Hello Anuradha,
Pl.go thru' the extract from the SC judgment before going into your query -
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“ 8. We have considered the submissions on behalf of the parties. To consider the common question of law, it will be necessary to set out the relevant provisions of the Act for purposes of the present controversy.
“Section 2 (b): “Basic Wages” means all emoluments which are earned by an employee while on duty or (on leave or on holidays with wages in either case) in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include
(i) The cash value of any food concession;
(ii) Any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), houserent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment.”
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“ 14. Applying the aforesaid tests to the facts of the present appeals, no material has been placed by the establishments to demonstrate that the allowances in question being paid to its employees were either variable or were linked to any incentive for production resulting in greater output by an employee and that the allowances in question were not paid across the board to all employees in a particular category or were being paid especially to those who avail the opportunity. In order that the amount goes beyond the basic wages, it has to be shown that the workman concerned had become eligible to get this extra amount beyond the normal work which he was otherwise required to put in. There is no data available on record to show what were the norms of work prescribed for those workmen during the relevant period. It is therefore not possible to ascertain whether extra amounts paid to the workmen were in fact paid for the extra work which had exceeded the normal output prescribed for the workmen. The wage structure and the components of salary have been examined on facts, both by the authority and the appellate authority under the Act, who have arrived at a factual conclusion that the allowances in question were essentially a part of the basic wage camouflaged as part of an allowance so as to avoid deduction and contribution accordingly to the provident fund account of the employees.
There is no occasion for us to interfere with the concurrent conclusions of facts. The appeals by the establishments therefore merit no interference. Conversely, for the same reason the appeal preferred by the Regional Provident Fund Commissioner deserves to be allowed. “
Now your query -
? As mentioned earlier I sought your expert opinion on fixing the EPF contribution at Basic Wage of Rs. 15000 pm.
My only question is that if we change our EPF contribution after the SC order will the regional EPFO under whose jurisdiction my organisation falls will object to such modification.
If so then how do we resolve this problem.
= I'm not clear, do you mean to say you have a consolidated salary/wage of Rs.15000 p.m. which now you try to bifurcate into various allowances (which are discussed in the SC judgment) Am I correct? If so, bifurcation is OK so long as you don't do it with a view to escape from the contribution by coining some new allowances which are not finding place in the SC judgment. Such attempts only will create problem for you. Neither RPFC not going to approve or disapprove your proposal as they have no such a role to play.
? Also if retrospective EPF contribution is to be paid what is the period to be considered.
For eg:
If employee A had PF being deducted on salary and not on Sp Allw but after the SC order we are obliged to pay the PF retrospectively. Now under the said judgement retrospective corresponds to what period as the employee may have been working with us for the last 10 years.
= I cannot conclusively say Yes or No on the necessity on the need to apply the SC judgment in right spirit from retrospective date. One may tend take a narrow view saying the judgment is passed against appeals in specific cases cited therein and therefore others may relax. Then here the catch is, this being the judgment of the apex court,SC, it applies to every where all over the country. I have no doubt all the RPFCs all over India now on will quote this judgment and raise demands and therefore the demand going to be retrospective effect which nobody could rule out. And therefore, I have no answer if you ask me, from which date? Anybody's guess. I'm sorry I don't want to mislead on this aspect. But pl.be prepared for anything.