Provident Fund

Dear Friends,
Greetings from CWS!

We are facing a typical problem with the PF department on which I would like to seek your advice. CWS functions with its partners i.e. it sub grants funds to other organizations. Under the current circumstances the PF field officer came for an inspection. He is of the opinion that CWS is responsible for the PF of the partner organizations. Kindly help me out on this and also if any case laws are there on such issues.

Thanks and regards,
___________________________
B V Soma Sastry
Director – Finance and Admin
Centre for World Solidarity
12-13-438, Street No. 1,
Tarnaka Secunderabad 500 017
Andhra Pradesh

This entry was posted in FCRA, TAX, LEGAL. Bookmark the permalink.

17 Responses to Provident Fund

  1. Dear SRRF Dialogue Members,

    I refer to a number of requests for a circular which exempts NGOs from PF. This circular has been posted on SRRF website. Kindly visit the website on following link to access the same.

    http://www.srr-foundation.org/circulars/NGOs_exempted_from_PF.pdf

    However please do take care before relying on it blindly, since it does not cover establishments running schools, colleges, universities as well as institutions running hospitals, nursing homes, etc, against charges.

    warm rgds

    subhash

    • C Udayashankar says:

      1.The second clause vide the exemption letter subsidised charges / recovery costs of training /knowledge imparted.
      2. Even if Government exempts certain categories of NGOs, no NGO should opt for denying social security benefits like PF and Gratuity to its workers on what ever plea. NGOs/CSOs stand for social justice / equity which should begin at home!
      3. It appears that third party-PF liability vide the case of CWS raised by Soma Sastryji, is more important to PF staff than what the nuclear liability of a foreign supplier is to our Nuclear Establishment! Cartoons are more at play than good governance!

  2. COLOMBOWALA Z. F. says:

    Do the NGO having office with 10/20 or more staff has been covered under PF, ESIS Professional Tax and allied law ? Could any one enlight in the matter ?

  3. C Udayashankar says:

    One understands that NGOs(Registered Societies / Trusts) are governed by Shops and Establishments Act. NGOs come under “other Establishments” as far as PF Act is concerned. No escape from PF commitments. There is a problem if the partner Agency of CWS does not comply with PF Act. CWS can produce evidence of compliance by partner NGOs. Does it not satisfy the Authority creating the problem for CWS, in this case?
    We never came across this kind of an issue before!

  4. B V Soma Sastry says:

    Dear friends,
    Greetings from CWS!

    Please note the following:

    1. The Officer is hell bent on treating CWS as a contractor and the partner as a sub-contractee
    2. We have also put across our CWS and the partner are two different organizations and that CWS is funding the partners as the objectives of both the organizations match
    3. There is no consideration and that we are not seeking the money back.
    4. The PF Act is also not clear as to whether the NGOs fall in the ambit of PF as the Act only talks of Factory and other establishments.

    I would therefore request you all to let me know in there is a case law as such arbitrary decisions by the PF will have far reaching consequences on the sector as a whole.

    Thanks and regards,
    _____________________________________
    B V Soma Sastry
    Director – Finance and Admin
    Centre for World Solidarity
    12-13-438, Street No. 1, Tarnaka
    Secunderabad 500 017
    Andhra Pradesh

    • Bhupinder Gupta says:

      There is a notification which exempts NGOs from PF. It is issued every five years. I have a copy of the same and will forward to you.

      • Gopi David says:

        Dear Bhupinder Gupta,

        Please send me the copy of notification which exempts NGOs from PF. Some of my friends are suffering with this problem. It will be a great help to us.

        Thanking you.

        • BHUPINDER GUPTA says:

          How do i attach it here? can’t figure that out

          • B V Soma Sastry says:

            Dear Bhupinder,

            Greetings!

            Please attach the notification as a normal attachment from your mail id and address to mail to srrf-dialouge@yahoogroups.com. This will then reach all the members of the forum.

            Thanks and regards,
            _____________________________________
            B V Soma Sastry
            Director – Finance and Admin
            Centre for World Solidarity
            12-13-438, Street No. 1, Tarnaka
            Secunderabad 500 017
            Andhra Pradesh

      • seema says:

        Dear Mr Singh,

        can you please share that PF notification where NGO’s are exempt from the PF laws.

