We have a lot of HR professionals but all HR professionals may not think professionally and interpret law professionally and that is why we the HR Professionals have misused the PF qualifying wages to mean just basic salary and dearness allowances. Certainly, PF is payable on basic wages and dearness allowances (it may be Fixed DA or Variable DA) but what constitutes BASIC Wages is very clearly defined and it is the sum total of the wages earned by an employee as per contract of employment excluding HRA, overtime payment, bonus etc. That means PF is payable on the total emoluments less HRA and Basic wage is not the same basic wage that an employer or the HR Professional like us fix according to our wisdom or custom of the company which will always be very very low since most of the contributions will be on that basic wages.
Now coming back to the discussion, I would say that the EPFO authorities cannot demand that the employer should pay contribution on the entire Delhi Minimum wages just because the notional wages amount if calculated for a monthly basis would be more than Rs 15000. That is Rs 622 for 26 days would be Rs 16172 and no way the EPFO can demand contribution on Rs 16172 though they can demand it on Rs 15000 in respect of an existing member. In respect of a new worker the EPFO cannot even demand any contribution because he can be an excluded employee since his wages at the time of joining the establishment is more than Rs 15000. As such the question of payment of contribution on Rs 900 per day will not arise.
Regarding "other allowances" in the salary break up, I would also say that this is going to be a heavy risk for the employer because any allowance which is paid to all employee in general will be taken as part of statutory wages for all purposes including calculation of gratuity. For deciding the PF qualifying salary also any amount which is required to make the salary equal to Rs 15000 can be taken from "other allowances" as the other component, ie, HRA, is not part of basic wages as per definition of wages under EPF&MP Act
Madhu.T.K
From India, Kannur
4193Now coming back to the discussion, I would say that the EPFO authorities cannot demand that the employer should pay contribution on the entire Delhi Minimum wages just because the notional wages amount if calculated for a monthly basis would be more than Rs 15000. That is Rs 622 for 26 days would be Rs 16172 and no way the EPFO can demand contribution on Rs 16172 though they can demand it on Rs 15000 in respect of an existing member. In respect of a new worker the EPFO cannot even demand any contribution because he can be an excluded employee since his wages at the time of joining the establishment is more than Rs 15000. As such the question of payment of contribution on Rs 900 per day will not arise.
Regarding "other allowances" in the salary break up, I would also say that this is going to be a heavy risk for the employer because any allowance which is paid to all employee in general will be taken as part of statutory wages for all purposes including calculation of gratuity. For deciding the PF qualifying salary also any amount which is required to make the salary equal to Rs 15000 can be taken from "other allowances" as the other component, ie, HRA, is not part of basic wages as per definition of wages under EPF&MP Act
Madhu.T.K
From India, Kannur
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PF is to be deducted on canteen allowance - Delhi HC 22.7.2013.pdf