Understanding EPF Contribution Reduction and Supreme Court Ruling

Dear all,

A company that is currently paying 12% of the basic salary, where the basic salary comprises 60% of the Cost to Company (CTC) until now. Now, the employer wishes to reduce the limit to Rs. 780 only. Please clarify whether this change can be implemented and accepted by the Employees' Provident Fund Organization (EPFO).

Thank you.

Sure, an employer can reduce their share of contribution to 12% of Rs 6500. By doing that, the PF authorities cannot question, stating that benefits already being received by the employees cannot be curtailed. It was also decided by the Supreme Court in a recent case in Marathwada Gramin Bank Karmachari Sanghatana Vs Management of Maratwada Gramin Bank (SC 2011 LLR 1130) that when an employer is deducting and depositing EPF upon more than Rs 6500, they can reduce it to Rs 6500 later on. In that event, section 12 of the EPF Act providing a bar on reducing wages will not attract.

For more details, please follow the link: [Madhu.T.K: Employer can reduce PF contribution at a later stage also](http://www.madhu-t-k.blogspot.in/2012/03/employer-can-reduce-pf-contribution-at.html)

Regards,
Madhu.T.K

Dear All,

Please find the judgment of the Supreme Court in the case of Marathwada Gramin Bank Karmachari Sanghatana Vs. Management of Maratwada Gramin Bank (SC 2011 LLR 1130) for your reference.