IS IT RIGHT?

The infancy protection, that is to say a company will be covered by EPF only after three years, is not in force now. Hence right on the day on which the total number of paid employees exceeds 19 (ie, becomes 20) the company is covered under the EPF Act. It is immaterial whether the company pays salary more than Rs 6500, the limit prescribed, but only those drawing not more than 6500 will only be covered. This amount is calculated taking into account both the Basic salary and the Dearness allowance. If the company has a definite DA policy that is to be follwed, otherwise, industrial Variable DA applicable to the particular industry has to be given ( VDA is based on consumer price index published by the Dept. of Economic ansd Statistics and is required to be followed whereever MInimum Wages Act are followed)

In case your company pays more than 6500(right at the time of joining itself) then those employees are uncovered, but if the number of employees exceeds 20, naturally, the company is to be covered.

Whenever an employee is appointed on a salary of less than 6500, he will be covered. There are posibilities of raising the salary limit from 6500 to 7500 or more. In such occassions many existing employees get covered and once covered he becomes under the EPF irrespective of any hike in salary. Therefore, it is not wise also to show the salary at higher rate just to avoid EPF implementation. Remember that sweepers and office boys are also employees and I donnot think that they are alos paid more than 6500 !!

regards,

Madhu.T.K

Hi,
As i understand you are asking why they are giving 6500/- as the minimum basic even if a guy's salary is 9000.Then please take a note that there is no compulsion on the basic salary. But yes if they are going to give you a proper salary structure & salary slip then it will be the headache for the Hr over there to describe the salary structure as a standard salary structure should contain the hollowing.
Basic
HRA (40 or 50% of Basic)
Employer pf
conveyance allow
DA
Special allowance
Hope its useful..
Regards
Raul

If we see the components of salary in percentage basis
Basic Should be 40%
HRA should be 20%
Transportation Allowance = 800-1200
CCA and CEA can be given =3%
Rest Others = 30 %

Thanks evrybody..i have learnt more than what i was expecting from all your views and suggestions. Is there any law for group insuarance or mediclaim also?

Just check if your company is registered under the Factory act or the Shop act . there are different rules for both. Most of the Software firms register themselves under the Shop Act as service provider and other larger ones opt for Software Parks to have the concessions for software development and Exports.
......sandeep_sable@rediffmail.com

Dear tsivasankaran
To the best of my knowledge there is no infancy period to the newly established company for the PF coverege . This has been deleted w.e.f. 22-09-97. In case of new company from the day 20 employees employed; coverage under EPF act is mandatory.
This is for your kind information.
Haresh Shah