Navigating PF Payments: How to Handle Contributions for Terminated or Absconding Employees?

Dear All,

Please help me with the following queries regarding PF Payments:

1. If an employee's last working day is 20th August 2009, should we pay the PF amount before September 15th?

2. If an employee's salary is on hold due to absconding and he has been terminated, should his PF amount for the days he worked be remitted? For example, if an employee is absconding from 10th Aug 2009, and we terminated him, do we have to remit the PF amount for the 10 days he worked?

3. If the answer to the first question is yes, then do we have to update it in the Form 10? In case the total number of employees according to Form 12A in July 2009 is 47 and 3 employees are joining on 2nd Aug 2009, the total becomes 50. We have one resignation on Aug 20th. So in Form 12A, the total employees would be 49. However, if we had to pay the contribution of the resigned employee, then the total number of employees for which the contribution is paid becomes 50 (including the resigned employee). There would be a mismatch between the Form 12A and Challan in the number of employees. Is this acceptable or should the numbers match?

4. We are paying the PF on the ceiling amount i.e. Rs. 6500. However, some employees want us to deduct a higher amount from them. What could be the maximum percentage that we can deduct from them, and by doing this, where as employers should we be losing money apart from the admin charges we should be paying?

I'm really sorry if I have confused you. I am confused too.

Please help me with this.

Thanks,
Darryl

Dear Darryl,

The answers to Questions 1 & 2 have already been provided by Mallik sir. Therefore, I am addressing Question 4 directly. (I am unsure about Question 3, so I will refrain from commenting on it.)

If an employee wishes to increase their share in the PF, they are able to do so. There is no maximum limit; if they desire 100%, they can opt for it. Obtain a written application from the employee requesting an increase in their contribution to the PF, clearly stating the desired amount. The company limit is fixed at ₹6,500, so the employer will not incur any additional costs. Administrative charges will remain the same.

Please correct me if I am mistaken.

For further information: [White Eagle: PF Query](http://kuldeeprathore.blogspot.com/2009/08/pf-query.html)

Dear Mr. White Eagle,

There is little correction as per the Payment of Wages Act. The total deduction cannot be more than 50% from your salary, including everything. However, the act is not clear about how much should be a voluntary contribution towards PF, but PF authorities accept 12% statutorily contribution + 12% voluntarily contribution of the individual, and they do not accept in-between formulas.

Regards,
JS Malik

Thank you very much for helping. I agree with Mallik sir that the employer is not entitled to stop the payment of salary for the period an employee works, even if the employee is absconding. On the other hand, is it not right for the employer to withhold the salary and release it during the Full and Final Settlement process? Is there a specific timeline for the company to settle F&F? It typically takes at least 30-45 days for us to complete the process.

Could you please guide me on the laws related to this issue? I'm really sorry for the confusion with the third question. In short, could you explain what needs to be filled in Form 12A, 5, and 10, which should be submitted to the PF office before the 25th along with the challan.

Thanks again for your support.

Dear Friend,

Please let it be clear that you are in the process of filing a return/Form 12A for July 2009, so do not consider any cases of new joinings and resignations, if any, in the current month.

As we are paying PF contributions via challan for the previous month, i.e., July 2009, there is also no issue of a mismatch of the number of employees as per the challan and Form 12A.

For example, if we are filing Form 12A for July 2009 in the month of August 2009:

- Number of subscribers as per last month (June 2009): 47
- Number of subscribers as per Form 5 (July 2009): 03
- Number of subscribers who left service as per Form 10 (June 2009): 00
- Total number of subscribers (July 2009): 50

Hope this information can help you.

Regards,

What is meant by absconding? What are the conditions of absconding? Please let me know about the clarification of absconding.

Regards, Arun Aher HR Assistant.

Hi Darryl,

Any employee on the payroll during the month, even if it is for one day, you have to remit his/her PF along with the company's contribution irrespective of whether he was terminated or absconding. Since you are remitting August contribution in September and submitting the employee details for the month of August in September, how come a mismatch appears?

If any employee wants to contribute an additional amount over and above the statutory limit of 12%, such voluntary contributions by the employee are permissible under the statute. However, the employer will not contribute more than 12%, which is the statutory limit for the employer. There is no such limit for voluntary contributions by the employee. However, he can contribute a maximum of 50% of his basic as VPF.

Kalyan Mitra

Hi Kalyan,

Thank you. In case the employee leaves the organization on 8th August, we would be remitting the contribution in September and submitting the returns in September. So, in Form 10, do we have to mention the employees who left in August or who left in July?

As per the post by Salve, it is July.

Can you please give me information on what Form 12A is about, Form 5, and Form 10? What are the other forms related to PF with a clear picture?

Hi Darryl,

The rule is if an employee's last working day is 31st July, he was on the roll up to 31st July and he has not left the Company in July since his resignation was effective from 1st Aug. He should be treated as left the Co in August, and his name should appear in Sept Form 10 showing his date of leaving as 1.8.2009. But an employee who has worked up to 7th August and resignation was effective from 8th August, he has actually left the Co in August itself, and his name should appear in Sept Form 10 showing his date of leaving as 8.8.2009.

Kalyan Mitra