Employer's EPF Liability: What Happens When Salaries Exceed the Ceiling Limit?

Employer's Liability with Respect to EPF

If an employee joins with a salary below Rs. 6,500/- and then the salary grows beyond that ceiling limit in subsequent years, what is the employer's liability with respect to EPF?

1) Is the employer obligated to pay EPF on the entire salary or only up to the ceiling limit?
2) Can the employer stop the contribution to EPF since the salary is beyond the ceiling limit?

Regards,
Krishna.

In that case, continuation of PF is mandatory, but you shall restrict it to the ceiling amount of ₹6,500/-. If the employee and employer wish so, your contribution shall be on the full basic salary.

Even though the salary goes beyond the ceiling limit, the employee can continue to contribute either on Rs. 6,500/- or on the entire salary. However, the employer is not obliged to contribute on the entire salary but can restrict their contribution to Rs. 6,500/- only. The employer cannot stop their contribution because of the employee's salary exceeding the ceiling limit.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

I received information that if an employer plans to contribute more than the basic limit, permission needs to be sought from the PF officer. Is this true? What happens if an excess amount is paid (as well as deducted from the employee)?

PF Contribution on Entire Salary

Our institution has been providing PF on the entire salary (12% of the entire salary) without knowing the finer details. We have not obtained any special permission to do so, but thus far, the EPF office has not prevented us from paying a higher PF.

Reducing PF Contribution to Ceiling Amount

Additionally, if we now wish to reduce the PF contribution and limit it to the ceiling amount, can we do so simply by notifying our employees, or would we require permission for that as well? I would appreciate it if you could share your experienced views on this.

The PF ceiling limit is taken from the basic salary or EPS wages. Please help me regarding this issue as early as possible.

The wage limit for P.F. is to be calculated on the basis of basic wages (basic pay and other allowances except HRA) + DA + retaining allowance, excluding overtime, commission, bonus, or any other similar allowance.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai