JAWEDALAM
Ir & Contract Labour Management
Rajusiachen
Leadership & Motivation
+3 Others

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Dear Sir,
my company start special allowance in payslip. i want to know that there is any law say about deduct in basic salary, because they show less basic salary from last month & that money gave a new head i.e. special allowance

Dear
this is the general tendency of some companies (specifically construction companies) to reduce basic wages by giving same amount in different heads just to avoid PF liability.
But in ur case if ur Basic wages is more than the Minimum Wages under ur category even after creating a new head as Special Allowance than u have no remedy available under PF Act except under Section 12.
if vice-versa than a recent clarification has come from PF Office regading this which u may show to ur office (if u think of doing so).
PF office clarification is attached herewith for ur purpose.
Regards.
Jawed Alam


Attached Files
File Type: pdf Splitting_of_Minimum_wage.pdf (684.1 KB, 581 views)

dear shah & jawed, let me add few more points that even Special allowance attract PF contribution as per new notification by madhay Pradesh high court on 24.03.2011....
Dear Jaheer_abbas
Any notification issued by High Court of a particular state may not be applicable for all state. decisions taken by Supreme Court is applicable for all states .if The employer of West Bengal will not adher by the decision given by the MP High court, then will it be illegal on the part of West bengal employer?...References may be taken from that judgement but not mandatory..
regards.
Jawed Alam.

Company CAN reduce the basic pay while carrying out rationalization of the Pay Scale.

Sometimes, a formal pay structure in a company is absent when it was small organisation (less that 10 - 15 employees and does not attract statutory compliances like EPF). As the company grows, the need to rationalization of the pay is needed and carried out.

However, the following should to be borne in mind:

(a) There should be not reduction with the Company's statutory liabilities as far as EPF, ESI or Gratuity for an individual.

(b) The CTC / Gross / Net is to be more or equal to the present pay packet - not less.

(c) The basket of "Special Allowance" is introduced in the pay structure and includes HRA, LTC, Med Allow, CCA, Education Allow etc etc. Normally, this 'Special Allowance' is left to the individual employee to intimate to HR / Accounts the heads which this money be given for the Financial Year so that maximum IT exemptions are availed off.

(d) The HR plays a crucial role in this salary rationization so that the Management and the Employees are satisfied with the new structure .

Rajusiachen

Dear JAWEDALAM,
Find enclosed herewith judgement of Punjab & Haryana High Court in regard to split of wages, which is self explanatory .
As per question of Mr. HMShah basis wage can't be reduced.
Regards
Tirlok Dhir


Attached Files
File Type: pdf APFC, Gurgaon VS G4 Securitas (P unjab & Haryana High Court Order).pdf (47.2 KB, 160 views)

Dear Tirlok Dhir,

Thanks for the attachement. but if u have copy of original order thn plz attached herewith for this discussion.

I request you to please go through the comments which I have made in this discussuion topic then it will better for other contributor to understand the subject.

In the first comment I had written "

this is the general tendency of some companies (specifically construction companies) to reduce basic wages by giving same amount in different heads just to avoid PF liability.

But in ur case if ur Basic wages is more than the Minimum Wages under ur category even after creating a new head as Special Allowance than u have no remedy available under PF Act except under Section 12.

if vice-versa than a recent clarification has come from PF Office regading this which u may show to ur office (if u think of doing so).

PF office clarification is attached herewith for ur purpose."


And in the 2nd comment I had written: "Any notification issued by High Court of a particular state may not be applicable for all state. decisions taken by Supreme Court is applicable for all states .if The employer of West Bengal will not adher by the decision given by the MP High court, then will it be illegal on the part of West bengal employer?...References may be taken from that judgement but not mandatory.."

So Mr. Tirlok Dhir I don't find any reason from your part to refer the attached judgement to me since my comments were not against any order issued by Punjab and Haryana High Court or MP High Court. What I suggested is that Basic wages cant be reduced for the purpose of contribution of PF (Section 12) and Basic Wages cant be less than Minimum Wages (recent clarification issued by the RPFC).

I hope u understood my point now.

Regards.

Jawed Alam.

Hello every1!!! Can anybody please guide me how to make salary slip with how much % is claculate by employer for employee??
Dear Mr JAWEDALAM

LABOUR LAW UP-DATE



SUPREME COURT ON EPF CONTRIBUTIONS ON ALLOWANCES



It may be recollected that in a Review Petition by Surya Roshni Limited vs. Employees’ Provident Fund and Another, 2012 LLR 42, Division Bench of Madhya Pradesh High Court has held that Section 2(b) and 6 of the Employees’ Provident Funds & Miscellaneous Provisions Act define basic wages and HRA, overtime allowance, bonus, commission or any other similar allowance are not covered in the definition of basic wages but when special allowance, dearness allowance, conveyance allowance and other allowances are paid universally to all the employees, they would be treated as part and parcel of basic wages.



A special leave petition to appeal, as filed, came up for hearing on 13.7.2012, in which the following order was passed :



ITEM NO.MM-128 COURT NO.12 SECTION XV

S U P R E M E C O U R T O F I N D I A

RECORD OF PROCEEDINGS

I.A. NOS.4-5 in

Petition(s) for Special Leave to Appeal (Civil) No(s).8781-8782/2012

(From the judgment and order dated 24-3-2011 in WPC No.1891/2011 and dated 22-11-2011 in RP No.117/2011 of the High Court of M.P. at Gwalior)

SURYA ROSHNI LTD. Petitioner(s)

versus

EMP. PROVIDENT FUND & ANR. Respondent(s)

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