Dear All,
I have a query and need your suggestion. The query is as follows: A person joined our company on 01.04.10 at a basic salary of Rs. 10,000/-, and as he is not entitled to PF since his basic salary is above Rs. 6,500/- at the time of joining. After one year of service in the company, as of 01.04.11, his basic salary was increased to Rs. 12,000/-. Now that he has completed one year, the company wants to provide him with PF benefits. My question is, can a company extend such benefits to a person after one year of service in the company or at any other point after joining? Please discuss.
Regards,
DG
From India, Calcutta
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1I have a query and need your suggestion. The query is as follows: A person joined our company on 01.04.10 at a basic salary of Rs. 10,000/-, and as he is not entitled to PF since his basic salary is above Rs. 6,500/- at the time of joining. After one year of service in the company, as of 01.04.11, his basic salary was increased to Rs. 12,000/-. Now that he has completed one year, the company wants to provide him with PF benefits. My question is, can a company extend such benefits to a person after one year of service in the company or at any other point after joining? Please discuss.
Regards,
DG
From India, Calcutta
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Hi,
As per EPF conditions, when a person joins an organization and starts working, it is the sole responsibility of the employer to deduct the EPF amount from the employee's salary from the first day of employment and contribute it to the EPF commissioner's office. However, this deduction is restricted to 6500 (basic salary).
In your case, after one year, you are planning to deduct the amount from the employee's basic salary and contribute it to the EPF commissioner's office. This is not possible after one year.
From India
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As per EPF conditions, when a person joins an organization and starts working, it is the sole responsibility of the employer to deduct the EPF amount from the employee's salary from the first day of employment and contribute it to the EPF commissioner's office. However, this deduction is restricted to 6500 (basic salary).
In your case, after one year, you are planning to deduct the amount from the employee's basic salary and contribute it to the EPF commissioner's office. This is not possible after one year.
From India
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There is no problem if you make a resolution that all employees, irrespective of their salary, would be brought under EPF coverage. The effect of such coverage can take place from the present date and not necessarily from the date of joining of each employee. It is not possible to apply it retrospectively since it would result in a significant liability towards past PF contributions.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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Mr. Madhu, you are right, but a huge amount of past E.P.F. liability will be imposed on the employer with the current interest, and you will also face legal problems. You will need to show all past data related to employment, which may not be possible to manipulate, such as salary records, attendance records, leave records, employment registers, and more.
So, it's better to stay calm and implement the policy on newcomers rather than existing employees. Also, ensure to have them sign a declaration form stating their unwillingness to contribute to EPF.
From India
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So, it's better to stay calm and implement the policy on newcomers rather than existing employees. Also, ensure to have them sign a declaration form stating their unwillingness to contribute to EPF.
From India
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I do agree with Mr. Vikas Sharma, but 6500 basic is not the limit of PF deduction. It's a ceiling limit, i.e., the pension fund should be calculated on Rs. 6500/- (max Rs. 541/- will go to the pension fund), and the difference should go to the PF fund (Employer's cont).
As per the PF deduction, from day one, PF has to be contributed for all except Apprentices who are covered under the Apprentice Act.
Regards, Dinesh Adikane
From India, Wardha
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As per the PF deduction, from day one, PF has to be contributed for all except Apprentices who are covered under the Apprentice Act.
Regards, Dinesh Adikane
From India, Wardha
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It is not necessary that it should be restricted to NEW EMPLOYEES but you can make it applicable to existing employees also BUT WITH EFFECT FROM A PRESENT DATE. Regards, Madhu.T.K
From India, Kannur
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From India, Kannur
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HI Madhu, This is possible if company give new joining date,effect from may 2011 to existing employee but in this case there Gratuity period will affect. so this is not possible at all.
From India
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From India
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There is no problem to give him pf benefit, but you will have to show his DOJ from May’11 and restrict his contribution on 6500/- (780/-). Sanjeev
From India, Delhi
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From India, Delhi
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Kindly don't get confused on this issue. What Mr. Madhu has written is correct. Indian Labour Laws are benevolent in nature, and generally, there are no restrictions or ceiling on benefits; they can be better than what is stipulated by Law.
