Can Minimum Wages Be Split For Pf Contribution? - PDF Download - CiteHR
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Whole problem started only after the circular issued by EPFO. PF office cannot have locus standi to issue such order. The Act is enacted in the Parliament and if any changes required, it is to be issued by Government. And that is where the problem. Everyone has their own way of interpretation. Even in court orders there seems to be difference of opinion between judges (and that is the reason why we see different judgments in different courts).
Do not get confused. Wait till end of this month. There is a hearing coming in Madras High Court against the order issued earlier. The matter will be thrashed out. We will know - as an employer - as to what to do. Have patience.

Dear Balaji,

Some one raised the question in Lawyers Club India also on the basis the extant judgment of the Punjab Haryana High Court. I replied to that question also on the Experts columns.

In fact, any judgment of any court becomes applicable only on that specific case in which judgment is made, unless specific orders of the competent court are there to apply on all the similar cases, or formal amemnd in the relevant law is made by the Parliament, or else, the Head of the Nodal department (here the EPFO in PF cases) issues specific orders to that effect.

Since, neither the Parliament mad any change in law, nor the Commissioner has issued any order to make it applicable generally on all the organisation, the effect of the judgment would remain restricted to the concerned organisation in favour of which the orders have been issued. Further, since the judgement is very recent, the EPFO, if it decides so, can also file an appeal against in Supreme Court against the said judgment.

So, in my views, it cannot be taken as granted to be effective in general for all the organisations, unless the organisations concerned are not able to get specific judgment individually in their own favour on the analogy of the existing judgment.

Your comments would however be valuable, if you have some other opinion against my views.

It is unjustice to split minimum wages for the sake of EPF Contribution.It has never been practice in the past to split minimum wages when it was Rs.1500/ or Rs.2000/-.
If the employer is paying allowances on minimum wages then that can be acceptable.
Jimmii d

Mr. Dhingra,

If you have a closer look at the circular floated by EPFO (from where the issue has started), you would understand they invoked certain judgments passed in certain cases like RPFC, Punjab Vs. Shibu Metal works, Crown Aluminium Works Vs. Workers Union, Kamani Metal works & Alloys, civil appeal in case of Air Friieght Limited Vs. in the State of Karnakata and Others.

It is a common phenomenon whenever such disputes take place, to quote the judgment or decree issued in favour or against that particular concept.

EPFO when they issued the circular, they quoted all the above cases justifying thier requirement of inclusion of all allowances in the basic wages and sought contribution on allowances.

When EPFO refers such cases, it is also possible for employers to quote certain court judgments supporting their claim. Therefore it is common for anyone to refer cases.

What I am trying to say is that there are different views in different forums and who is the deciding authority is what question now. When the Act is enacted in Parliament, whether EPFO have locus standi to issue such circulars and whether it has any merit. If EPFO initiates enquiry against employers and deals and passes separate orders for each and every enquiry initiated against such employers, and every employer has to approach High court / Supreme Court and get orders against such orders, where is the end? Therefore in my opinion, there should have been clear cut rule passed by Parliament w.r.t this issue with more clarity. Unless it happens, the EPF Tribunal, High Courts and Supreme Courts will be flooded with appeals and claims. How many of us (employer) / you are ready to spend your productive time in tribunals and courts?

Please refer the letter sent to EPFO, Delhi by Mr. H.L. Kumar, who is also an advocate like you, who is also running a big organization "Labour Law Reporter". I read the letter but I do not have the copy of the letter at this point of time. (I will post it later). Mr. Kumar sought certain clarifications with respect to this issue but I do not think he has got any reply from them till now.

The circular issued by EPFO and court judgments have been floating around only to confuse and complicate things further and there is no solution. In the whole process, the employers are harrassed and nothing more.


Dear Balaji,
Please don't get confused, as only the EFPO has the authority to issue clarificatory circulars even on the basis of judgments, but a particular judgment does not apply to any other organisation, other than the organisation referred in the case, until the EPFO takes cognizance of the universality of the judgment and itself agrees to apply on all organisations. So, any organisation, other than the concerned one, cannot presume the applicability of the judgment to that unless specifically affected by an order of the court or the EFPO.

Dear PS Dingra
Its wrong to say that, the judgement of a particular High court is restricted only to particular geographic location, is wrong. High court rulings and supreme court judgements are used as precedents and used in future case of similar nature. High court judgement can be over ruled by a supreme court or a full bench of same or other High court.
Its purely the discretion of a High court to accept views of another court when a case of same nature is presented before, if different high courts conclude different views on same matter, then the disputed matter has to be decided by a full bench of any High court, and if order of full bench of High court, has to be challenged, then same can be done by appeal in supreme court.
Please refer Constitution of India for clarity on the same.

Dear Octavious,

I have not used the words "particular geographic location" anywhere in any of my two posts. Probably you have misinterpreted the word "universality" used by me, which intended to convey that a judgment in any particular case applies only to that particular case only, not to all other organisations, until that is ordered so by the competent court, or by way of amendment to the relevant law, or when the organisations decides to apply uniformly to all the organisation.

In that respect, you have also agreed that the judgment can be used as precedent in future cases solely at the discretion of the courts. That also means the same thing, which I intended to convey. Hope you would have read my previous reply also. That also conveys the same thing. In other words, none of the organisations, other than the organisation on whose case the judgment was delivered, cannot treat the judgment to be applicable automatically to all the organisations universally, until specifically ordered to do so.

Dear Dingra

You tent to commit fallacy when you say that a judgment in any particular case applies only to that particular case only, not to all other organizations, until that is ordered so by the competent court, or by way of amendment to the relevant law, or when the organizations decides to apply uniformly to all the organization. I say fallacy is committed because of following reasons

1. Judgement can be used in other organization is matter to be decided is of same nature and question raised or asked is same and no new question or query is raised.

2. Precedents do not amendment in any way any statute or law established, but it clears the ambiguity and opacity, amendment of law is with legislature and not with Judiciary.

3. Judgement until over ruled has to be followed by any and all organization who are party too or are effected by such judgement. And also any precedent which effects the public in general are applicable not only to the party to the case but to others also who are or may be effected by the judgement


Dear Mr. Dhingra,
Your view that "a judgment in any particular case applies only to that particular case only" can not be termed as correct.
I would like to bring to your notice that Article 141 of the Indian Constitution clearly states that "the law laid down by Supreme Court of India is binding upon all courts in the country". Numerous cases all over the country are decided in accordance with the view taken by Supreme Court.
Article 141 of the Constitution has given Supreme Court powers to act even as a legislative body as it has the authority to interpret a law passed by the parliament.
Same is applicable for High courts judgement regarding its binding within the jurisdiction of that particular High court.

Dear Octavious,
If you find fallasy in my statement, you are free to sue me in some competent court of law at Delhi, OR ELSE quote relevant section of any law or court judgment in support of your own statment that any judgment can be made generally applicable to all other cases of other organisations without any specific order of the copurt of law or amendment to the relevant law, or by issue of specific instructions by the department concerned. Rather on the other hand, I feel, by your statment you are just misleading the managements of various other organisations.

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