Splitting Of Minimum Wages For EPF Contributions Not Illegal - CiteHR
Jeevarathnam
Sr. Manager Hr/admin
MAHESH PRASAD GUPTA
Deputy Manager - Hr & Admin
Raju636
Dy Manager

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Please find the below and advice whether Splitting of minimum wages for EPF contributions not illegal. can we split 50% basic of minimum wages of concern state and central wages, so the EPF contibution will be 12% of 50% of minimum wages.

(**) M/s Gaurav Enterprises vs. Regional Provident Fund Commissioner, ATA NO. 71(4)2015 decided on 5.9.2016

Splitting of minimum wages for EPF contributions not illegal.

Brief Facts:

The appellant challenged the order of the Regional Provident Fund Commissioner dated 31.12.2014 under Section 7Aof the Act whereby it was contended that basic wages as defined under the Act, specifically excludes House Rent Allowances, Conveyance and other similar allowances, so accordingly appellant establishment was supposed to remit the PF dues on basic wages actually given to employees. Amount which was paid by the client to the appellant for providing its services was not at all relevant for determining the PF liability of the appellant and it was the actual emoluments which were being paid by the appellant, including its components which only were required to be considered by the respondent. It is further contended on behalf of appellant that appellant establishment is remitting PF dues in accordance with the provisions of the Act and there no evasion of any kind of PF dues by appellant establishment. It is further contented on behalf of appellant establishment that during course of enquiry all the relevant record was duly produced by appellant establishment but respondent without considering such record, was adamant to pass such illegal order just to harass the appellant establishment. No subterfuge of any kind had been proved against the appellant during the 7A proceedings. The contracts for service between the appellant and its clients are on principal to principal basis therefore whatever charges are paid by the clients to the appellant are not emoluments paid to the appellant to its employees and no PF dues are liable to be deposited in the fund on the monthly charges paid by its client to the appellant.

The appellant relied upon the judgment of Assistant PF Commissioner vs. Gas Securities Services (India) Limited, 2011 LLR 316 (P&HHC), Group 4 Securitas Guarding Limited vs. Employees' Provident Fund Appellate Tribunal and Others, WP(C) No.4408 of 2000 (Del. HC)

Reasons & Decision:

The Hon'ble EPF Appellate Tribunal allowed the appeal with following observations:

Section 2(b) of the Act does not prescribed how much amount shall be considered as basic wages. So now this is to be seen by this Tribunal whether respondent is empowered to direct the appellant establishment to pay minimum wages to the employees. During course of argument, no provisions of the Act cited by counsel for respondent which could reveals that 'Commissioner' is empowered to direct the employer to pay minimum wages to the employee. Bifurcation of wages below minimum wages or basic wages and DA etc. are the issues , completely out of the purview of PF authorities. PF authorities has no jurisdiction to ensure the compliance of Minimum wages Act or to issue any direction in this regard.

Thanks Mahesh for your valuable share. Request you to share the document for our reference
Dear Mr. Mahesh, can you please share the order copy of EPF Tribunal.
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