Dear All experts, Please give me suggestions regarding queries I have about the PF deduction on stipend payments made to trainees in a pharmaceutical firm. We have paid stipends to some of our trainees. The question now is whether PF will be deducted from the stipend payment. If not, is there any judgment on it?
Regards,
Nilesh
From India, Mumbai
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13Regards,
Nilesh
From India, Mumbai
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Dear Friend, For Trainees you need to pay PF contributions as per the Apex Court Judgement - Mangalore Araco VS Regional PF Commissioner. Stiphend is not wages. G.K.Manjunath Sr. Manager-HR
From India, Bangalore
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From India, Bangalore
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Please find the news report from The Hindu on the subject.
A Trainee is Not an Employee: Apex Court
Legal Correspondent
They do not come within the ambit of the EPF Act.
NEW DELHI: The Supreme Court has held that an apprentice or a trainee is not an employee, and the employer is not liable to contribute Provident Fund for him or her.
A Bench, comprising Justice Arijit Pasayat and Justice R. V. Raveendran, held that trainees are apprentices engaged under the Standing Order of an organization or under the Apprentices Act and 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."
Regards,
G.K. Manjunath,
Sr. Manager-HR
From India, Bangalore
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A Trainee is Not an Employee: Apex Court
Legal Correspondent
They do not come within the ambit of the EPF Act.
NEW DELHI: The Supreme Court has held that an apprentice or a trainee is not an employee, and the employer is not liable to contribute Provident Fund for him or her.
A Bench, comprising Justice Arijit Pasayat and Justice R. V. Raveendran, held that trainees are apprentices engaged under the Standing Order of an organization or under the Apprentices Act and 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."
Regards,
G.K. Manjunath,
Sr. Manager-HR
From India, Bangalore
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Trainees and the EPF Act
That does not mean that all trainees are excluded from the purview of the EPF Act. Even without a verdict of the Court, it is a well-settled law as per the Employees' Provident Fund and Miscellaneous Act that trainees engaged as per the provisions of the certified Standing Orders are excluded from PF. Also, those who are engaged following the provisions of the Apprentice Act are also apprentices and not employees, not coming under the purview of any Labour Act.
However, a clear distinction has also been drawn between those who are engaged as part of provisions in the Standing Orders "of the company" or Apprentice Act and others who are just designated as trainees to deter their rights under various Labour Acts. Accordingly, all trainees who are not coming under the category of apprentices under the Apprentice Act or trainees under Standing Orders (of the company) are employees who are entitled to get minimum wages, PF, ESI, Bonus, Maternity benefits, and other benefits equal to regular employees and protection as per the Industrial Disputes Act.
One more thing, I have specified "of the company" along with Standing Orders to mean that all the companies may not have standing orders and the question of trainees under standing order does not arise in the case of companies which do not have certified Standing Orders.
Regards,
Madhu.T.K
From India, Kannur
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That does not mean that all trainees are excluded from the purview of the EPF Act. Even without a verdict of the Court, it is a well-settled law as per the Employees' Provident Fund and Miscellaneous Act that trainees engaged as per the provisions of the certified Standing Orders are excluded from PF. Also, those who are engaged following the provisions of the Apprentice Act are also apprentices and not employees, not coming under the purview of any Labour Act.
However, a clear distinction has also been drawn between those who are engaged as part of provisions in the Standing Orders "of the company" or Apprentice Act and others who are just designated as trainees to deter their rights under various Labour Acts. Accordingly, all trainees who are not coming under the category of apprentices under the Apprentice Act or trainees under Standing Orders (of the company) are employees who are entitled to get minimum wages, PF, ESI, Bonus, Maternity benefits, and other benefits equal to regular employees and protection as per the Industrial Disputes Act.
One more thing, I have specified "of the company" along with Standing Orders to mean that all the companies may not have standing orders and the question of trainees under standing order does not arise in the case of companies which do not have certified Standing Orders.
Regards,
Madhu.T.K
From India, Kannur
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PF Judgement - SC - Trainee - 2006.doc
Interest on PF taxability case law.pdf