Salary Structure - implementation of gratuity this year, its effect has been seen in the basic salary

Hello Team, We are changing our structure this year, and this year, we added a provision for Gratuity, which has an effect on the salary structure (CTC, Gross, Basic), etc.

My question is that last year the basic salary of the employee was 15500, so PF was not deducted, but in the current year gratuity is included in CTC, so the basic salary of the employee is affected. My concern is that the basic salary is in ascending order. Still, due to the implementation of gratuity this year, its effect has been seen in the basic salary also, so is this the right structure as it will affect the EPF wages?

Herewith attached are the previous and current structures. Please check and reply me.

Hi,

If the PF wages is more than 15000/- and if the employee was not covered under PF with the past employer then the employee can be exempted from PF after collecting Form11.

But if Basic is reduced below 15000/- then PF is compulsory. So where ever possible try to avoid changing the basic.

No attachment found in your post !

I am assuming that employee joined last year
and his basic was above the limit and he didnt have PF in any previous organisation.

If his basic is decreased in the new structure, then you will now need to cover him under PF and thereafter the employee will continue to be under PF.

I think the structure is wrong if it is resulting in a reduction of Basic.
You (or the management) needs to rethink it.

Are you interested to pay gratuity in monthly basis. This is absolutely wrong. If gratuity is a part of CTC and will be paid when it will be due is ok.

If PF Gross is more than 15,000/- as first time job and was not a member of EPFO earlier, the employer may avoid EPF and EPS payment.

But if the employer is interested to pay PF , the entire amount will be in PF but not in EPS. It is essential to take FORM-11 from the employee at the time of joining.

S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in