Is It Fair to Reduce EPF Deductions on a Low Salary by Splitting Pay into Basic and Allowances?

EPF Deduction on Low Salary

My wife has been working in one of the English schools for 22 years, and she is receiving only 6700 Rs. as her monthly salary. The EPF was being deducted from the gross salary (approximately 700 Rs.). However, with the recent change in management, they have divided the gross salary (6700 Rs.) into basic pay and other allowances. Consequently, the EPF deduction is now only 380 Rs. Is it permissible to reduce the EPF when the salary is already so low? How can they split it into basic and other heads in such a scenario? What should be the EPF on the aforementioned salary structure?

Regards, Sanjiv

Salary Structure Changes and Employee Rights

The split of salary, increment, or change of structure is done only after proper discussion between employees, management, and HR. The final draft is prepared after a majority acceptance. If such an incident occurs, it does not involve a single person but affects all employees. If they are all dissatisfied, they can jointly approach the labor commissioner and EPFO against the management decision. To the best of our knowledge, employees are well informed in advance before any changes in the salary structure.

Dear Sanjiv,

As per the notification by EPFO followed by the court's decision in a well-known litigation of G4S vs. Regional Commissioner of EPFO, it has been made clear that the wage structure should be such that the Basic should not be less than the prevailing minimum wages. So, in this case, the school authorities shall deduct only the Rs. 6700/--.

Please find attached the notification.

Shailesh Parikh
99 98 97 10 65
Vadodara

There are many court orders regarding teaching faculty/staff as their wages, days, and working hours are not similar to other industries. Therefore, their pay scale is determined by the recognizing board, not the labor commissioner.