Confused About Splitting Minimum Wages for PF Contribution? Let's Discuss Your Options

We are confused with so many contradictions appearing on the issue of the splitting-up of minimum wages for the purpose of computing PF contribution.

We are following a uniform wage structure for our unit wherein, along with Basic pay + DA (50% of gross pay), other components in the form of allowances (HRA, Con, Washing, LTA, etc.) exist. The sum total of all this constitutes the gross wages of an individual employee, and put together it works out to more than the notified minimum wages.

Are we justified in contributing PF on our basic + DA structure, which put together is not touching the notified minimum wages but with allowances, it crosses the notified minimum wages.

Regards, D.T. Choudhari

Dear Sir,

As per the latest Supreme Court verdict, EPFO does not have any authority to question or enforce the bifurcation of minimum wages for any industry.

Hence, you are allowed to split minimum wages and proceed. Hope this is clear now.

When did the Supreme Court give any verdict? Do you have a copy of the judgment that can be provided? The case of EPFO vs. G4 Securities is still pending in the Supreme Court, after which a final decision can be made. Until then, the employer can decide on the contributions they want to deduct from PF. Generally, deducting 50% of the basic salary from the gross salary for PF is recommended, but it is essential to ensure that the difference between the basic salary and the minimum wage is not too high to seem unacceptable. Up to 20% is considered acceptable as per most industry standards.

Regards, [Email Removed For Privacy Reasons]

Mr. Ramesan,

Can you please share the citation of the judgment with brief details.

With Warm Regards,

Bharat Gera
HR Consultant
9322404765

Dear Mr. Choudhari,

This matter is before the Supreme Court, and the judgment is still awaited. Till then, the Haryana High Court decision is binding on all, which allows the splitting of minimum wages for the purposes of PF contribution. However, minimum wages can be split into components of Basic, DA, HRA, and uniform washing. LTA or food allowance cannot form part of minimum wages.

The Basic + DA component should be at least 50% of the notified minimum wage.

Anil Raina
Mob: 9810180148