Dear All,
This incident happened in our organization during March 2014. One employee, who had been working with us for the past 4 and a half years, submitted a resignation letter. At the bottom of his letter, he specifically mentioned that he is submitting this resignation only for the purpose of withdrawing his Provident Fund amount. He had a perception that the organization would accept his resignation with the same purpose, remove his name from the company payroll for 3 months, and release his PF after 3 months from the date of resignation. Then, the organization would reinstate him in the payroll with a new appointment letter and a new PF account eventually.
Being in HR, I was the first person to respond to him, and based on my knowledge, I informed him that this is not the process. PF amount can only be claimed and withdrawn when a person retires or resigns from a particular organization. Furthermore, in some cases, I have read that a particular percentage of PF amount can be withdrawn in the case of an employee's daughter's wedding.
Hence, I request you all to guide me on this and let me know whether the PF can be withdrawn by submitting such a type of (temporary) resignation.
From India, Ahmadabad
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13This incident happened in our organization during March 2014. One employee, who had been working with us for the past 4 and a half years, submitted a resignation letter. At the bottom of his letter, he specifically mentioned that he is submitting this resignation only for the purpose of withdrawing his Provident Fund amount. He had a perception that the organization would accept his resignation with the same purpose, remove his name from the company payroll for 3 months, and release his PF after 3 months from the date of resignation. Then, the organization would reinstate him in the payroll with a new appointment letter and a new PF account eventually.
Being in HR, I was the first person to respond to him, and based on my knowledge, I informed him that this is not the process. PF amount can only be claimed and withdrawn when a person retires or resigns from a particular organization. Furthermore, in some cases, I have read that a particular percentage of PF amount can be withdrawn in the case of an employee's daughter's wedding.
Hence, I request you all to guide me on this and let me know whether the PF can be withdrawn by submitting such a type of (temporary) resignation.
From India, Ahmadabad
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This is not a new thing. Employees have been practicing such things for withdrawing their amount when the need arises. Probably this is due to the fact that people find it difficult to withdraw a loan from other sources. However, employers are expected to guide their employees and help them in granting easy welfare resources so that they do not opt for resignation due to the want of lump sum money from provident funds or other such resources.
From India, Vadodara
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From India, Vadodara
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Not a solution for getting money. Not to be encouraged. It is un-professional on the part of any organisation to allow this knowingly. seshadri
From India, New Delhi
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From India, New Delhi
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Dear Harshavardhan,
Please guide your employees that PF can be withdrawn not only for the purpose of a daughter's wedding but for many other reasons as well. The file attached here contains those details. If they resign like this, they may lose benefits pertaining to gratuity.
Regards,
Gauri
From India, Mumbai
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Please guide your employees that PF can be withdrawn not only for the purpose of a daughter's wedding but for many other reasons as well. The file attached here contains those details. If they resign like this, they may lose benefits pertaining to gratuity.
Regards,
Gauri
From India, Mumbai
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Dear Mr.Date, This practice is prevalent. However, kindly check — there are number of reasons for which advance may be taken.Advance is only % of own contribution. Regards, Col.Rathi
From India, Delhi
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From India, Delhi
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Dear all,
It is true that few workers opt to withdraw their EPF accumulations as and when they feel any financial crisis, which should be avoided by educating them and also extending possible financial aids. In fact, the purpose of EPF remains unachieved if it is withdrawn before it is required at old age, and such workers are also deprived of long-term benefits like gratuity due to well-established breaks in service.
PK Sharma
From India, Delhi
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It is true that few workers opt to withdraw their EPF accumulations as and when they feel any financial crisis, which should be avoided by educating them and also extending possible financial aids. In fact, the purpose of EPF remains unachieved if it is withdrawn before it is required at old age, and such workers are also deprived of long-term benefits like gratuity due to well-established breaks in service.
PK Sharma
From India, Delhi
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Dear Harsha,
First of all, isn't it easy for employees to exit and rejoin at their convenience in your office? I'm surprised.
Secondly, a 'conditional resignation' is not acceptable in normal circumstances.
Thirdly, from March '14 until today, what actions were taken by your company regarding this resignation? Is this still pending? On the contrary, if your company already accepted the resignation and relieved him, have you settled his PF? Have you reinstated him back on your rolls?
I feel the option exercised by your colleague is an ill-advised solution to his financial problems. As others have pointed out, he should have used the option of 'part final withdrawal' without quitting and closing his PF account. Now, I'm afraid, in the process, he may have lost a substantial amount of gratuity (equivalent to 2 1/2 months' salary) which he would have been eligible for once he completes 5 years of continuous service.
Sorry to see this hasty action.
From India, Bangalore
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First of all, isn't it easy for employees to exit and rejoin at their convenience in your office? I'm surprised.
Secondly, a 'conditional resignation' is not acceptable in normal circumstances.
Thirdly, from March '14 until today, what actions were taken by your company regarding this resignation? Is this still pending? On the contrary, if your company already accepted the resignation and relieved him, have you settled his PF? Have you reinstated him back on your rolls?
I feel the option exercised by your colleague is an ill-advised solution to his financial problems. As others have pointed out, he should have used the option of 'part final withdrawal' without quitting and closing his PF account. Now, I'm afraid, in the process, he may have lost a substantial amount of gratuity (equivalent to 2 1/2 months' salary) which he would have been eligible for once he completes 5 years of continuous service.
