Dear All,

Please guide me on this issue. I want to know whether PF is deducted from the stipend of the trainee. In our organization, people from Accounts are arguing with me on the same. According to them, PF should be deducted from every new joining employee, even if he is receiving a stipend during the training period.

Regards,
Archana

From India, Mumbai
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No, although i am not very sure with amendments in rules. But PF is not deductable from stipend of trainee, it is applicable to salaried employees. R sandhu
From India, Delhi
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Hi Archana, PF is deducted for everyone employed including trainees. The only exception are apprentices - PF is not deducted from the stipend as per the Apprentice Act. Regards, Anuradha
From India, Pune
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  • Hai, As per the judgement given by supreme court 'Trainee’is not an employee therefore PF may not be deducted. smile, smitha
    From India, Bangalore
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    Dear Smitha,

    Only for apprentices under the Apprentice Act, there is an exemption under the PF Act. As for trainees, it is up to the company to deduct PF. If trainees are treated at par with employees under the Certified Standing Orders of the company or company rules, PF should be deducted. On the other hand, if they are not treated as employees, then PF need not be deducted.

    I personally feel PF should be deducted from the employee angle because it is a good social security measure.

    Regards,
    SC

    From India, Thane
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  • Hi,

    We are currently deducting only ESI and Professional Tax from trainees and not PF. How would one differentiate between trainees and apprentices? Both of them get paid by stipend.

    Can anyone provide more detailed clarity on this, please?

    Cheers,
    Khushnum

    From India, Bangalore
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    Hi Swastik,

    I have a doubt now after reading your response. There are two types of trainees: Trainees who come for intern training during the semesters (say a period of 2-3 months) and the other type is freshers who join the organization for a permanent vacancy in the organization (taken as trainees by virtue of no experience, given on-the-job training and then absorbed in the organization after successful completion of the training period).

    Both are paid a stipend, but as far as the industry standard goes, we do not deduct PF or ESIC for them. It is only for the permanent trainee (oxymoron!) position that we deduct PF and ESIC.

    Is this the right way? Can you shed some light on this?

    Regards,
    Anuradha

    From India, Pune
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    Dear Anuradha,

    The intern or summer trainee is actually a student who is under the ultimate control (authority) of the Education Institute they are in. The relationship between the student and the Education Institute is not that of an employer and employee, and this status remains during the training period. It is not compulsory (I mean, under any law) to pay them a stipend; if a company wants, they can, and if the company does not, they won't. Therefore, the two major criteria (control and salary payment) to qualify for an employer-employee relationship do not exist in this case, and hence no statutory formalities need to be followed.

    Regards,
    SC

    Dear Archana,

    What site do you want??

    Regards,
    SC

    From India, Thane
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    Hi,

    The discussion seems to be opinion-oriented.

    The Supreme Court of India on January 30, 2006, decided the issue conclusively. The citation of the case is, Regional Provident Commissioner, Mangalore v Central Arecanut & Coca Marketing & Processing Co-op Ltd. Mangalore (2006 I CLR 861).

    One must read the entire judgment to appreciate the matter. The gist of the matter is that "the Trainees appointed under the standing orders applicable to the establishment are not covered by the definition of the term 'employee' u/s 2(f) of the EPF act." This section makes a specific inclusion of an Apprentice but clearly excludes an Apprentice under the Apprentices Act or under the Standing Orders of the establishment.

    Being a judgment of the highest court, we can safely follow the same within the parameters laid out by the judgment.

    With this explanation, I suppose the confusion, conflicting viewpoints, facts, and opinions will merge, and clarity on the issue will remain.

    As food for thought, would someone care to examine the definition of "employee" under the ESI act and comment on the same so that another useful thread will start?

    I trust all interested parties are now satisfied. Any labor lawyer in your area will make a copy of the decision easily available to you, please. Read the same to digest the full import of the matter!

