Dear All,
I am just entering my office after attending a workshop convened by Employers' Federation of Southern India (EFSI) which concluded an hour back.
There were a lot of deliberations on splitting of wages into different components. Three PF commissioners (Royapettah, Ambattur and Tambaram jurisdictions) were present and they UNANIMOUSLY SAID THAT THERE IS NO RULE OF HAVING 60% OF WAGES MUST BE CONSIDERED FOR PFCONFRIBUTION. Therefore my dear friends, do not have different opinion on this subject.
However, there was one point which might bother you. Wherever you pay your employees a wage of Rs. 5000/- p.m. (where minimum wages is Rs.4000/-) and you follow this assumed wage pattern,
Basic - Rs.1500
HRA - Rs.1000
Convey - Rs. 500
Special Allowance -Rs.1000
Washing Allowance-Rs.1000
then, excluding the HRA, you must contribute PF for Rs.4000/-. That is what one of the commissioners of PF said and they will view the salary structure like that. They also added that this will be followed for the employees who get wages less than their prescribed limit of Rs.6500/-. Those who get their basic wages more than Rs.6500/-, they are not particular about it.
To add fuel to the fire, there is judgement pronounced by Madhya Pradesh High Court in the case of Surya Roshini Ltd Vs.Employeers' Provident Fund and Another (LLR 568 - June 2011 issue), wherein it was held that allowances viz. Transport Allowance, Attendance incentive, Washing allowance and special allowance paid to employees have to be included in Basic salary and arrive at PF contribution. This will certain go against employer.
In the meanwhile, Labour Law Reporter (Mr. H.L. Kumar, Advocate at Supreme Court) written a letter to PF commissioner at New Delhi questioning Sanctity of the circular issued by PF authorities and insisting them to withdraw the circular. Let's wait and see that is their reaction to this letter.
Hope all these points will give you additional ideas on this.
Balaji