Is Your PF Basic Salary Aligned with State Minimum Wage Requirements? Seeking Advice!

Hi,

Can anyone please give me a solution to the query below? Recently, the PF vigilance officer visited our company and issued a notice stating that we are not providing the minimum Basic pay to our employees. They mentioned that we need to maintain the State Minimum Wage as Basic + VDA and make contributions accordingly. However, we are paying our employees the minimum wages, and our basic salary starts from 3k. Can someone provide input on whether we need to align the PF Basic with the Minimum wage requirements?

Thank you.

Though there is no statute that states PF should be contributed at least on the minimum wages fixed, the PF authorities are insisting on payment of contributions on minimum wages. Whether the EPF Organization has any right to direct so is also a question of dispute since the authority for enforcing minimum wages is the state's labor department. However, PF contribution being a social security measure meant to benefit the employees, and at the same time, there are employers who show the basic salary of employees very low to reduce their burden of contribution to PF (as well as to reduce Bonus and similar other payments like gratuity, leave encashments which are also worked out on basic + DA, if applicable), the demand by the PF authorities to pay contributions on minimum wages is maintainable and valid.

Regards,
Madhu.T.K

The labor officer is correct. EPF subscription should be deducted based on the minimum wages fixed by the State Government plus DA or VDA as periodically notified.

Regards,
S. Krishnamoorthy

Hi,

It is the state labor responsibility to ensure minimum wages to guarantee the contribution for PF. Currently, there is a strong emphasis on minimum wages by PF, requiring the organization to adhere to the basic and DA as per the state labor regulations.

What are the implications towards PF if the organization does not maintain the minimum wages and fails to provide accordingly? Some decisions may favor PF, resulting in penalties for the insufficient contributions due to the failure to maintain minimum wages. I am curious about the implications of such penalties and how we can challenge them. We cannot simply attribute it to ignorance.

What can we assert at that point in time? I would appreciate your thoughts on this matter.

Nimesh Paul
Stringz Cochin

Dear Team members,

In Section 6 of The Employees' Provident Fund and Miscellaneous Provisions Act 1952, the contribution that shall be paid by the employer to the fund shall be based on the basic wages, dearness allowance, and retaining allowance. The law is silent on the relevance of the minimum wages act's basic amount and also does not specify that the basic should align with the minimum wages act because the central act does not reference the state act. On the other hand, state acts or rules may refer to the central act.

However, it is advisable to maintain PF Basic + DA as per the Minimum Wage.

With Warm Regards,
Ashish K Sharma

We refer to the news of ESIC amendment in slab, which was raised to a maximum slab of Rs. 15,000 instead of the earlier Rs. 10,000 from 01.05.2010.

In this context, I would like to suggest an increase in the PF slab as well, as the current PF slab has been Rs. 6,500 for a long time. Due to the global financial situation, it is essential to amend this slab because at the time of retirement at the age of 58, an employee working in the private sector will receive a very nominal amount. It will be very challenging for a person to run his family with the PF amount and pension amount he will receive as per the current slab.

As you are aware, inflation rates are on an upward trend, and the prices of all necessary items have increased steeply. How can an average middle-class Indian fulfill his basic requirements with the above PF amount upon retirement?

I believe the government should change policies and take more effective actions, considering the long-term inflation rates. You can understand the critical position of a person retiring at the age of 58, especially private sector employees.

The government should think about the middle-class family. "Poor are becoming poorer day by day."

Expecting some amendments in the PF slab in the new fiscal year.

There is no provision under the EPF & MP Act, 1952, to enforce the minimum wages as piece-rated employees who earn less than the minimum wages are also covered in respect of a covered establishment. Furthermore, there is no post of vigilance officer meant for inspecting an establishment unless and until required to visit on a complaint.

CHANDOK - ex RPFC

Contact - 09988021715