Can Employees Legally Opt-Out of PF Deductions with a Written Request? Seeking Guidance on Proper Practices

Dear Sir,

PF Deduction Query

I have a question regarding PF deduction: One employee previously worked for another organization and had a UAN number. After some time, they left the job and withdrew the PF. Subsequently, they joined another organization but do not wish to have PF deductions. They have submitted a letter requesting a waiver of PF deductions. Is this legally acceptable or considered improper practice? If it is correct, please share the relevant section and clause details. If it is incorrect, please advise on the appropriate course of action.

PF Waiver for New Employees

Additionally, in the case of a new employee who has never worked elsewhere and does not possess a UAN number, can we consider a PF waiver option based on a written letter from them?

Exclusion from PF Coverage for New Employees

If the basic salary (PF qualifying salary) of a new employee, who has never been a PF member before, exceeds Rs 15,000, they can be excluded from PF coverage. You may collect Form 11, in which they will declare that they had no PF earlier.

Handling Existing PF Members

In the case of an existing PF member, they must provide a declaration in Form 11, stating that they are not an existing member of PF. Normally, even after withdrawing the PF, their Universal Account Number (UAN) would remain active. If you exclude them, they might request PF later as it is a tax-saving investment. To protect against legal issues, ensure you have a declaration in the prescribed form that they do not have a UAN. If the employee is willing to declare that they do not have a UAN, you can exclude them from PF. However, if their PF qualifying salary is not more than Rs 15,000, they should receive PF, even if they declare they do not have a UAN.

The Form 11 is attached.