Weplan to recruit a few apprentice officers in our organization for a period of one year for a fixed stipend. Depending upon their performance, they may be absorbed as regular employees. Will we have to deduct provident fund from the fixed stipend to be paid to them? Varsha Godbole

Ans: Under the EPFO Act and Scheme, it’s not permissible for an employee to contribute 12% on Rs. 15,000 while earning a basic salary of Rs. 20,000, even if he/she is excluded from the PF Act.

Kindly find the reasons for the same:-

• Mandatory Contribution: The EPFO Act mandates that employees covered under the Act contribute 12% of their basic salary (up to Rs. 15,000) towards the PF. This applies even to those excluded from certain provisions.

•No Selective Contribution: The Act doesn't allow employees to selectively contribute on a lower salary amount. They must contribute based on their actual basic salary.

• Wage Ceiling: The Rs. 15,000 wage ceiling applies only to the employer's contribution, not the employee's. Employees must contribute 12% of their entire basic salary, even if it exceeds Rs. 15,000.

For further clarity on specific exclusions and contribution rules, consult with the EPFO directly via email.

Ans: Hello;

If you will be employed by them you can't avoid EPF cut.

Talk to your employer about possible other options.

EPS is not applicable now since it matures at 58 years of age.

Best wishes;