Introduction Of PF And ESIC In An Emerging IT Startup

Hello Everyone,

I work as an HR in an IT startup. Please help answer a few queries regarding the introduction of PF and ESIC to existing employees.

1. Does the employer have the provision to ask all employees (with a basic pay of more than Rs. 15,000) to opt-out for PF?
2. If an employee opts out of PF, can he/she request to include it later?
3. What are the general steps taken by modern companies in the case of PF and ESIC?

Thank you in advance.

Hi Buddy,

Before proceeding to reply to your question, I would like to mention employees who are not eligible to become PF members:

A. Employees with Basic+DA exceeding 15,000 Rs per month at the time of joining the organization.
B. Employees who have withdrawn their PF before joining the organization.

From the above conditions, we understand that the employer has no role to ask his/her employee to opt out of PF unless the above two conditions arise.

Yes, they can opt-out unless their Basic+DA is under the wage ceiling.

Sorry, no answer.

With Regards,
Mr. Thumbs Up

Mr. Thumbs up,

Your post is misleading. It is not that someone is not eligible for becoming a PF member. Anyone can be a member of PF if they wish. The concept of ineligibility is in ESIC where an employee cannot be covered in ESIC after his salary crosses a certain limit.

First,

Once you have more than 19 employees, you are covered under PF. You have to register even if all the employees opt out of PF. You have to pay admin charges of ₹7.50 per month and file the returns anyway.

Now to your specific question:

Quote:

1. Does the employer have a provision to ask all employees (with basic pay more than Rs. 15,000) to opt out for PF.

Unquote

There is no such provision. In fact, that would be illegal. You can explain to them that they have the option to opt out. But whether to opt out is their choice. Those who don't opt out, you need to pay your share of PF in addition to the existing CTC. CTC can't remain the same as it's illegal to reduce take-home salary to cover the employer's contribution of PF. Furthermore, anyone who has an existing PF account (from a previous job) cannot opt out. They have to be covered. If anyone opts out, you need Form 11 to be filled and kept in your file.

Quote:

2. If an employee opts out of PF, can he/she request to include it later.

Unquote

Yes, anyone who had earlier opted out can always voluntarily register and be a member.

Quote:

3. Generally, what are the steps taken by modern companies in the case of PF and ESIC.

Unquote

Most large companies will just pay the PF. They encourage PF on the grounds that it helps save and create a retirement corpus.

Thanking in advance.

Posted Yesterday

Further, an employee needs to become a member of the PF at the time of joining if he was a member of the PF Scheme in his previous employment, even if his wages exceed Rs. 15,000 per month. The employee has to make a declaration about his membership at the time of joining.

B. Saikumar

Pravin, Thumbs Up,

Your post says that the following persons are ineligible or not eligible to be members of PF. There is no such concept. There is nothing in any law that makes any employee ineligible to be a member of PF. Instead, the law provides an option to the employee (it's the employee's choice, not the employer's choice) to opt out from the membership of PF under certain specified conditions. There is a huge difference between having the option of opting out of PF and being ineligible for PF.

Hi Thumbs Up,

Actually, there are a lot of conditions under which employees and even employers are exempt. Not what you asked specifically, but most of us forget it. So putting it down here for the knowledge and reference of members.

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The rest I need to find the specific section you want. It's in the office; I will post that later. The terms are similar to what you posted, but it's an opt-out, not a disallowance.