abedeen7
135

The government is planning to introduce new rule that is employee and employer will contribute EPF on gross salary at present it is made on basic, DA and food concession. The government may be planning with a noble intention but I have a question?

As per my understanding this will have an huge financial impact on entire economy as company net profit will slow down, employee with a lower net take home pay, government will have burden of paying interest and may even be counterproductive to the EPFO.

Employer Part:

They may think of changing the pay structure and capacity to minimize the employee cost.

They may choose to opt out to employees receiving salaries above Rs.6,500.

Small organization may not enroll their employee name rather may make cash payment.

Employee Part:

Employee net salary will be reduced and may affect their family budget especially who are paid Minimum Wages.

On the other part, employees saving will be more and will be beneficial in future. The amount will be multiplying and will receive a handsome amount during retirement or withdrawal. I will personally prefer this part as my saving will be more.

This may be a challenge for HR to convince employee (Lower salary) as they don’t have any option without opting. We need to highlight the benefit part to them and show a dream of secure future.

I need to have your views and opinion for the same.

Regards,

Shaikh Abedeen

Human Resources Professional

From India, Bhubaneswar
bhandhavi.r
69

Dear Abedeen,
I respect the decision of govt authorities.
But my personal view is that I would like to have pleasant present than secure future. Future is next to the present which is very unpredictable and unsure. Present is very important and to survive this stage the person need money.
I cannot starve today in the hope that I will have orange fields tomorrow.

From India, Hyderabad
sumitk.saxena
252

Dear Abedeen,
Greetings for the day,
It was long time demands from various trade unions and if government is willing to accept this , this should be beneficial for all.
Thanks & Regards,
Sumit Kumar Saxena

From India, Ghaziabad
AK CHANDOK
75

In my opinion, there is nothing to worry as whatever be the limit and inclusion of other items such as various allowances etc. in the definition of Basic Wages, EMPLOYER is not bound to contribute his share over and above the prescribed limit (presently Rs6500), provided the employee is already getting higher contribution benefit either in the present employment or was having in his earlier employment before joining the present employment.
Further, if the Employer is contributing his share on higher salary over and above the statutory limit, he can reduce his share with the permission of RPFC by giving suitable reasons.
AK Chandok
RPFC (Retd.)
<link no longer exists - removed>

From India, Chandigarh
himanshu.mgh
Dear All,
As most of policies, I am sure government will give some scope of creativity in the law.
If we go from current perspective, if any employer is paying Rs 780 PM towards the PF contribution of an associate, he is fulfilling compliance towards the law, so either government has to remove this ceiling or allow Comp & ben Managers to apply their own creativity to resolve the matter in the best interest of their employees & employer.
Best Regards
Himanshu Pant

From India, Delhi
bhavik_kk
13

Dear All,
The government was planning to implement the same in the month on November '12, but the employers denied on its implementation, as there are a lot of reasons(as said by Abedeen7). Dont worry as it wont be impletmented, even if government tries to forcefully implement it, the employers & the employees always have a choice of moving out of this; as PF is voluntary.
Regards,
Bhavik Mehta

From India, Mumbai
Sunita Dhoundiyal
10

Hello friends,
I have also seen the news in the news channel regarding the same that govt is planning to do this.
Definately it will affect to all sections either they get low salary or high.
But the weaker sections will be affected more for their current survival bcoz even thy dont want to contribute in the PF on basic and what if it will be deducted on gross.
They will get lower in hand salary and that would be tougher for them to nurture thier family.
And for high paid salary persons it will also affect bcoz they already have thier own personal savings/insurances for future contingencies.And if they get less salary due to the new PF impact,that will also be a mismanage of fund for them bcoz of high premium on insurance and other things.
In short an HR person can differentiate and understand the new rule & previous one of PF and will prefer new one (i suppose), but rest majority will be against...
BR,
Sunita Dhoundiyal

From India, Delhi
aniltoexcel
8

Hello friends!!
I understand there is already a concept of VPF where an employee can opt to deposit more EPF from his salary apart from standard percentage, which stands good enough however imposing EPF deposit on gross shall actually affect both employer and employee at large. Securing financial future is an important aspect but in that direction a minimum contribution is viable enough. Later part should be left to the subject person as a working professional or even a worker now-a-days smart enough to plan their own future.
I think this proposal require a serious reconsideration.
Anil Richhariya
Associate Manager - GMR Group

From India, Gurgaon
Saurabhgdave
Dear all I would like to know if govt want to count PF on gross salary then Pension will increase or not ? There is any breakup of PF and Pension Fund in this new structure. regards Saurabh
From India, Anand
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