How to Calculate Provident Fund for Employees Working Part of the Month?

In case an employee has worked for 17 days in a month and taken leave for the rest of the period, then on what amount of (Basic+DA+RA) should the Provident Fund liability be calculated? Should it be based on the actual salary of 17 days or the total of 30 days? Also, is there any provision where, in such cases where an employee didn't work for the whole month, the limit of 6500 should be reduced on a pro-rata basis for comparison?

First of all, the contribution under various welfare legislations is to be remitted based on the actual earned wages and not on assumed monthly wages. For EPF, it is subject to the employer's obligation on the ceiling of wages of Rs. 6500. In case of leave without pay during the month, no deduction or remittance shall be effected.

Thank you.

Dear Jain,

First of all, the contribution under various welfare legislations is to be remitted based on the actual earned wages and not on assumed monthly wages. For EPF, it is subject to the employer's obligation on the ceiling of wages of Rs. 6500. In case of leave without pay during the month, no deduction or remittance shall be effected.

Meaning to say that if an employee has worked for 17 days and has earned wages for EPF = Rs. 6000, then in such a case, the limit of Rs. 6500 should be reduced on a pro-rata basis to 3564 (6500/31*17) for comparison, and a maximum of Rs. 3564 should be considered for calculation. Or should the limit remain the same, and PF be calculated on Rs. 6000 (being less than the maximum limit of Rs. 6500)?

Regards,
Premkumar Nair

PF should be deducted based on the employee's basic earnings. For example, if Mr. X works for 17 days and the rest are unpaid leave days, the deduction should be calculated based on the 17 days' earned basic pay. If it is a paid leave, then the deduction should be based on the full 31 days' earned basic pay, similar to receiving a full salary.

Thank you.

Dear Harshit, PF is deducted based on the employee's basic earnings. For example, if Mr. X works for 17 days and the rest of the days are unpaid leave, the deduction should be based on the 17 days' earned basic salary. If it is a paid leave, then the deduction should be based on the full month's (31 days) earned basic salary.

Sir, thank you for sharing your valuable knowledge. My question is, if an employee has worked for 17 days and the rest are unpaid leaves, then in such a case, would the ceiling limit of Rs. 6500 also be reduced on a pro-rata basis for 17 days, i.e., 3564 (6500/31*17) for comparison purposes, assuming the establishment contributes to PF based on the ceiling limit.

I appreciate your clarification on this matter.

Best regards

Sir, thank you for sharing your valuable knowledge. My question is, if an employee has worked for 17 days and the rest are unpaid leaves, then in such a case, should the ceiling limit of Rs 6500 also be reduced on a pro-rata basis for 17 days, i.e., 3564 (6500/31*17) for comparison purposes, assuming the establishment contributes PF on a ceiling limit basis?

In my limited knowledge on the subject, yes, if unpaid leave is allowed and the person is entitled to Rs 6000 after deduction of leaves, and the company is contributing based on the basic ceiling, then the contribution shall also be reduced according to the actual amount in comparison to Rs 6500. Rs 6500 is for the complete month, so if an employee works and earns less than that, then in the same way, the contribution will also be decreased.

The ceiling of Rs 6500 per month. The basic or DA shall come down if any employee worked for 17/18 days, and the contribution has to be filed accordingly.

I feel that the contribution cannot be on a pro-rata basis for the days of work but for the total earned wages for the month. For the given example of 17 days of work, the calculation may be as follows:

A) If the salary for the period of 17 days is less than or equal to Rs. 6,500, the contribution is to be paid on the total amount of salary.

B) If the salary exceeds Rs. 6,500, the contribution should be restricted to the wage ceiling of Rs. 6,500.

However, learned seniors may please comment.

Regards

If an employee's Provident Fund (PF) is not deducted once, you cannot deduct PF if their earnings decrease due to leave. If an employee works for 17 days, naturally their basic earnings will decrease. This does not mean you can start deducting PF.

As rightly said by Mr. Premkumar, if the basic salary of the employee for 17 days' earnings is less than or equal to Rs. 6,500/-, then the employer's PF contribution will be based on the actual amount. However, if the basic salary of the employee for 17 days' earnings is more than Rs. 6,500/-, then the employer's PF contribution will be restricted up to Rs. 6,500/- of basic pay due to the cap.

It seems that you are not reading the post carefully or you are not understanding it clearly. With regards to your query, if the employee has not worked for the full month and if it is on LOP, then the Basic will be NIL. So, how can you contribute towards PF? Please explain.

Sir,

In case an employee has worked for part of the month and earned a basic salary for part of the month, let's say Rs. 6000, assuming the organization contributes to PF based on the ceiling limit, will the ceiling limit of Rs. 6500 be reduced on a pro-rata basis for the part month for comparison with earned wages?

Regards,

Clarification on PF Contribution for Partial Month Work

As rightly mentioned by Mr. Premkumar, if the basic salary of the employee for 17 days of earning is less than or equal to Rs. 6500/-, then the employer's PF contribution will be on the actual amount. However, if the basic salary for 17 days exceeds Rs. 6500/-, the employer's PF contribution will be restricted to Rs. 6500/- due to the cap.

This means that if the basic for 17 days is, say, Rs. 6000/-, then the PF contribution will be on Rs. 6000/- and not on a pro-rata basis. If the basic exceeds Rs. 6500/-, then the PF contribution will be capped at Rs. 6500/-. I hope this clarifies your query.

Regards,