Student-trainees getting on-the-job training not part of the employer-employee relationship: EPFO

With skill development a key agenda of the government, the Employees’ Provident Fund Organisation has once again clarified that students enrolled in on-the-job training will not be covered by the social security scheme.

“The Central Government has initiated skill imparting and skill development to enhance the employability of youth in India. In the light of these developments, several references were received from various stakeholders to issue further clarification.. “the EPFO said in a recent circular.

Clarifications on the scheme

While re-iterating the EPFO’s previous position laid out in a circular in 2015, the clarification has also introduced certain provisions to decide about the status of a student trainee under any scheme.

Significantly, it has said that the employer shall declare the details of such student trainees in electronic challan cum returns or furnish details of these student trainees every month, as may be directed by the PF Commissioner. 

According to the new circular, the educational or technical institute or University in which a student trainee is enrolled must be recognised by the competent authority.

“On the job” training would be an integral component of the course and would not exceed the specified time period, the EPFO has further said.

“In case a student trainee does not complete the course within the specified time, including the period of extension, if any, as may be specified in such a course, s/he will cease to be a student trainee,” it has said.

Further, the industry shall employ student trainees who are pursuing a course relevant to the specific industry.

The number of student trainees should not exceed such a percentage of the total workforce employed in the factor or branch of an establishment as may be specified in a similar scheme of the Central or State government, the EPFO has said.

It has also been clarified that the engagement of student trainees should not be for a purpose other than what has been specified in the course or scheme.

“However, should a dispute arise regarding the eligibility of a person to become a member of the scheme, the same would be decided as per law,” said the EPFO.

Experts said the new circular is clarificatory in nature but places emphasis on the practical training which is imparted as part of the course.

“The question of whether a student-trainee would be considered an “employee” within the meaning of the EPF Act assumes significance to assess the coverage of such individual under the contributory social security regime and inter alia requires analysis of the concerned person’s terms of engagement with the establishment (including whether the purpose of the engagement is to thereafter absorb the individual into the payroll of the concerned establishment, and the treatment of such individual vis-à-vis the employees of the establishment),” noted Khaitan & Co in a recent note.

The EPFO in the 2015 circular said that the employer-employee relationship does not exist between the industry and student-trainee and so the payment of stipend, if any, provided by the industry to such student-trainees does not attract the provisions of the EPF Act, 1952.

“However, for the students getting placement in companies and appointed as employees of the establishment, the Employee Provident Funds & Miscellaneous Provisions Act, 1952 will be applicable to such employees even during on-the-job training,induction, other training taken after becoming employees, it said.

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