How Is PF Calculated When There's a Salary Deduction for Unpaid Leave?

Hi all,

I wanted to know if any employee has a basic salary of Rs. 6800 and he has a loss of pay for 5 days, then his basic would be reduced to 5666. I would like to know how PF is calculated. Will it be calculated on the original basic or the reduced basic?

Can anyone explain?

Regards, Janhavi

Dear Janhavi,

In such a case, the PF will be calculated on the reduced basic and not on the original basic, i.e., Rs. 5666 only. Hope this is clear for you. If not, you can get back to me on the same.

Regards,
Amith R.

Hi Amith,

Thank you very much for your reply. PF will be calculated on the reduced basic for 30 days (calendar days), right? If any employee joins the organization in the middle of the month, PF will be calculated for 15 days, correct?

I have one more question regarding ESI calculation. Will the calculation be for 26 days if any employee goes on Loss of Pay, for example, 5 days? In that case, will the ESI be calculated on 26-5 days or 26 days only?

Could you please clarify this?

Regards,
Janhavi

Dear Janhavi,

According to me, when you take a Loss of Pay, each of the salary components will get reduced depending on the number of days. So ultimately, his Gross will decrease. For example, if he/she has only worked for 26 days, then his gross pay will be less compared to that of a complete month. In such cases, you need to recalculate the salary for those specific 26 days only, not for the full month minus 5 days.

When an employee joins in the middle of the month, the Provident Fund (PF) and Employee State Insurance (ESI) contributions will be calculated based on the number of days worked.

Regarding the number of days, it's not necessary to consider only 30 days; you can consider 31, 30, 29, or even 28 days, depending on the month when calculating Loss of Pay. I hope this explanation is clear. If you have any further questions, feel free to reach out.

Regards,
Amith R.

Hi everybody,

I have a doubt about the EPF scheme. Can anybody clarify the same? Our company recently entered into the EPF scheme under voluntary coverage. Most of the employees working in our company are drawing more than Rs. 6,500 as basic pay + DA. I would like to know whether it is mandatory for employees drawing more than Rs. 6,500 as basic + DA to contribute 12% of the basic pay + DA + allowances towards EPF contribution, or can they restrict their EPF contribution to Rs. 780 (i.e., 12% of Rs. 6,500) irrespective of their basic pay + DA.

Similarly, I would also like to know whether the employer contribution should be equal to the employees' contribution of EPF or if the employer can restrict it to Rs. 780, i.e., 12% of Rs. 6,500.

Hey guys, I need help. Can anyone help me understand PF and the whole salary structure?

Regards,
Gopi

As per my view, in case an employee's basic salary + DA is more than 6500 per month, then the employer restricts their contribution to 780 per month.

Dear Kuldeep,

If your employee's PF is contributed based on the exact basic salary, and if it exceeds the limit, you cannot reduce it back to only. In fact, I just received clarification on this from the PF enforcement officer yesterday.

Dear Gopi,

I would suggest you visit the PF website at www.epfindia.com to learn more about EPF.

Regards,
Amith R.

If there is no salary and a loss of pay for 30 days due to continuous leave for 2 months, will the company pay PF?