1. During Probation period can Employer deduct PF,ESI and Tax from Employee?
2. Scenario 1: The Employer has provided the complete salary structure to the Employee. This includes PF deduction and they also deduct Tax. But the Employee is in probation period. The company has a policy that they do not enroll the employee on PF till the Employee completes his probation.
In this situation should the Employer pay the Employee the Employee's part of PF and the Company's part of PF as his salary without any tax deduction?
Kindly help me.
Regards,
Getsie Jesse
From India, Madras
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592. Scenario 1: The Employer has provided the complete salary structure to the Employee. This includes PF deduction and they also deduct Tax. But the Employee is in probation period. The company has a policy that they do not enroll the employee on PF till the Employee completes his probation.
In this situation should the Employer pay the Employee the Employee's part of PF and the Company's part of PF as his salary without any tax deduction?
Kindly help me.
Regards,
Getsie Jesse
From India, Madras
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PF, ESI, and tax are applicable to employees from the date of joining. During the probation period, employees are considered employees but not permanent employees. The employer and employee have entered into a contract, which is the employment contract.
Hope this will help you.
Regards,
Shaikh
From India, Bhubaneswar
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Hope this will help you.
Regards,
Shaikh
From India, Bhubaneswar
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Dear Getsie Jesse,
Anyone who joins the company, even if they are on probation, is entitled to PF (from day one) and ESI (from day one if gross salary is less than Rs. 15,000 or if the unit is covered under ESI as per the ESI act). Income tax, professional tax, etc., should be deducted as applicable.
The members' PF deduction, along with the management contribution, must be paid to the PF organization. Failure to do so is considered an offense. As an HR professional, please highlight this to your management.
V. Selvaraj
Senior Executive (HR)
From India, Bangalore
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Anyone who joins the company, even if they are on probation, is entitled to PF (from day one) and ESI (from day one if gross salary is less than Rs. 15,000 or if the unit is covered under ESI as per the ESI act). Income tax, professional tax, etc., should be deducted as applicable.
The members' PF deduction, along with the management contribution, must be paid to the PF organization. Failure to do so is considered an offense. As an HR professional, please highlight this to your management.
V. Selvaraj
Senior Executive (HR)
From India, Bangalore
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Thank you all for the response.
So far, I was putting all employees under PF right from day one. Since I heard that there was a practice in a few companies where they do not pay PF and do not deduct tax until the employee's probation is complete, I wanted to confirm whether this practice was fair.
Once again, thank you all for the clarification.
Regards,
Getsie Jesse
From India, Madras
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So far, I was putting all employees under PF right from day one. Since I heard that there was a practice in a few companies where they do not pay PF and do not deduct tax until the employee's probation is complete, I wanted to confirm whether this practice was fair.
Once again, thank you all for the clarification.
Regards,
Getsie Jesse
From India, Madras
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My Dear Friend,
First of all, immediately correct your company policy and start the deduction of PF without delay. Secondly, calculate the arrears of all employees currently on the payroll and those who have left the services, especially those who were on probation and for whom your company failed to deduct the PF.
You have committed an offense, and it is time to rectify it. The PF authorities may take legal action against your company. I am curious to know the name of the person or consultant who recommended these incorrect actions to your company. The IT and other acts may also be implicated.
Best of luck,
Sanjeev
From India, Pune
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First of all, immediately correct your company policy and start the deduction of PF without delay. Secondly, calculate the arrears of all employees currently on the payroll and those who have left the services, especially those who were on probation and for whom your company failed to deduct the PF.
You have committed an offense, and it is time to rectify it. The PF authorities may take legal action against your company. I am curious to know the name of the person or consultant who recommended these incorrect actions to your company. The IT and other acts may also be implicated.
Best of luck,
Sanjeev
From India, Pune
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Hi,
This incident has not happened in my company. I got this information from my friend and I had told them it was a wrong practice. Then I wanted to have a clear cut idea about the above and I wanted to know if there was any exceptional case that's why I posted this question on discussion. The person who gave me the information was an employee and not HR. Hence I have no further information.
It's very kind of you to provide me with all details.
Regards,
Getsie Jesse
From India, Madras
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This incident has not happened in my company. I got this information from my friend and I had told them it was a wrong practice. Then I wanted to have a clear cut idea about the above and I wanted to know if there was any exceptional case that's why I posted this question on discussion. The person who gave me the information was an employee and not HR. Hence I have no further information.
It's very kind of you to provide me with all details.
