Applicability of PF on contractual engagement - In case of a not for profit organisation

In the case of a not-for-profit organization often there is a requirement of engaging professionals for specific project requirements. In their engagement letter, it is clearly mentioned that their engagement is purely on a contractual basis and they will be paid a consolidated Fee as per their performance after deduction of TDS. I want to know whether they should be covered under PF whereas the regular employees of the Organisation have PF coverage. I would appreciate your valuable feedback. Thanks in advance.

If they are purely contractual employees, there is no need or provision to cover them under PF (at least till the new labour codes come into effect).

Even otherwise, if they are paid professional fees, they are not entitled to PF
However, if it is proved that they are actually salaried employees but only shown as professionals for avoiding PF, the department can demand their coverage. However, unless there is a specific compliant, the department is unlikely to take that route.

Lord Krishna had 108 names. Similarly we engaged employees at Organizations with different names - Permanent, Temporary, Casual, Contractual direct, Contractual through contractor, Consultant, Adviser etc.

In the instant case, the Organization has PF coverage. Therefore, the employees engaged on contractual basis will also be covered under PF. If there is one or two employees who are really working as consultant / Adviser due to nature of jobs - for them deducting TDS at source and make payment is possible. Employees engaged on contractual basis and engaged for permanent, temporary, casual nature of routine jobs must be covered under PF, ESIC etc.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
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