    Cheers and Regards,

    Samvedan

    September 22, 2006

    From India, Pune
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  • hi!

    if the person concerned is an apprentice then pf cannot be deducted.(as per The Apprentcieship Act, 1959)

    Sec 37.—A person who carries on a designated trade in an apprenticeship district for the purposes of the trade shall not take into his employment by way of apprenticeship in the trade and in the district any person—

    ( a ) other than a person who is registered in the register of candidates kept, under section 43 of this Act, by the apprenticeship committee for the trade and the district, and

    ( b ) save with the consent of such committee.

    Sec 50.—For the purpose of facilitating employment by way of apprenticeship in a designated trade, an apprenticeship committee for the trade—

    ( a ) may arrange for the taking of a particular person into employment by way of apprenticeship in the trade and in the district of the committee by a particular employer, or

    ( b ) where a person employed by way of apprenticeship in the trade desires to be transferred from one employer to another in the district of the committee or from an employer in the district of the committee to an employer in another apprenticeship district for the purposes of the trade, may arrange for the carrying out of the transfer, or

    ( c ) where it considers it desirable that a person employed by way of apprenticeship in the trade should be transferred from one employer to another in the district of the committee or from an employer in the district of the committee to an employer in another apprenticeship district for the purposes of the trade, may arrange for the carrying out of the transfer.

    sec 37.—A person who carries on a designated trade in an apprenticeship district for the purposes of the trade shall not take into his employment by way of apprenticeship in the trade and in the district any person—

    ( a ) other than a person who is registered in the register of candidates kept, under section 43 of this Act, by the apprenticeship committee for the trade and the district, and

    ( b ) save with the consent of such committee.

    if the person concerned is a trainee then definitely yes.

    Shyamali

    From India, Nasik
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  • Dear Samvedan,

    You are absolutely right. However, I was referring to situations. I have known companies that have listed the names of Labour Welfare Officers and Safety Officers in the Annual Return of Factories, who are actually trainees and have been performing the duties of LWOs or Safety Officers.

    In this context, we should adhere to the spirit rather than just the letter of the law. When it comes to trainees, many of them are entrusted with responsibilities and independent duties that should not be assigned to a trainee. Even for fulfilling statutory requirements, trainees have been included. Companies have utilized trainees to fill vacancies, having them work at 1/10th of the cost while receiving full-time benefits. Therefore, in the operational field, a Trainee Asst. Manager (Marketing) may function as an Asst. Manager (Marketing), but for PF coverage, the same individual is categorized as a trainee.

    While all these laws can be applied to the working class due to existing regulations, the scenario differs for management cadre and trainees. They are often not covered by specific laws or Standing Orders, and companies frequently require them to work as a manager would, providing benefits based on what is most advantageous for the company.

    I believe I am not merely expressing my opinion but rather presenting practical situations. Furthermore, if a company includes its trainees under PF, is this considered illegal?

    Regards,

    SC

    From India, Thane
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    Hi!

    As per the Payment of Wages Act, 1952, every employee, including those employed through a contractor (but excluding apprentices under the Apprentice Act), who receive wages up to Rs. 6,500/- falls under the purview of this act.

    Satish

    From Germany
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    Hi,

    The law is a funny animal.

    The definition of "employee" under states, ...ii) engaged as an apprentice, not being an Apprentice under the Apprentices Act 1960 or under the standing orders of the establishment.

    This means that there is yet another category of "apprentices" not clearly defined anywhere that could get covered as an "employee" for the purposes of the Act.

    Be that as it may, I only pointed to a case law from which one may draw support or learn a lesson.

    Swastik, I appreciate each point raised by you. We are NOT the custodians of the morality or commitment towards legal compliance of any employer. We must appreciate that the law prescribes only the minimum and does NOT prevent the employer from doing better than the legal stipulations. One just cannot contract out of the law, and that is an uncompromising feature of the law of the land!