Warm regards.
From India, Delhi
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Warm regards.
From India, Delhi
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Thank you for your response. I also believe that Mr. Madhu is correct. In this case, PF applicability is voluntary, so it can be initiated at a later date agreed upon by both the employer and the employee. I would like to clarify one point: Can this issue be handled on a case-by-case basis, or do we need to make it applicable to all employees who exceed the ceiling?
Regards,
DG
From India, Calcutta
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Regards,
DG
From India, Calcutta
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Hi We are planning for pf , for our employee so what are the intial step we have to take. help me
From India, Delhi
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From India, Delhi
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It is always advisable to make it applicable to all employees rather than case-to-case because, in the latter case, there is a chance that in the future, there may arise some disagreement regarding the CTC aspects, since some employees are not getting the share of PF that the employer contributes. From the point of view of EPF Organization, there will not be any problem since it is already an initiative by the employer, not by compulsion but by will.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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Dear All,
If the basic salary is more than Rs. 6500, it is not mandatory for the employer and employee to contribute. However, upon mutual consent from both parties, contributions can be made effective from the date of mutual consent.
Mr. Madhu is correct and has explained it in the best possible way.
From India, Bhubaneswar
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If the basic salary is more than Rs. 6500, it is not mandatory for the employer and employee to contribute. However, upon mutual consent from both parties, contributions can be made effective from the date of mutual consent.
Mr. Madhu is correct and has explained it in the best possible way.
From India, Bhubaneswar
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If the person has submitted his declaration at the time of joining in from No 11 EPF of Act, he is not willing to become a member of EPF. The same declaration was taken on the date of joining. Why is he approaching to become an EPF member since the date of joining?
One thing I tell you is that it can be applicable with the present date. In case it has been implemented from the date of joining, it will create lots of problems. All contributions will be deposited with interest as applicable by the act, and damages may be payable under section 14B of the EPF Act. Therefore, if it is necessary, you may implement PF deduction with effect from the current period, not from the date of joining after one year.
Dashrath Mishra
08800113175
From India, Delhi
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One thing I tell you is that it can be applicable with the present date. In case it has been implemented from the date of joining, it will create lots of problems. All contributions will be deposited with interest as applicable by the act, and damages may be payable under section 14B of the EPF Act. Therefore, if it is necessary, you may implement PF deduction with effect from the current period, not from the date of joining after one year.
Dashrath Mishra
08800113175
From India, Delhi
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Hi Mr. Sapid & All,
I have gone through the responses, and Mr. Madhu is right. However, I would like to summarize the response for a clear understanding:
1. PF is applicable from day one when the employee joins.
2. The Act provides an option that those whose basic+DA is above Rs. 6500/- need not be covered under PF & EPS.
3. Companies can choose to restrict paying PF if their basic+DA is above Rs. 6500/-. However, this is not mandatory.
4. Companies can extend PF benefits even if it is more than Rs. 6500/- up to the full basic+DA.
5. It is always advisable to cover employees from day one, and the option of coverage under PF should not be on a case-to-case basis. Otherwise, companies will face administrative problems.
Regards,
K. Ramachandra
Bangalore
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I have gone through the responses, and Mr. Madhu is right. However, I would like to summarize the response for a clear understanding:
1. PF is applicable from day one when the employee joins.
2. The Act provides an option that those whose basic+DA is above Rs. 6500/- need not be covered under PF & EPS.
3. Companies can choose to restrict paying PF if their basic+DA is above Rs. 6500/-. However, this is not mandatory.
4. Companies can extend PF benefits even if it is more than Rs. 6500/- up to the full basic+DA.
5. It is always advisable to cover employees from day one, and the option of coverage under PF should not be on a case-to-case basis. Otherwise, companies will face administrative problems.
