Can Employers Legally Reduce PF Contributions to a Fixed Amount? Seeking EPFO Guidance

A company is currently paying 12% of the basic salary, where the basic salary comprises 60% of the Cost to Company (CTC). 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.

Employer's Ability to Reduce PF Contribution

An employer can reduce their share of contribution to 12% of Rs 6500. By doing this, the PF authorities cannot question it, stating that benefits already being received by the employees cannot be curtailed. It was also decided by the Supreme Court in a recent case, Marathwada Gramin Bank Karmachari Sanghatana Vs Management of Marathwada 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, which provides a bar on reducing wages, will not apply.

For more details, please follow the link: http://www.madhu-t-k.blogspot.in/201...bution-at.html

Regards,
Madhu.T.K