Coverage of Trainees Under the PF Act 1952
Are "Trainees" covered under the provisions of the PF Act 1952? The basic question arises as to whether the trainees are recruited under the Apprenticeship Act of 1961 or not. In my opinion, a trainee appointed under the Apprenticeship Act is exempted from PF contributions; all others are covered under the provisions of the PF Act.
Please advise.
Regards,
Prabhakar Srivastava
Pune
From India, Aurangabad
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2Are "Trainees" covered under the provisions of the PF Act 1952? The basic question arises as to whether the trainees are recruited under the Apprenticeship Act of 1961 or not. In my opinion, a trainee appointed under the Apprenticeship Act is exempted from PF contributions; all others are covered under the provisions of the PF Act.
Please advise.
Regards,
Prabhakar Srivastava
Pune
From India, Aurangabad
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Coverage of Trainees Under EPF and ESI
Trainees engaged following the provisions of a certified Standing Orders of the company and the apprentices engaged following the provisions of the Apprentice Act are excluded from the coverage of EPF. Whereas, all other trainees are covered as if they are employees of the company.
For ESI exemption, only apprentices engaged under the Apprentices Act are excluded, and those engaged under the provisions of Standing Orders are also covered.
Regards,
Madhu.T.K
From India, Kannur
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Trainees engaged following the provisions of a certified Standing Orders of the company and the apprentices engaged following the provisions of the Apprentice Act are excluded from the coverage of EPF. Whereas, all other trainees are covered as if they are employees of the company.
For ESI exemption, only apprentices engaged under the Apprentices Act are excluded, and those engaged under the provisions of Standing Orders are also covered.
Regards,
Madhu.T.K
From India, Kannur
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Trainees were considered employees of an establishment. Their appointment is under the provision of standing orders. As far as apprentices are concerned, they are not employees. Therefore, the provision of EPF is only mandatory for the salary that the trainees receive, not for the stipend provided for apprenticeships.
Thanks & regards,
Sumit Kumar Saxena
[Phone Number Removed For Privacy Reasons]
From India, Ghaziabad
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Thanks & regards,
Sumit Kumar Saxena
[Phone Number Removed For Privacy Reasons]
From India, Ghaziabad
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I agree with what you have said. Let me be a little clearer about my doubt. I have appointed an MBA fresher as a "Management Trainee," and I am paying a stipend of Rs 15,000. As per the terms of his appointment letter, he will be a trainee for 12 months. Will he be covered under the provisions of the PF Act 1952? Please let me know the reference where I can get more clarification on this.
Interpretation of Employee Definition under PF Act
My interpretation of the definition of an Employee as per section 2 (F) of the PF Act is that these Management Trainees are liable for PF Contribution. "Employee" means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer. It includes any person (i) employed by or through a contractor in or in connection with the work of the establishment; (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961, or under the standing orders of the establishment.
Please clarify.
Regards,
Prabhakar
From India, Aurangabad
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Interpretation of Employee Definition under PF Act
My interpretation of the definition of an Employee as per section 2 (F) of the PF Act is that these Management Trainees are liable for PF Contribution. "Employee" means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer. It includes any person (i) employed by or through a contractor in or in connection with the work of the establishment; (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961, or under the standing orders of the establishment.
Please clarify.
Regards,
Prabhakar
From India, Aurangabad
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I hope I have given the clarification in my previous post itself that all trainees, other than apprentices engaged under the Apprentice Act, are covered by PF. In case you appoint Management Trainees, they are covered by EPF subject to their salary factor. If their salary, stipend, or by whatever name it is described, is more than Rs 6500, then it is up to you whether to provide coverage or not. If the practice of your company is not to cover any employee whose salary at the time of joining is more than Rs 6500, then you can exclude him. But if you have a salary bifurcation and if the Basic and DA total less than Rs 6500, naturally he will be covered even if his total/gross salary exceeds Rs 6500.
