Compliance PF

This query is : Resolved

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This discussion clarifies whether new employees can opt out of PF and ESIC deductions. Generally, if an employee has previously contributed to PF or their salary falls within the mandatory ESIC limit, they cannot opt out. Employers are legally obligated to deduct and remit these contributions, with penalties for non-compliance.

DPCS Khan

DPCS Khan (Querist)
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29 November 2025 Hi,
Our query is there is an employee who is currently joining us. His previous employer was deducting compliances such as PF - ESIC, but now he has joined us but do not want to get deducted any compliance (PF-ESIC).

Can we do this, confirm what steps to follow.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 November 2025 PF (Provident Fund): An employee is mandatorily covered by PF if their monthly basic wages plus dearness allowance are up to ₹15,000. If their salary is above this limit, and they have never contributed to EPF before (i.e., they do not have a UAN from a previous job), they can opt out at the time of joining by submitting a declaration in Form 11. Once a person becomes an EPF member, they cannot opt out in any subsequent employment, regardless of their salary. Since your new employee was previously contributing to PF, they must continue to do so.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 November 2025 ESIC (Employees' State Insurance Corporation): An employee is mandatorily covered by ESIC if their gross monthly salary is up to ₹21,000 (or ₹25,000 for persons with disabilities). If an employee's salary is within this limit and your establishment is covered under the ESI Act (generally 10 or more employees), contributions are mandatory and cannot be stopped.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 November 2025 Employer’s Responsibility
- You are legally bound to:
- Deduct PF and ESIC contributions from eligible employees.
- Remit both employer and employee contributions to the respective authorities.
- Non-compliance can lead to penalties, interest, and prosecution under the Acts.

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