Hi, Are interns who are paid stipend upto 6500 rs per month covered under the definition of employee under the PF Act. If yes, are there any exemptions.
From India, Vadodara
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2From India, Vadodara
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Hi Jyotsna, The interns are not your employees. They are doing project or learning in your company so they are excepted from PF & ESI.
From India, Chennai
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From India, Chennai
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Thank you Nijanthan for the reply.
The definition of employee under the act is :-
(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, and 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;
Would'nt then interns by definition be covered under the act ?
From India, Vadodara
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The definition of employee under the act is :-
(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, and 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;
Would'nt then interns by definition be covered under the act ?
From India, Vadodara
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Hi Jyotsna,
What you mentioned is right. We have an exception if it is registered under the Apprentice Act 1961, so those stipends will not be considered as salary. The company that offers positions at the trainee level as employees will then fall under the category of salaried employees.
If it is more than Rs. 6,500, you cannot expect it to be exempt from PF and ESIC. However, if you are not paying any wage or salary and are providing a stipend, it will not be considered as employment. The differences are highlighted.
From India, Chennai
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What you mentioned is right. We have an exception if it is registered under the Apprentice Act 1961, so those stipends will not be considered as salary. The company that offers positions at the trainee level as employees will then fall under the category of salaried employees.
If it is more than Rs. 6,500, you cannot expect it to be exempt from PF and ESIC. However, if you are not paying any wage or salary and are providing a stipend, it will not be considered as employment. The differences are highlighted.
From India, Chennai
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Why should you pay the interns any stipend if they are undergoing their project? You need not pay it if the intention is genuine, i.e., it is part of the curriculum. On the other hand, if you pay a stipend, it should be construed that you are using him (his labor) in your business operations, and if so, you should contribute PF and ESI by whatever name the payment is called. Now PF applicable salary is not Rs 6500 but it is Rs 15000.
Madhu.T.K
From India, Kannur
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Madhu.T.K
From India, Kannur
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"Interns" are not employees. They are not covered under EPF Act. Please read the provisions of the Act. Naturally giving them stipend or they are given free training without payment of stipend is not the criteria to decide about the status as they are not recruited to perform the work of the establishment but they are accommodated in the estt. to learn 'hands on' during the prescribed period of internship to qualify for the award of the degree/diploma. And they are not employed and not in "Employment".
EPF Act.(extract) xxxxxxxxxxxx
Definitions. - In this Act, unless the context otherwise requires, - xxxxxx
b) “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-
(i) the cash value of any food concession;
(ii) any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;
(e) “employer” means-
(i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause f of sub-section 1 of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and
(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;
(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, and includes any person,-
(i) employed by or through a contractor in or in connection with the work of the establishment;.............
------------------
From India, Bangalore
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EPF Act.(extract) xxxxxxxxxxxx
Definitions. - In this Act, unless the context otherwise requires, - xxxxxx
b) “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-
(i) the cash value of any food concession;
(ii) any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;
(e) “employer” means-
(i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause f of sub-section 1 of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and
(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;
(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, and includes any person,-
(i) employed by or through a contractor in or in connection with the work of the establishment;.............
------------------
From India, Bangalore
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From India, Delhi
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From India, Delhi
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Dear S. Kumarji,
I would like to draw your attention to your remarks as mentioned above, wherein you stated, "Interns are not employees." With all due respect, I disagree with this statement. To the best of my knowledge, there is no law that states "interns are not employees" within the context of the ESI or EPF Acts. Section 2(9) of the ESI Act, 1948, only excludes "apprentices engaged under the Apprenticeship Act, 1961." Similar provisions exist under the EPF & MP Act, but this Act also includes persons engaged as per the "Standing Orders of the Establishment."
The position you mentioned in your remarks is commonly utilized by employers for their advantage and often excludes a significant number of casual and temporary employees under the pretext that these individuals are merely "trainees" or interns. However, ultimately, they are obligated to pay contributions along with interest and damages under ESI and EPF when the issue is raised through any means, including periodic inspection or verification of records. For instance, in a factory with 20 employees, if 10 individuals are engaged as "interns" or "trainees" for varying durations without any recommendations from authorities established under the Apprenticeship Act, how can one justify such engagements?
