Whether EPF is a mandatory Act? Whether an Employee can opt out of EPF scheme? If yes, then will it not affect the objectives of Social Securites Act?

Our organization is covered under EPF Act as we have employed more than 20 employees. We have hired a contractor's services, but he has refused to pay provident fund by saying that the employees deputed in our organization have opted out of the scheme by filling Form 11 and he had attached Form 11 with the bills. However, the said Form contains only the self-declaration that these employees are presently not the member of such scheme, but it has nothing which shows the disinterest of the employees. Our organization is ready to pay provident fund, but the contractor is kept on saying that it has no liability as the employees are not willing and their salaries is above INR 15,000. In such circumstances, the issue is Whether the EPF Act is not a mandatory Act? If yes, then Will it not affect the core spirit of the social securities laws? As employees will be willing to take more salary in home.

Here is multiple dimension of the issue. Form-11 under EPFO is for declaration from employee whether the employee was earlier member of EPFO or not. There is no option for employee's willingness to join as EPFO member or not. If the employee was earlier member, then to disclose all details including UAN number etc.

If the employee was earlier member of EPFO but discontinued joining new organization as the PF gross is more than 15,000/- per month, it is illegal. The employee should continue as EPFO member.

If the employee is joining first time in any organization with more than 15,000/- per month PF gross , the employee will be considered as excluded employee and will not be member of EPFO. They may be member of EPFO voluntarily subject to agreement of PE.

In the instant case , the merit has to be judged based on above conditions.

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

As SK has explained, if the employee joins a new organisation with salary above 15,000 (basic + DA), and do not have existing PF account (never had or closed it by withdrawing the money in it), then they may opt out of PF by claiming to be exempt employees. For this, the details are filed in Form 11

If they fulfil the criteria, then you are not liable for the PF.
If you follow that route, keep copies of all the documents and ensure that any new employee also falls into the same criteria, or they have to immediately register and pay the PF