Clarification on NEEM Trainees

There were several queries raised for seeking clarification whether trainees registered under NEEM are exempted from the provision of Provident Fund. The matter was examined in detail and it is clarified by notification dated 24/02/2022 and 12/10/2015.

In the notification dated 24/02/2022 below points were clarified:

15. The NEEM Trainees are not exempted from the definition of “employee” under section 2(f) of the EPF & MP Act, 1952 and Regulation 15.2 of the Neem Regulation as it ultra vires the provision of the act.
16. Certain criteria’s are clarified in HO circular dated 12^th October 2015 wherein they have distinguished between a student-trainee and an employee ascertaining the facts and circumstances of each case on merit.
17. Under para 26B of the EPF Scheme it has already been provided that a Regional PF Commissioner has been vested power to decide whether an employee is required to become a member of the scheme.

The circular dated 12^th October 2015 states the following:

1. In the current scenario many technical/professional educational institutes impart industrial training/practical on the job training to their students. This helps the students to understand the industry and get hands on knowledge. Sometimes they may also be provided with stipend. Once the training is completed the student-trainee goes back to the institutions for completing the course.
2. It has been stated in the circular that employer-employee relationship does not exist between a student-trainee and the industry in spite of receiving on job training and the stipend provided does not attract the provision on Employee Provident Fund and Miscellaneous Provision Act,1952. Only those who get placements in companies and appointed as employees of establishment will be applicable for Employee Provident Fund and Miscellaneous Provision Act,1952; even if on the job training, induction or other training has been conducted by an employer.

Conclusion:

• National Employability Enhancement Mission (NEEM)was launched by GOI in 2013 with a purpose of upgrading the skills of labourer and generating employment.
• Students getting placement in the companies and appointed as employees are to be covered under the EPF & MP Act, even during the job training /inductions/other trainings taken after becoming the employee.
• There has to be no Employee and Employer relationship between the intern hired under the NEEMS. If the Employee-Employer relation exists, then such employees are then to be covered under EPFO and PF contribution is to be remitted.
• The question of whether it’s a Student-Trainee or Employee-Employer, will be answered by Regional PF commissioner by the power vested by him under section 26B of the EPF Scheme.
• Cases of Subterfuge shall be distinguished from those of genuine arraignments.

The conclusion whether employee is entitled to become member of the scheme, will only be answered after ascertaining the facts and circumstances of each case on