{"id":266452,"date":"2022-05-05T15:00:52","date_gmt":"2022-05-05T09:30:52","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=266452"},"modified":"2022-05-05T13:58:54","modified_gmt":"2022-05-05T08:28:54","slug":"epfos-approach-to-neem-trainees","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/05\/epfos-approach-to-neem-trainees\/","title":{"rendered":"EPFO\u2019s Approach to NEEM Trainees \u2014 A Legal Conundrum"},"content":{"rendered":"

To develop a workforce of world-class competence, skilling and upskilling is the sine qua non. Towards this endeavour, the Government of India has taken an initiative in collaboration with All India Council for Technical Education (hereinafter referred to as \u201cAICTE\u201d) and in this exercise emerged is the National Employment Enhancement Mission (hereinafter referred to as \u201cNEEM\u201d) Scheme to impart on-the-job training (OJT) to eligible candidates to enhance their employability. For this purpose, the AICTE had exercised its power under Section 23(1)[1]<\/a> read with Section 10 of the AICTE Act, 1987[2]<\/a> and in supersession of the AICTE Regulations, 2013[3]<\/a>, the AICTE had made the All India Council for Technical Education [National Employability Enhancement Mission (NEEM)] Regulations, 2017 (hereinafter referred to as \u201cthe AICTE NEEM Regulations, 2017\u201d).<\/p>\n

The objective of this Scheme is specified under Regulation 2.1 as follows:<\/p>\n

\n

The objective of National Employability Enhancement Mission\u00a0 is to offer on the job practical training to enhance the employability of a person either pursuing his or her postgraduation\/graduation\/diploma in any technical or non-technical stream or has discontinued\u00a0studies after Class 10th to enhance his or her employability.<\/p>\n<\/blockquote>\n

Under this Scheme, establishments can induct trainees under the NEEM Scheme and engage them under the OJT programme and after the completion of the programme, there is no compulsion on the establishments\/organisations to provide the said trainees fixity of tenure in their respective organisations. The training period ranges from 3 months to 3 years and should be National Skills Qualifications Framework (NSQF) compliant.<\/p>\n

The trainees under the NEEM Scheme are regulated by a facilitator. The NEEM facilitator shall be in the business of training for at least five years. A person registered under the NEEM Regulations is called a trainee under NEEM. A contract needs to be signed between NEEM facilitator and the NEEM trainee to capture all terms and conditions which would govern the relationship. The NEEM training shall be deemed to have started from the date of joining of the NEEM trainee. The NEEM contract shall not be either an offer of employment or a guarantee of employment. The duration of NEEM training shall be determined by the nature of industry or trade where a NEEM trainee would be engaged in such training and shall be at the sole discretion of NEEM.<\/p>\n

In accordance with Regulations 15.1 and 15.2 of the AICTE NEEM Regulations, 2017, the NEEM facilitator shall pay the enrolled NEEM trainees a stipend which shall be at par with the prescribed minimum wages for unskilled category. The said stipend shall be paid as single consolidated amount and such payment will not attract any statutory deductions or payments applicable to regular employees, namely, provident fund (PF)\/Employees\u2019 State Insurance (ESI)since the NEEM contract assures training and does not constitute employment.<\/p>\n

Even prior to the advent of the AICTE NEEM Regulations, 2017, the Employees\u2019 Provident Fund Organisation (EPFO) Head Office vide their Circular Coord\/40 (5) 2015\/Misc\/Clarification\/ 27300 dated 12-10-2015, has clarified that in the matter of student trainees of educational\/technical institutes recognised by Central\/State Government or any authority constituted by them, there is no employer-employee relationship between the industry and the student trainee who is on industrial on-the-job training. Therefore, payment of stipend, if any, provided by the industry to such student trainees do not attract the provisions of the EPF Act[4]<\/a>. However, it was clarified that so far as the students getting placement in companies and appointed as employees of establishments, the EPF Act will be applicable on such employees even during the on-the-job training after becoming an employee.<\/p>\n

In contra, the EPFO Head Office vide their Circular ACC (HQ)\/ACC dated 24-2-2022, clarified as under:<\/p>\n

    \n
  1. The NEEM trainees are not exempted from the definition of \u201cemployee\u201d under Section 2(f<\/em>) of the EPF Act[5]<\/a>.<\/li>\n
  2. Under Para 26-B of the EPF Scheme[6]<\/a>, the Regional Provident Fund (RPF) Commissioner has been vested with the power to decide whether an employee is entitled to or required to become a member of the Scheme after ascertaining the facts and circumstances of the case.<\/li>\n
  3. Cases of subterfuge shall be distinguished from genuine arrangements for training.<\/li>\n
  4. Any question whether a person is a trainee or employee may be decided as per the law and considering the Circular dated 12-1-2015.<\/li>\n<\/ol>\n

    Hence, the questions whether the NEEM trainee should be treated as an \u201cemployee\u201d under the EPF Act and whether the RPF Commissioner is having the power to decide that matter under Para26-B of the EPF Scheme and all the more the construction of Section 2(f<\/em>)of the EPF Act, assume significance.<\/p>\n

    Section 2(f<\/em>) of the EPF Act which defines the term \u201cemployee\u201d reads as under:<\/p>\n

    2.(f<\/em>). \u201cemployee\u201d means any person who is employed<\/em> for wages <\/em>in any kind of work, manual or otherwise, in or in connection with the work of an establishment<\/em> and who get his wages <\/em>directly or indirectly from the employer, and includes any person<\/em>\u2014<\/strong><\/p>\n