To continue with the previous post, if you have certified Standing Orders and if the orders contain provisions for the engagement of Management Trainees for one year, then he can also be excluded.
Regards,
Madhu.T.K
From India, Kannur
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To continue with the previous post, if you have certified Standing Orders and if the orders contain provisions for the engagement of Management Trainees for one year, then he can also be excluded.
Regards,
Madhu.T.K
From India, Kannur
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Yes, Mr. Madhu, you are right. The apprentices under the Apprenticeship Act, 1962, and trainees included in Standing Orders are exempted from PF. Thanks, Mr. Prabhakar Srivastava and others for sharing the case.
Regards,
From India, Delhi
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Regards,
From India, Delhi
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Supreme Court Ruling on Apprentices and Trainees
The Supreme Court has held that an apprentice or a trainee is not an employee, and the employer is not liable to contribute to the Provident Fund for him or her.
A Bench, comprising Justice Arijit Pasayat and Justice R. V. Raveendran, held that trainees and apprentices engaged under the Standing Order of an organization or under the Apprentices Act will not come within the ambit of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Bench noted that Section 2(f) of the EPF Act "defines an employee to include an apprentice but, at the same time, makes an exclusion in the case of an apprentice engaged under the Apprentices Act or under the Standing Orders. Under the Model Standing Orders, an apprentice is described as a learner who is paid an allowance during the period of training." Therefore, employers are not obliged to contribute to the PF for them.
The Bench, by its order, upheld a judgment of the Karnataka High Court rejecting the claim of 45 trainees of the Central Arecanut and Cocoa Marketing and Processing Co-op. Ltd, Mangalore, claiming PF payment. The Regional Provident Fund Commissioner (RPFC), Mangalore, had held that the trainees were employees for the purpose of the Act and the respondent was liable to pay the quantified amount.
The company challenged this order in the High Court, and the court concluded that trainees were not employees as per the Act and reversed the RPFC's order.
Dismissing the appeal, the apex court held that "in the case at hand, trainees were paid a stipend during the period of training. They had no right to employment, nor any obligation to accept any employment if offered by the employer. Therefore, the trainees were apprentices engaged under the 'Standing Orders' of the establishment. That being so, the view of the learned single judge as affirmed by the Division Bench of the High Court cannot be faulted."
From India, Mumbai
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The Supreme Court has held that an apprentice or a trainee is not an employee, and the employer is not liable to contribute to the Provident Fund for him or her.
A Bench, comprising Justice Arijit Pasayat and Justice R. V. Raveendran, held that trainees and apprentices engaged under the Standing Order of an organization or under the Apprentices Act will not come within the ambit of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Bench noted that Section 2(f) of the EPF Act "defines an employee to include an apprentice but, at the same time, makes an exclusion in the case of an apprentice engaged under the Apprentices Act or under the Standing Orders. Under the Model Standing Orders, an apprentice is described as a learner who is paid an allowance during the period of training." Therefore, employers are not obliged to contribute to the PF for them.
The Bench, by its order, upheld a judgment of the Karnataka High Court rejecting the claim of 45 trainees of the Central Arecanut and Cocoa Marketing and Processing Co-op. Ltd, Mangalore, claiming PF payment. The Regional Provident Fund Commissioner (RPFC), Mangalore, had held that the trainees were employees for the purpose of the Act and the respondent was liable to pay the quantified amount.
The company challenged this order in the High Court, and the court concluded that trainees were not employees as per the Act and reversed the RPFC's order.
Dismissing the appeal, the apex court held that "in the case at hand, trainees were paid a stipend during the period of training. They had no right to employment, nor any obligation to accept any employment if offered by the employer. Therefore, the trainees were apprentices engaged under the 'Standing Orders' of the establishment. That being so, the view of the learned single judge as affirmed by the Division Bench of the High Court cannot be faulted."
