I have this new ruling by Madras High Court on the applicability of Provident Fund contributions on certain allowances. Looking forward for views / impact on organisations on the same.
The Madras High Court in the case of Reynolds Pens India Pvt Ltd and other petitioners (‘Petitioners’) vs Regional Provident Fund Commissioner (‘RPFC’) has held that certain allowances such as Conveyance, Educational Allowances, Food concession, Medical, Special Holidays, Night Shift Incentive, City Compensatory Allowances etc. should be treated as part of Basic wages under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (‘EPF Act’). Accordingly, provident fund (‘PF’) contributions should be remitted on such allowances. "
The Employees’ Provident Fund Organisation (‘EPFO’) has in a recent internal communication1 forwarded the aforesaid judgment to its officers and directed them to utilise this judgement as per the merits of each case.
Please refer the CPFC's letter dated 23rd May 2011, asking the RPFC's to see PF contribution should be paid at least on minimum wages.Now this madras High court order has come. Two different guidances.Which is correct ?
To my knowledge there should be suitable amendment in the act itself. Because the Act has been enacted long back according to that period. Now things has changed a lot. New salary components are introduced as the nature of work demands.
PF authorities are just reacting to the judgements given by the court every now and then. Tomorrow another judgement will come, then they will refer that.
There should be a concrete guidance, which will enable both Employers as well as Employees about their commitment towards PF contribution.
Many Thanks to Shri. Sethupathy for his posting.
Please find attached a gist of ruling by Madhya Pradesh High Court on similar parameters in which conveyance allowance and special allowance are considered for determination of provident fund liability for the information and knowledge of all. The said gist of ruling is posted by me on 06.07.2011 in a Thread "Splitting of Minimum Wages for the purpose of PF contribution not permissible" by Shri. Madhu.T.K.
Thanks with regards.
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As we all know the endless argument go's on and on. I think we have to keep our cool till the EPF organisation wakes up. Because they them self do not know what the act implies and waiting for the Court orders to come one by one to tell us what are all the components covered for PF contribution.Please note that,
1) A review Petitions have been filed before the Madhya Pradesh High Court (Gwalior Bench) which would come up for hearing on 29th July, 2011.
2) A Writ Appeal has also been filed in the High Court of Madras which is likely to come up for hearing on or around 8th August, 2011.
Wait for the judgements to come from the above petition and appeal to come.
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