If an employee is suspended, and the company is providing subsistence allowance to him at 50% of basic and DA, do we have to deduct EPF and ESI contributions from that? Also, should the employer contribution of EPF and ESI be paid?
From India, Hyderabad
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1From India, Hyderabad
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Subsistence allowance is part of wages for ESI purposes. Though this is an amount that an employee receives while he is not working (during suspension), this amount will attract ESI.
In the case of EPF, there is a different interpretation that subsistence allowance, being a payment made to a suspended employee for his survival and earned by him not while working, should not be subjected to EPF contribution. Therefore, no PF deduction or contribution shall be made on subsistence allowance.
From India, Kannur
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In the case of EPF, there is a different interpretation that subsistence allowance, being a payment made to a suspended employee for his survival and earned by him not while working, should not be subjected to EPF contribution. Therefore, no PF deduction or contribution shall be made on subsistence allowance.
From India, Kannur
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The karnataka payment of subsistence allowance Act, 1988.pdf
SC directive on subsistence allowance to suspended staff.doc