Montage Enterprises Pvt. Ltd (‘Petitioner’) Vs. Employees’ Provident Fund

Please find attached a scanned copy of Judgment Copy, the Madhya Pradesh High Court in the case of Montage Enterprises Pvt. Ltd (‘Petitioner’) vs. Employees’ Provident Fund has held that certain allowances like conveyance allowance, transportation allowance and special allowance should be treated as part of Basic wages under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (‘EPF Act’). Accordingly, provident fund (‘PF’) contributions should be remitted on such allowances.

Dear Friends,

Recently, two topics have been of great concern for all of us relating to EPF matters. One relates to the deduction and deposition of contributions on various allowances as decided by the Honorable High Courts of Madhya Pradesh & Madras H.C., and the decision of the Honorable Punjab & Haryana High Court. The second issue is the circular issued by EPFO on enforcing contributions as per the Minimum Wages Act, as discussed in these columns. Furthermore, we have to consider that the Honorable EPFAT has given two different decisions on the same issue. In the case of G-4 Securitas, the decision was duly upheld by P&H H.C. (recently learned that it has also been upheld by the D.B.). On the other hand, the appeal of Montage Enterprises and Reynold Pens Ltd. was dismissed by the Honorable Madras H.C., along with many other similar writ petitions.

In light of the above position, in my view, we have to wait for the final verdict of the Honorable Supreme Court on this issue when any SLP is filed by the affected party.

Chandok
ex-RPFC

Sir,

The DB version can be considered now, but its retrospective effect on others is a question of law because of the contradiction in Section 2 & 6. So if anybody is asked to pay as per the Montage Enterprise & Madras High Court cases, let EPF authorities give the management the opportunity to get reimbursement or repayment if the SPL will be in favor of the employer.

Regards,
GD

Dear Members,

The EPFO has already filed an SLP before the SC regarding the splitting of minimum wages on EPF Contribution. The case has not yet been listed for a hearing. Ref: G4Security Services Vs. EPFO.

In the Reynolds pen case, the management of Reynolds obtained an interim stay passed by the DB against the order of the Single Judge. We believe that the SLP verdict will provide more clarity on this issue.

Furthermore, all EPFO and RPFC have been informed through the Department Circular that, since the matter is under sub-judice, they should not proceed on this issue.

Yes, please. Keeping in view the latest circular of EPFO as stated above, we have to wait for the verdict of the Hon'ble Apex Court.

Chandok
RPFC (Retd.)
09988021715
email: chandokak@yahoo.co.in

[Note: The link provided no longer exists.]

Illustration 1

Production Incentive/Allowance

A company gives an incentive/allowance of Rs 500 to motivate its workers to increase production. For instance, Rs 500 is awarded for producing 500 pieces of safety pins, Rs 400 for 400 pins, and so forth. The condition for receiving the allowance is fulfilling the requirement of producing the corresponding number of pins.

Attendance Incentive/Allowance

Another incentive/allowance provided by the company is Rs 200 to encourage workers to attend their duties for the maximum number of days in a month. For example, Rs 200 is granted if a worker takes only 2 days of leave per month. If 3 to 5 leaves are taken, Rs 170 is given, and so on. The criteria for receiving the allowance is meeting the condition of attending the maximum number of days in a month.

According to the judgment by a Division bench of the M.P. High Court in Montage Enterprises Pvt. Ltd vs EPFO Indore:

Both the