Is My Company Wrongfully Deducting PF? Seeking Advice on Fair Salary Deductions

I recently joined a company. They are deducting ₹780 as a PF contribution, but the company is not depositing the same amount into any PF account, and the company is not providing any contribution either. I informed the management to stop the deduction, and in response, they suggested deducting the same amount under any security deposit head from the employee.

Seeking Advice on Salary Deductions

Can anyone suggest how and under which category I can deduct money from employees' salaries? However, it should not be unfair to the employee.

Thanks

Deduction of PF and Non-Deposit Issues

Deduction of PF and non-deposit of the same is a crime. You might need an expert consultant to help navigate this issue.

Legally Permissible Salary Deductions

Deduction of salary is based on legally permissible heads only, such as meals, etc., and not on any arbitrary process, head, or norm.

Regards,
Abhipsa Sahoo

Please note that deductions from wages are to be made in accordance with the provisions under the Payment of Wages Act. You are not authorized to make any deduction other than the deductions listed in section 7(2) of the Act and subject to limits as mentioned in section 7(3). Deductions other than the listed items/heads are unauthorized deductions.

Unauthorized Deductions

Deductions towards security deposits are unauthorized deductions. What do you mean by security deposit?

Deductions towards PF without having a code are also unauthorized deductions. Non-depositing deducted PF in the code allotted to you within the stipulated time is a serious offense under criminal law.

Illegal PF Deduction Practices

The employer has deducted PF contributions on PF wages as per the old wage ceiling of ₹6,500 and has not deposited them, which is an offense. Deductions, other than those defined in enactments applicable to the establishment, cannot be made. As explained above by expert members, the conduct of the employer is illegal and liable for punishment.

The HR personnel and payroll executive should decline to be part of this illegality.

PF Act Compliance for Companies with More Than 12 Employees

If your company has more than 12 employees, then it falls under the PF Act.

If your company is not deducting your PF, then it is an offense according to government rules.