Can an employee opt to not to contribute to Provident Fund?

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1

Hello everyone,
I have a few questions needing your inputs:

  1. Is it allowed under India labor law to add a note in a promotion letter, like " the employee is not to leave the company within 2 years after this promotion with increment" ? If not, can anyone share the article of the law mentioning such.
  2. Can an employee opt not to contribute to Provident Fund and the company will not also share, despite that the company is registered with the EPFO?

Thank you so much for your answers.

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  1. Can an employee opt not to contribute to Provident Fund and the company will not also share, despite that the company is registered with the EPFO?
    If the employee at the time of joining draws a basic salary in excess of Rs 15000/- pm and has not been a member of the EPFO in his previous employment. Normally this would be for freshers and Form 11 should be collected from the employee

Mohan Jacob

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thank you mohanjacob, appreciate the reply

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Hi,

  1. You have to add it as a clause just like you add the Notice period clause in the Appointment letter.
    And it has to be signed and agreed upon by the employee. You can also mention what will be the recovery in case of breach of this clause.
  1. If the employee is already a member of PF, then he will not have an provision to opt out of PF in the new Organisation. However, if his Basic salary is than 15K at the time of joining and not a existing member of PF then he can choose to opt out of PF.
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Hi Ludymar

  1. A special clause can be added in the offer letter mentioning notice period and if they leave whether it can be compensated by an amount repaid to the company to be specified clearly and it has to be signed by both employer and employee.
  2. No we cant opt not to contribute to PF if the company is registered with EPFO. If anyone is already a member of PF and if his basic is more than 15K then he can contribute to FPF but only to
    EPF.
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Dear Amiths,

Thank you very much for your replies.

Just a few more follow up question, for the PF - is there any form he needs to sign when he will opt out of PF, his salary is high as he is holding a senior role and is 56 years old, he said he does not have PF and does not want to have one.

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Dear C0025.

Thank you for your inputs.

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Hi,

You can use Form 11 to collect the previous employment information and keep it for records.
https://www.epfindia.gov.in/site_docs/PDFs/Downloads_PDFs/Form11Revised.pdf

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Dear Amiths,

So we can agree with him not to have any PF contribution just he needs to fill out the Form 11, right?

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YES Ludy you are right. Form 11 is enough.

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