1. Can an employer limit the basic to just Rs.15,000 even for an employee with CTC of 12L by paying the rest under 'Special Allowance' category so that the burden on gratuity for the employer be reduced? Is this not illegal?
Response - Yes, as far as the employer is paying above the minimum wages, can limit the basic pay to Rs. 15,000 even if the total compensation is 12 LPA. Though this is a very primitive approach and is neither Fit not competitive.
2. Is there a provision for an employee drawing a CTC of Rs.12L, to pay more than 12% of the basic of Rs.15,000 (Rs.1,800) as employee contribution for PF. In such a case, is the employer obligated to match employee's contribution?
Response - Yes, the employee can pay over and above the 12% of 15,000 as Voluntary PF. however this does not obligate the employer to match employee's contribution.
8th March 2019 From India, Delhi
Thanks for your useful reply. Appreciate it.
Continuing with this, do you mean to say that for computation of gratuity, only this Basic of Rs.15,000 is taken into consideration (ofcourse, there is no DA component in the salary). The reason, I am asking this follow up question is that I remember to have read somewhere that in such circumstances, the Special allowance, which cannot be justified as one-time payment like bonus/performance incentive also has to be added with Basic for computing the gratuity.
Please comment. Thanks in advance.
8th March 2019 From India, Bangalore