Clarification on NEEM Trainees as the employees under PF Act

The EPFO and Ministry of Labour & Employment has issued a circular clarifying that the National Employability Enhancement Mission (NEEM) trainees are employees under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952.

The National Employability Enhancement Mission (NEEM) Regulations 2013 was replaced by the NEEM Regulations 2017 published in gazette of India dated 15 June 2017 and the amended NEEM Regulations were circulated for the information of the members vide KEA Circular No.36/2018 dated 09 May 2018.

As per Regulation 15 of the NEEM Regulation 2017, the NEEM Facilitator shall pay all enrolled NEEM trainees a remuneration/stipend which shall be at par with the prescribed minimum wages for unskilled category; and the Remuneration/ Stipend shall be paid as a single consolidated amount and such payment will not attract any statutory deductions or payments applicable to regular employees i.e. PF/ESI etc., since the NEEM contract assures training and does not constitute employment. In view of the Regulation 15.2, the NEEM trainees were not to be covered under the EPF Scheme and ESI Scheme. However, there has been some controversy with regard to the coverage or otherwise of the NEEM trainees under the EPF Scheme.

As per the clarification:

  • The NEEM trainees are not exempted from the definition of “employee” under section 2(f) of the EPF and MP Act, 1952 and the Regulation 15.2 of the NEEM Regulation, 2017 is ultra vires to the provisions of the Act.
  • However certain criteria have been laid down in HO circular dated 12 Oct 2015 (copy annexed with circular) to distinguish a student-trainee from an employee engaged by an establishment covered under the Act. EPF Scheme, 1952 after ascertaining the facts and circumstances of each case on merit.
  • Further a mechanism under para 26B of the EPF Scheme has already been provided whereby a Regional PF Commissioner has been vested with power to decide a question whether an Employee is entitled to, or required to become a member of the scheme, after ascertaining the facts and circumstances of each case on merit.
  • Cases of subterfuge shall be distinguished from genuine arrangements for training.
  • Whether a person is a trainee or employee may be decided as per law and considering the circular dated 12 May 2015.

The consequence of above clarification is that NEEM Trainees are the employees for the purpose of Section 2(f) of the EPF and MP Act and they shall have to be covered under the EPF Scheme.

Related Acts
  • PF Act

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