Confused About New PF Deduction Rules for Bonuses? Seeking Clarity from HR Peers

Dear All,

I would like to address a significant issue concerning PF that has arisen recently. Previously, PF deductions were based on the basic salary in accordance with the Minimum Wages Act. However, it has now come to light that PF deductions are required for bonuses and performance incentives as well. This update stems from a notification from the Gujarat High Court, which has also been adopted by the Haryana government. As a resident of Haryana, this change now applies to our company as well. I am currently lacking comprehensive information on this matter. Therefore, I am seeking clarification or correction if any errors have been made in my understanding. Your assistance on this matter would be greatly appreciated.

Regards,

Meenu Bhutani
Sr. Executive - Human Resource

Dear Meenu,

I do not think PF should be deducted on statutory bonus or performance incentive. The PF Act does not say so. If there is any notification or court order, please let us know as well. In my view, it should not be deducted on these heads.

Regards,
J. S. Malik

Dear Meenu,

Mallik Sir is correct, and so far organizations are deducting PF on Basic + DA or FDA or VDA, Special, and Personal Pay only. In case you have any notice/gazette available, please do put it in the mail.

Regards,
Sekhar

P.F. will only be deducted from basic + DA only. That is sure, but whether P.F. can be deducted from encashed earned leave. Our company has done it last year.

Dear Arun,

As per the notification issued by the Employee Provident Fund Organisation dated 5th May 2008, there will not be a subscription of PF on leave encashment, whether it is paid in between the service or during the full and final settlement.

Regards,
J. S. Malik

We are deducting PF contribution from employees' wages based on Basic, DA, and VDA. The question is whether the conveyance allowance should also be included for PF deduction.

No PF will be deducted on conveyance allowance. Regards, J.S. Malik

Malik Jee, can you provide any case law regarding the above?

Kalijanni

Dear Kalijanni,

No need to refer to case law; it is clearly mentioned in the act itself. You can read Section 29 of the Employees' Provident Fund Scheme 1952.

Regards,
J. S. Malik

Mr. Mallik is correct. The PF Act states that no PF amount will be deducted on leave, bonus, or performance incentives.

Thank you.

Dear Malikji,

Can you help me find the article titled "Notification issued by Employee Provident Fund Organisation dated 5th May 2008"? I need an immediate response.

Thank you.

Thank you, Malikji. I got the article. It solved my problem. Now, I can fight my case easily in DLC.

Dear,

How are you involving the DLC in PF matters.

Regards,
R.N. Khola

Dear members,

We are a consultancy firm with more than 70 members. Is it necessary that all the employees should have the PF deduction, or only the employees whose basic salary is less than Rs. 6500/- should have a PF deduction?

Please help me in clearing the doubt.

Thanks and Regards, M. Nisha

Hi friends, if anybody has a notification or circular regarding the deduction of PF on minimum wages, please send it immediately.