From India, Mumbai
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My understanding of the law is that apprentices under the Apprentices Act, 1961, and trainees, as engaged under the standing orders of an establishment, are excluded from the coverage under the EPF Act. In your case, since you have been appointed on a salary exceeding the prescribed limit of Rs. 6,500/- and if you have not been a member of EPF earlier, you will not be liable for the benefits of the provident fund under the scheme as you will be termed as an 'excluded employee'.
Categories of Excluded Employees
The excluded employees are categorized as follows:
(i) An employee who has been a member of the Fund and withdrew the PF accumulations from his accounts.
(ii) An employee whose pay at the time he is otherwise entitled to become a member of the fund exceeds Rs. 6,500/- per month.
I hope the position is clear to you.
Regards,
B. S. Kalsi
Contributing Member
From India, Mumbai
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Categories of Excluded Employees
The excluded employees are categorized as follows:
(i) An employee who has been a member of the Fund and withdrew the PF accumulations from his accounts.
(ii) An employee whose pay at the time he is otherwise entitled to become a member of the fund exceeds Rs. 6,500/- per month.
I hope the position is clear to you.
Regards,
B. S. Kalsi
Contributing Member
From India, Mumbai
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Dear Prabhakar,
I have gone through the details cited by you, and it was noted that the management trainee is appointed under the standing order. As the trainee is appointed, he will be compensated with salary and wages instead of a stipend.
Thanks and Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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I have gone through the details cited by you, and it was noted that the management trainee is appointed under the standing order. As the trainee is appointed, he will be compensated with salary and wages instead of a stipend.
Thanks and Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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Dear All,
Exemptions Under the Apprenticeship Act and Standing Orders
It is clear that any person or employee engaged under the Apprenticeship Act of 1961 is exempted under the E.P.F. Act. In continuation of this, any person or employee engaged as a trainee under the provisions of the Standing Orders of an establishment is also excluded from the same.
Scrutinizing Employee Engagement
Now, how can we examine or scrutinize whether any person or employee has been engaged under the Standing Orders or the Apprenticeship Act? Sometimes, they join as regular trainees, learners, or freshers in the same establishment, but they are still not members under the E.P.F.
Obtaining Certificates and Provisions
Please explain how to obtain an Apprenticeship Act certificate. How can one obtain the provisions of the Standing Orders? Who is authorized to grant these exemptions?
Thank you.
From India, Mumbai
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Exemptions Under the Apprenticeship Act and Standing Orders
It is clear that any person or employee engaged under the Apprenticeship Act of 1961 is exempted under the E.P.F. Act. In continuation of this, any person or employee engaged as a trainee under the provisions of the Standing Orders of an establishment is also excluded from the same.
Scrutinizing Employee Engagement
Now, how can we examine or scrutinize whether any person or employee has been engaged under the Standing Orders or the Apprenticeship Act? Sometimes, they join as regular trainees, learners, or freshers in the same establishment, but they are still not members under the E.P.F.
Obtaining Certificates and Provisions
Please explain how to obtain an Apprenticeship Act certificate. How can one obtain the provisions of the Standing Orders? Who is authorized to grant these exemptions?
Thank you.
From India, Mumbai
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Trainees appointed under the Apprentices Act of 1961 and 1973 are registered under the Government ITI (for Trade Apprentices under the 1961 Act) and the Board of Apprentices (under the 1973 Act). They receive a registration number, etc., upon registration with the respective authorities. Trainees taken on under the Standing Orders of the establishment should have this specified in the offer/Appointment Letter, along with the clause on the Standing Orders of the Establishment. Otherwise, it is advisable to provide coverage under PF to avoid future complications.
From India, Madras
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From India, Madras
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In fact, our current discussion is on PF for Trainees. However, I still wish to share information on ESI for Trainees. As we discussed, trainees engaged under the SO Act are excluded from PF, but they are covered under ESI. Shri. Madhu ji rightly mentioned this in his reply at the beginning. By the 2010 amendment, trainees engaged under the SO Act are now brought under the ambit of the ESI Act.
From India, Mumbai
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From India, Mumbai
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HC All - Trainees not covered for PF -2010.pdf