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I agree with Shri Vidyadahar. What EPFO insists is that PF wages should not be less than minimum wage since some employers attempt to split their wage structure to reduce the basic wage and then add some allowances. EPFO is against such splitting of wages in order to calculate PF Contribution on lesser (basic) wage. In this connection, I would like comments on the EPFO (internal) circular dated 23.05.2011 (attached).
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Yes,there was an attempt on the part of EPFO to make sure that the employers pay contributions at least on the notified minimum wages. But that has not been effective because the EPFO cannot enforce minimum wages which is a subject of State Labour department. There are a lot of industries for which minimum wages has not been notified and in such cases you can straightly say that you are not a scheduled employment and as such you pay as per the rules of the company. All these have happened due to poor enforcement of law and the employers have taken misused the word "basic" although the law speaks very well that it should include all components. When we noticed that HRA is exempted, we have also started paying 90% HRA!!! That happens only in India!!!
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