Saswatabanerjee
Partner - Risk Management
Loginmiracle
Consultant & G.m.
+2 Others

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Dear All, Plz confirm whether PF shall be calculated and deducted on Overtime earnings?
No, PF is not to be deducted on Overtime however, nothing in the act stops the employer and employee from voluntarily deducting amount higher than statutorily required
As per PF Act, definition of “Basic wages” does not include “Overtime Payment”. Hence we should not deduct PF on Overtime.

PF inspectors are insisting, only in following cases.

Case 1:

Ex. Basic 4500 + HRA 1000 = i.e. monthly salary for 8 hours is 5500, but contract labours are working 12 hours a day hence actual earning is 5500 + 4500 OT (i.e. every day 4 hours working based on this double salary of basic come to 4500) (Where number of OT hours is not the jurisdiction area of PF Enforcement officer, hence he can suggest you to correct)

Case 2:

Basic is 4400 and other allowance is 12000 = Total salary 16500, hence also PF enforcement officer suggest to correct the distribution. i.e. increase basic upto 6500.

There is no mention in law about Basic v/s other allowance, even though if PF enforcement officer finds that we are trying to keep minimum basic to avoid PF then he may suggest for changes in structure. Law is silent on Basic v/s other allowance.

BrainLight HR Solutions


Hai,
Please refer section 2(b)(ii) of EPF&MP Act. As per the said section overtime wages are not considered for calculating PF.
But when it comes to ESI Act, refer section 2(22). Here wages includes total remuneration.
So, don't confuse with the Acts.
Overtime Wages are not considered for PF calculation.
Regards,
S.N.Raju.U.

Dear friends, No doubt PF to be paid on allow. also. Pl. go thro' the attachments for further clarifications. kumar.s.

Attached Files
File Type: doc PF on allw..doc (36.5 KB, 340 views)

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