Dear All,
If we try and understand the concept behind Notice Pay; we'll get to know whether we have to contribute PF on the same or not.
In the Appointment letter we mention the clause of Notice pay to avoid employees to leave the company at his own wish; without assuming his accountability. To avoid the loss of loosing an employee out of the blue; company adds the clause of Notice pay. It means that if any employee wishes to resign he will serve a notice of 1 month(or whatever mentioned) such that in all such time the company shall find his replacement and train the new hire ,without any loss to the co.
If any employee disagrees to serve such period; then to penalise him or to force him to stay back for a month, such amount called 'Notice Pay' is claimed. On the other hand, if any company wishes to terminate an employee with immediate effect, in order to compensate to him the cost of him finding a new job, such an amount is paid called 'Notice Pay'.
In both the cases, we clearly observe that the employee was not the employee/or was not on the rolls of the co. Thus, in my view PF should not be deducted by way of wages. As 'Notice Pay' is not any wage being paid to any party rather a compensatory amount which us by default equal to one's salary.
I may not be 100% correct. But this was according to my knowledge. I hope that clears many doubts.
Thanks & Regards,
Parul Makkar
Manager - HR