Sorry to see this hasty action.
From India, Bangalore
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Dear Harshavardhan,
This incident happened in our organization during March 2014. One employee, who had been working with us for the past 4 1/2 years, submitted a resignation letter. At the bottom of his letter, he specifically mentioned that he was submitting this resignation only to withdraw his Provident Fund amount. He believed that the organization would accept his resignation for this purpose, remove his name from the company payroll for 3 months, and release his PF after 3 months from the date of resignation. Then, the organization would re-instate him on the payroll with a new appointment letter and a new PF account.
As an HR professional, I was the first person to respond to him, and based on my knowledge, I informed him that this is not the correct process. PF amount can only be claimed and withdrawn upon retirement or resignation from a particular organization. In some cases, a specific percentage of the PF amount can be withdrawn for events like an employee's daughter's wedding.
Therefore, I request your guidance on whether PF can be withdrawn by submitting such a (temporary) resignation.
It is regrettable to mention that the PF amount and account are used as a bank FD by employees. Once employees realize that a specific amount has accumulated in their PF account, they become restless until they withdraw it. In the industry, unprofessional employers encourage such practices to avoid liabilities under the gratuity act or retrenchment compensation. If an employee resigns before completing 5 years (or 1 year as the case may be), the employer is relieved of the mentioned liabilities.
There are certain occasions such as children's weddings, house purchases, LIC premium payments, and medical expenses under which a PF beneficiary can claim a withdrawal. However, a minimum of 5 years of membership under PF is mandatory.
I hope this clarifies the situation. Thank you.
From India, Mumbai
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This incident happened in our organization during March 2014. One employee, who had been working with us for the past 4 1/2 years, submitted a resignation letter. At the bottom of his letter, he specifically mentioned that he was submitting this resignation only to withdraw his Provident Fund amount. He believed that the organization would accept his resignation for this purpose, remove his name from the company payroll for 3 months, and release his PF after 3 months from the date of resignation. Then, the organization would re-instate him on the payroll with a new appointment letter and a new PF account.
As an HR professional, I was the first person to respond to him, and based on my knowledge, I informed him that this is not the correct process. PF amount can only be claimed and withdrawn upon retirement or resignation from a particular organization. In some cases, a specific percentage of the PF amount can be withdrawn for events like an employee's daughter's wedding.
Therefore, I request your guidance on whether PF can be withdrawn by submitting such a (temporary) resignation.
It is regrettable to mention that the PF amount and account are used as a bank FD by employees. Once employees realize that a specific amount has accumulated in their PF account, they become restless until they withdraw it. In the industry, unprofessional employers encourage such practices to avoid liabilities under the gratuity act or retrenchment compensation. If an employee resigns before completing 5 years (or 1 year as the case may be), the employer is relieved of the mentioned liabilities.
There are certain occasions such as children's weddings, house purchases, LIC premium payments, and medical expenses under which a PF beneficiary can claim a withdrawal. However, a minimum of 5 years of membership under PF is mandatory.
I hope this clarifies the situation. Thank you.
From India, Mumbai
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Dear Gauri,
Your suggestion to get an advance from the PF department for your daughter's marriage is noted. The employee must have completed seven years of service to be eligible for a PF advance; otherwise, there is no chance to receive the advance payment for the marriage.
Yogesh Setia (Sr. HR Executive)
9210106263
From India, Delhi
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Your suggestion to get an advance from the PF department for your daughter's marriage is noted. The employee must have completed seven years of service to be eligible for a PF advance; otherwise, there is no chance to receive the advance payment for the marriage.
Yogesh Setia (Sr. HR Executive)
9210106263
From India, Delhi
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Dear Harsh,
It is totally unprofessional to think that Form 31 is only applicable after 5 years of employment, and that is only for one case: the purchase and construction of land. After 7 years of his/her employment, he can withdraw 50% of the amount for medical treatment and his daughter's marriage.
However, if your employee has a very good track record and a serious condition that requires immediate financial assistance, you can only proceed with approval from the senior management as part of an Internal Employee orientation program.
Alternatively, if your company has an Advance salary policy, you can suggest that as an option.
From India, Delhi
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It is totally unprofessional to think that Form 31 is only applicable after 5 years of employment, and that is only for one case: the purchase and construction of land. After 7 years of his/her employment, he can withdraw 50% of the amount for medical treatment and his daughter's marriage.
However, if your employee has a very good track record and a serious condition that requires immediate financial assistance, you can only proceed with approval from the senior management as part of an Internal Employee orientation program.
Alternatively, if your company has an Advance salary policy, you can suggest that as an option.
From India, Delhi
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CiteHR.AI
(Fact Checked)-The reply provided contains accurate information regarding the withdrawal of Provident Fund (PF) amounts, mentioning the necessity of having a minimum of 5 years of membership. The user also correctly highlighted the instances when PF withdrawals are permissible, such as weddings, house purchases, LIC premium payments, and medical expenses. The explanation about unprofessional practices by some employers to avoid statutory liabilities under labor laws is also valid. (1 Acknowledge point)