Dear Colleague,
The provisions of Employees Provident Fund Act 1952 and the Scheme thereof is insisting contribution for 15K. Some employers contribute more than this as a voluntary measure. In the given situation, if you want to restrict to 15k now, you need to examine few important aspect and also adhere to the process:
1. Whether you are going to do this change for Workmen who are covered under Industrial Dispute Act 1947. Then you need to align the Trade Unions as you are impacting the existing terms / privilege that is practiced over a period. Further you need to adhere to the Notice of Change Procedure also in my view. Need to consult the Enforcement Officer and take individual undertaking and consent form each of such workers.
Conditions of Service for change of which Notice is to be given ....1. Wages, including the period and mode of payment;/2. Contribution paid, or payable, by the employer to any provident fund or pension fund or for the benefit of the workmen under any law for the time being in force; ............/8 Withdrawal of any customary concession or privilege or change in usage;.......
2. In case of Non- ID Act covered employees, while you bring this change, you are altering the agreed Contract of Employment / CTC structure. Hence take consent from employees and issue revised CTC structure and to be signed by both sides- Employee Concerned and Employer both as amendment to previous CTC Structure.
3. You may need to consult the EPFO Officers well in advance still as part of Liaison so that it will go smooth.
4. Further do a good Internal Communication with all concerned- Trade Union, HODs, Managers, Employees and then smoothly execute this change.
In some of my previous organizations, we tried this but due to lack of good internal communication it was perceived by employees differently and they all refused to co-operate and went as a failure.
From India, Chennai
305The provisions of Employees Provident Fund Act 1952 and the Scheme thereof is insisting contribution for 15K. Some employers contribute more than this as a voluntary measure. In the given situation, if you want to restrict to 15k now, you need to examine few important aspect and also adhere to the process:
1. Whether you are going to do this change for Workmen who are covered under Industrial Dispute Act 1947. Then you need to align the Trade Unions as you are impacting the existing terms / privilege that is practiced over a period. Further you need to adhere to the Notice of Change Procedure also in my view. Need to consult the Enforcement Officer and take individual undertaking and consent form each of such workers.
Conditions of Service for change of which Notice is to be given ....1. Wages, including the period and mode of payment;/2. Contribution paid, or payable, by the employer to any provident fund or pension fund or for the benefit of the workmen under any law for the time being in force; ............/8 Withdrawal of any customary concession or privilege or change in usage;.......
2. In case of Non- ID Act covered employees, while you bring this change, you are altering the agreed Contract of Employment / CTC structure. Hence take consent from employees and issue revised CTC structure and to be signed by both sides- Employee Concerned and Employer both as amendment to previous CTC Structure.
3. You may need to consult the EPFO Officers well in advance still as part of Liaison so that it will go smooth.
4. Further do a good Internal Communication with all concerned- Trade Union, HODs, Managers, Employees and then smoothly execute this change.
In some of my previous organizations, we tried this but due to lack of good internal communication it was perceived by employees differently and they all refused to co-operate and went as a failure.
From India, Chennai
@Madhu Sir,
You mentioned previously that if PF member remains active, pf needs to submitted without any salary bar in mind.
My question is how to decide if PF is active or inactive for an employee who has UAN in his previous company but has not been working for a few months or years.
From India, Bengaluru
You mentioned previously that if PF member remains active, pf needs to submitted without any salary bar in mind.
My question is how to decide if PF is active or inactive for an employee who has UAN in his previous company but has not been working for a few months or years.
From India, Bengaluru
Vignesh
You have misunderstood what Mr. Madhu had posted.
1. If an employee joins the company at a salary less than ₹ 15,000 he will be covered under PF
2. If his salary at the time of joining is more than 15,000 and he does not have an existing PF Account, he may be exempt if he files Form 11 seeking exemption.
The term active PF account basically means that he has a PF account from which he has not withdrawn his money and closed the account. I believe it can be verified if you check for the UAN. I think in your case, since the money does not seem to be withdrawn, it will be considered active, even if he was out of job for a few months.
From India, Mumbai
You have misunderstood what Mr. Madhu had posted.
1. If an employee joins the company at a salary less than ₹ 15,000 he will be covered under PF
2. If his salary at the time of joining is more than 15,000 and he does not have an existing PF Account, he may be exempt if he files Form 11 seeking exemption.
