Clarification on PF and ESI applicability to Apprentices

The Ministry of Skill Development and Entrepreneurship, vide Office Memorandum dated 21^st October 2026, clarified the applicability of the Provident Fund and ESI Acts to Apprentices. In the said clarification, the Ministry has directed reference to Section 18 of the Apprentices Act, 1961, informing that an apprentice is treated as a trainee and not a worker; therefore, the laws related to regular employees do not apply to them. Further, the Code on Social Security, 2020, which subsumes the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Employees’ State Insurance Act, 1948, defines “employee” as any person, other than an apprentice engaged under the Apprentices Act, 1961, employed on wages by an establishment, directly or through a contractor, for any kind of work.

Therefore, Apprentices engaged under the Apprentices Act, 1961, including under NAPS and NATS, are not “employees” within the meaning of the Code. Accordingly, provisions of the Code relating to PF and ESI are not applicable to them, and no enrolment or contribution is required in respect of the stipend during the period of apprenticeship. This exclusion shall apply only to persons engaged as apprentices under the Apprentices Act, 1961, with a contract of apprenticeship registered on the apprenticeship portal and not to trainees or apprentices engaged otherwise than under the Act.