I completely agree with the views expressed by Sh. Madhu T.K. in this thread. I would appreciate it if you could point out any errors in my writing so that I can update myself accordingly.
Thank you.
From India, Noida
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I would like to draw your attention to your remarks as mentioned above, wherein you stated, "Interns are not employees." With all due respect, I disagree with this statement. To the best of my knowledge, there is no law that states "interns are not employees" within the context of the ESI or EPF Acts. Section 2(9) of the ESI Act, 1948, only excludes "apprentices engaged under the Apprenticeship Act, 1961." Similar provisions exist under the EPF & MP Act, but this Act also includes persons engaged as per the "Standing Orders of the Establishment."
The position you mentioned in your remarks is commonly utilized by employers for their advantage and often excludes a significant number of casual and temporary employees under the pretext that these individuals are merely "trainees" or interns. However, ultimately, they are obligated to pay contributions along with interest and damages under ESI and EPF when the issue is raised through any means, including periodic inspection or verification of records. For instance, in a factory with 20 employees, if 10 individuals are engaged as "interns" or "trainees" for varying durations without any recommendations from authorities established under the Apprenticeship Act, how can one justify such engagements?
I completely agree with the views expressed by Sh. Madhu T.K. in this thread. I would appreciate it if you could point out any errors in my writing so that I can update myself accordingly.
Thank you.
From India, Noida
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Dear Harsh Kumar Mehta Sir,
Thank you so much for your information. I was a little bit confused about it. I have an interview at Afcons for the position of Time Keeper, so that's why I want to clear it.
Thanks/Regards,
Ankit Kumar
From India, Delhi
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Thank you so much for your information. I was a little bit confused about it. I have an interview at Afcons for the position of Time Keeper, so that's why I want to clear it.
Thanks/Regards,
Ankit Kumar
From India, Delhi
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Dear Sh. Ankit ji,
Please see my remarks in another thread started by you as follows:-
Sir,
1. As soon as the employee joins employment, his contribution under EPF & MP Act, 1952 is required to be deducted, and compliance is to be made up to and including the date he remains in employment of any unit. Even if the said employee is in employment for a few days, his deductions and compliance are required to be made.
2. So far as I understand, there is no infancy period, or there is no condition of regular employment in order to become eligible for deductions in respect of the above Act.
URL: [https://www.citehr.com/512135-a.html](https://www.citehr.com/512135-a.html)
From India, Noida
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Please see my remarks in another thread started by you as follows:-
Sir,
1. As soon as the employee joins employment, his contribution under EPF & MP Act, 1952 is required to be deducted, and compliance is to be made up to and including the date he remains in employment of any unit. Even if the said employee is in employment for a few days, his deductions and compliance are required to be made.
2. So far as I understand, there is no infancy period, or there is no condition of regular employment in order to become eligible for deductions in respect of the above Act.
URL: [https://www.citehr.com/512135-a.html](https://www.citehr.com/512135-a.html)
From India, Noida
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Very good presentation by Kumar. But the core of the subject is whether the interns who are paid STIPEND be considered as trainees for coverage of PF. After going through all comments, I believe my apprehensions about the subject remain unanswered. If we describe one trainee as an intern, why should we pay him? In my opinion, the basic criteria are nothing but payment as consideration for the work done, by whatever name the payment or remuneration is called and accounted. If we pay remuneration even for a single day's work, the said amount should attract PF.
If we exclude all interns from statutory coverage, naturally, there will be no employee, but we will have only interns in the place of workers.
Madhu.T.K
From India, Kannur
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If we exclude all interns from statutory coverage, naturally, there will be no employee, but we will have only interns in the place of workers.
