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Dear Sir, As per Apex court decision, the leave which are encashed can not attract PF contribution and the same is also not calculate as gross in ESIC.
In view of the above I have following doubt for both PF/ESIC
1. As some leave days like CL, SL, EL are availed by the employees then should it be calculated as salary components for PF/ESIC.
2. If it is no, then how maternity leave will be calculated for PF in case of Non ESIC member.
Looking forward to your views in this regard.
Thanks

From India, Bhubaneswar
Only unavailed leaves encashed will be excluded from PF or ESI. Leave taken is treated as day worked for all purposes and these days are paid as if worked. The paid leave days will automatically be included in the salary. This will obviously attract PF and ESI.

Maternity leave days are paid days and is accounted as salary earned. Therefore, you should deduct PF from it.

Take this example,

There are 12 months in a year. You are paid for that 12 months. If you have leaves, say, 24 days in a year and you have not used it or have only partially used, say only 4 days you have used, then there will be 20 days left unavailed. This can be encashed or surrendered against money value of salary equivalent to 20 days. This cannot attract PF or ESI because this is encashment and something addition to what you have been paid for 365 days. At the same time, if you have worked for 361 days and availed 4 days leave that leave salary is paid as salary and that will attract PF.

In the case of maternity leave also, the employee remains on leave and for that you pay salary, and that leave salary will attract PF.

From India, Kannur
Dear Madhu Sir,
Thank you very much for the suggestion.
I have also the same opinion but our finance team suddenly insisting not to contribute PF for earned leave availed.
I have replied several times that leave availed are paid leave should attract PF/ESIC as they are component of salary. But they are insisting as we paying from leave encasement provision it will not attract. They are showing me the judgement which says only about leave encasement.
If you have any further clarification/ notification then kindly share.
Thanks

From India, Bhubaneswar
Ask them to show where is it written in that verdict that leaves availed should be treated separately while processing payroll? If so, you need not pay PF or ESI for your weekly off days and holidays also. You will have to show separately the wages/ salary for the days worked and then wages for the leave days, weekly off days and holidays. that would be stupid.
From India, Kannur
Thank You very much sir,
They have given the following link
https://www.bankbazaar.com/saving-sc...rds%20the%20PF.

From India, Bhubaneswar
In the given link there is no mention about leave salary. It only says that encashment of leave will not attract PF. Yes, I know it and I have already said that encashment of leave (surrendering the leave and getting cash) will not attract PF. That was decided in Manippal Academy of Higher Education Vs Provident Fund Commissioner, a Supreme Court order.

Please explain to the Finance team the definition of Basic Wages in EP & MP Act. It is very clearly mentioned hat emoluments earned by an employee while on duty or on LEAVE.

Please find the attached Apex Court order. I would request that we should not rely on the articles which come in forums like this (that you have given in the above post) because many of such articles may lead to confusions but you can get the court orders similar to the situation that your face.

From India, Kannur

Attached Files
File Type: pdf LEAVE ENCASHMENT NOT INCLUDED IN WAGES FOR P. F. CALCULATION.pdf (94.1 KB, 15 views)

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