Dear Colleague,
Your Question is : EPF deduction in leave bonus and conveyance and laundry allowance is mandatory. Can any one provide Include and exclude Allowances list under EPF. Here what is the real meaning of " Leave Bonus" is to be examined from all legal perspective. The nature of payment of conveyance and laundry allowance is to be examined in line with the land mark judgement as detailed below. Kindly read the below details and if possible the full judgment and then interpret how these components are really implemented in your establishment which can only be done internally.
In Regional Provident Fund Commissioner (II) West Bengal v Vivekananda Vidyamandir, the Supreme Court opined on five different appeals arising from the High Courts of Calcutta, Madhya Pradesh and Madras. The appeals concerned the same question of law – namely, whether the special allowances paid by an employer to its employees form part of their basic wages and are thus subject to PF contributions.
The Supreme Court reiterated the principle of universality set out in its previous judgments in Manipal Academy of Higher Education v Provident Fund Commissioner and Bridge and Roof Co (India) Ltd v Union of India. In these cases, the court had set out the following guidelines for establishing what constitutes basic wages:
1. Where a payment is universally, necessarily and ordinarily paid to all employees across the board, it constitutes basic wages.
2. Where a payment is available only to those who avail of the opportunity, it does not constitute basic wages.
3. Where a payment is linked to a special incentive or extra work, it does not constitute basic wages.
Based on the above guidelines, the Supreme Court ruled that the special allowances in the case at hand, which formed part of the employees' basic wages, were subject to PF contributions on the basis that they:
- were not variable in nature;
-were not linked to an incentive to perform extra work; and
-were paid across the board to all employees in a particular category.