Dear Seniors,
Please guide me can we split the Minimum wages for PF Calculation.
For Example
Minimum Wages is Rs 7395( include Basic+ Spl Allowance)
For PF Calculation can I split Minimum wages 30% for PF Calculation.If yes then please provide me few evidence.Because my seniors telling me that one circular pass by High court or Supreme court for that in 2015-16.
Thanks & Regards

From India
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The wages as defined in the minimum wages includes BASIC and HRA but it is not clear as to what percentage of HRA should be. Similarly, the wages defined in the EPF includes BASIC, DA and any food concession etc. and again capping of percentage is not defined.
Since the minimum wages is a subject matter of State Governments, some State Governments have capped the bifurcations of minimum wages into HRA which is 5%.
P K Sharma

From India, Delhi
Wages is what the actual cash plus the cash value of amenities received by the employee at the end of the wage period as per the contract of employment. Breaking up of gross wages or salary is a matter of collective bargaining between Labour and Management or in its absence due to obvious reasons, a matter of discretion of the employer based on industry practice. The purpose behind such a move is to reduce the finacial burden of the employer in respect of indirect commitments like bonus, P.F, gratuity etc and to ensure more take-home pay to the employees.

The purpose behind fixing of Statutory minimum wages and its periodical revision is to ensure not only the employee's subsistence but also to retain his efficiency of labour.That's why payments under certain heads have been specifically excluded from the definition of wages under the Minimum Wages Act,1948.

Therefore, in my opinion, breaking down the components in such a manner solely to minimize the indirect commitments of the employer can reduce the quantum of terminal benefits of the employees in the long run though it is not considered as illegal or unlawful by the courts.Better, what all paid over and above the minimum rate of wages can be considered for such exclusive componential break-ups.

From India, Salem
I fully agrees with the briefing made by Shri Umakanthan.M on the subject. The sole intentions of employers behind bifurcation of wages is to reduce the quantum of certain contributions and also curtail the long term benefits.
Mr. Jagdish Rai had just wanted to know as to what extent minimum wages can be bifurcated into allowances and accordingly I restricted my views to that extent.
P K Sharma

From India, Delhi
I too appreciate your views on the matter, Mr.Sharma.The controversy was created by a circular of the EPFO, of course issued in good faith.But it stands struck down now by the Apex court on the ground that the executive can not rewrite the Law enacted by the Legislature. Moreover, determination of wages is a matter mostly dependent upon of demand and supply of labour market. In the Airfrieght Corporation's case, the Apex Court has categorically laid down that the sum total of the industry wages should be equivalent to the sum total of the statutory minimum wages irrespective of the difference and the rate of components introduced in the wage structure with the exception of the excluded items in the definition of wages under the Minimum Wages Act,1948.However, judgments tend to vary according to the situations and times.If employers try to defeat the very purpose of Social Security Legislations like the EPF Act, PG Act by adopting inequitable breaking up of total wages payable, who knows, the Courts may interefere with a different ratio decidendi.
From India, Salem

Dear All PF will be calculated on Basic wages ,in Bengal, HRA is not a part of Minimum wages .
From India, Kolkata

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File Type: jpg PF Notification.jpg (151.1 KB, 317 views)

Hi, Please find attached the EPF tribunal’s order of Minimum wages can be split for paying EPF contributions.
From India, Chennai

Attached Files (Download Requires Membership)
File Type: pdf Delight Sevices - EPF Trbnl order 2015.pdf (670.3 KB, 428 views)

Dear All PF will be calculated on Basic wages ,in Bengal, HRA is not a part of Basic Wages as per MW circular.
From India, Kolkata
The minimum is the base minimum that cannot be subject to to splitting for any purpose.
From India, Delhi
Dear Mr. Psdhingra, Please find above EPF tribunal’s order in post no 7 which enables an employer can split the minimum wages for EPF contribution purpose.
From India, Chennai

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