Sr. Manager Hr/admin
Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Business Development
+3 Others

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Hi I am HR for XXXXX PVT Ltd Company located at Hyderabad. We are working for Canada client for architectural Drafting services. We have nearly 50 Employees.
My Question is do we dedect Emloyee share and Employer share from Employee salary (For EPF and ESIC). Actually When employee joined in my company I inform to employee that the both shares are dedecting from his salaries at that time employees are agreed also. But Is It Legal? We can do like this? Please give suggestions / Advice..

From India, Gurgaon
Hi We should not deduct it into the gross salary but you can consider that as CTC to the employee
From India, Bangalore

Employer share is included in the total cost to the company(CTC) and Employee share will be deducted from his gross. And only employee share deduction will be reflecting in the pay slip.

It is illegal to deduct employer contribution from employee's gross salary.

I would be happy to help you to streamline your payroll and statutory compliance process at your organization.

We help companies like yours manage their entire payroll function and handle statutory compliance. We have office in Hyderabad. Currently we are serving nearly 200 companies in SME segment and processing 80,000 records per month.

We offer the following features in our application called " myPayroll" - A web portal where

1) Employees can view their pay slip, provide online Investment declaration and submission of actual proofs, manage their leaves, file their ITR etc...

2) Employer can download various reports like Salary register / Variance report / Summary – PT,PF,TDS,ESIC,LWF / Tax register / Financial JV / Manpower reconciliation / Net Pay Reconciliation / Bank file – Multi-formats / Reimbursement balances / Location/cost center wise payroll summaries / YTD pay-slips.

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From India, Vellore
As Jeevaratnam said both employee and employer contribution can be part of CTC. But cannot be part of GROSS. There will be 2 parts in CTC structure. gross(part A) and other benefits(part B). All the employer contributions and retiral benefits can be part of Part B.In case you have already informed employees that it both will be deducted from emp CTC so it should be OK from emp side but you need to be careful in devising this into gross and benefits to be Complaint with statutory regulations.
If you need help in streamlining the salary structure, statutory compliance please reach out to me at [email protected]

From United States, Ogden
Dear Bchrsnag
Our esteemed members have given you the correct answer; and also explained the underlying issues.
However, I am surprised, how your Company had been committing this for such a long time ??
Are you an HR ??
Or, working in Operation (Line functions) ??
In fact, the words "Employee's Share " and "Employer's share" should have been very clear even to a barely literate person.
It seems the Company has been indulging in such un-ethical and illegal practice wilfully.

From India, Delhi
Hi Bchrsnag,

EPF & ESI are tobe extended to employees as per respective Acts- as a Welfare Measure. It is Statuory Obligation for every Co. & HR Manager to ensure compliance. There is no problem to pay Factory Licence Fee, Consent Fee, I.Tax, Service Tax etc., Co. wants to try to reduce expenses Only of PF & ESI etc., to create problem for HR Manager. HRM cannot agree to such mal-practice only to create problem for HR Mgr. As rightly pointed out by Shri Rajkumar.

the words "Employee's Share " and "Employer's share" should have been very clear even to a barely literate person.

It seems the Company has been indulging in such un-ethical and illegal practice wilfully.

It is Cos. duty & liability to pay its contribution & to show to Inspecting Authorities (Recover employees portion from their salary). If Co. deduct Co's Portion from employees salary, it is against Law & illegal and inviting more trouble to HRM. HRM cannot support such mal-practice & should present the case to Management to avoid violation & future trouble which HRM only will have to face & solve.

[email protected] HR Consultant .1.16

From India, Mumbai
Shri Madanagopalaswamy, Sir,
Kindly attach a copy of PF Depts. Clarification reg. deducting of both shares of PF Contributions from the employee in CTC cases for our infn. & reference.
Thanks & Regards,

From India, Mumbai
Hi Starlet I do agree. As the question was about both EE & ER contribution I responded as it can’t be into gross.
From India, Bangalore
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