    As for other observations in this thread, it is clear that this law does NOT recognize any levels of employment. As of now, it only says that if an employee is paid a salary/wage less than Rs. 6500/- p.m (as Basic+DA), then he has to be covered under the act even if he is employed just for a day! This limit of the EPF and in course of time, your salary/wage crosses the coverage limit, at that point of time, then you continue to be a member of PF but the contributions would be restricted to the ceiling of the coverage limit.

    If you join a new employment at a salary/wage in excess of Rs. 6500/- p.m. (Basic+DA), then you are an "exempted employee" and the new employer may or may not cover you in PF depending upon the policies of that organization but even if he does cover you, your contributions will continue to be restricted to the ceiling limit.

    This is how the PF operates. Again, there are employers that continue to cover employees irrespective of the salary/wage being in excess of the coverage limit and contribute on actual Basic+DA.

    You get all sorts. The cases mentioned by Swastik are interesting, and one would like to know more details before one could comment! If culprits escape the law, they don't become decent folks; they can at best carry on a pretense of decency, and everyone is innocent till proven guilty, which is what Indian jurisprudence is based on. A very noble value often misapplied at all levels!!!

    I suppose I should stop here (at least for the time being!!)

    Regards,

    Samvedan

    September 22, 2006

    From India, Pune
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  • Hi,

    As per Section 2(f) of the PF Act, "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 receives his wages directly or indirectly from the employer. This 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 (52 of 1961), or under the standing orders of the establishment.

    It is not applicable only to the apprentices as per the Apprenticeship Act. All others are covered.

    Regards,
    Mahesh D.S.

    From India, Madras
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  • Hi, Why do you ignorw the last sentence of the Sec 2(f) (ii) of the definition of an "employee" and the Supreme Court decision I just cited in this thread only? Regards samvedan September 22, 2006
    From India, Pune
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    yes, PF has to be deducted from stipend of Trainee. Since as per PF act stipend comes under definition of wages and trainee as a employee.
    From India, Pune
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    You have to deduct provident fund of Every employee who join the company on your regular muster roll except persons appoint under the Apprentice ship Act and getting stipend during apprentice ship
    From India, Hyderabad
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    Dear all,

    Please take a look at this link and suggest some measures to check for duplicacy of topics in order to restrict the search criteria.

    <link no longer exists - removed>

    Dear senior members,

    Instead of repeatedly discussing the same topic in various posts, it would be beneficial to recall past discussions and continue with only one post for a comprehensive exchange of experiences. 💡


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    Dear All,

    Anuradha is correct - while deciding PF deduction, we have to see PF Act for the definition of an employee and eligibility criteria. Only apprentices are excluded from PF.

    Avinash Desai
    Manager HR
    FUJIFILM SERICOL INDIA PVT LTD
    PUNE

    From India, Mumbai
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    Dear Archana,

    I will also go with Anuradha because recently I have consulted our consultant regarding new joiners in my organization. He suggested that every person from the date of joining is eligible for PF deduction.

    Regards,
    Om Prakash

    From India, Vadodara
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    Hi Members, This is a sensitive issue. we need expert opinion on this. can any one give a concrete answer on this. no vague suggestions please. ram.
    From India, Hyderabad
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    hi ram, pf is applicable to all, except apprentice which is engaged under apprentices act. if any employee who is not under apprentice act then pf is applicable to him. rk.
    From India, Pune
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    I agree with Anuradha. To be more specific, Trainees under Apprentice Act or Trainees under some other scheme of the company for which approval has been obtained under the Apprentice Act are not to be covered by PF. For all other Trainees, PF needs to be deducted.

    KKT

    From India, Delhi
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    Hi Archana, Rules & Law says PF should be deducted from the Salaried Officials. Stipend paid to the trainees is not salary,so PF need not be deducted for the trainees. Regards, Abhi
    From India
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    smitha is is correct pf can not be deducted on stipend of trainnes as per PF ACT regards sudhir
    From India, Delhi
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    Hi Archana

    Employees covered under the scheme - As per section 2(f), “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 [/b[b]](ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 or under the standing orders of the establishment.

