Understanding Minimum Wage Breakdown in Haryana: Can PF Be Deducted Only on Basic Pay?

Manoj Gupta
Hi,

Can anyone advise on the bifurcation of Minimum Wages [Rs. 3510 in Haryana] as [Basic 2640 + HRA 870 = Total 3510] and deduct Provident Fund (PF) only on Basic i.e. Rs. 2640? If possible, please provide:
- Relevant ruling supporting the aforesaid case.
- Is it possible to have any breakdown of Minimum Wages [Basic: HRA: Others, in any % of Minimum Wages]?

Manoj Gupta
shreeramjoshi2007
Hi,

PF has to be 12% on Basic + DA. If DA is not applicable, then it can be on 12% of Basic.

Regards,
SJ
msv8200
I am not clear how basic can be fixed by the PF authorities. Basic salary means the skill is evaluated in terms of money, like HRA is to defray the cost of House Rent Allowance. We cannot have the same basic for a housekeeping staff and a storekeeper. It is left to the management to fix the basic and deduct the PF on this.
Madhu.T.K
Wages, whether in the form of basic + DA + HRA + CCA, etc., or in the form of a consolidated amount, are decided by the employer, and PF authorities have nothing to do with it. If you show the salary of the employees as Basic + DA + HRA, etc., then PF will be calculated on the Basic amount + DA. That means HRA and CCA or Conveyance allowance will not be taken into account for the calculation of PF.

The fixation of basic wages is purely an internal matter, but it shall be done at par with the minimum rates of wages applicable to your industry and your area of work.

Regards, Madhu.T.K
msv8200
Dear Madhu,

I agree with you, but I still don't know why the PF authorities are asking companies to keep 60% of the salary as basic.

Regards,
M S V
AJAY MOROLIA
Dear All,

There is only one principle applicable in this query: the principle of natural justice. You can't make a breakup that is unjustified compared to the structure of other on-roll teams and other industries in the same profession, just to deprive employees of better PF accumulation, bonus, and gratuity benefits. If you are doing so without following the principle of natural justice, you may face a notice from the PF authority and encounter trouble.

Thanks,
Ajay Morolia
Jaipur
Madhu.T.K
I am sorry to find that PF officers do insist you to make 60% as basic wages. It is only an internal matter of the company. The only thing you have to ensure is that you are not supposed to fix basic wages at a rate below the minimum rate fixed by the Government. PF authorities have nothing to do with fixing up of wages.

Regards,
Madhu.T.K
Subiah.G
Dear Mr. Madhu,

We need clarification on whether the government-fixed minimum wages can be bifurcated as Basic + HRA. For example, if the minimum wage + DA = 2600, then shall we bifurcate the minimum as basic = 1200 + HRA = 659 + DA = 741. We require this information along with supportive local government laws or any guidance documents.

Regards,
G. Subiah
Rajendra Bhavsar
No bifurcation of minimum wages or wages below minimum wages is allowed by PF. The PF contribution is charged on the entire minimum wages amount.

Regards,
Rajendra Bhavsar
Subiah.G
This case shows a difference of opinion among PF authorities and Inspector of Factories. Some say that bifurcation is correct, while others argue that the bifurcation of minimum wages is wrong. This debate seems to be endless. Could anyone please explain with supportive law or guidance?

Thanks,

G. Subiah
itankar_kb
Minimum wages are declared by government authority, but no one knows the minimum basic amount for PF working.
babanaresh
Minimum Wages and Provident Fund in Haryana

First of all, in Haryana, the minimum wages are Rs. 4214/-.

Second, minimum wages cannot be bifurcated.

Third, PF authorities cannot insist on keeping the basic at 60% unless there is a provision under the act. Agreed with Madhu, it's an internal matter of an organization. Only ensure that the basic is not less than the minimum wages.

Regards,
Baba Naresh
sanjay1502
Can anyone share the breakup of minimum wages in Haryana and the minimum PF that can be deducted from employees, as well as the share of the company?
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