        Regards,
        Seema Vasudeva

      • Sohit Yadav says:

        Dear Bhupinder Ji

        Can you mail us copy of PF notification which exempts NGOs from PF.

        Regards,
        Sohit Yadav

  5. C Udayashankar says:

    Funding / channeling agencies have criteria for selecting partners. One of the criteria is statutory compliance regarding items related not only to FCRA but also other laws of the land which include IT, PF, Gratuity, items under DTC and any other. Such screening is also helpful in designing capacity building of partner agencies.

  6. Dear Soma,

    You always provide food for thought. It was a good issue that you raised and needed some research. S.6 of PF Act requires an employer to pay PF for its employees. However often to avoid PF and other legal liabilities organisations sub-contract the work to other organisations. There are several organisations who outsource the entire labour to third parties. Hence courts have taken the view that a person cannot evade its PF responsibilities by hiring labour from a third person. S 8A even allows Principal employer to deduct from contractor’s bill any such PF contribution that the PF employer pays towards such employees. However it is important to look at the definition of employee under the Act. Employee has been defined as any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets his wages directly or indirectly
    from the employer.

    I believe important part of this definition is ‘…..connection with the work of an establishment…’ Here establishment means establishment of Principal Employer. In case of your organisation if it grants funds to NGO partners, where employees are not working on your organisation’s establishment then you can claim that they are not working under your employment.

    In this regard I also refer to a recent Delhi High Court case law ‘Group 4 Securitas Guarding Ltd v Employees Provident Fund Appellate Tribunal & Ors’ where the court has decided that in case of Group 4 Securitas, which is an established organisation and also has its own PF registration. Though the guards work on the premises of the Principal, since Group 4 Securitas has it own supervision and control over these guards. To decide upon the definition of employer under S 2(e), the court considered who has the ultimate control over the affairs of the establishment.

    Hope the above is helpful.

    warm rgds

    • B V Soma Sastry says:

      Dear Subhashji,

      Greetings from Hyderabad!

      Thanks a lot for sharing the details of the issue of PF. It is definitely of use as I have downloaded the judgement in the case quoted by you. I am a bit confident that CWS is now on a relatively strong footing so far as the case is concerned. But we have to keep our fingers crossed till the issued is settled.

      Thanks once again.

      Regards,
      _____________________________________
      B V Soma Sastry
      Director – Finance and Admin
      Centre for World Solidarity
      12-13-438, Street No. 1, Tarnaka
      Secunderabad 500 017
      Andhra Pradesh

  7. N K Gupta says:

    1. please check if PF is applicable to your establishment.

    EPF MP Act, 1952 defines applicability. kindly consult a local EPF advisor or a labour law expert in Hyd/Nampally. there are many.
    wishes

    N K Gupta

  8. Ajaya says:

    Dear Soma,
    Greetings from Ajaya!

    I had faced same problem 5 years back in Delhi at the time of introducing PF for the staff newly in an organisation. An officer from PF department came to inspect accounts (balance sheet for last 3 year) and was asking lot of questions. He was even asking to pay PF for fellows ( fellowship) and part time staff. He explained us if we appointed a person even for a day that person would be eligible for PF in other words organisation has to pay PF. Finally I explained him that fellows are not our staff. They are scholars, volunteers and getting scholarship/stipend etc. Finally agreed and could open only for regular staff.

    I feel you have 2 options here (1). one of the criteria would be to select partners who have already introduced PF for its staff. (2) Explain/convince �the PF officer the partner organization staff are not CWS staff and are not falling under the pay roll of CWS. Partner organizations have different entities and have their own HR policy to safeguard the staff. CWS wouldn’t interfere in the HR policy rather respect their policy and recommend for the introduction of PF. However it is up to the partners to follow.

    Thanks & Regards,

    Ajay

  9. S K Hegde says:

    Please ask him to give reference in the PF act / rules.

    S K Hegde

Comments are closed.