Hello. I have some questions related to PF:
1) Is the company already contributing the employer share on amounts of Rs. 6500 and above? Can they limit their contribution to Rs. 6500?
2) Following on from point number one, can the company completely stop paying contributions since the employees are already earning above Rs. 6500?
3) If the company is currently paying as per point number one for all old employees, can it exclude new employees (earning above Rs. 6500) from this liability?
4) If the answer to points 1, 2, and 3 is YES, what formalities should be completed to ensure compliance?
I would appreciate a point-by-point reply to bring clarity.
From India, Aurangabad
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141) Is the company already contributing the employer share on amounts of Rs. 6500 and above? Can they limit their contribution to Rs. 6500?
2) Following on from point number one, can the company completely stop paying contributions since the employees are already earning above Rs. 6500?
3) If the company is currently paying as per point number one for all old employees, can it exclude new employees (earning above Rs. 6500) from this liability?
4) If the answer to points 1, 2, and 3 is YES, what formalities should be completed to ensure compliance?
I would appreciate a point-by-point reply to bring clarity.
From India, Aurangabad
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Company can restrict the PF contributions to 12% of Rs 6500 even if it was being contributed at a higher amount. This reduction in PF qualifying wages, which is not permitted as per Section 12 of EPF & MP Act, will not stand as the PF Organization has no right to demand contribution on an amount over 6500. This was decided in a Supreme Court verdict in Maratwada Gramin Bank case in 2012.
An employee once covered by PF should continue his contribution till he leaves the organization or withdraws his PF accumulations. Therefore, the company cannot stop contributing PF in respect of those who have more than 6500 as PF qualifying salary. It can, however, restrict the contribution to 12% of 6500.
An employee whose PF qualifying salary exceeds Rs 6500 at the time of joining the company can be excluded from coverage. However, if the new employee has been a PF member while at his previous company and when he left the company, he has not withdrawn the accumulations, then the present company is liable to give him coverage. That means an existing PF member should be given coverage whereas a new joiner who has not been covered by PF earlier can be excluded if his PF qualifying salary exceeds Rs 6500. In such cases, the employer should get Form 11 from the new joiner which declares if he was a PF member or not.
Madhu.T.K
From India, Kannur
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An employee once covered by PF should continue his contribution till he leaves the organization or withdraws his PF accumulations. Therefore, the company cannot stop contributing PF in respect of those who have more than 6500 as PF qualifying salary. It can, however, restrict the contribution to 12% of 6500.
An employee whose PF qualifying salary exceeds Rs 6500 at the time of joining the company can be excluded from coverage. However, if the new employee has been a PF member while at his previous company and when he left the company, he has not withdrawn the accumulations, then the present company is liable to give him coverage. That means an existing PF member should be given coverage whereas a new joiner who has not been covered by PF earlier can be excluded if his PF qualifying salary exceeds Rs 6500. In such cases, the employer should get Form 11 from the new joiner which declares if he was a PF member or not.
Madhu.T.K
From India, Kannur
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Dear Madhu Sir As always, you have given enough clarity to understand the matter. But I have not found any Form 11 in the PF Act or Schemes. Is this Form still in use?
From India, Aurangabad
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From India, Aurangabad
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Yes, it is not a form to be sent to EPFO but to be kept in the office for our record. In case the EPF Enforcement Officer asks about any excluded employee, we can show it and establish that the excluded employee has not been a member of PF earlier. Form 11 is attached for reference.
Madhu.T.K
From India, Kannur
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Madhu.T.K
From India, Kannur
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Can anyone guide me on the point of whether PF contribution can be stopped when an employee attains the age of 58? Also, in the practice of keeping employees employed even after the age of 70 years, should their PF still be deducted?
From India, Mumbai
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From India, Mumbai
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PF contribution cannot be stopped if the age of the employee exceeds 58 years. In such a situation, all contributions, i.e., 24%, shall be deposited into his PF account only. The Pension Account Fund shall be diverted to the PF account fund.
Yes, if the employee has resigned, withdrawn all his accumulations, and settled his account, in that case, you can keep him out of the PF preview, subject to his salary being more than Rs 6500/-.
From India, Delhi
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Yes, if the employee has resigned, withdrawn all his accumulations, and settled his account, in that case, you can keep him out of the PF preview, subject to his salary being more than Rs 6500/-.
From India, Delhi
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Thank you for your valuable contribution.
I want to know, is there any retirement age for PF? Can the management retire an employee at the age of 58 or 60, clear all his/her dues (like gratuity, leave encashment, etc.), and re-appoint him/her for the next 2 or 5 years?
From India, Mumbai
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I want to know, is there any retirement age for PF? Can the management retire an employee at the age of 58 or 60, clear all his/her dues (like gratuity, leave encashment, etc.), and re-appoint him/her for the next 2 or 5 years?
From India, Mumbai
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There is no retirement age for PF, but an employee cannot be part of the PF Pension Fund after 58 years of age. If an employer employs a person above 58 years of age, the employer has to contribute their share of the contribution of 12% to the Provident Fund along with the employee's share without bifurcating it as 8.33% to the Pension fund and the remaining, i.e., 3.67% to the Provident Fund.
