Is It Legal for Employers to Deduct Their PF Contributions from Salaries? Let's Discuss!

Isn't it against the law to deduct employer contributions from employees' salaries? Are there any court rulings regarding the same? (As I personally feel it is the social responsibility of an employer to provide the amount to PF.)

Employer Contribution to Provident Fund

There need not be any court ruling for it, but the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, itself states that the employer's share of the contribution should not be deducted from the salary of the employees.

Regards,
Madhu.T.K

If you have material proof to show that deductions have been made from the employees, you can file a complaint with the EPFO.

Regards,
S. Sethupathy.

If it is to be deducted from employees' salary, why should it be called "EMPLOYER'S contribution"? It could have been simply said "PF contribution," don't you feel so? The purpose of the Act is that both employer and employee have to contribute to the fund.

Employer's Contribution

Employer's contribution has to be paid by the EMPLOYER only. There is no question of a second opinion on this. If there is any clause woven into the appointment letter, it will not hold water.

Regards,
Balaji

PF Contribution Register and Employee Records

All companies must maintain a PF contribution register for each employee. Both employees' and employers' contributions are recorded monthly. From this, one can see the accumulated amount of PF. Annual subscriber slips are also sent by the PF Organization, which can be collected from the employer.

If the employer's contribution to PF is included in the CTC offered while joining, this will be deducted from the CTC for the employer's contribution towards PF. However, the gross salary does not include the employer's contribution towards PF or ESI.

Regards,
Rajusiachen

Rajusiachen is right. Kindly review the appointment letter for the term they have used. If they have used monthly CTC, then the employer's contribution will be deducted from the respective person's salary. If they have termed the same as gross and the deduction is ongoing, then it's a violation of the law. In that case, kindly approach the HR Department regarding the same.

Regards, Sunil

Dear Members,

Clarifying Employer's PF Contribution and Employee Salary

Since I have also faced the statement "Employer's PF contribution getting deducted from employee's salary," I believe this is a mere confusion between certain terms. Normally, a company offers its employees an offer letter which contains CTC (Cost to Company) and Gross Salary (Employee's Salary negotiated with him). Generally, an employer would like to calculate how much an employee would cost him, including all the statutory benefits costs; thus, he arrives at a figure by adding up GROSS (employee's salary) plus ESIC (if any) plus PF, etc., and that forms the employee's CTC. This CTC is usually not the employee's salary but the total cost of the employee which has to be ultimately borne by the employer every month.

Now, most employees misunderstand the CTC figure as their salary and observe that the PF amount is mentioned/deducted twice; that's where they land into confusion. Employees should understand that their salary is definitely their Gross per month, plus the annual allowances (if any, like LTA, performance bonus, etc.) and statutory benefits. For ease of understanding, they should better negotiate on gross or take-home pay to be on the safer side.

Having said the above, if still any employer deducts both shares from the employee's Gross, then an official written complaint may be lodged at the EPFO along with a copy of the salary sheet on the company's letterhead.

Regards

As some of our friends have mentioned, nowadays most companies are following the CTC model. They are providing annexures, discussing elaborately with the candidates during interviews, obtaining acknowledgments, and including clear annexures of the salary structure in the appointment letters. This process is done with the full consent of the employee, so there should be no cause for lodging any complaints. Even if a complaint is lodged, it may not stand in a court of law, as this rule is consistently followed across the organization and well-communicated with and accepted by the employees.

In companies where there is no CTC model, deductions occurring without the consent of the employee can lead employees to seek legal recourse.

Regards,
Kamesh