    Thus, (a) Persons employed through contractor in connection with work of establishment are covered (b) Apprentices employed under Apprentices Act or under standing orders of establishment are excluded, i.e. they are not employees. [The model standing orders merely state that an ‘apprentice’ is a learner who is paid an allowance during the period of his training].

    Non-Eligible employees under PF - * Employee whose ‘pay’ is more than Rs. 6,500 per month are not eligible. (It may be noted that limit of pay was Rs 5,000 upto 31.5.2001 and Rs. 3,500 upto 30th Sept., 94) * Apprentices as per certified standing orders or under Apprentices Act * Casual employees. However, employees employed through contractors have also to be covered under PF

    Thus,

    As per section 2(f), “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.

    Accouts is correct. PF is deducted from apprentice.

    regards

    arun k mishra


    From India, Bahadurgarh
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    Hi Archana

    Employees covered under the scheme - As per section 2(f), “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 [/b[b]](ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 or under the standing orders of the establishment.

    Thus, (a) Persons employed through contractor in connection with work of establishment are covered (b) Apprentices employed under Apprentices Act or under standing orders of establishment are excluded, i.e. they are not employees. [The model standing orders merely state that an ‘apprentice’ is a learner who is paid an allowance during the period of his training].

    Non-Eligible employees under PF - * Employee whose ‘pay’ is more than Rs. 6,500 per month are not eligible. (It may be noted that limit of pay was Rs 5,000 upto 31.5.2001 and Rs. 3,500 upto 30th Sept., 94) * Apprentices as per certified standing orders or under Apprentices Act * Casual employees. However, employees employed through contractors have also to be covered under PF

    Thus,

    As per section 2(f), “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.

    Accouts is correct. PF is deducted from apprentice.

    regards

    arun k mishra

    Employees Provident Funds Act, 1952

    As per Preamble to the Act, the EPF Act is enacted to provide for the institution of provident funds, pension fund and deposit lined insurance fund for employees in factories and other establishments. - - The Employees’ Provident Funds and Miscellaneous Provisions Act is a social security legislation to provide for provident fund, family pension and insurance to employees. Employee has to pay contribution towards the fund. Employer also pays equal contribution. The employee gets a lump sum amount when he retires, which will be useful to him after retirement. The Act covers three schemes i.e. PF (Provident Fund scheme), FPF (Family Pension Fund scheme) and EDLI (Employees Deposit Linked Insurance scheme).

    The EPF Act contains basic provisions in respect of applicability, eligibility, damages, appeals, recovery etc. The three schemes formed by Central Government under the Act make provisions in respect of those schemes.

    Applicability of the Act - The Act applies to (a) Every establishment which is a factory engaged in industry specified in Schedule I to the Act and in which 20 or more persons are employed and (b) any other establishment or class of establishment employing 20 or more persons which may be specified by Central government by notification in official gazette. - - Central Government can also apply provisions of the Act to any establishment even if it employs less than 20 persons. [section 1(3)].

    In RPFC v. T S Hariharan 1971 Lab IC 951 (SC), it was held that temporary workers should not be counted to decide whether the Act would apply.

    Even if the provisions of PF Act are not applicable in a particular establishment, if employer and majority of employees agree, the Central Provident Fund Commissioner can apply the provisions to that establishment by issuing a notification in Official Gazette. [section 1(4)]. Once the provisions of Act become applicable, it continues to be applicable even if number of employees fall below 20. [section 1(5)].

    Coverage of Act - The Act has been extended to * Factories * Mines other than coal mines * Hotels and restaurants * Plantation of tea, coffee, rubber [Tea factories in Assam have been excluded vide para 1(3)(a) of EPF Scheme] * Trading and commercial establishments engaged in purchase, sale or storage of goods * Establishments of exporters, importers, advertisers, stock exchanges * Canteens * Establishments of Attorneys, CA, ICWAs, Engineers and Contractors, architects and medical practitioners * Hospitals * Travel agencies * Banks doing business only in one State * General Insurance * Expert services * Clubs and societies rendering services to their members * Agricultural farms * Financial Establishments other than banks * Building and construction Industry * Poultry farming * University, college or schools. - - The Act has been extended w.e.f. 1.4.2001 vide notification dated 22.3.2001, to * courier services * Aircraft or airlines other than aircraft or airline owned or controlled by Government * Establishment engaged in rendering cleaning and sweeping services.

