Are Contractual Professionals in Nonprofits Eligible for PF Coverage? Seeking Clarification

In the case of a not-for-profit organization, there is often a requirement to engage professionals for specific project needs. In their engagement letter, it is clearly stated that their involvement is solely on a contractual basis, and they will receive a consolidated fee based on their performance after the deduction of TDS. I am seeking clarification on whether they should be included in PF coverage, considering that regular employees of the organization are covered by PF. Your valuable feedback on this matter would be greatly appreciated. Thank you in advance.

Contractual Employees and PF Coverage

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

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

Employee Engagement and PF Coverage

Lord Krishna had 108 names. Similarly, we engage employees at organizations with different names: Permanent, Temporary, Casual, Contractual Direct, Contractual through Contractor, Consultant, Adviser, etc.

In this case, the organization has PF coverage. Therefore, employees engaged on a contractual basis will also be covered under PF. If there are one or two employees who are genuinely working as a consultant or adviser due to the nature of their jobs, deducting TDS at the source and making payments is possible. Employees engaged on a contractual basis and engaged for permanent, temporary, or casual nature of routine jobs must be covered under PF, ESIC, etc.

S K Bandyopadhyay (WB, Howrah)
CEO-USD HR Solutions
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