Employee Wants Only ESI, No PF – Is This Possible Under Current Regulations?

An employee has a CTC of 20,000, and he wants only the ESI service. He doesn't want the PF facility. Is it possible to provide only the ESI service?

Hi, PF and ESI are statutory and compulsory, not as per the wish of the employees. You can explain to the employee about the benefits of PF as a compulsory saving for their future, pension facilities after 9.6 years of service, EDLI benefits, etc.

The decision on whether or not to provide PF to an employee is determined by law, not by the desires of an individual employee. If the person has a starting salary (when they joined your organization) of more than ₹15,000 (computed at gross less HRA) and does not have a PF account (never had one or has withdrawn all the money), then they may be eligible for exemption. Please refer to the PF regulations for more information.

Please note that if they are already under PF, it cannot be stopped just because their salary has increased. You need to inform the employee that it is a statutory obligation and cannot be skipped. In case they are unaware of the benefits, I suggest you inform them as well.

Dear HR CLAL,

Some additional comments on the issue following Mr. V.M.L's reply. You have mentioned that the CTC sums up to Rs. 20,000.00 per month. However, CTC is an all-inclusive cost of employment, which comprises components falling under the definitions of the term wage under both the ESI Act, 1948, and the EPF Act, 1952, including the excluded ones. Therefore, the threshold wage under the ESI Act, being above the CTC, means neither the employee nor the employer has any choice in the enrollment.

Regarding enrollment into EPF, the wage threshold is Rs. 15,000.00 per month only. Out of the CTC of Rs. 20,000.00 per month, if the components constituting wages are Rs. 15,000.00 or below, then there is no choice to be outside the EPF. Moreover, if he is already a member of the EPF, then he has to continue, of course, limiting the contribution to the threshold amount of wages.

If the employee's previous PF account has been closed and he doesn't want to continue with it again, is it possible to provide only ESI service?

If the conditions I mentioned above are fulfilled, then yes. If his starting salary was less than $15,000, then no.

If the person has a starting salary (when he joined your organization) of more than ₹15,000 (computed at gross less HRA) and does not have a PF Account (never had or withdrawn all the money), then he may be eligible for exemption.

Can you provide any database for this?
(Please refer to the PF regulations for the same.)