It is not mandatory that an employee who is receiving PF pension (PF pension only) or who has withdrawn PF accumulations should be given PF coverage as mentioned above. They can be excluded even if their PF qualifying salary is less than Rs 6500.
Please note that exclusion is granted only for employees who have withdrawn PF and/or are receiving PF pension. A person retired from government service who is receiving a government pension and is employed in an establishment after their government service retirement should be given PF coverage. However, they are not required to contribute towards the pension fund.
Madhu.T.K
From India, Kannur
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It is not mandatory that an employee who is receiving PF pension (PF pension only) or who has withdrawn PF accumulations should be given PF coverage as mentioned above. They can be excluded even if their PF qualifying salary is less than Rs 6500.
Please note that exclusion is granted only for employees who have withdrawn PF and/or are receiving PF pension. A person retired from government service who is receiving a government pension and is employed in an establishment after their government service retirement should be given PF coverage. However, they are not required to contribute towards the pension fund.
Madhu.T.K
From India, Kannur
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Can an employee claim exclusion if they become a member during 54 and withdraw after 55?
If an employee becomes a member before 55 and withdraws before 55, can they claim exclusion?
What is the purpose of social security?
What is the difference between "pay" of 6500/- and wages under the EPF Act and Pay under the EPF Scheme?
Why does the exclusion only mention "pay"? Are there no court rulings on PAY?
Anil Narayan, adv
From India, Palakkad
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If an employee becomes a member before 55 and withdraws before 55, can they claim exclusion?
What is the purpose of social security?
What is the difference between "pay" of 6500/- and wages under the EPF Act and Pay under the EPF Scheme?
Why does the exclusion only mention "pay"? Are there no court rulings on PAY?
Anil Narayan, adv
From India, Palakkad
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I have some questions related to PF:
1) Is the company already contributing the employer's share on Rs 6500 and above? Can they limit their contribution to Rs 6500?
If the company contribution is ongoing, the company cannot stop it. However, they have the option with new joinings under para 34 of PF Rules.
2) In point No. 01, can the company completely cease paying contributions since the employees are already above Rs 6500?
No, if the PF membership is active, it cannot be stopped.
3) If the company is paying for all old employees as per Point No. 1, can they exclude new employees (earning above Rs 6500) from the liability?
Yes, they can refer to para 34 of PF rules.
4) If the answer to Points 1, 2, 3 is YES, then what formalities should be completed to ensure compliance? I would appreciate a point-by-point reply for clarification.
For more information, please visit https://www.citehr.com/460492-pf-lia...#ixzz2TcFdsEBb
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1) Is the company already contributing the employer's share on Rs 6500 and above? Can they limit their contribution to Rs 6500?
If the company contribution is ongoing, the company cannot stop it. However, they have the option with new joinings under para 34 of PF Rules.
2) In point No. 01, can the company completely cease paying contributions since the employees are already above Rs 6500?
No, if the PF membership is active, it cannot be stopped.
3) If the company is paying for all old employees as per Point No. 1, can they exclude new employees (earning above Rs 6500) from the liability?
Yes, they can refer to para 34 of PF rules.
4) If the answer to Points 1, 2, 3 is YES, then what formalities should be completed to ensure compliance? I would appreciate a point-by-point reply for clarification.
For more information, please visit https://www.citehr.com/460492-pf-lia...#ixzz2TcFdsEBb
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In some cases where the CTC is applicable companies do not pay the partial amount from their own but they deduct and deposit the employer part as well as employee part from the CTC of the employee.
From India, Lucknow
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From India, Lucknow
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Dear Madhu Sir,
Please let me know if an employee was a member of PF in their previous organization, is the new organization liable to provide membership if the employee desires it. Is it possible for the organization to not deduct the employee's PF share even if they were a member already?
Thank you.
From India, Shahkot
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Please let me know if an employee was a member of PF in their previous organization, is the new organization liable to provide membership if the employee desires it. Is it possible for the organization to not deduct the employee's PF share even if they were a member already?
Thank you.
From India, Shahkot
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A break up of salary with employer’s contribution to PF shown as cost to company is common now a days but deducting both the share from the salary of employee is not legal.
As discussed, an employer is expected (I can only say that it is expected from a prudent employer who wishes to follow all laws) to give coverage to a new employee who has been a member of PF with the previous employer even if his PF qualifying salary at the time of joining exceeds Rs 6500. At the same time there are employers who do not even care to give coverage even to those whose salary does not exceed Rs 6500. PF organisation can take action against them, but I am not sure if all are charged for this offence.
Madhu.T.K
From India, Kannur
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As discussed, an employer is expected (I can only say that it is expected from a prudent employer who wishes to follow all laws) to give coverage to a new employee who has been a member of PF with the previous employer even if his PF qualifying salary at the time of joining exceeds Rs 6500. At the same time there are employers who do not even care to give coverage even to those whose salary does not exceed Rs 6500. PF organisation can take action against them, but I am not sure if all are charged for this offence.
Madhu.T.K
From India, Kannur
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