Generally, if the company is covered under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, the employer and the employee will have to make an equal contribution to the EPF account. However, the Act is silent on whether any apprenticeship or apprenticeship stipend comes under its purview.
Soumya Kumar, partner (labour and employment) at Induslaw, a law firm, says, “The Employees’ Provident Fund Organization (EPFO) issued two major circulars to clarify whether interns and apprentices are covered under the Act or No. These were issued on October 12, 2015 and July 27, 2022. As per these circulars, EPFO ​​has prescribed the conditions when EPF contribution is to be made for interns and trainees. Read together, these two The circular stipulates the conditions when interns and trainees will not be covered under the EPF Act.”
It depends on the nature of the internship of the trainee. Kumar says, “As per these circulars, student apprentices doing internship with companies as a part of a recognized course of an educational or technical institution will not be covered by the EPF law. In simple words, it means That if on-the-job training is an integral part of the recognized curriculum, the EPF laws will not apply to them.”
Interns or apprentices may also be hired by companies while receiving on-the-job training. Kumar says, “If an intern or trainee is hired by a company after completing on-the-job training, there is no need to make EPF contribution on stipend. However, once he/she joins the company as an employee Joins, will have to make EPF contribution on salary.”
EPF exemption criteria for student trainees
In the EPFO ​​circular issued in July 2022, conditions have been laid as to when an intern or trainee will not be covered under the EPF Act. Some of these are:
a) The educational institution must be recognized by the Central or State Government
b) On the job training should be part of the curriculum
c) The course for which on-the-job training is mandatory should be recognized by the Central or State Government
d) The student must complete the training within the stipulated period mentioned in the syllabus
What if one of the criteria is not met
If any one of the above criteria is not met – for example, the student has taken up internship for self/better career opportunities, or the training period mentioned in the syllabus is not followed – further investigation of the matter To see whether EPF contribution has to be made. In layman’s terms, this means that the role and responsibilities of a trainee or trainee will determine whether the EPF contribution is to be made on stipend.
Kumar says, “In a situation where the internship is of sufficiently long duration or is not mandatory as part of the curriculum or as a practice, and the intern does regular company work, it is possible to make EPF contribution on stipend. Employers will have to generate UAN for such members and file ECR return for depositing their EPF contribution.”