Navigating PF Contributions: What Happens When Minimum Wages Increase?

Dear all, I have a little query regarding an act: when we appoint an employee based on the minimum wages and pay him PF, now that the minimum wages have increased but the PF limit remains the same. As per the PF limit, it is exempted, and we can stop PF contribution. However, the PF inspector says that if you enroll any employee in PF, then you have to pay PF until resignation.

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Thanks in advance.

Dear Mr. Kumar, With reference to your query on the above subject, please refer to Section 43, which states that at the time of inception, the wages of those exceeding Rs. 6,500 per month and who are also employees covered under the PF Trust as established by the employer under the guidelines of RPFO/CPFO under Section 17(1) of the EPF Act - 1952.

Regards,
V R RAO PULIPAKA

Whatever your PF Enforcement Officer has said is right. An employee once covered by the scheme will continue to be covered irrespective of any hike in their salary. Therefore, you cannot stop their contribution just on the ground that their salary has crossed Rs 6500.

Regards,
Madhu.T.K

Yes, very correct. In case anyone is a member under the EPF Scheme, they will remain a member, but the PF deduction will be restricted to the maximum limit, which is currently Rs. 6,500/-.

Regards,
Nigam

The above statement is correct. Once an employee's PF deduction has started, you cannot stop the deduction until their employment with you ends. I agree with the inspector.

Regards,

I agree with the above views. Section 12 of the Act states that the employer should not reduce wages, etc. Similarly, Paragraph 29 of the EPF Scheme onwards should be referred to when dealing with contributions. In fact, statutorily, Minimum Wages have nothing to do with the EPF & MP Act 1952, but under the Minimum Wages Act, the employer is bound to pay the minimum wages. Under the EPF Act, PF is to be deducted on the basic wages plus dearness allowance and retaining allowance, if any, but the employer is not bound to deduct PF contributions above 6500 until and unless mutually agreed upon. In case PF is being deducted at higher wages, it cannot be reduced under normal circumstances.

Regards,
A K Chandok
RPFC (Retd.)
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