Employee Or No Employee: EPFO Re-Clarifies The Status Of Student-Trainees

• Published date: 08 August 2022
• Subject Matter: Employment and HR, Employee Benefits & Compensation, Employee Rights/ Labour Relations
• Law Firm: Khaitan & Co LLP
• Author: Mr Anshul Prakash, Deeksha Malik, Shreya Sukhtankar and Ajeta Anand

Background

By way of a circular dated 27 July 2022 (New Circular), the Employees' Provident Fund Organisation (EPFO) issued a clarification on the status of student-trainees 'under any scheme' vis-à-vis the applicability of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act). This circular has been issued in furtherance of EPFO's circular dated 12 October 2015 (Old Circular), wherein a distinction was made as regards student-trainees and their coverage under the EPF Act.

The Old Circular had clarified that no employer-employee relationship exists in respect of student-trainees who return to their respective institutions for completion of their academic course post the industrial / practical training received by them as trainees, and as such, the stipend payable to such trainees will not attract the provisions of the EPF Act including the obligation of the relevant establishment to deposit employees' provident fund contributions in respect of them. That said, for students having been placed with establishments / being appointed as employees of the establishments, the provisions of the EPF Act will be applicable even in respect of the duration of such practical training (presumably because there is a promise of employment post completion of the training). Accordingly, the applicability of the provisions of the EPF Act to trainees is required to be assessed on a case-to-case basis and much would depend on the specific facts and circumstances, and the actual purpose of their engagement by the establishment.

Requirements in the New Circular

Reiterating the position taken by EPFO as regards student-trainees, the New Circular prescribes further guidelines to determine the status of student-trainees 'under any scheme'. Notably, these guidelines include:

• recognition of the institution and the course (by a competent authority) from or in respect of which the student-trainees have been engaged, which institution / course in turn incorporates practical training as part of the curriculum / programme;
  
  
• the duration of the practical training not exceeding the period specified under the concerned course; and
  
  
• the purpose of the practical training not exceeding the scope envisaged / allowed under the concerned course.

Having so set out the guidelines, the New Circular further requires establishments to declare details of the student-trainees engaged by them in the electronic challan-cum-return required to be filed with EPFO in respect of...