Madhu.T.K
From India, Kannur
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Dear friends,
I'm confident that my conviction matches the status of students. I have to stress the following specifics:
- The "Interns" remain as "students" and have not yet attained the status of "Trainees" either during the internship or after its completion. It would be a misnomer to call the "Interns" "Trainees".
- "Trainees" are "appointed" in an industry, office, or establishment, whereas "Interns" are inducted from an educational institution for further studies.
- There is no obligation whatsoever on the part of the establishment to pay any remuneration to the "Interns", whereas "Trainees" are entitled to including a salary.
- An "Internship" is only for a specific period, say for a couple of weeks or months, whereas "Training" is for a longer period as per the attached terms and conditions.
- "Trainees" are covered by certain "Terms & Conditions" issued individually, whereas there are no individual arrangements except with the institutions for operational reasons.
- "Trainees" have the potential for regular appointment (regularization), whereas "Interns" have no such opportunity as they are still in the process of qualification.
- The "Training period" could be extended by the establishment at their discretion, whereas "Internship" has no such arrangement.
- "Interns" are expected to submit their "dissertation" after completion of their "Internship" to the educational institution/university, but "Trainees" have no such obligation.
- "Interns" are awarded a degree or diploma upon completion of their curriculum, including Internship, whereas "Trainees" are a stage post Degree/Diploma, and so on.
- An "Intern" who fails to complete the internship, a prerequisite, is denied a degree or diploma, whereas a "Trainee" has other options.
- An "Intern" could be a "Minor", whereas a "Trainee" cannot be a "Minor".
- An "Intern" is an "Intern" and a "Trainee" is a "Trainee".
Dear friends, in our firm, we receive at least 200 student interns of various disciplines every year, from at least 5 institutions, free of cost. Imagine a situation if we have to treat them as "Trainees", give them remuneration, regularize them in regular posts. In fact, our permanent staff strength is only 35.
So, there is no confusion at all between these two stages, and there is no iota of doubt. Interns and Trainees are two different statuses that are not interchangeable and cannot be equated under any circumstances.
From India, Bangalore
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I'm confident that my conviction matches the status of students. I have to stress the following specifics:
- The "Interns" remain as "students" and have not yet attained the status of "Trainees" either during the internship or after its completion. It would be a misnomer to call the "Interns" "Trainees".
- "Trainees" are "appointed" in an industry, office, or establishment, whereas "Interns" are inducted from an educational institution for further studies.
- There is no obligation whatsoever on the part of the establishment to pay any remuneration to the "Interns", whereas "Trainees" are entitled to including a salary.
- An "Internship" is only for a specific period, say for a couple of weeks or months, whereas "Training" is for a longer period as per the attached terms and conditions.
- "Trainees" are covered by certain "Terms & Conditions" issued individually, whereas there are no individual arrangements except with the institutions for operational reasons.
- "Trainees" have the potential for regular appointment (regularization), whereas "Interns" have no such opportunity as they are still in the process of qualification.
- The "Training period" could be extended by the establishment at their discretion, whereas "Internship" has no such arrangement.
- "Interns" are expected to submit their "dissertation" after completion of their "Internship" to the educational institution/university, but "Trainees" have no such obligation.
- "Interns" are awarded a degree or diploma upon completion of their curriculum, including Internship, whereas "Trainees" are a stage post Degree/Diploma, and so on.
- An "Intern" who fails to complete the internship, a prerequisite, is denied a degree or diploma, whereas a "Trainee" has other options.
- An "Intern" could be a "Minor", whereas a "Trainee" cannot be a "Minor".
- An "Intern" is an "Intern" and a "Trainee" is a "Trainee".
Dear friends, in our firm, we receive at least 200 student interns of various disciplines every year, from at least 5 institutions, free of cost. Imagine a situation if we have to treat them as "Trainees", give them remuneration, regularize them in regular posts. In fact, our permanent staff strength is only 35.
So, there is no confusion at all between these two stages, and there is no iota of doubt. Interns and Trainees are two different statuses that are not interchangeable and cannot be equated under any circumstances.
