You cannot consider gross salary for excluding an employee and Basic salary (plus DA, if available) for contribution and coverage. If the gross pay is Rs 16,000 and out of it an amount of Rs 1,000 is HRA, then his PF qualifying salary will come to Rs 15,000. In such a scenario, he should be covered by EPF without fail. The employee cannot refuse to accept it because the law is for all the people of India and not for a particular person.