Is PF Deducted from Overtime Pay? Seeking Clarity on Contribution Rules

Can anybody clarify whether PF contribution is to be deducted on overtime? I feel there is no deduction of PF on overtime. Please clear my doubts.

Thanks, friends.
S.S. Kumar

Hi,

PF is a two-sided contribution from both the employer and employee. The EPF contribution for employers is 12%, while employees contribute 3.67% based on the basic salary.

ESIC is calculated on the gross salary.

Hi,

I hope Ms. Sujata gave you a clear picture as PF is applicable only to Basic + DA, and ESIC is deducted on Gross Salary. Definitely, PF is not deductible on OT.

Cheers,
Ajay

Dear All,

Yes, Provident Fund is a contribution by the employee and an equal contribution by the employer, subject to the statute, Basic Earnings, Voluntary Contribution of the employee, and the Employer. The statutory deduction depends on the Basic Earn, which is 12% for the employee and an equal contribution by the employer. Thus, now the contribution deducted, i.e., 24%, is deposited in 12% (Employee Contribution) + 8.33% (Employer Contribution) in the Employee PF account, and the rest amount in the Pension Fund. In any case, if the employee's basis is more than Rs. 6500/-, then the Pension Contribution will be capped at 541 only, and the remaining amount will be deposited in the Employee PF account with their contribution of 12% and 8.33%.

Hope the same is clear.

Regards,

It has been made quite clear that PF is recovered on Basic wages and DA.

However, I have come to know that in some cases, Enforcement Officers (E.O) are forcing employers to deposit PF on overtime (OT) when the employer has paid more than 50 hours of OT in a quarter.

There is still uncertainty about whether to deposit PF on OT or not. Can anybody clarify this?

Regards,
Harminder

Hi All,

We calculate OT as follows: (Basic + HRA + Adhoc Allow) x 2 x No. of OT hrs. If PF is calculated on Basic, then I believe PF must be applicable on OT as well. Requesting seniors to please clarify.

Regards,
Beena

As I said earlier, NO PF is deducted on OT wages. It is only when a worker has worked more than 50 hours of OT in a quarter that the Enforcement Officer insists on depositing PF contributions on OT wages. Can anybody clarify if this is included in the PF act?

Regards, Harminder
🤔😕

Hi,

I have a small query - if the quarterly overtime is more than 50 hours, will the PF on OT be applicable?

Regards,
Monica

[QUOTE=malikjs;599182]
Dear Malik Jee,
As it is well known and, to the best of my knowledge, PF is applicable on normal wages (Basic+DA) only. However, we are now being instructed by PF Authorities to also deposit the contribution on OT wages. This includes both the employees' and employers' share in arrears, along with interest and damages. We are being accused of evasion of wages under Sec 7A.
Can anyone provide assistance in this matter? How is OT considered as part of wage evasion? Can you provide any rules or regulations that state that no PF contribution is applicable on OT?
Thanks and Regards,
Harminder Singh

Dear Prabhakar,

Can you cite any rule? We are directly affected by this clause as we are being asked to deposit PF on OT wages with arrears, employees/employers share, and are framed under Sec 7A for evasion of wages. I will be thankful for an early response.

Regards,
Harminder

PF cannot be deducted on overtime allowances.

For detailed information, visit [White Eagle: Provident fund and Overtime Allowances](http://kuldeeprathore.blogspot.com/2009/11/whether-provident-fund-can-be-deducted.html).

Dear All,

I want to tell you that PF deduction is applicable on overtime amount as well. According to Section 2 of the 1952 Act, if you do not have written permission from the Chief Inspector of Factories, then you will have to pay PF contributions on the entire overtime amount.

Regards,
Shalu

Dear Mr. Harminder,

The Section 6 of The Employees Provident Fund and Miscellaneous Provisions Act 1952, the contribution which shall be paid by the employer to the fund shall be of the basic wages and dearness allowance and retaining allowance. The law is silent in matter relevance with the minimum wages act's basic amount and also silent on the fact the basic should be as per minimum wages act because the central act never refers the state act on the other hand state act or rules may refers to the central act.

Section 2 (b) of employees provident Funds & Misc Provisions Act 1952 defines as defines as “ Basic Wages” means all emoluments which are earned by an employee while on duty or on leave or on holiday with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but doesn't include

i) The cash value of any food concession

ii) Any dearness allowance that is to say, all cash payment by whatever name called paid to an employee on account of rise in the cost of living, house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment.

iii) Any present made by the employer

In above case you can clearly view that the above section just gives meaning of the basic wages it doesn't make any relevance with the minimum wages act basic. More over it doesn't give any minimum limit or maximum limit of basic wages. It also excluded the other allowances for considering the basic wages even it doesn't enlighten us about what should be the basic wages for time rated worker and piece rated worker. Employees Provident Fund & Misc Provisions Act 1952 is silent in above all matter therefore judgment given by either high court or apex court in this regard from time to time purely depends on the terms of condition, agreements made between worker and management as per settlement as per award given by the labour court and as mutually agreed in the appointment letter. Therefore courts put focus on the changes made from time to time on such agreement and assess the affected areas in different law and relevant parties.

Example

1. Bridge & Roof Co (I) Ltd V Union of India 1962 II LLJ 490.

2. Burmah- Shell oil storage & distributing Co.Ltd Vs R.P.F.C Delhi 1981 II LLJ 86

3. Shree Changadeo Sugar Mills Vs Union Of India 2001. I Clr 701 (S.C)

4. K.Ramnathan Chettiar Jewellers, Madurai V Regional Commissioner, Employees Provident Fund, madurai, 1998 II LLJ 945 (Mad.H.C)

5. Ponni Sugar & Chemicals Ltd . Pallipalayam, Erode Vs Cauvery Sugar & Chemicals Ltd. 2001 II LLJ 1201 (Mad – D.B)

Regards,

Ashish K Sharma

Sr. Manager -IR