Dear Seniors,
I have a doubt on PF contribution. An employee was working in Company A, and his Basic+DA is greater than 6500 INR. The employee is contributing towards EPF & EPS in Company A.
He then resigns and takes up employment in Company B, where his Basic+DA is also greater than 6500 INR. The employee is saying that he doesn't want to contribute towards EPF & EPS, citing the ceiling of 6500 INR. Now, is the employee duty-bound to contribute to EPF & EPS (considering the previous contributions in Company A)?
Is Company B duty-bound to deduct EPF & EPS?
Please guide me in this matter with supporting material from the EPF Act. I am looking for a solution from a legal perspective.
Regards,
Suresh
From India, Bangalore
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40I have a doubt on PF contribution. An employee was working in Company A, and his Basic+DA is greater than 6500 INR. The employee is contributing towards EPF & EPS in Company A.
He then resigns and takes up employment in Company B, where his Basic+DA is also greater than 6500 INR. The employee is saying that he doesn't want to contribute towards EPF & EPS, citing the ceiling of 6500 INR. Now, is the employee duty-bound to contribute to EPF & EPS (considering the previous contributions in Company A)?
Is Company B duty-bound to deduct EPF & EPS?
Please guide me in this matter with supporting material from the EPF Act. I am looking for a solution from a legal perspective.
Regards,
Suresh
From India, Bangalore
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If, at the time of joining an establishment (say Company B in our present example), the salary of the employee (Basic+DA) is more than Rs 6500, he can be an excluded employee. But since he was previously covered under the EPF (when he was working in Company A) and he has not withdrawn the benefits and closed the accounts, he is expected to continue contributing towards PF.
Now, as far as the present employer is concerned, he can only rely on the words of the employee joining. In order to make sure whether to include him or not, he has to collect a declaration (Form 11) from the new joinee which declares that he has not been a member of PF (in case he was not a member earlier) or he has been a member of PF (if he was covered earlier). If the declaration states that he has been a member of the PF, the present employer should also include him into PF regardless of his salary and make arrangements to transfer his PF by issuing Form 13.
Now it is up to the employee to decide whether to give a false declaration or to continue with PF.
Form 11 is attached.
Regards,
Madhu.T.K
From India, Kannur
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Now, as far as the present employer is concerned, he can only rely on the words of the employee joining. In order to make sure whether to include him or not, he has to collect a declaration (Form 11) from the new joinee which declares that he has not been a member of PF (in case he was not a member earlier) or he has been a member of PF (if he was covered earlier). If the declaration states that he has been a member of the PF, the present employer should also include him into PF regardless of his salary and make arrangements to transfer his PF by issuing Form 13.
Now it is up to the employee to decide whether to give a false declaration or to continue with PF.
Form 11 is attached.
Regards,
Madhu.T.K
From India, Kannur
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Dear Madhu Sir,
Thank you so much for your reply. Sir, in case the employee resigns from Company A and withdraws the benefits under EPF. At the time of joining the Company B, he declares in Form 11 that he was a PF member in Company A. His salary in Company B (Basic+DA) is greater than Rs 6500. In this case, is the employee duty-bound to contribute to EPF & EPS (earlier in Company A employee was contributing towards EPF & EPS)? Is Company B duty-bound to deduct EPF & EPS?
Regards, Suresh
From India, Bangalore
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Thank you so much for your reply. Sir, in case the employee resigns from Company A and withdraws the benefits under EPF. At the time of joining the Company B, he declares in Form 11 that he was a PF member in Company A. His salary in Company B (Basic+DA) is greater than Rs 6500. In this case, is the employee duty-bound to contribute to EPF & EPS (earlier in Company A employee was contributing towards EPF & EPS)? Is Company B duty-bound to deduct EPF & EPS?
Regards, Suresh
From India, Bangalore
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(Fact Checked)-The employee is indeed bound to contribute to EPF & EPS in Company B if basic+DA exceeds Rs 6500, as per EPF Act. Company B must deduct EPF & EPS. (1 Acknowledge point)
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In the above scenario, he is an excluded employee. Normally, before joining the company B, there should be a gap of at least two months because the withdrawal forms (Form 19 and Form 10C) will be accepted by the EPF Organisation only when they are submitted two months after leaving the organization.
Please note that in Form 19, there is a declaration of non-employment to be given by the employee/member that he has not been employed in an organization to which the PF Act applies. This two-month waiting period is to ensure that if the employee joins another employer to whom PF applies, then he is not expected to withdraw the PF but is expected to transfer it to the new account.
The relevance of Form 11 is also to ensure this. As far as the new employer is concerned, he can rely on the declaration given by the employee, and his past PF details cannot be checked in the present scenario and in the absence of a National Social Security Number, which was planned but not introduced due to some technical reasons.
Regards,
Madhu.T.K
From India, Kannur
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Please note that in Form 19, there is a declaration of non-employment to be given by the employee/member that he has not been employed in an organization to which the PF Act applies. This two-month waiting period is to ensure that if the employee joins another employer to whom PF applies, then he is not expected to withdraw the PF but is expected to transfer it to the new account.
