Interns and EPF: What Declaration Do We Need for Non-Deduction?

Dear Experts, I need clarification about EPF matters for interns. What kind of declaration document has to be obtained from interns for non-deduction of EPF? We are paying Rs 21,500/-, so we are exempted from ESI and EPF limits.

Thanks and Regards, D. Devarajan

Hi, I'm not sure whom you are referring to as interns. As part of their curriculum, college final-year students gain practical work exposure through internship training with organizations. These students need to submit an authorization letter from their respective colleges for the internship training. For such interns, PF/ESI is not required, and there is no need to obtain any declarations from them.

Understanding Interns and Their Exclusion from PF and ESI

An intern is a student undergoing a program at a university, engaging in project work or an internship as part of the university curriculum. The duration of such internships may extend to four or six months, after which they return to their campus. These interns are completely excluded from PF (and ESI). To support this exclusion, you only need to produce a letter from their institution requesting permission for them to undertake the project or internship. The letter should clearly state that they are doing it as part of the curriculum.

If you pay them Rs 21,500 per month, no document is required to exclude them from ESI. However, you can collect Form 11 (PF), which declares that they do not have any PF account.

Clarification on Intern vs. Trainee

Paying this amount to an intern may imply that you should be paying a regular employee around Rs 50,000 as a starting salary. Or is it that you mean a TRAINEE when you refer to an intern? In that case, the status will change, and the intern will qualify for various rights under different labor enactments such as Gratuity, annual leave, etc.

After completing graduation, they join our company as interns. We provide a stipend of Rs 21,500 per month without deductions for ESI and EPF, as they have exceeded the statutory limit of Rs 21,500/-. In this case, the employer must obtain a declaration from the interns for non-deduction of statutory EPF.

Questions Regarding EPF Declaration
1) Is the declaration form mandatory?
2) Is there a specific form/format according to the EPFO?

Hi, you need to term them as Trainees and not Interns. Trainees are like regular employees undergoing training for a specific period.

You cannot call them interns because interns are those who are undergoing an internship as part of the curriculum of the university. You can only call those who have completed their program and come to gain some practical knowledge from your company as trainees.

Types of Trainees

Trainees can be of two types: those engaged following the Apprentice Act and those engaged directly without following the Apprentice Act. The former may be of two types, undergoing training in designated trades and those under optional trades. These trainees are totally excluded from all labor acts. However, their stipend should be at par with the stipend fixed by the Central Government in this regard.

All trainees other than apprentices are just like regular employees. They should be given the coverage of all labor acts. It is true that since their salary (no need to say stipend since they are employees only) is above Rs 21,000, they will not come under ESI, EPF, and Bonus. However, their service will count for gratuity. They should be given leave as per the law in force. Whatever the work assigned, be it development or research, they are employees only.

An intern is a trainee who has signed on with an organization for a period of 3 to 6 months, and we are paying the monthly stipend.

You need to term them as Trainees and not Interns. Trainees are like regular employees undergoing training for a specific period. Reply: Yes, but in our case, they are paid interns for a specific period of 3-6 months.

Hi, irrespective of the specific period or whatever name you may assign, such a category of employment should be treated as regular employees only. I hope your organization is not running a training institute. The purpose behind their training is to utilize their service after the training period, which will be cost-effective compared to an experienced candidate in the same field, right? So, for the purpose of gratuity and other benefits, their actual date of joining, right from the training period, should be considered.

In addition to what Lakshmi Narayan has mentioned, let me also ask one question: Will you not engage these 'interns' in night shifts? Will you not engage them in overtime? A trainee should not be engaged during nights, and you cannot allow him to do overtime work.

Anyway, the nomenclature used by your organization is wrong, and you should accept it rather than defending blindly. The answer you were seeking has been given to you, and the rest is your duty. There is no document to be kept to exclude an employee from the coverage of ESI if his salary is more than Rs 21,000, and you should collect Form 11 as support that he is not an existing member of PF. In case this 'intern' has had a PF account with his previous company, certainly, he should be given PF in your company also, even if you are paying him a 'stipend' of Rs 21,500. In such cases, he will declare his previous/existing PF account number or UAN in Form 11. No nomenclature can exclude him from the coverage of PF then.