High Court Ruling on EPF Deductions: Should We Follow Without Official Notice?

Dear All,

Please clarify my query. The High Court has ruled that all components will be part of the basic salary, excluding HRA. Should we adhere to this instruction even though we have not yet received any official notification from the EPF department regarding this matter? Please advise.

Clarification on Basic Wages and PF Deductions

When the Supreme Court has provided clarification on what constitutes Basic Wages, what legal notification is expected from the EPFO? Every employer is expected to pay the contribution at the prescribed rates on the BASIC WAGES and Dearness Allowances. The Basic Wages itself is the total salary paid to an employee. This means it is the total salary that is to be considered for PF, not just the basic salary that you fix. Even the HRA is a part of the salary for many private sector companies. It can be excluded only if HRA is paid solely to those who reside in rented accommodation and the rent is paid by the employer.

Very simple, if an employee takes a few days' leave without pay, will you pay the allowances in full and deduct the salary only from the basic salary? You will deduct the salary from the total salary, including all allowances. Why? Because this is the salary agreed with the employee. If so, this is the basic salary for PF deduction as well.