Stephen_7
Senior Officer - Hr
N.Fernandes
H.r. Associate
Rajesh Kumar Dubey
Manager - Hr
Gayatri P
Hr Generalist
+4 Others

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Hi, Experts
In our company some of the employee basic salary is below the minimum wages as applicable in state, kindly guide me should PF
be deduct on minimum wages or on actual basic salary which is below the minimum wages,
Regard
Kankit kumar

PF need to be deducted on basic wages only. Not on minimum wages as per the the EPF act.

EPF tribunal have passed the orders of the same. Refer M/s. Chalet Hotel Pvt ltd vs RPFC, Thane ATA no: 17(9) 2013 decided on 21.07.2014

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BIFURCATIION OF MIINIIMUM WAGES IINTO ALLOWANCES – NOT IILLEGAL

An appeal was filed by the appellant, before the EPF Appellate Tribunal, against the order dated 06.07.2011, passed by the EPF Authority, under Section 7A of the Act, assessing PF dues and allied dues on allowances also which is illegal. The EPF Appellate Tribunal observed that the employer has bifurcated the minimum wages into different heads like basic wages, house rent, conveyance allowances etc. the employer has been paying employees contribution only on the basic wages as provided under the EPF Act excluding allowances. The EPF Authority pleaded that PF dues can never be calculated on wages lower than minimum wages. Accordingly, the EPF Authority initiated proceedings under Section 7A of the Act, taking into consideration the minimum wages under the Minimum Wages Act and directed the employer to pay the contribution so determined. The EPF Appellate Tribunal opined that minimum wages has not been defined under the EPF Act. The EPF Authority has no power to hold whether minimum wages amount to basic wages or not. While interpreting a provision of any Act, the Court only has to interpret the law and cannot legislate it. If a provision of law is misused and subjected to abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. There is no compulsion to hold that the definition of ‘minimum wages’ under the Minimum Wages Act. Employer is liable to deduct under Section 2(b) read alongwith Section 6 of the EPF Act and not on minimum wages as per Minimum Wages Act. Hence, impugned order is set aside. Appeal is allowed.

M/s. A.K. Manpower Services Vs. RPFC, Mumbai ATA No.606(9), 2011, decided on 27.07.2011

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MIINIIMUM WAGES CAN BE SPLIIT IINTO ALLOWANCES,, HENCE,,

EPF CONTRIIBUTIION NOT TO BE ON TOTAL WAGES

An appeal was filed by the appellant, before the EPF Appellate Tribunal, against the order dated 14.12.2012, passed by the EPF Authority, under Section 7A of the Act, taking into consideration of the minimum wages under the Minimum Wages Act. The EPF Appellate Tribunal observed that the employer has bifurcated the minimum wages into different heads like basic wages, house rent allowance, conveyance allowance, special allowance, skill allowance etc. the employer has been paying EPF contribution only the basic wages as provided under the EPF Act excluding allowance. The headquarters office of the EPFO, vide circular dated 23.05.2011 has stated to ensure that the PF contribution shall be remitted on not less than minimum wages. Accordingly, the EPF Authority initiated proceedings under Section 7A of the Act, taking into consideration of the minimum wages under the Minimum Wages Act and directed the employer to pay the contribution so determined. The EPF Appellate Tribunal opined that minimum wages has not been defined under the EPF Act. Only basic wages is defined under the Act. The EPF Authority has no power to hold whether minimum wages amount to basic wages or not. While interpreting a provision of any Act, the Court only has to interpret the law and cannot legislate it. If a provision of law is misused and subjected to abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. There is no compulsion to hold that the definition of ‘minimum wages’ under the Minimum Wages Act. Employer is liable to deduct PF contribution on basic wages as defined under Section 2(b) read alongwith Section 6 of the EPF Act and not on minimum wages as per Minimum Wages Act. Hence, impugned order is set aside. Appeal not allowed.

M/s. Chalet Hotel Pvt Ltd Vs. RPFC, Thane, ATA No.17(9) 2013 decided on 21.07.2014

You have to deduct PF on the salary which u are paying to your staff / workers , there is no need to pay excess / deposit PF which are not in actual.
Any more views on this? This has been my confusion also for sometime now with no specific answers as getting two different views from the experts. Best regards, GP
Minimum wages comprise of Basic + DA in general or Lump sum amount fixed by the Govt. In such case the deduction of PF will be on such total amount.
If the actual Basic wages paid below the minimum wage, then , PF deduction will be on on the minimum wages amount only, but not on lesser actual basic pay.

Gurumurthy, you are wrong. You did not read the explanation above.PF has to be deducted on wages payable, whether as per minimum wages or not.
Dear STEPHEN_7 , Do you have a copy of the said appellate judgement of m/s Chalet hotel P ltd vs RPFC thane
Dear Kumar, the pf amount should be deducted on the basic salary, actually paid. There are many companies where the minimum wages rule isn't followed by management. However, the management don't have rights to deduct extra pf.
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