Madhu.T.K
Industrial Relations And Labour Laws
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I would like to post a very recent circular from the Employees provident Fund Organisation which insists that for the purpose of PF contributions, the minimum wages should not be bifurcated. That means if an employee is paid the statutory minimum wages, the whole of the said amount will attract PF contribution.
Please find the attachment.
Regards,
Madhu.T.K

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Dear Sir,
Thank you for the posting. But one question comes in to my mind when I read this article - What will happen if the minimum wages is above Rs. 6,500/-. Whether employer can restrict PF contribution to Rs. 6500 or should they pay PF contribution on the minimum wage, since as per the circular the whole of the minimum wages attract PF contribution?
Regards
Arun John Cherian
I don't think that for any scheduled employment the minimum wages is more than Rs 6500. But, of course, in due course, the minimum wages will exceed Rs 6500 because it is linked to cost of living index and for many categories of employment, there is every chance that it would cross Rs 6500. If so, naturally, it will be restricted to Rs 6500 until the PF Act itself is amended. There is a move to increase the statutory limit of salary.
One thing more. The circular itself states that the authority to decide what should be the salary for the purpose of PF contribution is the PF authorities and as such the enquiry u/s 7A of the Act will be held and accordingly the liability will be decided.
Regards,
Madhu.T.K
sir.
greeting of the hour.
in above aforesaid case,for employee PF contribution there is ceiling of Rs.780(12% of Rs. 6500) above that if employee willingly wants to share more then that comes under voluntery PF fund.
for the same , i wanna to know wheather contribution under voluntary PF fund is consider as seperate A/C or continue in the same one.
thanks,
regards,
mondon
Both the Statutory and voluntary PF are remitted in the same account.
Let me also clarify that contribution above Rs 6500 is not considered as voluntary contribution whereas when an employee contributes at a rate higher than 12% that is considered as voluntary contribution. That will also go through the same account only.
Regards,
Madhu.T.K
Dear Madhu,
Thanks for updating the recent updates and keep posting same in future also.
My query would it be applicable to contractor employing for short duration and casual worker. As we are discussing two days back many of our contractors are not abiding by the same.
Should we send a formal communication to them that you should adhere to the change. Waiting for your suggestions and feedbacks.
Yes, it would be applicable to contract labour because contractor is also expected to pay minimum wages and comply with all statutory formalities connected with labour he employs. Regards, Madhu.T.K
As stated, if the minimum rates of wages is more than Rs 6500, the employer can restrict contribution to Rs 6500 not withstanding any higher minimum wages.
Please remember that EPF Organisation is the not the authority to enforce minimum wages and as such if the company is paying an amount much lesser than the minimum wages (say Rs 2000 per month) but at the same time PF is being contributed on the entire amount (ie, Rs 2000) so paid without further bifurcating the wages, then PF authorities should accept it as genuine contribution and question the act of employer. PF cannot direct to employers to pay minimum wages. The responsibility to enforce the minimum wages rests with the State labour department only.
Regards,
Madhu.T.K
sir,
greetings of the hour......
in the extension of myquery, i wanna to know one thing that if employee share more than Rs 780/- in his PF account then already his contribution becomes higher than @12%
then comes under volantry PF contribution.
contribution above Rs 780/-means how we calculate and where remitted,please clarify the same.
thanks,
regards,
mondon
i hope I have already given explanation to your question that any contribution about statutory will be remitted in the same account only. Madhu.T.K
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