Medical Trainees Not 'Employees' Under EPF Act: Calcutta High Court Upholds Tribunal Order, Quashes PF Demand

The Calcutta High Court has upheld an order of the Employees Provident Fund Appellate Tribunal setting aside provident fund dues assessed against a private company, ruling that trainee medical representatives engaged as apprentices under the Model Standing Orders cannot be treated as “employees” for the purpose of provident fund contributions under the EPF Act.

Justice Shampa Dutt dismissed a writ petition filed by the Regional Provident Fund Commissioner and other EPFO authorities challenging the Tribunal's 2011 order in favour of M/s. Klar Sehen Pvt. Ltd., which had quashed a demand of ₹18.74 lakh raised under Section 7A of the Employees' Provident Fund Organisation framework.

The dispute arose after the EPF authorities received a complaint alleging that the company had denied statutory benefits to trainee medical representatives by not enrolling them as EPF members. Following an inspection, proceedings were initiated under Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and the authorities concluded that the trainees were not apprentices under the Apprentices Act or certified standing orders and therefore fell within the definition of “employee” under Section 2(f). A demand of ₹18,74,239 was raised for the period between 1999 and 2007, and recovery proceedings were commenced through bank attachment.

On appeal, however, the Tribunal held that in the absence of certified standing orders, the Model Standing Orders would apply, under which trainees/apprentices receiving stipends and undergoing training without any right to employment could not be treated as employees. It set aside the EPF demand.

Affirming the Tribunal's view, the High Court relied on the law laid down by the Supreme Court of India in Regional Provident Fund Commissioner v. Central Arecanut and Cocoa Marketing and Processing Co-op. Ltd., which held that apprentices engaged under the standing orders of an establishment are expressly excluded from the definition of “employee” under Section 2(f) of the EPF Act. The Court noted that such trainees are learners paid stipends, with no right to employment or obligation to accept work, and therefore cannot be saddled with EPF liability.

Observing that the trainees in the present case stood on identical footing, the Court held that the Tribunal's decision was legally sound and called for no interference. The writ petition was accordingly disposed of, upholding the setting aside of the provident fund demand.

Case: Regional Provident Fund Commissioner and another Vs. Employees Provident Fund Appellate Tribunal, Ministry of Labour & Employment Government of India & Ors.

Case No: WPA 11596 of 2011

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