Origin Of New IR Issue On Proposed PF Rule May Cut Your Take-Home Salary

Hello HR Skippers,
Please find attached a very alarming ET article on An Origin of New IR Issue on Proposed PF Rule may Cut your Take-Home Salary.
As it will be difficult to convince employee especially the Blue Collar Unionised Labour Category Staff to reduce net take home salary & Management will not increase the CTC.
Therefore a tough days ahead for HR Professionals as a scape goat executor of the new rule.

If the net take home is reduced, it is not going to make any difference as far as the employee is concerned or rather the PF as a saving is going to increase only. From the employer's point of view, ofcourse, the restructuring or redefining of (the decision is on stay and is not going to be introduced in the near future!!!) salary will add cost to him but should remember that the PF has not taken a stand like this without any study but has been the outcome of a lot of observations and analysis to improve the financial status of employees who leave service after long years. It is true that some employers had deliberately bifurcated salary with very huge portion on non PF qualifying salary and very small amount as basic salary. It is interesting to note that an employer who is ready to pay huge amounts of HRA or Conveyance Allowance is not capable of paying the minimum wages!! It is in this scenario that PF had to take a tough step like this. Though the order is kept in abeyance, the scheme to increase the PF qualifying portion of salary is beneficial to employees and all HR should convince the employees taking it in the right manner, I believe.

Regards,

Madhu.T.K

I fully agree with Madhu ji's explnation.... even a HR professional is an Employee who will be benfitting from the amendment.... come on lets have positive approach and lets do our job.

Dear Kadali ji,
There is no circular or letter as yet, as you have requested from Mr. Madhu. It is a column from our Union Labour & Employment Minister who has clarified as such, in The Hindu on 14th December 2012. I am enclosing the post for your review.
P. Vathiraj

Dear all,
The PF Dept is giving its own interpretation to the definition of 'basic wages' to include all allowances which is contrary to the court judgements and not correct. The present interpretation of the PF Dept is not binding on the employers. The definition has to be amended only by Parliament. P F department cannot be change by its own interpretation. It is now open for disputes and confrontation between the employers and the PF Dept.

dear all
now you should keep it abeyance as per notification on dated 14.12.2012 by karnatka pf

please also see the notification copy

Notice from the Department too... Attached FYI.