Notice Pay And PF Deduction - High Court - appointment letter

SoniaKohli Started The Discussion:

Dear Friends,

Please clarify if employer needs to deduct the PF on the notice pay that is given to the employee in lieu of the notice period.

Many thanks for your help and support.

Kind Regards,

htdesai -  Member Since: Nov 2007
Hi, How can you deduct PF on notice pay, since it will consist of allowances other than basic and DA? PF is deduted only on Basic+DA. Regards, Harshad

SoniaKohli -  Member Since: Nov 2007
Dear Harshad

I believe what is conveyed is that PF is deductable on the basic of the notice pay payable to an employee while they exit from the organisation.

I have another question to this -
In case, if we are claiming notice pay from a leaver in lieu of not serving the required notice period, and the notice pay is equivalent to one months gross salary and not simply Basic + DA, under such circumstances, the gross salary exluding the PF amount would be claimed from the leaver?

Looking forward for your thoughts.

Many thanks,

Raul. -  Member Since: Mar 2007
Any income through your salary, the employer will deduct PF. So as in this case as well.

Secondly Any notice pay in either side is purely decided then & there in the Letter of appointment. Again if notice pay has to be there, then pf must be deducted or recovered on it. In this case for the next notice period you can show the employee as on roll in pf challan as you have given a written clause in his appointment letter to pay him in case he leaves.

htdesai -  Member Since: Nov 2007
Dear Sonia,

What I meant was in Notice pay PF is not applicable as employee is not working in that period. It is applicable in both cases, in which we are paying notice pay or recovering it.



SoniaKohli -  Member Since: Nov 2007
Hi Raul

Thanks for your response however it was not clear.

The employee would not make an income if the notice pay is claimed by the employer from the employee. Hence, I believe, the employer should claim gross salary excluding PF (if PF is part of the gross salary) while claiming the notice pay.

Please comment.

Many thanks.


htdesai -  Member Since: Nov 2007
Dear Sonia,

The fact is in notice period in either case the particular employee is not in employment of the company. So no PF will be deducted. When we give or recover notice pay , we will pay or recover full gross.



SoniaKohli -  Member Since: Nov 2007
Dear Harshad, Just to clarify - You mean to say that we pay / recover full gross salary and in either case do not submit anything to the PF Fund? Kind Regards, Sonia

Raul. -  Member Since: Mar 2007
Please dont be confused. If its there in your appointment letter that the notice period has to be recovered from an employee if he desires to leave without serving notice period,then the Fixed components of the gross monthly salary has to be recovered from the employee including pf and the PF amount will be submitted to the PF department and vice versa.

BSR2008 -  Member Since: Aug 2008
my name is srinu. i had some clarifications regarding PF, whether the employees who draws basic + DA 8000/-, he didn't wants to contribute PF whether he is exmpted from contribution. what type of declaration he should give to employer.

Because coverage of PF is Rs. 6500/- please clarify any one


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