Dear All,
This entire week was panic not only to HR commodity but to all working community. I will say that the TOI has created this panic by publishing the article on front page giving broad headline “Save more in PF, take home lower salary every month” and that too without studying all this aspect of EPF&MP Act 1952. The article is misleading with examples which created panic amongst all.
In our CiteHr there are many postings in different threads on this topic. Many viewer viewed the postings. I appreciate the posting by the members but very few discussions I found to be really meaningful.
By this time many experts have given their opinion on this subject. Shri. B.C. Prabhakar, President- Karnataka Employers’ Association who came out with Circular to its members. The said circular is posted in our CiteHr by Shri. Sasidharan Kollery, which is available to us. Shri. Vivek Sang who has posted clipping of Hindu dated 13.12.2012 which says maintain status quo on the circular- said by Union Labour and Employment Minister.
With this, the matter is now clear to all. But still I wish to give some points. This points I wish to give in every thread which I came across on this topic. This may be repeated but helpful in easy understanding.
The Circular in this context is an internal circular giving guidelines to its officers for quasi-judicial proceedings under section 7A. The Sr. 12 in this circular on splitting of wages is an explanation or clarification on the definition of Basic wages which is bit confusing one and probably half way attempt by the officer who signed on his last day of retirement.
There is no mention in this circular as regards to Paragraph 2(f) and or Paragraph 26A. This means both this Paragraph are unchanged.
There is no change in Paragraph 2(f) and or Paragraph 26A. EPFO can not make change in this Paragraph. Any amendment in law can not be done by such kind of internal circular. No one has any right to do it.
The said paragraphs are given below for ready reference:
Paragraph 2(f) of the EPF scheme defines an excluded employee as an employee whose pay at the time he is otherwise entitled to become a member of the Fund, exceeds Rs. 6,500/- per month. The explanation to the paragraph defines the pay to include basic wages with D.A, Retainers allowance if any and cash value of food concession admissible thereon.
Paragraph 26A which contains the provisions with regard to retention of PF membership stipulates that where a monthly pay of a member exceeds Rs.6500/- per month the contribution payable by him and in respect of such employee by the employer, shall be limited to the amounts payable on a monthly pay of Rs.6500/- including D.A, Retention Allowance if any and cash value of food concession.
The question of whether the allowances should be taken into account for the purpose of PF contribution is still pending adjudication before the Supreme Court.
According to me the inclusion of all allowances for the purpose of EPF contribution will not affect much to majority. It will affect to those who are paying basic less than minimum wage rate.
Hope, now there remain no doubts in the mind of any body.
Thank and regards.
Keshav Korgaonkar