From India, Bangalore
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I don't think that any of us would disagree with Kumar and the findings of Kumar are extremely good. But Kumar, the question was whether an intern who is paid a stipend of Rs 6500 would be covered under PF or not. In reply, I said if you pay any remuneration, it should be construed that you extract something from him, otherwise you will not pay him any remuneration and if you pay him, he should be treated as an employee. On the other hand, if the interns are engaged purely for their own projects and the company is not paying anything in the form of remuneration, they will not come under PF as there is no payout. In Satish Plastics Vs. Regional PF Commissioner [1982(44)FLR 207], the interpretation of an employee given by the Court was centered on this payout, and it was said that if the person engaged is given any remuneration, the employee-employer relationship would be established. In the instant case, there is a payout of Rs 6500 to the intern, and as such, I don't think that there is anything wrong in including that intern as an employee.
We know that apprentices who are engaged following the Apprentice Act and those trainees who are engaged following the specific provisions in the Certified Standing Orders (you should read it as Certified Standing Orders since any company can adopt model standing orders for the time being, i.e., for six months and will not make the company have trainees) only are excluded, and all other trainees come under PF coverage. In NEPC Textile Ltd Vs Asst. PF Commissioner [2007 LLR 535(Mad.HC)], the Madras High Court has said that even the apprentices who are engaged in the place of regular workers and who are required to do work of regular workers are covered by PF.
Madhu.T.K
From India, Kannur
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We know that apprentices who are engaged following the Apprentice Act and those trainees who are engaged following the specific provisions in the Certified Standing Orders (you should read it as Certified Standing Orders since any company can adopt model standing orders for the time being, i.e., for six months and will not make the company have trainees) only are excluded, and all other trainees come under PF coverage. In NEPC Textile Ltd Vs Asst. PF Commissioner [2007 LLR 535(Mad.HC)], the Madras High Court has said that even the apprentices who are engaged in the place of regular workers and who are required to do work of regular workers are covered by PF.
Madhu.T.K
From India, Kannur
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Mr. Madhu,
Your points are twofold - 1) the remuneration aspect and 2) the "Apprentices."
Here, I wish to clarify that the "Stipend" paid is not considered "Wages" for the work done, as the interns are not meant to work for the establishment but to continue their studies. By paying the Stipend, no formal "Employee" and "Employer" relationship is established between them.
They are not even classified as "Apprentices" under the Apprentices Act. Just because they receive a stipend, it should be seen more as pocket money to cover incidental expenses. I'm sure you are aware that students pursuing postgraduate and doctoral degrees, as well as those in CA courses, also receive stipends during their studies. Should we also categorize them as "Employees" and be subjected to EPF contributions? Doing so would undermine the fundamental principles of the EPF Act itself.
From India, Bangalore
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Your points are twofold - 1) the remuneration aspect and 2) the "Apprentices."
Here, I wish to clarify that the "Stipend" paid is not considered "Wages" for the work done, as the interns are not meant to work for the establishment but to continue their studies. By paying the Stipend, no formal "Employee" and "Employer" relationship is established between them.
They are not even classified as "Apprentices" under the Apprentices Act. Just because they receive a stipend, it should be seen more as pocket money to cover incidental expenses. I'm sure you are aware that students pursuing postgraduate and doctoral degrees, as well as those in CA courses, also receive stipends during their studies. Should we also categorize them as "Employees" and be subjected to EPF contributions? Doing so would undermine the fundamental principles of the EPF Act itself.
From India, Bangalore
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Dear Sir(s),
In this thread, the issue raised is whether "interns who are paid a stipend up to 6500 rs per month are covered under the definition of an employee under the PF Act" or not?
To my knowledge and belief, as per my submission made earlier, if the said interns are not covered as "apprentices" under the Apprentices Act, 1961, then they are merely casual or temporary employees and coverable under EPF & ESI Acts.
