the salary is above the ceiling limit.

It is better to seek the opinion of the RPFC in this matter, and if possible, keep the contribution in a separate account.

Para 69(5) of the PF & Misc. Act, 1952 states as follows:

"Any member who withdraws the amount due to him under sub-paragraph (2) shall, on obtaining re-employment, be required to qualify again for the membership of the Fund and on qualifying for membership shall be treated as a fresh member thereof."

Therefore, as mentioned above, the EPF (MP) Act, 1952 mentions nothing about an employee who has already settled his account. Whether his account can be reopened or not is not 100% correct as per para 69(5) of the scheme. It is not automatic but conditional. It is also required that the employee should be considered as a fresh member.

Now, if we read 2(f) - Excluded Employee of the Scheme along with Paragraph 69 and also Para 69(5) specifically, it is crystal clear that my earlier conclusion is absolutely right. In this case, the employer is not interested in contributing PF voluntarily, which the employer has every right to do so.

In an equation under Algebra of mathematics where if A = B = C, then A = C. But in any legal interpretation, there are explanations, provisos, etc. which are not straightforward like the above equation. Therefore, the comment "So the same would apply even if the salary is above the ceiling limit" is not a straightforward equation.

The Excluded employees are: An Apprentice, an employee whose pay at the time he is otherwise entitled to become a member of the Fund exceeds 15,000/- per month, an employee who, having been a member of the Fund, withdrew the full amount of his accumulations in the Fund.

In this case, the employee should be considered under 69(5) of the scheme as a fresh member.

If any employee settled his/her account from EPFO after leaving the job and joined an organization covered under the scheme with a salary above the coverage limit, in that case, if the employer allows him/her to join voluntarily under the PF scheme, that is possible but considered as a fresh employee. Also, it is required to read the famous circular of EPFO Actuarial/18(2)2008/Vol.III/7738 in the last week of August 2014, wherein it is mentioned that if any employee joins employment from 01.09.2014 onwards and the salary is beyond the coverage limit, but the employer, as per the policy of the organization, covered the employee under EPFO, then no contribution to be deposited in the EPS account; rather, the entire contribution will be deposited to the PF Account.

My only daughter, after passing B.TECH, joined Sapient where her salary was within the coverage limit, and she was a member of both PF & EPS. After 3 years working with Sapient, she left the job for her MBA and settled her PF & EPS account. After completing her MBA, she joined Godrej almost after 2.5 years, and as per the organization's policy, she is a member of EPFO against her old UAN number (which will never change as linked to the Aadhar number) but not the EPS member. If Godrej does not have any policy to cover excluded employees under PF, Godrej may do so. From my experience and working with MNCs & Voltas, I have noticed that the MNCs and big Indian houses are covering employees under EPFO voluntarily as per the organization's policy.

S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 [Login to view] www.usdhrs.in