Is It Legal for Our Employer to Deduct Both Employee and Employer Contributions from Our Salary After a Merger?

Hello everyone, I'm uncertain if this is the appropriate place to post my query as a discussion thread, but I'm in need of a prompt response. My question pertains to a recent change in my company. We recently merged with another company, forming a Limited Liability Company. The HR department has announced that they will start deducting Employee Provident Fund (EPF) and Employee State Insurance Corporation (ESIC) contributions from our salaries.

Issue with Salary Deductions

The problem arises with their claim that the total 24% of the Basic Salary (comprising 12% Employee and 12% Employer Contribution) will be deducted from the employee's salary. Furthermore, they also stated that the entire 6.5% contribution of the employee's Gross Salary (1.75% Employee and 4.75% Employer Contribution) will be deducted from the employees' salary. They have also registered us with the EPF Organization and indicated that they will retroactively deduct EPF and ESIC for the months of November and December 2015, and January 2016, in addition to the current month's deductions.

They justified this by explaining that the Cost To Company (CTC) specified in our Offer Letter includes all deductions to be made from the Employer's share as well. I would like to ascertain if their explanation is lawful. If it isn't, what are our options as employees? A prompt response would be greatly appreciated. Thank you in advance.

Also, I would like to state that they didn't even get any document signed from us, so it leaves us wondering how they, as a company on their own, can open an account for all the existing employees without any prior information and without getting any kind of document signed from us.

Hi, If you are declaring the package as CTC, then the ER and EE share of ESIC and EPF shall be considered as part of CTC, but should not be declared in Gross pay.
Back wage contributions for ESI and EPF shall not be adjusted in upcoming month deductions. It has to be borne by the company itself.

Actually, in CTC, the employer has the right to mention employer contributions to ESI and PF. The employee has to verify the CTC components at the time of receiving the offer letter from that company.

Regards,
Jagadeesh.G

Hi Mr. Jagdish,

With respect to what you wrote in your reply, in our case, actually, the Offer Letter doesn't declare any of the deductions but simply states what will be our current CTC. We have to stick with the company for the next 6 months, and nothing else. Nowhere in the Offer Letter have they mentioned any such deductions, nor did the HR take the time to inform employees in advance about any such deductions.

Mr. Jeevarathnam has given you the correct reply. If your offer letter states the term CTC, then obviously the statutory deductions will also be deducted from your pay package. At the time of appointment, the same was not applicable, but when they registered their establishment for ESI and EPF, then obviously the same will be deducted from your pay package. However, the arrears cannot be recovered from the employee's salary, and it should be borne by the company itself. Only the current month's deduction can be effected.