Apex Management
Labour Laws Consultants
Korgaonkar K A
Ba,llb,mpm,dir&pm,dll&lw,d.cyber
Srinath Sai Ram
Hr Manager
+2 Others

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Dear Experts,
I am working in one Pvt. Ltd. Co. in Mumbai as HR. My company is having 30 employee but there is no PF and ESI as on date. Majority of employees are having salary more than 25000 without any split up today.
Now my company has decided to apply for PF showing 20 employees to start with. My MD told me to split the salary in Basic, HRA, Conveyance, Education and Medical showing basic between 4000 to 5500.
I told my MD that we have to give basic at minimum wage rate but he is not agreeing to it. He has given me wage slips of one dozen companies from Mumbai wherein the basic is shown between 4000 to 5500. PF is deducted on this basic amount only.
I am confused now as to what to do. I need your advise at the earliest.
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If the company is paying more than the applicable Minimum Wages, Employer has right to realistically structure the various Salary Components.Please go ahead as per the instruction.Basic appears to be 20% of Gross Salary.please do not waste time, atleast now you are getting covered under EPF
ESI is applicable only for Employees drawing Gross Salary of rs21,000/- & below.Something is better than nothing.
Dear SRINATH SAI RAM ji,
I feel you need to review your answer by reading the query once again.
It seems to me that you have made mistake in reading the query. Company is paying basic component less than minimum wage rate. Basic component between 4000 to 5500 is definitely much lower than minimum wages in any of the schedule industries in Mumbai.
The query needs to be examined under the scenario wherein the establishment does not fall under schedule industry.
Dear all,
The salary structure should always be realistic. Why Rs.4000 to Rs.5500 be treated as Basic? Why not at Zero basic and all your remunerations / salary be treated as HRA or any other allowances? You are employing more than 20 persons and applicability of ESIC and EPF is their. Now when you are intended to get the establishment covered, you are going to split your salary into certain allowances and such practices are opted to deprive employees from the benefits. The inspecting authorities, in such cases, can make you liable to pay contributions on the wages as existed on the day or prior to the day of coverage.
Anyhow, if you are going to restructure your salary, take into confidence the staff members too and fix allowances in genuine way.
Dear Korgaonkarji,
The reply given was based on Judgements 1.Minimum Wages can be Split in to Allowances 2.Employer, not PF Authority can Fix Wages for Contributions.The Judgements are attached for your Perusal.Besides, Present Gross Salary is around Rs25,000/-
I subscribe to your opinion in toto, but as already mentioned, the MD concerned has given wage slips of one dozen companies from Mumbai wherein the Basic is shown between 4000 to 5500. PF is deducted on this basic. Already PF Coverage is delayed.Future, consequences will be at the sole risk of Employer

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File Type: docx EPF Judgement.docx (12.0 KB, 69 views)

Hello!
As far as concern about salary structure of employees, i think, when we divide the gross salary/ ctc in various allowances, we should consider basic+DA amount should not be less than the existing minimum wages of that particular region or state. That will be better for compnay if it put the amount in Basic +DA more than the minimum wages because the PF contribution is based on it.
it may be non compliance of less contribution of PF amount and PF Deptt. may take the action over it. In addition with, The labour deptt. also take step on it.
Dear All,
Thanks for your valuable Comments and inputs.
Mr. Ajay Kr Kuntail can you provide any notification in this regard, that Basic salary should be minimum wage. I have employees with low salary , if we show state wise min wage for them, then net is less for them. Though we are following the same for safe guard.
But if any notification you have please share.
Debashree Ghosh Dutta
mail:
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