However, in case their apprenticeship has been referred to a unit/factory under the said Act by the authorities created under the Apprentices Act, then they will remain exempted only for the period of such apprenticeship. The words "or under the standing orders of the establishment" have been deleted from section 2(9) of ESI Act, 1948, vide amendment in the year 2010. Therefore, the judgments of various honorable courts as referred to by Sh. Kumarji have no relevance so far as coverage of such employees under ESI Act is concerned. Further, the judgment of the case titled Hassan Cooperative Milk Producers Society as quoted by Sh. Kumarji is on the issue of loading and unloading work and, in my opinion, is not related to the coverage of so-called "interns".
So far as the definition of "employee" in EPF & MP Act is concerned, the words "or under the standing orders of the establishment" are still there in section 2(f). However, in such cases, the question will arise whether the employer has made compliance with various provisions of The Industrial Employment (Standing Orders) Act, 1946? This Act is applicable in "industrial establishments" as defined under section 2(e) of the said Act. Whether the said industrial establishment is such where there are 100 or more employees (section 1(3) of said Act). Whether the establishment to which Sh. Kumarji has referred as employing only 35 regular workers is covered/coverable under the said Industrial Employment (Standing Orders) Act, 1946? If not, then under which provisions the said compliance of EPF & MP Act is not being made when there are no standing orders of the establishment? There may be a number of issues involved, and appropriate authorities of EPF may take their own decision as per provisions of the said Act and on the basis of their departmental instructions, if any. However, I fully agree with the doubts and apprehensions as raised by Sh. Madhu T.K. In my opinion, Rs.6500/- per month is not a small amount and whether this amount has been determined by any authority under the Industrial Employment (Standing Order) Act, 1946, or under the Apprenticeship Act, 1961 as referred to above may also be a very relevant issue as and when the question will arise.
Thank you.
Best regards,
[Your Name]
From India, Noida
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In this thread, the issue raised is whether "interns who are paid a stipend up to 6500 rs per month are covered under the definition of an employee under the PF Act" or not?
To my knowledge and belief, as per my submission made earlier, if the said interns are not covered as "apprentices" under the Apprentices Act, 1961, then they are merely casual or temporary employees and coverable under EPF & ESI Acts.
However, in case their apprenticeship has been referred to a unit/factory under the said Act by the authorities created under the Apprentices Act, then they will remain exempted only for the period of such apprenticeship. The words "or under the standing orders of the establishment" have been deleted from section 2(9) of ESI Act, 1948, vide amendment in the year 2010. Therefore, the judgments of various honorable courts as referred to by Sh. Kumarji have no relevance so far as coverage of such employees under ESI Act is concerned. Further, the judgment of the case titled Hassan Cooperative Milk Producers Society as quoted by Sh. Kumarji is on the issue of loading and unloading work and, in my opinion, is not related to the coverage of so-called "interns".
So far as the definition of "employee" in EPF & MP Act is concerned, the words "or under the standing orders of the establishment" are still there in section 2(f). However, in such cases, the question will arise whether the employer has made compliance with various provisions of The Industrial Employment (Standing Orders) Act, 1946? This Act is applicable in "industrial establishments" as defined under section 2(e) of the said Act. Whether the said industrial establishment is such where there are 100 or more employees (section 1(3) of said Act). Whether the establishment to which Sh. Kumarji has referred as employing only 35 regular workers is covered/coverable under the said Industrial Employment (Standing Orders) Act, 1946? If not, then under which provisions the said compliance of EPF & MP Act is not being made when there are no standing orders of the establishment? There may be a number of issues involved, and appropriate authorities of EPF may take their own decision as per provisions of the said Act and on the basis of their departmental instructions, if any. However, I fully agree with the doubts and apprehensions as raised by Sh. Madhu T.K. In my opinion, Rs.6500/- per month is not a small amount and whether this amount has been determined by any authority under the Industrial Employment (Standing Order) Act, 1946, or under the Apprenticeship Act, 1961 as referred to above may also be a very relevant issue as and when the question will arise.
Thank you.
Best regards,
[Your Name]
From India, Noida
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PF act.doc
Employees' PF & Misc Prov Act 1952.pdf