Dear Prasanna
I was heading HR for more than 30 years in private sector, including MNCs. But I left my job in 2001 and am not in touch very much with these things. Let me give you my opinion based on my experience. If an an employee is suspended " suspension pending enquiry" as per model standing order, he is to be paid subsistence allowance on which no statutory deduction is made. I suggest you may refer standing order and take a decision.
Best wishes.
Dr K K Anirudhan
9847925580
From India, Kochi
1I was heading HR for more than 30 years in private sector, including MNCs. But I left my job in 2001 and am not in touch very much with these things. Let me give you my opinion based on my experience. If an an employee is suspended " suspension pending enquiry" as per model standing order, he is to be paid subsistence allowance on which no statutory deduction is made. I suggest you may refer standing order and take a decision.
Best wishes.
Dr K K Anirudhan
9847925580
From India, Kochi
Dear Mr. Varghese and Mr. Buwan Arya
The Employee Provident Fund Scheme framed under the Employee Provident Fund Act, provides in Para 26A that a member of the Fund continues to remain a member until he withdraws the money in his name from the Fund, or until he is excluded form the Scheme under a scheme for exemption.
Thus, in light of the above, though it does not appear to have been expressly held as such by a court, it can be stated that subsistence allowance ought to constitute wages under the Employee Provident Fund Act, and Provident Fund contributions ought to be made on subsistence allowance, since the suspended employee continues to remain a member of the Provident Fund, and the employer-employee relationship is not extinguished on suspension
From India, Ahmadabad
The Employee Provident Fund Scheme framed under the Employee Provident Fund Act, provides in Para 26A that a member of the Fund continues to remain a member until he withdraws the money in his name from the Fund, or until he is excluded form the Scheme under a scheme for exemption.
Thus, in light of the above, though it does not appear to have been expressly held as such by a court, it can be stated that subsistence allowance ought to constitute wages under the Employee Provident Fund Act, and Provident Fund contributions ought to be made on subsistence allowance, since the suspended employee continues to remain a member of the Provident Fund, and the employer-employee relationship is not extinguished on suspension
From India, Ahmadabad
Dear Saji Sir,
I agree that if an employee is a member of the Fund then he / she should continues to remain a member until he / she withdraws the money in his name from the Fund or excluded form the Scheme. As you have mentioned that the employer-employee relationship is not extinguished on suspension, then I am not agree with you on this point. There is an order of APFC-EPFO in which it has clearly mentioned that "during the suspension period the concerned workers are not on duty and employer employee relationship suspended".
Subsistence allowance is paid for the survival of the suspended workers and during the suspension period the concerned workers are not on duty and employer employee relationship suspended, since the decision not over-come from the enquiry. Hence, subsistence allowances paid to the suspended employees does not constitute wages and not liable for deduction of Provident Fund.
For your ready reference, here I am attaching The Order dt. 17-11-2009 passed by APFC, RO-Mumbai.
From India, Delhi
I agree that if an employee is a member of the Fund then he / she should continues to remain a member until he / she withdraws the money in his name from the Fund or excluded form the Scheme. As you have mentioned that the employer-employee relationship is not extinguished on suspension, then I am not agree with you on this point. There is an order of APFC-EPFO in which it has clearly mentioned that "during the suspension period the concerned workers are not on duty and employer employee relationship suspended".
Subsistence allowance is paid for the survival of the suspended workers and during the suspension period the concerned workers are not on duty and employer employee relationship suspended, since the decision not over-come from the enquiry. Hence, subsistence allowances paid to the suspended employees does not constitute wages and not liable for deduction of Provident Fund.
For your ready reference, here I am attaching The Order dt. 17-11-2009 passed by APFC, RO-Mumbai.
From India, Delhi
Dear All,
In continuation of above, I would like to add that, If the under suspension employee exonerated from the charges and the employee is reinstated. Then he / she should be paid full salary, after deducting the subsistence allowance already paid and at that time, PF can be deducted and submitted to the Department as per procedure.
From India, Delhi
In continuation of above, I would like to add that, If the under suspension employee exonerated from the charges and the employee is reinstated. Then he / she should be paid full salary, after deducting the subsistence allowance already paid and at that time, PF can be deducted and submitted to the Department as per procedure.
From India, Delhi
Dear Mr. Arya
I have gone through the order of PF Authority, there are few more orders from the Honorable Court of Chandigarh and Madras with the same topic. It is indeed a debatable topic. Here I am of the opinion that as per the Order of PF Authority the employer employee relationship is suspended but not extinguished/exhausted, which is a very thin line in the court of law. I am not against any orders but is of the opinion that the same can be heard/taken for litigation.
Also if the employee is reinstated, the difference of Salary and Subsistence allowance is paid, so how would you bifurcate the PF contribution, also what about interest on late payment, the return filing etc. There are en number of queries co relate with this issue.
Last but not the least, I am not against your comment, I may be wrong somewhere but need clarity in depth to satisfy my conscience.
From India, Ahmadabad
I have gone through the order of PF Authority, there are few more orders from the Honorable Court of Chandigarh and Madras with the same topic. It is indeed a debatable topic. Here I am of the opinion that as per the Order of PF Authority the employer employee relationship is suspended but not extinguished/exhausted, which is a very thin line in the court of law. I am not against any orders but is of the opinion that the same can be heard/taken for litigation.
