1. Sir(s), I fully agree with the views of Sh.Saswata Banerjee in this thread as above indicating that the terms "basic wages" are being grossly misused by the vested interests. The Government should plug this loophole in the EPF & MP Act, 1952 by redefining the term "wages" so that the total wages are considered while paying the contribution under EPF & MP Act, 1952. I recollect some years back ESIC had issued a circular indicating that the "conveyance allowance" will not be considered as "wages". The net result of this circular was that it was grossly misused and the employers used to book the salary/wages by indicating huge amount as "conveyance allowance". The result was the said circular was later on reversed and withdrawn by ESIC. The provisions of EPF & MP Act, 1952 so far as the same were till the years 1989 (I am not sure about exact date), when there was provision of qualifying service of 90 days for an employee were also grossly misused. The employee(s) was kept out of membership of EPF by changing his name well before he completed the qualifying service of 90 days. The result was the Paliament abolished the so called provision of qualifying period by amendment in the said Act and the result is that as soon as the employee is engaged in a unit where said Act is applicable, he becomes entitled for EPF membership. However, if the amount of contribution becomes higher by deducting from total "wages" as per proposed revised definition of "wages" then the Government should definitely, in my opinion, reduce the rates of employers' and employees' contribution in the said Act.
2. Further in my opinion, for the legislature it is important that the laws so framed should not be such which may be either misused or mis-interpreted. The 2nd National Commission on Labour in its report in the year 2002 had also recommended for unification of labour laws in the words :6. 21 Existing set of labour laws should be broadly grouped into four or five groups of laws pertaining to (i) industrial relations, (ii) wages, (iii) social security, (iv) safety and (v) welfare and working conditions and so on. The Commission is of the view that the coverage as well as the definition of the term ‘worker’ should be the same in all groups of laws, subject to the stipulation that social security benefits must be available to all employees including administrative, managerial, supervisory and others excluded from the category of workmen and others not treated as workmen or excluded from the category of workmen."
3. The term 'wages" is different in many labour laws and for a common man it becomes difficult to understand as to what constitute" wages". If Government is trying to bring the definition of wages at par with other enactments as mentioned by seniors and experts in remarks in this thread, then in my opinion, the same should be welcomed.
4. It is further submitted for kind consideration of seniors that the present Government has also prepared a Bill titled: The Small Factories ( Regulation of Employment & Conditions of Service) Bill, 2014 and had called for comments from public. In the said proposed bill, the factories employing less than 40 persons are reported to be defined as small factories and will be out of purview of EPF & MP Act, 1952. Therefore, the proposed amendments in said EPF & MP Act, 1952 reducing the coverage to 10 or more persons will, in my opinion, be contradictory to the above proposed bill of the Small Factories (RE&CS) Bill, 2014. Only time will tell as to which of the proposed amendments will be finalised and passed by the Parliament.