Holding that trainees are not employees, the Supreme Court has ruled that they are not entitled to provident fund.

A Division Bench of Justice Arijit Pasayat and Justice R V Raveendran, held that trainees were apprentices, engaged under the Standing Order of an organisation under the Apprentices Act, and therefore employers were not obliged to contribute to the Provident Fund for them.

The Bench upheld a Karnataka High Court order, quashing the petition of Regional Provident Fund commissioner, Mangalore, asking Central Arecanut and Coca Marketing and Processing Cooperative Limited (CACMPCL) to contribute provident fund for 25 trainees at its chocolate factory in Puttur.

Trainees, who are paid a stipend during the training period, have no right to employment, and it is for the employer to offer or not to offer a job to them, it said.

The court clarified that though the term 'employee' under the Provident Fund Act, included apprentices, these apprentices, engaged under the Apprentices Act, under standing order of an organisation were excluded from it.

The court said, "In the case at hand, trainees were paid stipend during the period of training. They had no right to employment, nor an obligation to accept any employment, if offered by the employer. Therefore the trainees were apprentices engaged under the standing order of the establishment."

The counsel of the Provident Fund commissioner had contended that Section 2(f) of the Employee Provident Fund and Miscellaneous Provisions Act 1952, should be given a wider meaning for the benefit of the employer.