Case Study: Trainee Nurses Not Employees Under EPF Act

🧾 Case

Sivagiri Sree Narayana Medical Mission Hospital vs. Regional Provident Fund Commissioner (RPFC)

🏛 Court and Date

Kerala High Court
W.P.(C) Nos. 14751/2017 & 11852/2011
Date: 07.06.2018
Justice: Hon’ble Mr. Alexander Thomas

📜 Relevant Law

Section 2(f) and Section 2(b) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

• Sec. 2(f): Definition of “employee”
• Sec. 2(b): Definition of “basic wages”

🧩 Background

The Medical Mission Hospital had engaged trainee nurses as part of their educational program. These trainees were pursuing their coursework, and the practical training at the hospital was an extension of their curriculum.
The EPFO had issued orders treating these trainees as “employees” under the EPF Act and sought to recover Provident Fund contributions.

❓ Legal Issue

Are trainee nurses who receive a stipend during the course of practical training considered “employees” under Section 2(f) of the EPF Act, thereby attracting PF contributions?

🧠 Key Legal Findings

1. No Employer-Employee Relationship:
   The court held that there was no jural relationship of employer and employee between the hospital and the trainees. Their presence was part of a course requirement.
2. Stipend ≠ Wages:
   The stipend paid to trainee nurses was not considered “basic wages” under Sec. 2(b), hence no PF liability arises.
3. Work was Incidental:
   Any services rendered by the trainees were incidental to their training and not part of a formal employment contract.

⚖️ Judgment

• Impugned orders of the EPFO were quashed.
• The PF contributions demanded were declared as not legally sustainable.
• Any deposits already made were to be refunded to the petitioner institution.

(Ref: Paragraphs 18–20 of the judgment)

📌 Conclusion

The Kerala High Court clarified that practical training provided to students as part of a course does not constitute employment, and stipends paid in this context do not attract EPF liability.

💡 Key Learning

• Institutions hosting students or interns for mandatory training are not liable for PF contributions, provided:
  • The training is part of a structured course,
  • There is no formal employment contract, and
  • Stipends are paid and not wages under the EPF Act.

This decision protects educational institutions and training bodies from being wrongly held liable under labor compliance laws for educational training programs.

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