Introduction

One of the most common questions faced by employers in India is:
“Can I legally exclude a new employee from EPF registration?”

The Employees’ Provident Fund (EPF) plays a crucial role in providing financial security to employees. This blog explores the legal boundaries and exceptions around EPF enrollment for new hires under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.

1. EPF is a Legal Mandate for Most Establishments

As per the EPF Act, every establishment with 20 or more employees is mandatorily required to enroll eligible staff into the EPF scheme. This is not optional — it’s a statutory obligation.

2. Exemptions for New Employees: Who Can Be Excluded?

While the rule is mandatory, there are specific conditions under which a new employee can be exempted:

• First-time Employment + PF Wages > ₹15,000
  ➤ The employee may be exempted from EPF enrollment
  ➤ Condition: The employee has never worked before and does not have an existing UAN linked to Aadhaar

• First-time Employment + PF Wages ≤ ₹15,000
  ➤ The employee must be enrolled into the EPF scheme
  ➤ Mandatory registration, even if they have never contributed to EPF before

• Existing UAN (Aadhaar Linked), Regardless of Salary
  ➤ The employee must be enrolled under EPF
  ➤ Salary threshold becomes irrelevant in this case

Note: “First-time employment” means the individual has no UAN linked to their Aadhaar.

3. Risks of Non-Compliance

Employers who attempt to intentionally withhold eligible employees from PF registration are exposing themselves to:

• Backdated PF liabilities

• Interest & penalties

• Fines

• Legal prosecution for statutory violation

Non-compliance can trigger audits and enforcement action by EPFO authorities.

Conclusion: Do It Right from Day One

Employers can only exclude a new employee from EPF if they meet all exemption criteria.

In all other cases, the right course of action is:

Register the employee under EPF from the date of joining.

It’s not just about legality — it’s about building trust, compliance, and long-term workforce welfare.