Is PF Deducted from Notice Pay When an Employee Is Asked to Leave? Seeking Updates

Hi all,

Is PF deducted on notice pay payable as 3 months' salary if the employee is asked to leave the post by the employer? Any amendments regarding this, please share.

Regards

Dear Amar,

There is no amendment in this issue. If your salary is based on the CTC concept, then your employer will ask for that, so we will pay; otherwise, there is no need to pay.

Dear Malik Sir,

Is there any amendment regarding the same? Please forward the same. When I confirmed the same with one of the PF consultants, he told me that it will be deducted and did not ask me to forward the amendment. He said if the person is working for 3 months, then his regular salary is paid with all statutory deductions, and in this condition, the company is asking the employee to leave his job by paying 3 months' salary, which will be treated as regular.

As I'm confused, please guide me.

And thanks for your suggestion.

Regards,
Amar

Dear Amar,

Your consultant is stupid. If you are paying in lieu of notice and relieving an individual, then no PF will be deducted. However, if you are preparing salary for the notice period, then PF will be deducted and deposited.

Regards,
JS Malik

Malik Sir is right.

Understand the basic concept - PF is deducted from salary. Paying in lieu of notice period is not salary; it is compensation (liquidated damages) for breach of contract (various legal judgments are available on this). For compensation, PF will not come into the picture.

Examples:
1) If the employer terminates the contract of employment and pays salary in lieu of the notice period (does not give notice period) to the employee, then the amount paid to the employee is compensation, and PF will not be deducted.
2) If the employer terminates the contract of employment and gives the proper notice period to the employee, and while the notice period salary is given to the employee, then PF will be deducted.

Please correct me if I am wrong.

For more information: http://kuldeeprathore.blogspot.com/2...otice-pay.html