Is PF Deduction Mandatory During Probation, or Can Companies Opt Out?

Is it correct that the PF is not deducted from the salary when an employee is on a probation period or is it mandatory as per the law in all conditions.

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It is important to clarify the policy regarding PF deduction during an employee's probation period. Typically, PF deductions are applicable from the start of employment, including the probation period. However, specific regulations may vary based on the company's policies and local labor laws. It is recommended to review the employment contract and relevant regulations to determine the exact requirements in this situation.

Hi,

PF is to be deducted right from day 1 of your employment. It has nothing to do with the probationary period.

Siva

Hi,

Friend,

There is no relation between PF and the probation period of an employee. PF is a social right of each and every employee. Also, PF is optional for an employee, not mandatory.

Regards,
Bhagwan
Sr. HR
TM Group

It's very true. PF is actually a statutory obligation of the employer provided the factory/company is covered under the PF Act, which I believe is "any factory or undertaking employing more than 20 employees."

Not only does the employer have to deduct the PF (if applicable), but they also have to contribute an equal amount from their own funds. The probationary period has nothing to do with the statutory obligations of the employer. However, an Industrial Trainee or other trainees not employed on the rolls of the company are not covered under PF rules or the Act.

Please correct me if I am wrong here.

Regards,
Manish

You can skip deducting PF from salary if the employee is a trainee, e.g., management trainee, GET. However, make sure the salary is paid under the name of stipend.

Hi,

Is it obligatory on the part of the employer to deduct PF of employees from day one of the employees entering the organization? If we have Trainee Engineers and we are giving them a stipend during the probation period, is the employer liable to deduct their PF as they are trainees?

Dear Nagpal,

Training is different from probation.

Training:
You engage a fresher and call him a Trainee, it is acceptable. If you engage a person with 5 years of experience and call him a Trainee, it is generally not acceptable. During training, we give inputs. We do not expect outputs. If you expect outputs from a Trainee, then it will be construed as regular employment. Practically, this may not happen. But on records, don't show targets for a Trainee.

Probation:
It is an observation period. You expect output from him.

Siva

Dear Nagpal,

I agree with Siva. Nagpal, as you said, a trainee is entitled to receive a stipend and not a salary on a monthly basis. Therefore, a trainee is not entitled to receive regular benefits like PF, HRA, and others as company employees do. On the other hand, a company cannot impose deductions of statutory complaints such as PF on trainees.

Regards,
Nandansingh
Primetime Consulting

Dear Siva,

Regarding your comment on Training and Probation, I didn't understand what is practically not possible. Did you mean that we can't appoint a candidate as a trainee on a regular basis? Can you explain the subject of not showing targets of a trainee?

You provided an example of appointing a person with 5 years of experience as a trainee, but can a fresher be appointed as a trainee on a regular basis or not?

Regards,
Manisha