PF AND ESI - Is it possible to give only ESI service?

An employee has a CTC of 20000, and he wants only ESI service. He doesn't want the PF facility. Is it possible to provide only 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 his future, pension facilities after 9.6 years of service, EDLI benefits, etc.

The decision on whether or not to give PF to an employee is decided by law and not the desires of an individual employee. 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your organization) of more than ₹15,000 (computed at gross less HRA) and does not have a PF Account (never had or withdrawn all the money), then he may be eligible for exemption. Please refer to the PF regulations for the same.

Please note that if he is already under PF, then it cannot be stopped just because his salary went higher. You need to inform the employee that it is a statutory due and cannot be skipped. In case he does not know the benefit, I suggest you inform him of the same too.

Dear HR CLAL,

Some additional comments on the issue following Mr. V.M.L's reply. You have mentioned about CTC summing up to Rs. 20,000.00 per month. But CTC is an all-inclusive cost of employment which comprises the components falling under the definitions of the term wage under both the ESI Act, 1948, and the EPF Act, 1952, and the excluded ones too. 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 again.

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your organization) of more than ₹15,000 (computed at gross less HRA) and does not have a PF Account (never had or withdrawn all the money), then he may be eligible for exemption.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

What database do you expect when this is a part of the law? If you are looking for the provisions, do go and read the law.

And I suggest you be clear in your communications so that you do not confuse people.