Is Employer PF Contribution Required for Paid Holiday Allowance on Public Holidays?

Sir,

In our company, we are making PF payments on a component of workers' payslip called "Paid Holiday Allowance."

This paid Holiday allowance is given to workers who are attending duty on public holidays declared under acts like "August 15, Vijaya Dasami, or Deepawali."

Is it necessary to make employer contributions to PF on such a component under the Act?

Paid holiday means a part of the salary. Therefore, all statutory deductions are applicable.

The management cannot escape by nominating a certain amount/earning as a paid holiday allowance. This earning and all amounts attract PF/ESI/TDS/PT coverage.

You are talking about workers. Is it a factory? You are calling workers on a paid holiday for others. As such, these workers should be paid overtime wages at twice the normal rate of wages. Overtime wages do not attract PF.

Guys, first understand the whole scene and then post your comments, lest you may misguide.

Understanding PF Contributions and Paid Holiday Benefits

According to my understanding, you have raised two queries:

1) PF amount being paid as Paid Holiday Allowance
2) Paid Holiday benefit

1) You are required to pay the company's contribution on the PF amount being paid as Paid Holiday Allowance.

2) Paid Holiday Benefit

In case you are depriving a declared holiday to your worker (Vijayadashami, Deepavali, etc.), your company has to pay them an additional day's wages or provide a compensatory holiday for missing the declared holiday, whichever the individual opts for. However, overtime payment on a paid holiday is to be calculated if the worker is engaged beyond 9 hours on that particular paid holiday and not otherwise.

Clarification on Paid Holiday Allowance and PF Contribution

Ours is a manufacturing industry with a continuous process (running 24 hours x 7 days), hence it is not practically possible to close. Workers who attend duty on paid holidays will be paid overtime for the paid holiday, and this is termed as Paid Holiday Allowance, on which management is also paying Professional Tax, considering it as their earning.

Since overtime is paid in the name of Paid Holiday Allowance, is it required to pay the employer's contribution to PF?

Regards

Overtime wages (paid as Paid Holidays Allowance) do not attract Employer Contribution of PF. In case you are recovering employee contributions towards PF from OT wages paid as Paid Holiday allowance, you have to pay Employer matching contribution for the same.