PF on leave Encashment

Hi Friends

I would like to know PF should be paid on leave encashment,
I came to know there is a stay order for the payment of PF, Please clarify


Raja

Dear Raja,

As early as in the year 1995, the Bombay High Court in the case of Hindustan Leaver Employees Union v. RPFC & Another, 1995 LLR 416 and lately, the Karnataka High Court held that encashment of earned leave would qualify as ‘basic wages’ under the provisions of the EPF Act and that this amount would be liable to PF contribution. However, a final verdict of the Apex Court is still awaited, but even then the EPF organisation issued directions to all Regional Provident Fund Commissioners and others to treat leave encash-ment amounts as attracting Provident Fund Contribution.

It is strongly felt that in basic wages, there are situations overwhelmingly peopled by various allowances, commissions, etc. interwoven by inclusions and exclusions. It was therefore necessary to locate symbiotic relationship with each other and in this venture, it is discovered that universality i.e., a payment that is made by all concerns to all their employees without discrimination would be an important component of ‘basic wages’. The encashment of leave payments is not uniform in all establishments and for all employees and it is contingent. An over-expansive interpretation of ‘basic wages’ might be a deterrent.


Regards
Chandrakant V
9820592842
(Consultant :- PF, ESIC, Contract Labour & Other labour Laws)