The Supreme Court has held that an apprentice or a trainee is not an employee and the employer is not liable to contribute Provident Fund for him or her.
A Bench, comprising Justice Arijit Pasayat and Justice R. V. Raveendran, held that trainees are apprentices engaged under the Standing Order of an organisation or under the Apprentices Act and will not come within the ambit of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Bench noted that Section 2 (f) of the EPF Act “defines an employee to include an apprentice, but, at the same time, makes an exclusion in the case of an apprentice engaged under the Apprentices Act or under the Standing Orders. Under the Model Standing Orders an apprentice is described as a learner who is paid allowance during the period of training.” Therefore, employers are not obliged to contribute to the PF for them.
The Bench, by its order, upheld a judgment of the Karnataka High Court rejecting the claim of 45 trainees of the Central Arecanut and Coca Marketing and Processing Co-op. Ltd, Mangalore, claiming PF payment. The Regional Provident Fund Commissioner (RPFC), Mangalore, had held that the trainees were employees for the purpose of the Act and the respondent was liable to pay the quantified amount.
The company challenged this order in the High Court and the court concluded that trainees were not employees as per the Act and reversed the RPFC’s order.
Dismissing the appeal, the apex court held that “in the case at hand, trainees were paid stipend during the period of training. They had no right to employment, nor any obligation to accept any employment, if offered by the employer. Therefore, the trainees were apprentices engaged under the “Standing Orders” of the establishment. That being so, the view of the learned single judge as affirmed by the Division Bench of the High Court cannot be faulted.”