Employee Requests to Remove PF Contribution: How Can We Handle This Without Compliance Issues?

Employee Requests for PF Contribution Removal

Some of our employees are asking us to remove the PF contribution. Is there any way, considering we have voluntarily opted for the same? Which document should be handled in this case to ensure it will not be a compliance issue?

We have 10+ permanent employees, and we are currently deducting PF from all of them.

Alternatives and Workarounds for PF Contribution

Please share alternatives or workarounds if possible to minimize PF contributions if there is no option to skip the PF.

Note - Employees already have UAN.

PF Registration and Exemption

Once PF is registered for, there is no exemption or option to cancel it. Further, once a person is under PF, they continue to be under PF even if their salary crosses the threshold. Therefore, there is no such option where they can opt out.

PF Registration and Contribution Guidelines

If an organization has fewer than 20 employees, they need not register for PF, and therefore they would not have PF deductions for their employees. But once you have registered, there is no option to opt out.

Employee PF Exemption Criteria

When an employee joins you, if their salary is above 15,000 (PF Salary, excluding HRA), and they have no existing PF account, they can opt for an exemption. However, once they are in PF, then statutorily applicable PF is to be deducted and contributed.

Benefits of PF Contribution

I suggest you show them how PF benefits them. Firstly, because you are contributing also, secondly because it is a forced saving, and thirdly, it offers the best interest rate they can get, and is tax-free (plus insurance under EDLI).

Benefits of Continuing PF Membership

It is always better for your employees to continue to be members of the PF scheme. Apart from the benefits Mr. Banerjee has highlighted, others include:

- PF is a social security benefit.
- Your employees shall become members of PF either in your company or elsewhere where PF is covered.
- If they put in a minimum of 10 years of service, they shall be entitled to a lifelong pension.
- They are entitled to avail of Refundable Loans and Non-refundable loans depending upon the corpus lying in PF with their individual accounts (for housing, children's higher education, daughter's marriage, etc.).

Please discuss these with your employees.