Regards,
Getsie Jesse
From India, Madras
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Hi,
This is to get clarified on a point regarding ESI deduction as mentioned in the answer. If the head office of the company is in Chennai and it has multiple centers across India, and it deducts PF but does not deduct ESI amounts from any employee earning below Rs. 15,000.00 (during probation). Initially, the amount was deducted, but later (after four months), it was returned along with the salary.
In this scenario, is it legal? Does being an ESI registered unit depend on the number of people working in each center or on the total employees in the company across all centers?
Regards,
rari
From India, Kannur
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This is to get clarified on a point regarding ESI deduction as mentioned in the answer. If the head office of the company is in Chennai and it has multiple centers across India, and it deducts PF but does not deduct ESI amounts from any employee earning below Rs. 15,000.00 (during probation). Initially, the amount was deducted, but later (after four months), it was returned along with the salary.
In this scenario, is it legal? Does being an ESI registered unit depend on the number of people working in each center or on the total employees in the company across all centers?
Regards,
rari
From India, Kannur
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dear jesse, ESI and PF and other statutory deduction will be effective from the date of joining. where it’s probation or temporary.
From India, Bhopal
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From India, Bhopal
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Tax and Benefits Applicability
If the salary is more than 15,000, then only tax is applicable. PF is not applicable if the salary is more than 6,500 per month, and ESI is not applicable if the salary is more than 15,000 per month. All the above benefits should be provided to your employees from day one, whether they are on probation, permanent, or in other forms of employment.
From India, Delhi
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If the salary is more than 15,000, then only tax is applicable. PF is not applicable if the salary is more than 6,500 per month, and ESI is not applicable if the salary is more than 15,000 per month. All the above benefits should be provided to your employees from day one, whether they are on probation, permanent, or in other forms of employment.
From India, Delhi
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Yes, my learned professionals have given the right advice. PF and ESI deductions have to be made from the day the employee joins the company; otherwise, it would be a legal non-compliance and could lead to prosecution for violating the provisions of the law. You have not mentioned where your establishment is located. Therefore, I suggest checking to see if your establishment is within the notified area for the purpose of the Act's applicability. If it is not in the notified area, then the provisions of ESI will not be applicable to you.
Regards,
Ashok K. Ghose
From India
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Regards,
Ashok K. Ghose
From India
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We have 13 staff members in our company; we all started working from 2nd February 2011. We have fixed the salary at Rs. 5000/-. It's a new company. Do we have to deduct PF and ESI for our staff in the first month's salary?
Regards,
M. Govardhan
From India, Coimbatore
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Regards,
M. Govardhan
From India, Coimbatore
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As per the law, if the employee strength of the company is 20 or more, then PF and ESIC are deducted. Moreover, for ESIC, the ceiling of 15,000 should be taken into consideration, i.e., employees having a salary less than the mentioned amount are eligible for it.
Regards,
Priyanka
From India, Delhi
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Regards,
Priyanka
From India, Delhi
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Hi Getsie, I am taking the liberty of being a little specific:
i) An employer has to start deducting and contributing PF right from day one if an employee's salary (basic and DA) is less than Rs. 6,500 per month for sure; otherwise, it is optional, and the employer may or may not cover such employees.
ii) An employer has to start deducting ESI if the employer has 20 employees or more who are drawing a salary (basic and DA) of less than Rs. 15,000 per month; otherwise, the organization as such is not covered under ESI.
GOD BLESS. Regards
From India, Mumbai
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i) An employer has to start deducting and contributing PF right from day one if an employee's salary (basic and DA) is less than Rs. 6,500 per month for sure; otherwise, it is optional, and the employer may or may not cover such employees.
ii) An employer has to start deducting ESI if the employer has 20 employees or more who are drawing a salary (basic and DA) of less than Rs. 15,000 per month; otherwise, the organization as such is not covered under ESI.
GOD BLESS. Regards
From India, Mumbai
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Hi, I still have a doubt regarding the policies.
1. Does the staff member get a PF number even if they have only worked for a few months or if they leave within the probationary period due to any reasons between both parties?
2. Does the company also contribute the same amount according to the deductions made for that employee during those few months?
Thanks,
Mike
From India, Bangalore
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1. Does the staff member get a PF number even if they have only worked for a few months or if they leave within the probationary period due to any reasons between both parties?
2. Does the company also contribute the same amount according to the deductions made for that employee during those few months?
Thanks,
Mike
From India, Bangalore
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PF & ESI.zip
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