I recently joined a software company as manager hr and found that company is not paying PF to anybody. The employee strength is 40 right now and the company started at year ago. We are planning to hire about 50 more people by next year. What they do is, they dont pay anyone the basic salary less than 6500 even when the salary is around 9k. So i want to know whether its legal or not? Please guide me on the same.
Awaiting for response
From India, Delhi
1Awaiting for response
From India, Delhi
Hi Deepa,
It is mandatory for a company employing 20 or more persons to have their employees covered under PF. If the company has not done so till date then you will have to strongly suggest them to do it. The site <link no longer exists - removed> gives you quite a bit of information on this.
Emereen
From India, Mumbai
It is mandatory for a company employing 20 or more persons to have their employees covered under PF. If the company has not done so till date then you will have to strongly suggest them to do it. The site <link no longer exists - removed> gives you quite a bit of information on this.
Emereen
From India, Mumbai
Hi Deepa
There is waiting period of three years for every company. it is provided for in PF Act itself
You say that your Company is just one year old and hence legally for three years, you do not come under the purview of the Act.
After three years, you have to take a number. But if all employees are drawing more than 6500 rupess as Basi plus Da, you do not need to cover these employees legally.
This is the leagl position
Siva
From India, Chennai
There is waiting period of three years for every company. it is provided for in PF Act itself
You say that your Company is just one year old and hence legally for three years, you do not come under the purview of the Act.
After three years, you have to take a number. But if all employees are drawing more than 6500 rupess as Basi plus Da, you do not need to cover these employees legally.
This is the leagl position
Siva
From India, Chennai
thanks emreen n siva. now my question to mr.siva is...can we decide basic salary as per our convenience? like if the monthly salary is 8k for an employee can we give the basic of 7000 to him? thr must be some formula to calculate basic salary.
From India, Delhi
From India, Delhi
Dear Deepa
You can give
Basic plus DA put together should not be too low
I have come across with Basic and DA at 40 % and other allowances contributing 60%
There are prganisation giving more Basi and less on allowances
Law does not prevent you from giving more basic
It prescribes minimum basic and DA under Minimum Wages Act If you give more, it is the organisations wish
Siva
From India, Chennai
You can give
Basic plus DA put together should not be too low
I have come across with Basic and DA at 40 % and other allowances contributing 60%
There are prganisation giving more Basi and less on allowances
Law does not prevent you from giving more basic
It prescribes minimum basic and DA under Minimum Wages Act If you give more, it is the organisations wish
Siva
From India, Chennai
Dear Deepa,
As per the P.F. Act if an employees monthly basic and D.A. adds upto more than Rs 6500/- then the Co. has the option of not deducting of P.F. from the employee provided the employee agrees to it.
Also the calculation of Basic Salary is usually 40-50% of your Gross Salary.
Regards
Juin
From India, Calcutta
As per the P.F. Act if an employees monthly basic and D.A. adds upto more than Rs 6500/- then the Co. has the option of not deducting of P.F. from the employee provided the employee agrees to it.
Also the calculation of Basic Salary is usually 40-50% of your Gross Salary.
Regards
Juin
From India, Calcutta
It is optional if basic salary exceeds Rs.6500/-. However, if there is PF deduction already made below Rs.6500/- in the establishment then consent of employee is required. Below Rs.6500/- PF deduction is mandatory. This culture is maximum prevalent in call centre industries where maximum attrition is reported. In absence of PF deduction, no statutory register in respect of PF is required to be maintained.
Regarding your second question, please note that in case of minimum salary e.g. in Haryana Rs.3510/-. The basic salary is to be kept at Rs.3510/-. Where salary is higher, basic salary can be put in the range of 40-50% of CTC. This is what the maximum companies follow.
Regards,
From India, Mumbai
Regarding your second question, please note that in case of minimum salary e.g. in Haryana Rs.3510/-. The basic salary is to be kept at Rs.3510/-. Where salary is higher, basic salary can be put in the range of 40-50% of CTC. This is what the maximum companies follow.
Regards,
From India, Mumbai
Thanks Mr. Singh. I know PF is an important component for an employee but my director thinks that thr is a lot of tension and problems involved in this process, so he is not ready to implement this component. How can I convince him for the same?
From India, Delhi
From India, Delhi
I have a question here, dont know how relevant would it be, still!!! :D
We talked about flexibilty in deciding the basic salary but none of us talked about HRA which is always linked to Basic salary. if we keep Basic salary close to CTC, we will have no scope for HRA then. Minimum HRA has to be 50/60% of the CTC.
Comments invited.
thanks.
Best Wishes
Rajiv Naithani
From India, Lucknow
We talked about flexibilty in deciding the basic salary but none of us talked about HRA which is always linked to Basic salary. if we keep Basic salary close to CTC, we will have no scope for HRA then. Minimum HRA has to be 50/60% of the CTC.
Comments invited.
thanks.
Best Wishes
Rajiv Naithani
From India, Lucknow
No doubt there is lot of tension involved in it by keeping its records, timely return and inspection of records from PF office and their illegal gratification if there had been any mistake reported in return submitted to them. It consumes non productive time in maintaining all these records. But above all, PF is what we get for our retirement. If your employer is paying enough to save good amount of money for rainy days then it can be avoided (nowadays there are lot of other avenues where investment can fetch a good return) but if he pays moderately then it is must and he must be convinced to introduced PF scheme in your establishment. This is also one of the components which attracts the new joinees and reflect the intention of employer as how far he thinks welfare of his employees. If he is money oriented and only knows to earn profit then it would be waste of time to convince him.
Regards,
From India, Mumbai
Regards,
From India, Mumbai
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
