Is PF Deduction Mandatory on Minimum Wages Without Splitting? Seeking Court Orders for Clarity

Dear All Friends,

I want to clarify whether it is compulsory that PF deduction will be made on the minimum wages. The wages cannot be split. The PF department is directing that minimum wages cannot be bifurcated into various heads. PF deductions will be done on minimum wages. Are there any court orders that have been passed regarding this? Please provide me with the same.

Thanks & Regards,
Sheetal Gupta
Email: sheetalgupta.associates@gmail.com

Dear Sheetal,

To my knowledge, PF deductions are to be made on minimum wages without any sort of bifurcation.

Priyanka is right. PF deductions are to be made on minimum wages, and minimum wages cannot be bifurcated as per rules.

Regards,
Sivadasan

Hi guys,

I think you are all discussing PF deductions only. PF is deducted only on BA & DA or Special Allowance as per the Minimum Wages Act. As an employer, it is required to pay minimum BA & DA to employees as mentioned in the Minimum Wages Act. The minimum BA & DA or Special Allowance should not be split into other components. However, if it exceeds the minimum wage, the remaining amount can be split into other salary or wage components.

If an employer pays more than the minimum wages, they have to deduct PF on that specific BA & DA or Special Allowance, as determined by the organization.

Regards,

Dear Friends,

I have a doubt. What is the minimum amount of BA and DA as per the Minimum Wages Act? If we pay an employee Rs. 4000 (Gross) where his minimum wages come to 1200, and we deduct PF on that amount, is that correct? Please advise.

I am from Chennai. I hope the amounts mentioned in the PF Act and Minimum Wages Act are the same throughout India. Please clarify.

G. Priya

Priya,

In case the salary is more than the minimum wages for a particular employee, then it can be bifurcated into parts. The deduction will happen on the Basic + DA in that case.

Thanks

Dear Friend,

You cannot check your PF status. There are two options:

From the PF website, you can check the claim status of your refund. To know the yearly amount, you should approach your finance department and ask them for the yearly PF slip, which will be provided by the PF department. The receipt provided will assure you that your PF amount is being deposited; however, the amount mentioned in it will not tally with your yearly deducted details. This discrepancy is because it depends on the remittance of the PF amount by your company every month, and you might find a difference of one month's deduction amount.

G Priya

Hi all,

This is allowed as there is no clarity in the act with reference to Minimum Wages. Sometime back this matter was brought in Karnataka High Court, which confirmed that breakup of Minimum wages can be done for PF purposes. But most importantly, what should be the apportionment. As a general notion which is acceptable to PF authorities also, it should be in the ratio of 70:30.

Hope I am able to clear my view.

Regards,
Salil Sharma
99102 47001

The PF deductions are purely based on the minimum wages set by the state government, and the bifurcation is also provided by the PF office. If you deviate from the amount, it would be recovered from your company for paying less PF.

Thanks and Regards,
Sandeep Thakur
H.R Executive
USV Limited
Baddi, H.P

Minimum Wages Act and Employees' Provident Fund Act are two altogether independent acts and cannot be clubbed together.

It is not mandatory to fix the basic pay of an employee at least at the level of Minimum Wages. So, it is not necessary to deduct PF on minimum wages.

Regards, Shabbir