Labour Law For Salary Calulation - Pptx Download - CiteHR
Prathapsvumba
Hr Executive
Rameshbg_1955@yahoo.com
Retired Chief - Ir
+2 Others

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Hello
I need to know is it compulsory for companies to give 60% as Basic of gross salary ? and also How much to calculate in terms of EPF (12.5%) frm Employee end and 13.5% from employer end . Need to confirm on this
Thanks
Ronaleen
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Dear Priyadarsini,
For Basic salary the mandatory rule is that the Basic, DA, HRA etc. should not be less than the notified wages by the State/Central Govt (as applicable).
The 60% pattern started just to reduce employer liability towards PF-ESI, Bonus, Gratuity, Leave payment etc.
Also note the PF rate is 12% and 13.36% for employee and employer contributions respectively.
Similarly the ESI is 1.75% & 4.75%.
However, pfa a brief presentation of PF-ESI. I also got this from Cite HR and I made little changes as per current laws.
Hope this will clarify you the basic points. If still any query, pls raise the point.

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File Type: pptx ESI & PF Presentation.pptx (901.3 KB, 343 views)

Dear Priyadarsini,
It is not compulsory for companies to give 60% as basic. It may vary from 30-50% ideally depends on the management.
Employee PF - 12%
Employer PF - 13.61%
Please let me know if you require any clarification.
Thanks & Regards
T.Prathap
Senior Executive-HR
9491771437
Dear Ms.Ronaleen,
If in your organization have above 20 employee As per the EPF and MP Act you can deduct the PF amount with a % of 12% of Basic whose basic till 15000,or existing PF member of your organization or less than twenty employee then the PF rate is 10%.And for employer it should be 13.36% of basic.EPF-3.67%,EPS-8.33%,Admin Charge-0.85%,EDLI-0.50%,and EDLi admin-0.01% total=13.36% for employer.
Hope this should make your answer of your question.
Regards,
Anil
The salary/wages components for the purposes of contribution are varied.
For PF normally it is Basic + DA only, where both put together is beyond the salary/wage ceiling prescribed in the Act. If it is less than the ceiling you need to take into consideration all allowances except HRA. 60% is only a thumb rule and has no legal sanction. Employee contribution is 12% and Employer share is 13.36%. In case you have EDLI covered by separate insurance, you can seek exemption and the employer share towards EDLI to PF authorities need not be given. The Act requires the Employer to contribute upto the salary/wage ceiling prescribed by the Act,. Anything beyond this is employer's descretion, but needs to intimated to PF authorities. It could be started any time during the financial year but can be stopped only after the end the current finacial year.
For gratuity and Bonus it is Basic + DA only.
Under ESI Act, for the purposes of coverage of an employee wages means - Basic, DA and all allowances and any payment made to the employee in interval not exceeding two months, Productivity linked incentive is not to be considered as wages while determining the coverage under the act. However, for the purpose of contributions productivity linked incentive also has to be taken into account.
BGRamesh
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