Can a New Employee with No Past Job History Opt Out of Provident Fund? Seeking Clarification

Hi all, can anyone help me with this circular or gazette regarding the statement below or as mentioned in the ACT for opting out of PF for a new joiner who doesn't have any previous employment history? An employee with a basic salary of over Rs. 15,000 and who has never been a member of EPF can opt out of the scheme. However, once they become a member, they cannot opt out of the scheme.

Thanks,
Subramanyam
HRD

Yes, if you are not an existing member of EPF and are joining a new establishment with a basic salary of more than Rs 15,000, then you can be excluded from EPF. A declaration in Form 11 stating that you do not have any Universal Account Number (UAN) allotted by the EPF is required to be submitted to the employer so that they can exclude you.

At the same time, if you are an existing member of PF, then you should continue the membership even if your salary exceeds Rs 15,000.

Dear Subramanyam,

You can opt out of EPF as per Sec 17 under the Employees' Provident Fund and Miscellaneous Act, 1948. However, this is applicable only if your employer is an exempted establishment.

Mr. K. Ramesh, Section 17 of the EPF and MP Act 1952, speaks about exemption to an establishment and not excluding an employee from the coverage. Exemption is granted to establishments that can provide employee benefits better than what is provided by EPFO. Even an establishment not exempted but covered by EPF can exclude certain employees from coverage. The post relates to excluding an employee and not exempting an establishment.

Hi Mr. Subramanyam,

As per the EPF Act, employees whose basic salary is above Rs. 15,000 are considered excluded employees, and it is not mandatory to cover them under the scheme. However, if they are already EPF subscribers and their salary is now increased above Rs. 15,000, they should continue to receive the scheme benefits, subject to a maximum basic salary of Rs. 15,000 (i.e., to continue contributions of Rs. 1,800 each, from both sides, indefinitely) and not necessarily above this.

In this regard, the employer should obtain a declaration in the specified format from the employee upon joining the employment. If the employee declares that they are not an existing EPF subscriber, then the employer can allow them to opt out of the scheme. I hope the above clarifies any doubts you may have.