Understanding PF Deductions on Daily Wages: Is There a Central Government Circular?

To calculate the CTC when a person is receiving daily wages (highly skilled) of 617 as per central wages norm, PF will be deducted from the gross salary. Is there any circular in the central government stating that for those on daily wages, PF will be deducted from the total gross as there is no basic salary?

i.e. 617 * 26 = 16042 * 26 / 100

Please help me.

Dear Varnika,

There is no specific directive on this. Provident Fund (PF) is deducted based on the Basic and Dearness Allowance (DA). The Basic and DA should not fall below the minimum wages that are applicable. Whether an individual is on a monthly wage or a daily wage, there must be a component for the Basic salary.

Shailesh Parikh
99 98 98 10 65
Vadodara

As per central wages, those who are on daily wages, there is no basic salary. Calculation of PF will be on the total gross, isn't it?

Dear Varnika,

617 * 26 = 16042/-
16042 * 12% = 1925 (Employee Contribution)
16042 * 13% = 2085 (Employer Contribution)
Total contribution with respect to the employee will be (1925 + 2085 = 4010).

Thank you for your help. If I need help, like if I want to appoint 3 highly skilled individuals as per central wages, whose daily wage is Rs. 617. They are entitled to the following statutory leaves to be paid: PPF & EDLI at 13.67%, Bonus at 8.33%, retrenchment at 4.82%, leaves at 5.0%, and national holiday at 1.0% of the basic minimum wages. Now, how can I calculate the salary of a person based on this information? Additionally, PF should be calculated on the total gross.

Please let me know if you need any further information or clarification.

Let me clarify that the EDLI contribution is a part of the amount disbursed by the employer, which is calculated automatically based on EDLI wages at the time of PF challan generation at 0.5%. Now, the employer's contribution is 13%, wherein 8.33% goes to EPS, 3.67% goes to PF, 0.5% goes to administrative charges, and 0.5% goes to EDLI. The statutory minimum bonus is calculated on the capping of 7000/- at 8.33%.

As per the Shop and Establishment Act, an employee is entitled to 5 days of leave for every 60 days worked only if they have completed 3 months of continuous employment. Therefore, I believe that at the time of salary preparation, you need to calculate their PF, ESIC, PT, and any advance deductions, considering the capped amount prescribed under the act.

Please let me know if you require any further clarification or assistance.

Thank you.