The term active PF account basically means that he has a PF account from which he has not withdrawn his money and closed the account. I believe it can be verified if you check for the UAN. I think in your case, since the money does not seem to be withdrawn, it will be considered active, even if he was out of job for a few months.
From India, Mumbai
@Saswata Sir,
My doubt is if employee had UAN previously and later took out his entire PF amount. Now she joins in a firm with salary above 15k, will she be called active PF member or not. Because I believe no UAN member can close their account until their PF pension amount is taken which cannot be done until retiring age.
Please clarify my doubt sir.
From India, Bengaluru
My doubt is if employee had UAN previously and later took out his entire PF amount. Now she joins in a firm with salary above 15k, will she be called active PF member or not. Because I believe no UAN member can close their account until their PF pension amount is taken which cannot be done until retiring age.
Please clarify my doubt sir.
From India, Bengaluru
Yes, if he has taken his PF money out, then he is inactive
But if he is not taken EPF account, then he has not closed his account and he is still active.
Mostly people would remove their EPF balance unless they have worked for more than 10 years, in which case they can not remove it.
So, in summary, if he has taken out both PF and EPF balances, then he can be considered as exempt
In other cases, he will need to be a part of the PF system
From India, Mumbai
But if he is not taken EPF account, then he has not closed his account and he is still active.
Mostly people would remove their EPF balance unless they have worked for more than 10 years, in which case they can not remove it.
So, in summary, if he has taken out both PF and EPF balances, then he can be considered as exempt
In other cases, he will need to be a part of the PF system
From India, Mumbai
What if the salary increased to more than 15K, Joined new establishment with salary >15K (Basic+DA) & previous company not paid the contributions from last 3 years. Then can the new establishment exempt this employee? If has to pay his contribution will the employee eligible for EPS , coz for new establishment he is a new employee & salary is more than a threshold ?
From India
From India
You can do it. You can reduce the PF qualifying salary to Rs 15000. In Marathwada Gramin Bank karamchari Sanghatan Vs Management of Marathwada Gramin Bank, the Supreme Court has ruled that the EPF cannot demand a contribution on an amount of wages above Rs 6500. Now this 6500 ceiling may be replaced by Rs 15000. In the Marathwada Bank's case, the Bank was earlier contributing on actual salary but later on decided to restrict it to Rs 6500. The Union opposed and the EPFO also objected saying that as per section 12 of the EPF & MP Act, an employer cannot reduce salary of employees so that the employer's liability towards PF can be reduced. But the court said that reduction of PF contributing salary to a level equal to Rs 6500 will not attract section 12 of the Act and EPFO cannot demand any contribution on salary above Rs 6500. The wages ceiling having increased to Rs 15000, the same can be applied in your case and you can very well reduce the PF qualifying salary to Rs 15000 with the consent of employees.
However, if the cost to company is equal, whether we should adopt such a step or not is my question. Contributing higher amount to PF is anyway beneficial to the employees because of various reasons. The interest that EPFO pays is any way higher than what one can gain from other sources of investments. There is a verdict from the Apex Court accepting the order of Kerala High Court that an employee is eligible to get pension on actual PF contribution. It is true that this verdict is being reviewed by the Court. If, for chance the review court also stands in favour of Kerala High Court decision, then your employees would get the benefit of higher pension, that is pension based on their actual PF contribution and that would be a life long benefit. Therefore, if the cost to company is the same, i would say that you should continue to contribute to PF on actual salary.
From India, Kannur
However, if the cost to company is equal, whether we should adopt such a step or not is my question. Contributing higher amount to PF is anyway beneficial to the employees because of various reasons. The interest that EPFO pays is any way higher than what one can gain from other sources of investments. There is a verdict from the Apex Court accepting the order of Kerala High Court that an employee is eligible to get pension on actual PF contribution. It is true that this verdict is being reviewed by the Court. If, for chance the review court also stands in favour of Kerala High Court decision, then your employees would get the benefit of higher pension, that is pension based on their actual PF contribution and that would be a life long benefit. Therefore, if the cost to company is the same, i would say that you should continue to contribute to PF on actual salary.
From India, Kannur
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