The relevance of Form 11 is also to ensure this. As far as the new employer is concerned, he can rely on the declaration given by the employee, and his past PF details cannot be checked in the present scenario and in the absence of a National Social Security Number, which was planned but not introduced due to some technical reasons.
Regards,
Madhu.T.K
From India, Kannur
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(Fact Check Failed/Partial)-The user reply contains inaccurate information.
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Dear Madhu Sir, Thank you so much for your valuable reply. Your reply is very elaborate and filled with a lot of clarity which helps me in better understanding of EPF. Regards, Suresh
From India, Bangalore
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From India, Bangalore
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(Fact Check Failed/Partial)-The user's reply does not address the original query about PF contributions accurately. It lacks substance on the legal obligations of the employee and Company B regarding EPF & EPS.
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Dear All, Enclosed herewith revised Form 11 for your information and nesesarry action. intended to withdraw is as well as PF Withdrawn. Thanks and Regards. Vijay Tapadiya
From India, Mumbai
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From India, Mumbai
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(Fact Check Failed/Partial)-The user reply is incorrect as it does not address the query regarding PF Contribution and Form 11 is not relevant to the original post.
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Super clarification given by Shri Madhu! Dear vijay,Please also clarify what will happen if an employer fails to collect form11 from the employee joined newly.
From India, Madras
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From India, Madras
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(Fact Check Failed/Partial)-The user's reply does not address the query on PF contributions accurately. The focus should be on the EPF & EPS contributions based on the given scenario.
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Dear Seniors,
Please correct me if I am wrong on Form 11.
@Ramachandran Sir, Form 11 is a declaration by the employee stating whether he was/is a PF member with his previous employer. It serves as documentation if the new employer omits the new employee (with the consent of the employee) from EPF contribution. This Form 11 serves as written evidence in case of an inspection by a PF inspector on what basis the new employer has omitted the employee from PF contribution.
The previous post by Madhu Sir would address whether the new employee can be omitted or included in EPF contribution and also discuss Form 11. (PF contribution is mandatory if the salary of the employee Basic+DA is less than Rs. 6500).
Seniors, I am also interested in knowing if there are any penalties in case of failure to produce Form 11 during an inspection by a PF inspector.
Regards,
Suresh
From India, Bangalore
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Please correct me if I am wrong on Form 11.
@Ramachandran Sir, Form 11 is a declaration by the employee stating whether he was/is a PF member with his previous employer. It serves as documentation if the new employer omits the new employee (with the consent of the employee) from EPF contribution. This Form 11 serves as written evidence in case of an inspection by a PF inspector on what basis the new employer has omitted the employee from PF contribution.
The previous post by Madhu Sir would address whether the new employee can be omitted or included in EPF contribution and also discuss Form 11. (PF contribution is mandatory if the salary of the employee Basic+DA is less than Rs. 6500).
Seniors, I am also interested in knowing if there are any penalties in case of failure to produce Form 11 during an inspection by a PF inspector.
Regards,
Suresh
From India, Bangalore
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(Fact Check Failed/Partial)-The information provided in the user reply is mostly correct. However, there is a small clarification needed regarding the salary ceiling for PF contribution. The salary ceiling for mandatory PF contribution is Rs. 15,000, not Rs. 6,500 as mentioned. Additionally, Form 11 is indeed a declaration form by the employee regarding PF membership with previous employers. There are no penalties specifically mentioned for failing to produce Form 11 during a PF inspection.
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There is no penalty if the employer omits to include one member on the basis of the declaration given in Form 11. Moreover, Form 11 is not to be submitted to the PF Office but is to be kept with the employer as proof that he has inquired of the employee about his previous PF matters.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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(Fact Check Failed/Partial)-The user reply is incorrect. As per the EPF Act, an employee with a Basic+DA greater than 6500RS can choose not to contribute to EPF & EPS, but the employer is still required to deduct and contribute to EPF & EPS. Form 11 is to be submitted to the PF Office, not just kept with the employer.
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Dear Seniors,
Company XYZ pays sales incentives to employees upon achieving sales targets on a monthly basis. Is the payment of incentives eligible for PF & ESI deductions? Does the incentive fall under the purview of the definition of basic wages/wages as per the EPF & ESIC Act?
To my knowledge, I think incentives are excluded from PF & ESI contributions. Your point of view will be highly appreciated.
Regards, Suresh
From India, Bangalore
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Company XYZ pays sales incentives to employees upon achieving sales targets on a monthly basis. Is the payment of incentives eligible for PF & ESI deductions? Does the incentive fall under the purview of the definition of basic wages/wages as per the EPF & ESIC Act?
To my knowledge, I think incentives are excluded from PF & ESI contributions. Your point of view will be highly appreciated.
Regards, Suresh
From India, Bangalore
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(Fact Check Failed/Partial)-The user reply is incorrect. Incentives are considered part of basic wages for PF/ESI deductions as per EPF & ESIC Act.
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(Fact Check Failed/Partial)-The user reply is partially correct. The Employee Provident Fund and Miscellaneous Provisions Act, 1952 mandates PF contributions for employees with basic wages up to Rs 15,000. Form 11 is required for declaration. However, the statement about excluding an employee with a salary above Rs 6500 is incorrect.