Confused About Employer EPF Deductions on Payslips? Seeking Clarity and Legal Guidance

Can We Show Employer EPF Deduction in a Payslip?

We used to show both PF parts in an Employer Total CTC, but in monthly payslips, we used to display the Employee PF part in the deduction. However, in the Net salary section, we used to deduct the Employer part as well (which is not explicitly mentioned in the payslip). This situation often confuses employees, and they frequently request us to include the employer part in the payslips. But according to my Accounts team, we are not legally allowed to show Employer EPF deduction in the salary slip.

Please advise if we can display the Employer EPF deduction on the payslip. If not, what reason should I provide to the employees?

Regards,
Parul

Hi Parul,

You need not add and should not have Employer PF as a part of the payslip. A payslip will have two sections "Gross Earning" and "Deductions". Employer PF in the past was not shown up as a part of the offered salary break-up; then HR included that in the CTC, as the same is a cost to the company. Though CTC and Gratuity are a part of the CTC nowadays, you cannot include that as a deduction in the payslip.

Hi Parul,

The employer PF is a part of the CTC and not the monthly salary slip. Employer PF is a part of the PF Slip and not the Salary Slip. It would be illegal to show that on the salary slip, as this would mean that both deductions are done from the employee's end. So do not show the employer PF on the salary slip.

Regards,
Ashutosh Thakre

Greetings Parul,

As rightly pointed out by Mahr, the payslip has two sections. Obviously, the monthly salary always indicates the gross amount and the deductions lead to the net pay. This represents the employee's contribution. Additionally, any other perks the employee receives fall under CTC (cost to the company), whether provided directly or indirectly by the employer.

Employer's Contribution to Provident Fund on Payslip

Employers' contribution towards the Provident Fund cannot be shown on the respective employees' payslip. The employer's part of 8.33% will go to the Pension account, which is maintained by EPFO, and the remaining amount will be credited to the respective members' PF account. The employer's contribution to the Provident Fund is not considered as the earnings of the employee; rather, it is an additional benefit to the employee as per the EPF Scheme, 1952.

The payslip should only contain gross earnings, statutory deductions, and net pay.

Regards, Adoni Suguresh
Labour Laws Consultant