    Once an establishment is covered under PF, all its departments and branches wherever they are situated are also covered.

    Other non-factory establishments covered - Besides factories, other establishments employing 20 or more persons can be covered under the Act u/s 1(3)(b). Various notifications have been issued extending the provisions of PF Act to non-factory establishments. Some major among them are - plantation, mines, coffee, hotels and restaurants, cinema and theatres, trading and commercial establishments, laundry, canteens, establishments of attorneys/CA/ ICWA/engineers/ architects/medical practitioners, hospitals, financial establishments (other than IFCI, UTI, IDBI, SFC), building and construction industry, poultry, university, college, schools, scientific institutions etc.

    Transitory provisions when Act is extended - It is possible that when PF Act is extended to certain establishment, some PF scheme may be already in existence. Such scheme will continue and the balance amount in such scheme to credit of the employee will be transferred to the Provident Fund under statutory scheme of PF Act. [section 15].

    Establishment to include all departments and branches - Where an establishment consists of different departments or has branch­es, whether situate in the same place or in different places, all such departments or branches shall be treated as parts of the same establishment. [section 2A]. - - Thus, if factory is covered, the head office and branches will also be covered under the Act.

    Act not applicable to certain establishments - As per section 16(1), the PF Act does not apply to (a) any establishment registered under Cooperative Societies Act or State law relating to cooperative societies, employing less than 50 persons and working without paid of power (b) to any establishment belonging to or under Control of Central Government or a State Government and whose employees are entitled to benefit of contributory provident fund or old age pension. (c) to any establishment set up under any Central or State Act and whose employees are entitled to benefit of contributory provident fund or old age pension..

    Where PF Act is not applicable - The PF Act is not applicable to certain establishments—* Factories or establishments employing less than 20 employees. However, once Act becomes applicable, it continues to apply even if subsequently, the number is lower than 20 * Banks doing business in more than one State * Coal mines * Units established under Cooperative Societies Act employing less than 50 workers and working without aid of power * Other establishments belonging to or under control of Central Government or State Governments and whose employees are entitled to benefits of contributory provident fund or pension. * Tea factories in Assam * Exemption granted by Central Government by a special notification.

    Administration of the Fund - Both employer and employee have to pay contribution at prescribed rates.. These amounts are credited to a fund. The fund vests in and is administered by Central Board. [section 5(1A)].

    Employees covered under the scheme - As per section 2(f), “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.

    Thus, (a) Persons employed through contractor in connection with work of establishment are covered (b) Apprentices employed under Apprentices Act or under standing orders of establishment are excluded, i.e. they are not employees. [The model standing orders merely state that an ‘apprentice’ is a learner who is paid an allowance during the period of his training].

    Non-Eligible employees under PF - * Employee whose ‘pay’ is more than Rs. 6,500 per month are not eligible. (It may be noted that limit of pay was Rs 5,000 upto 31.5.2001 and Rs. 3,500 upto 30th Sept., 94) * Apprentices as per certified standing orders or under Apprentices Act * Casual employees. However, employees employed through contractors have also to be covered under PF.

    Employee to become member of Fund immediately on joining – Every employee employed in or in connection with work of a factory or establishment to which the Act applies is entitled and required to become member of Provident Fund, unless he is an excluded employee. [para 26(1) of EPF Scheme]. An employee who is drawing ‘pay’ above prescribed limit (presently Rs 6,500) can become member with permission of Assistant PF Commissioner, if he and his employer agree. [para 26(6) of EPF Scheme].

    Contribution by employer and employee - As per section 2(c) “contribution” means a contribution payable in respect of a member under a Scheme or the contribution payable in respect of an employee to whom the Insurance Scheme applies.