Regards,
K. Ramachandra
Bangalore
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Dear,
First of all, the company is not liable to contribute towards P.F. if the employee's basic salary is more than 6500 p.m. If your company wants to provide the P.F. benefit to the employee, there is no problem. The company can offer the benefit to the employee. But ensure one thing: the employee's date of joining should match the contribution date of the P.F. In your records, his date of joining may be different. However, when you commence the P.F. contribution, the employee's joining date should be the contribution date.
For example:
Date of Joining: 01-04-2010
Date of P.F. contribution: 01-04-2011
Ensure that the date of joining in the P.F. return is 01.04.2011.
So, there is no issue. Go ahead.
Regards,
Atul Katoch
From India, Ludhiana
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First of all, the company is not liable to contribute towards P.F. if the employee's basic salary is more than 6500 p.m. If your company wants to provide the P.F. benefit to the employee, there is no problem. The company can offer the benefit to the employee. But ensure one thing: the employee's date of joining should match the contribution date of the P.F. In your records, his date of joining may be different. However, when you commence the P.F. contribution, the employee's joining date should be the contribution date.
For example:
Date of Joining: 01-04-2010
Date of P.F. contribution: 01-04-2011
Ensure that the date of joining in the P.F. return is 01.04.2011.
So, there is no issue. Go ahead.
Regards,
Atul Katoch
From India, Ludhiana
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Dear DG,
Firstly, please let us know the number of employees in your organization/office. If it is fewer than 20 and you are opting for voluntary coverage, the process is different. If there were more than 20 employees, then why were all the employees not covered from the day your company reached 20 employees?
Regards,
Murali
From India, Chennai
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Firstly, please let us know the number of employees in your organization/office. If it is fewer than 20 and you are opting for voluntary coverage, the process is different. If there were more than 20 employees, then why were all the employees not covered from the day your company reached 20 employees?
Regards,
Murali
From India, Chennai
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Dear Mr. DG,
Please note that you can start deducting PF for the employee from the date of completion of even 1 year also. But should assure that the employee was on probation for the said one year. Otherwise, you should remit the PF from his date of joining. 12% of the basic salary can be deducted and remitted to the PF fund. The limit for the deduction of the basic salary is up to $6500.00.
Nidhi HR Manager Liberty Marketers
From India, Kochi
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Please note that you can start deducting PF for the employee from the date of completion of even 1 year also. But should assure that the employee was on probation for the said one year. Otherwise, you should remit the PF from his date of joining. 12% of the basic salary can be deducted and remitted to the PF fund. The limit for the deduction of the basic salary is up to $6500.00.
Nidhi HR Manager Liberty Marketers
From India, Kochi
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Hello All,
As per the Provident Fund Act of 1952, amended in 2006-2007, it is clear that the limit of calculation is set at Rs. 6500/- minimum (Basic + DA only). Since his basic is much above the set limit, his PF cannot be deducted as he is not eligible for the same. Matter closed.
Do not get confused between PF and ESI.
Rashpal HR Manager
From India, Chandigarh
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As per the Provident Fund Act of 1952, amended in 2006-2007, it is clear that the limit of calculation is set at Rs. 6500/- minimum (Basic + DA only). Since his basic is much above the set limit, his PF cannot be deducted as he is not eligible for the same. Matter closed.
Do not get confused between PF and ESI.
Rashpal HR Manager
From India, Chandigarh
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No problem if the basic is Rs. 10,000 and the employee has completed one year, and the company wants to give the benefit of P.F. That's not a problem. You can mention the present date of deduction; there is no statutory problem. You can also show the actual date of joining. Statutory problems can arise only when the Basic was less than Rs. 6,500, and you were not deducting P.F. If the basic is more than Rs. 6,500, you can give the benefit after one year.
Rajiv Singh
From India
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Rajiv Singh
From India
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The PF contribution may be started with the current month, and a letter to the concerned Provident Fund authority may be sent informing the intention of the company to contribute to the Provident Fund. It should also state that this decision has the acceptance of the employees.