Also if the employee is reinstated, the difference of Salary and Subsistence allowance is paid, so how would you bifurcate the PF contribution, also what about interest on late payment, the return filing etc. There are en number of queries co relate with this issue.
Last but not the least, I am not against your comment, I may be wrong somewhere but need clarity in depth to satisfy my conscience.
From India, Ahmadabad
As I said from the definition of basic itself it is clear that subsistence allowance is not wages as it is not earned while on duty or leave or holidays.It is based on this logic that Courts have held that EL surrender , lay off and retrenchment compensations are not wages for EPF .When a suspended employee is taken back his contribution for the suspended period can be paid in the same way the contribution on arrears of wage revision is paid.
Varghese Mathew
09961266966
From India, Thiruvananthapuram
Varghese Mathew
09961266966
From India, Thiruvananthapuram
Dear Saji Sir,
If the employee is reinstated, there no question should be raised for bifurcate of PF contribution. The management can decide the Salary Structure for the suspension period, as per company policy for all OR the EPF Contribution can be simply calculated on the Minimum Wages of the State / on Rs. 6,500/-; which ever is less.
On question of late payment, if I am not wrong, then there is no question of interest on clearing the dues on re-instantiation, as it cannot be considered late payment.
As now, EPFO has already introduced online portal for filing monthly contribution, it is not a hack-tic job. It can be done very easily.
I hope, i made your conscience satisfied.
From India, Delhi
If the employee is reinstated, there no question should be raised for bifurcate of PF contribution. The management can decide the Salary Structure for the suspension period, as per company policy for all OR the EPF Contribution can be simply calculated on the Minimum Wages of the State / on Rs. 6,500/-; which ever is less.
On question of late payment, if I am not wrong, then there is no question of interest on clearing the dues on re-instantiation, as it cannot be considered late payment.
As now, EPFO has already introduced online portal for filing monthly contribution, it is not a hack-tic job. It can be done very easily.
I hope, i made your conscience satisfied.
From India, Delhi
Dear Mr Arya
Your statement contradicts, The management can decide the Salary Structure for the suspension period, as per company policy for all OR the EPF Contribution can be simply calculated on the Minimum Wages of the State / on Rs. 6,500/-; which ever is less.
If the management can decide the salary structure for suspension period, why can the company decide on the subsistence allowance and contribute to EPF on Minimum Wage/Rs. 6500/- whatever the case may be.
I hope the PF authority will never stop you towards contribution on subsistence allowance, if you take the Minimum Wage/Rs.6500/- as basic pay. Please clarify if I am wrong.
From India, Ahmadabad
Your statement contradicts, The management can decide the Salary Structure for the suspension period, as per company policy for all OR the EPF Contribution can be simply calculated on the Minimum Wages of the State / on Rs. 6,500/-; which ever is less.
If the management can decide the salary structure for suspension period, why can the company decide on the subsistence allowance and contribute to EPF on Minimum Wage/Rs. 6500/- whatever the case may be.
I hope the PF authority will never stop you towards contribution on subsistence allowance, if you take the Minimum Wage/Rs.6500/- as basic pay. Please clarify if I am wrong.
From India, Ahmadabad
Dear Sir,
When an employee joins the organization, at that time also the management / HR Dept. decides the salary structure as per company policy, under the views of Law.
As the EPF is deducted on the Basic+DA, then as per the revised structure, if the Basic +DA goes above Rs. 6,500/-, then EPF can be contributed on Rs. 6,500/-, as it is the wages ceiling for EPF currently.
But, In some cases, the Hon'able High Court & Supreme Court has given the judgements that "Basic Wage" for the purposes of the EPF Act could not be less than the Minimum Wage. That's why it is suggested that "Basic Wage" should not be less than State Min. Wages. And, the EPF Contribution can be calculated on that "Basic Wage" / on Rs. 6,500/-; which ever is less.
Two Judgements are also attached in this regard. Hope this will put some more light on the matter.
From India, Delhi
When an employee joins the organization, at that time also the management / HR Dept. decides the salary structure as per company policy, under the views of Law.
As the EPF is deducted on the Basic+DA, then as per the revised structure, if the Basic +DA goes above Rs. 6,500/-, then EPF can be contributed on Rs. 6,500/-, as it is the wages ceiling for EPF currently.
But, In some cases, the Hon'able High Court & Supreme Court has given the judgements that "Basic Wage" for the purposes of the EPF Act could not be less than the Minimum Wage. That's why it is suggested that "Basic Wage" should not be less than State Min. Wages. And, the EPF Contribution can be calculated on that "Basic Wage" / on Rs. 6,500/-; which ever is less.
Two Judgements are also attached in this regard. Hope this will put some more light on the matter.
From India, Delhi
suspend is not a punishment, so in case of suspension, statutory deduction will continue from the subsistence allowance.
in course of suspension employees given a under taking to the employer, for payment of substance allowance, that he is not engage in different job. he is wholly depends on the job. so payment will continue as per rule. then all statutory deduction will made from the payment.
badal moharana
bharatiya mazdoor sangh
9439020587
From India, Bangalore
in course of suspension employees given a under taking to the employer, for payment of substance allowance, that he is not engage in different job. he is wholly depends on the job. so payment will continue as per rule. then all statutory deduction will made from the payment.
badal moharana
bharatiya mazdoor sangh
9439020587
From India, Bangalore
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