    As per section 6, contribution shall be paid by employer @ 10% of basic wages plus dearness allowance plus retaining allowance. This amount is defined as ‘pay’ as per explanation to para 2(f)(ii) of EPF Scheme.

    Equal contribution is payable by employee also. This contribution can be increased to 12% by Central Government and in fact, has been increased to 12% in most of the cases.

    A person who is already a member continues to be a ‘member’ even if his ‘pay’ exceeds Rs 6,500. However, the contribution is limited to Rs 6,500 only. [para 26A(2) of EPF Scheme].

    RPFC is liable under Consumer Protection Act - The Regional Provident Fund Commissioner is providing service under the Act and hence he is liable under Consumer Protection Act. - RPFC v. Shiv Kumar Joshi (1996) 4 CTJ 805 = 1996 LLR 641 (NCDRC 5 member bench) - confirmed in RPFC v. Shiv Kumar Joshi 1999 AIR SCW 4456 = 1999(7) SCALE 453 = 2000 LLR 217 = AIR 2000 SC 331 = 99 Comp Cas 347 = (2000) CLA-BL Supp 26 = 24 SCL 46 (SC).

    Employees Provident Fund Scheme - This is the main scheme under the Act. Both employer and employee have to pay contribution to Provident Fund. The employer has to deduct contribution of employee from the salary of employee and has to pay both employees’ contribution as well as employer’s contribution by a challan in prescribed form. The amount has to be paid in approved bank.

    Employee can pay higher contribution - Employee has to contribute 12/10% of his 'pay' as contribution. The employee can voluntarily pay higher contribution above the statutory rate. However, employer does not have to match the voluntary contribution, over and above the statutory rate. [para 26(2) of EPF Scheme].

    Contribution payable under PF Scheme - The Principal Employer is liable to pay contribution of his own employees as well as employees employed through contractor. Principal Employer can recover from contractor the amount paid by him on behalf of contractor. The contribution is 12% of ‘pay’ i.e. basic wages, plus dearness allowance, cash value of food concession and retaining allowance. Contribution of both employer and employee is same i.e. 12% each. [para 29 of EPF Scheme].

    Employer has to pay his contribution to EPF. He cannot deduct his contribution from wages of the employee. [Para 31 of EPF Scheme]. However, he has to deduct employee’s share from his salary and pay the same in EPF scheme. This deduction can be only from the wages pertaining to period for which contribution is paid. However, if there is accidental omission, the amount can be recovered later. Amount deducted from salary of employees is held in trust by the employer or contractor. [Para 32 of EPF Scheme].

    Out of employer’s contribution of 12/10%, the Employer’s contribution of 8.33% will be diverted to Employees’ Pension Scheme. The balance will be retained in the EPF scheme. Thus, on retirement, the employee will get his full share plus the balance of Employer’s share retained to his credit in EPF account. [This diversion is only w.e.f. 16th November, 95. Earlier Employer’s contribution to their credit will continue to remain to their credit].

    Lower contribution in certain cases - The employer's and employee’s contribution is 12% each. This is applicable to many of industries and establishments. However, this contribution is not applicable to - * any establishment employing less than 20 persons * any establishment registered with Board for Industrial and Financial Reconstruction (BIFR) as a sick company - the lower rate of contribution continues till its net worth is positive * any other establishment which has accumulated loss equal to or more than its assets and has also suffered cash loss in last two years. * Jute industry * Beedi industry * Brick industry * Coir industry other than the spinning sector * Guar gum factories. In these cases, the contribution is 10%.

    Interest on account – PF Commissioner shall maintain account of each member of EPF scheme. [Para 59 of Scheme]. Interest is credited to the account of employee. The Interest is calculated on monthly running balance basis. Amount standing to credit at end of the month is considered for calculation of interest for the following month. The interest rate is declared every year by Central Government in consultation with Central Board of Trustees of Provident Fund. [Para 60 of EPF Scheme].

