Hi Sathya,
I have an article. Please go through it; it may help you a bit.
Supreme Court held on 12 March 2008 that the money received by an employee from encashing earned leave could not be considered as wages for the calculation of provident fund (PF) contributions.
Deciding a group of petitions in favor of the employees, a bench comprising Justices Arijit Pasayat and P. Sathasivam rejected the stand of the regional PF commissioner that the amount received from encashing earned leave had to be included in calculating PF contributions.
The bench allowed the appeals — the leading case being the one filed by Manipal Academy of Higher Education — stating, "the inevitable conclusion is that basic wage was never intended to include amounts received for leave encashment."
It acknowledged a case in Mumbai where an employer was including the amount of leave encashment as emoluments for calculating PF dues from both the employer and employees' contributions. When the Employees' Union raised the issue with the commissioner, they were informed that the provision did not allow for the deduction of PF on leave encashment.
"Where the wage is universally, necessarily, and ordinarily paid to all across the board, such emoluments are basic wages. Conversely, any payment by way of a special incentive or work is not basic wages," the court said.