Madhu.T.K
Industrial Relations And Labour Laws
Shishirs
Employee

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Hi, Can anyone please share the current structure what should be followed to be 100% complied in terms of MW compliance as well as PF.
Basic to maintain as MW or Gross to maintain as MW?
PF to deduct on Basic or Gross (allowances)
If CTC is 20K and MW is 8500 how much Basic we can give (Min) and on which amount PF should deduct?
Regard's
Shishir
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PF is to be deducted from the gross fixed salary. If HRA is also paid to an employee, over and above the salary, it can be excluded from PF contribution. By "over and above" I mean an amount paid as allowance to an employee is is staying in a leased house exclusively for the purpose of his occupation and the same is paid irrespective of his absence from duty for one or two days.
if notified Minimum Wages is Rs 8500, you can take it as basic salary. But this does not mean that you can pay PF on that salary. Whatever is agreed with the employee as payable is the salary for PF contribution. If you have hired an employee for a monthly salary of Rs 20000 and this is the amount that he will get if, during the month, he takes a few days' casual leaves or if this is the amount on which the loss of pay for the days he remained on leave without pay is deducted, PF should be deducted on this Rs 20000. However, since there is a capping of PF wages to Rs 15000, you can treat Rs 15000 as PF qualifying salary.
Thnx Madhu,
One more point if you can please clarify to clear my understanding.
If basic salary is 35000 and PF is getting deducted on only 15000, can company be questioned on this or its within compliance.
Regards
As of now, the maximum amount that the EPF Organisation can demand as payable is 12% of Rs 15000. It is okay that an employer can pay PF on any amount over and above Rs 15000 but the EPFO cannot insist that the employer should contribute PF on the total amount, if it is more than Rs 15000. In maratwada Gramin bank's case, the Supreme Court has ruled that the EPFO has no right to demand contribution on amount exceeding Rs 6500 (this ruling came in 2011 and at that time the salary ceiling was Rs 6500 but now it should be taken as Rs 15000) In that case the Bank was contributing the PF on gross salary (which was above Rs 6500) but later the management decided to restrict their contribution to 12% of 6500 and that was questioned by EPF Organisation saying that section 12 of the EPF & MP Act says that you cannot reduce the PF qualifying salary and as such the bank cannot reduce the PF contributing salary to Rs 6500. The Court said that section 12 does not apply in this case because the EPFO cannot demand a contribution on any amount above Rs 6500 though it is optional for the employer to pay it without putting any restriction. Therefore, employer can very well restrict his contribution to 12% of Rs 15000.
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