    Employees’ Pension Scheme - This scheme has been introduced w.e.f. 16th November, 95. The Scheme is applicable to all subscribers of Employers’ Provident Fund. It is also compulsory to persons who were subscribers as on 16.11.95.

    Contribution - The employer’s contribution of 8.33% will be diverted to the fund of Pension Scheme. Employee does not have to make any contribution. Employer’s contribution is 12%/ 10%. In such cases, 8.33% is diverted to Pension scheme and balance 1.67%/3.67% as the case may be, will be in credit of employee’s name in Provident Fund account. The 8.33% is on maximum salary of Rs. 6,500. If some employers are paying contribution on salary in excess of Rs. 6,500, the excess contribution will be credited to Provident Fund account and not to Pension scheme.

    No separate administration charges or inspection charges are payable, as these are already paid along with Provident Fund contribution.

    Benefits under the scheme - Members will get pension on superannuation or retirement from service and upon disablement during employment. Family pension will be available to widow/widower for life or till he/she remarries. In addition, children will be entitled to pension, upto 25 years of their age. In case of orphans, pension at enhanced rate is available upon death of widow/widower or ceasing payment of widow pension. Benefit of pension to children or orphan is only restricted for two children/orphans.

    If the person is unmarried or has no family, pension is available to nominee for a specified period.

    Commutation of Pension - The member can commute 33.33% of the pension, so as to receive hundred times the monthly pension so commuted as commuted value of pension. Balance will be paid on monthly basis.

    Employees Deposit Linked Insurance Scheme - The purpose of the scheme is to provide life insurance benefits to employees who are already covered under PF/FPF. The employer has pay contribution equal to 0.50% of the total wages of employees In addition, administrative charges of 0.1% of total wages. [Notification No. AO 503(E) dated 28-7-1976 issued u/s 6C(2) of PF Act].

    The employee does not contribute any amount to the scheme. The salary limit for coverage of employees is same as that of Provident Fund.

    Exemption from the scheme can be obtained from RPFC if LIC Group Gratuity scheme is adopted by employer. If exemption is granted, only inspection charges @ 0.005% are payable to PF authorities.

    Benefit to nominee of employee - If an employee dies during employment, his nominee or family member gets an amount equal to average balance in the Provident Fund Account of the deceased employee during last 12 months. If such balance is more than Rs. 35,000, the insurance amount payable is Rs. 35,000 plus 25% of the amount in excess of Rs. 35,000, subject to overall limit of Rs. 60,000. If the employees are covered under another life insurance scheme whose benefits are better than this scheme, an exemption from this scheme can be obtained. [Increased to 35,000 and 60,000 w.e.f. 13.6.2000]

    From India, Bahadurgarh
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  • CA
    CiteHR.AI
    (Fact Checked)-The information provided in the user reply is accurate. Thank you for the detailed explanation and clarification on the deduction of PF from stipends of trainees. (1 Acknowledge point)
    0 0

  • Dear Anuradha,

    Thank you for providing clarity in this regard as this is of great help, at least for me since I have recently joined an MNC as a Management Trainee in the HR department, and PF is also deducted from my stipend. However, another doubt is troubling me - can an employer deduct the Employer's Contribution towards PF from a trainee's stipend in any case?

    Please clarify my doubt in this regard.

    Anant

    From India, Delhi
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    Hi,

    So, the employee says he should be exempted from PF deduction. Is it possible? If so, what should the employer do?

    I know, as per the Act, anybody's salary falling between INR 6,500/- is eligible for PF. However, if someone within this parameter requests not to have PF deductions made, what should be the procedure?

    Regards

    From India, Pune
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    If the employee’s base office is Delhi and he is going to work to another location in Delhi itself. He/ She should be given per day DA (for food expenses) or not ?
    From India, Delhi
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    sir, we have appoint a trainee for stipend of rs. 9000 per month, plz clear pf and esi deduct or not, if yes plz provide a notification or any section for better understand to me.
    From India, Rudrapur
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    KC
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