Dear Seniors,
It is statutory to deduct PF on the leave availed/encashed during the service tenure of an employee. But how far is it correct to deduct PF from the monetary benefits for the unavailed leave paid to an outgoing/separated employee in his final settlement? Can you please justify?
With regards,
SRP
From India, Gurgaon
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2It is statutory to deduct PF on the leave availed/encashed during the service tenure of an employee. But how far is it correct to deduct PF from the monetary benefits for the unavailed leave paid to an outgoing/separated employee in his final settlement? Can you please justify?
With regards,
SRP
From India, Gurgaon
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Hi SRP,
In order to answer your query, one has to refer to the definition of the term "Basic wage" which includes the cash value of food concession and dearness allowance. This definition encompasses all emoluments earned by an employee while on duty, on leave, holidays with wages, which are paid or payable in cash to him.
In the case cited by you, the leave has not been availed of, but the same has been encashed while settling the final dues. This will be covered by the words "paid or payable." In my view, the provident fund amount should be deducted. This will also be advantageous to the incumbent as he will be entitled to the matching contribution of the employer as well. However, in the case where the balance leave lapses, and no advantage is accrued by the individual, in my view, no provident fund will be deducted.
Cyril
From India, Nagpur
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In order to answer your query, one has to refer to the definition of the term "Basic wage" which includes the cash value of food concession and dearness allowance. This definition encompasses all emoluments earned by an employee while on duty, on leave, holidays with wages, which are paid or payable in cash to him.
In the case cited by you, the leave has not been availed of, but the same has been encashed while settling the final dues. This will be covered by the words "paid or payable." In my view, the provident fund amount should be deducted. This will also be advantageous to the incumbent as he will be entitled to the matching contribution of the employer as well. However, in the case where the balance leave lapses, and no advantage is accrued by the individual, in my view, no provident fund will be deducted.
Cyril
From India, Nagpur
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Hi! Thatz true!! I want to clear my doubt that in our company PF is deducted but after resigning from the company, is it possible to get the PF easily? Regards, Swati
From India, Surat
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From India, Surat
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Hi Swati,
The provident fund deductions made from your salary are to be credited to your account maintained with the EPF office. If the organization where you are working is an exempted one and has its own provident fund scheme, the amount is to be kept in a fund maintained by the exempted PF organization.
Upon separation from service, you are entitled to the refund of provident fund accumulations, including the matching contribution of the employer. You have to make a claim for withdrawal of accumulations to the EPF authorities through your employer. The procedure has been prescribed in the Act (Clause 72 (5) (a) (b) of EPF scheme). However, if you are joining another organization covered under the EPF Act, you can get the accumulations transferred and continue as a member of the provident fund.
There should be no difficulty in getting the withdrawal benefit as the Act has made very clear provisions on the subject.
Cyril
From India, Nagpur
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The provident fund deductions made from your salary are to be credited to your account maintained with the EPF office. If the organization where you are working is an exempted one and has its own provident fund scheme, the amount is to be kept in a fund maintained by the exempted PF organization.
Upon separation from service, you are entitled to the refund of provident fund accumulations, including the matching contribution of the employer. You have to make a claim for withdrawal of accumulations to the EPF authorities through your employer. The procedure has been prescribed in the Act (Clause 72 (5) (a) (b) of EPF scheme). However, if you are joining another organization covered under the EPF Act, you can get the accumulations transferred and continue as a member of the provident fund.
There should be no difficulty in getting the withdrawal benefit as the Act has made very clear provisions on the subject.
Cyril
From India, Nagpur
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PF deduction on leave encashment.doc
PF Contribution on Leave Encashment - Clarification by EPFO.pdf