Regards,
Deepak
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Regards,
Deepak
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Dear all,
Please understand that an employee can become a member of the Employee Provident Fund (EPF) at any time if they are not already a member. In this case, the employee must submit an application along with a joint declaration from the employer to the Regional EPF Commissioner to become a member of the EPF. The Commissioner will then grant permission for the employee to join the EPF.
Thank you.
From India, Mumbai
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Please understand that an employee can become a member of the Employee Provident Fund (EPF) at any time if they are not already a member. In this case, the employee must submit an application along with a joint declaration from the employer to the Regional EPF Commissioner to become a member of the EPF. The Commissioner will then grant permission for the employee to join the EPF.
Thank you.
From India, Mumbai
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Here are some suggestions:
The PF Act will apply to persons drawing up to a salary of Rs. 6,500. They have to be covered from day one for which you don't have any choice. For others, you can take a policy decision to extend the said benefit to employees whose salary exceeds Rs. 6,500. However, you cannot:
- Put restrictions like after one year
- After probation
- On a single employee
You have to do it for all employees in that position. You can start now prospectively and not retrospectively (with some influence, you can implement it from the current year, i.e., PF year).
Instead of asking them to pay into the Public Provident Fund and reimbursing the same to the employees, this can be extended when they serve one year or after confirmation, among other conditions.
Dr. Nagaraj
From India, Bangalore
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The PF Act will apply to persons drawing up to a salary of Rs. 6,500. They have to be covered from day one for which you don't have any choice. For others, you can take a policy decision to extend the said benefit to employees whose salary exceeds Rs. 6,500. However, you cannot:
- Put restrictions like after one year
- After probation
- On a single employee
You have to do it for all employees in that position. You can start now prospectively and not retrospectively (with some influence, you can implement it from the current year, i.e., PF year).
Instead of asking them to pay into the Public Provident Fund and reimbursing the same to the employees, this can be extended when they serve one year or after confirmation, among other conditions.
Dr. Nagaraj
From India, Bangalore
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Dear Nidhi, This is to inform you that if also an employee is under probationer he/she will be eligible for PF contribution.
From India, Bhubaneswar
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From India, Bhubaneswar
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HI Vikash, Madhu is correct, PF can be implemented for all the employee (old & new) unless the cealing limit of Rs.6500/- & no. of employees as per the law is considered. Regards, Sanjeev
From India, Mumbai
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From India, Mumbai
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As per my knowledge and understanding, if an employee drawing Basic + DA is more than Rs. 6500/- per month and the employer is not interested in covering the employee in the PF scheme, then the employer has to obtain Form No. 11. If the employee is covered under the EPF scheme by their previous employer, then we cannot deem them as an exempt employee. Hence, their PF is liable from the date of joining, subject to a minimum contribution of Rs. 780/- (12%) per month.
Nikhil - 9826685084
From India, Indore
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Nikhil - 9826685084
From India, Indore
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Earlier if you have taken concern from employee for not deducting PF as his Basic is more than Rs. 6500/- and now employee wish to start his PF Contribution then you can start from today.
From India
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From India
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As per the Provident Fund Act, employees whose pay is less than Rs. 6,500 per month are covered under the act. "Pay" includes basic wages, dearness allowance, retaining allowance, and cash value of food concession. If an employee is receiving a salary of more than Rs. 6,500, they can become a member of the P.F. with the consent of the management. The management has to incur an additional 1.61% for administrative charges, etc.
However, if an employee is a member of the P.F. in their previous organization and the new organization they join falls under the P.F. act, it is mandatory for the new organization to deduct their P.F. This is all I know.
Any comments?
BEST REGARDS,
Ajay Bajaj
From India, Chandigarh
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However, if an employee is a member of the P.F. in their previous organization and the new organization they join falls under the P.F. act, it is mandatory for the new organization to deduct their P.F. This is all I know.
Any comments?
BEST REGARDS,
Ajay Bajaj
From India, Chandigarh
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Provident Fund - Excluded Employee - Definition.pdf