Our company is a manpower outsourcing services company. Could you please clarify and confirm whether PF contribution is compulsory or optional for a contract worker whose salary is more than Rs. 6,500? - Thanks
Srinivas
Thirdage
From India, Hyderabad
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Srinivas
Thirdage
From India, Hyderabad
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Dear Srinivas,
Greetings for the day.
First of all, you should know that EPF accumulation should be deducted on basic salary + DA + food conc. (if any). Secondly, the applicability of the act is to all establishments whose worker strength is up to 10. Thirdly, you should be aware that the deduction of EPF/EPS is compulsory up to a basic of INR 6500/-, with an exemption only for those whose basic is above that. Lastly, once an employee becomes a member of the EPF/EPS scheme, they cannot be discontinued as long as they remain in service, until their basic salary increases by INR 6500/-. Discontinuation can only occur by tendering resignation.
Thanks & Regards,
Sumit Kumar Saxena
+91-9899669071
From India, Ghaziabad
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256Greetings for the day.
First of all, you should know that EPF accumulation should be deducted on basic salary + DA + food conc. (if any). Secondly, the applicability of the act is to all establishments whose worker strength is up to 10. Thirdly, you should be aware that the deduction of EPF/EPS is compulsory up to a basic of INR 6500/-, with an exemption only for those whose basic is above that. Lastly, once an employee becomes a member of the EPF/EPS scheme, they cannot be discontinued as long as they remain in service, until their basic salary increases by INR 6500/-. Discontinuation can only occur by tendering resignation.
Thanks & Regards,
Sumit Kumar Saxena
+91-9899669071
From India, Ghaziabad
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Dear Srini, Sumit,
PF is applicable if the number of employees is a minimum of 20, and ESI is applicable for a minimum of 10 employees.
If anyone's salary has increased above 6500, and if he is already a member of PF, then you cannot stop deducting his PF. You need to continue deducting his PF based on a basic of 6500 (even if his salary + DA is 10,000).
However, in an organization with more than 20 employees (where PF is deducted for all), if a new employee joins with a salary + DA of more than 6500 (for example, Rs 8000), it is at the discretion of the organization whether they want to deduct PF for this employee or not.
As a manpower outsourcing company, you are responsible for deducting and depositing PF and ESI for contract labor. In cases of default or complaints, both you and the principal employer who has hired labor from you shall be liable for prosecution and lawful penalties. Therefore, in the case of outsourced labor/staff, the principal employer should enter into a contract that ensures the contractor can meet their obligations regarding ESI and PF. The principal employer has the right to demand proof from the contractor regarding the deposit of PF and ESI for the actual outsourced staff.
From India, Delhi
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PF is applicable if the number of employees is a minimum of 20, and ESI is applicable for a minimum of 10 employees.
If anyone's salary has increased above 6500, and if he is already a member of PF, then you cannot stop deducting his PF. You need to continue deducting his PF based on a basic of 6500 (even if his salary + DA is 10,000).
However, in an organization with more than 20 employees (where PF is deducted for all), if a new employee joins with a salary + DA of more than 6500 (for example, Rs 8000), it is at the discretion of the organization whether they want to deduct PF for this employee or not.
As a manpower outsourcing company, you are responsible for deducting and depositing PF and ESI for contract labor. In cases of default or complaints, both you and the principal employer who has hired labor from you shall be liable for prosecution and lawful penalties. Therefore, in the case of outsourced labor/staff, the principal employer should enter into a contract that ensures the contractor can meet their obligations regarding ESI and PF. The principal employer has the right to demand proof from the contractor regarding the deposit of PF and ESI for the actual outsourced staff.
From India, Delhi
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Hi,
Our company is a manpower outsourcing services company. Could you please clarify and confirm whether PF contribution is compulsory or optional for a contract worker whose salary is more than Rs. 6,500? - Thanks
Srinivas
Thirdage
PF contribution is a must, whether it may be for a contractual worker or a permanent worker, as long as the basic pay (basic + DA) is up to Rs. 6,500 per month.
PF contribution cannot be avoided at the whims of the employer, as it requires the consent of the employee. This mutual consent is documented by filling up Form 11 by the concerned employee.
PF contribution and deduction can be refrained for a new joiner in the organization whose basic pay is above Rs. 6,500 per month, provided the employee consents to refrain from PF by filling out Form 11.
For existing employees, PF deductions and contributions cannot be stopped at any stage of employment, even if the basic pay crosses Rs. 6,500 per month due to appraisals.
However, it can always be arranged that the employee and employer limit the deduction and contribution to Rs. 6,500 per month, which amounts to Rs. 780 per month as PF deduction and contribution in case the basic pay of an existing employee crosses Rs. 6,500 per month after an appraisal or for a new joiner joining the organization with a basic pay above Rs. 6,500 per month.
PF contribution is not required in the case of an "Apprentice Trainee" as per the clause of the "Apprentice Act, 1961."
From India, Chandigarh
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Our company is a manpower outsourcing services company. Could you please clarify and confirm whether PF contribution is compulsory or optional for a contract worker whose salary is more than Rs. 6,500? - Thanks
Srinivas
Thirdage
PF contribution is a must, whether it may be for a contractual worker or a permanent worker, as long as the basic pay (basic + DA) is up to Rs. 6,500 per month.
PF contribution cannot be avoided at the whims of the employer, as it requires the consent of the employee. This mutual consent is documented by filling up Form 11 by the concerned employee.
PF contribution and deduction can be refrained for a new joiner in the organization whose basic pay is above Rs. 6,500 per month, provided the employee consents to refrain from PF by filling out Form 11.
For existing employees, PF deductions and contributions cannot be stopped at any stage of employment, even if the basic pay crosses Rs. 6,500 per month due to appraisals.
However, it can always be arranged that the employee and employer limit the deduction and contribution to Rs. 6,500 per month, which amounts to Rs. 780 per month as PF deduction and contribution in case the basic pay of an existing employee crosses Rs. 6,500 per month after an appraisal or for a new joiner joining the organization with a basic pay above Rs. 6,500 per month.
PF contribution is not required in the case of an "Apprentice Trainee" as per the clause of the "Apprentice Act, 1961."
From India, Chandigarh
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Hi,
I own a recruitment firm. I have a small clarification. I'm planning to get into Contract Staffing. So, if I hire 15 employees on a contract to work on my payroll, do I need to deduct PF? Also, what components do I need to include in the salary breakup?
From India, Coimbatore
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I own a recruitment firm. I have a small clarification. I'm planning to get into Contract Staffing. So, if I hire 15 employees on a contract to work on my payroll, do I need to deduct PF? Also, what components do I need to include in the salary breakup?
From India, Coimbatore
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