Is It Fair for Companies to Deduct PF from Notice Pay Without Remitting It? How Can Employees Recover Their Money?

If a company asks a staff member to leave and provides one month's notice pay, the company deducts PF from this amount and includes it in the full and final statement. However, in Form 16, the company does not reflect this PF deduction. After a year, they claim that PF does not apply to notice pay and that they never remitted this amount to the PF office, despite deducting it from the employee. What is the best course of action to recover this deducted amount?

Wages Paid in Lieu of Notice

Wages paid in lieu of notice are not considered basic wages as per Section 2(b) of the EPF Act. Hence, recovery need not be made from it towards EPF.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

You are entitled to a refund of the amount wrongly deducted by your employer. You need to write a letter to your employer.

Thank you.

You should ask them to return the amount with interest (as applicable for EPF for the period the money was with them) within a specific period, say, one month. If no action is taken by them to return the money, you can file a complaint with the EPF authorities, informing them that although the employer has deducted the amount for EPF, they have failed to deposit the same with the EPF authorities, which is a criminal offense.

Please approach your past employer for a refund of the amount; otherwise, you will be free to file a complaint against the company.

I understand the provision is very clear. But what would be the effect on the continuity of contribution in cases of transfer of PF where the contributing member joins another employer after the said notice period? Please enlighten.