Will somebody clarify the following:
Whether there is any official circular or guidelines from the government regarding the splitting of minimum wages into HRA and CCA to ease the burden of employers from contributing higher PF as per the court order in the appeal NO 9284/2013 in the case between APF Commissioner Vs M/S Gas Security Services (India) Ltd and others. The appeal was dismissed on 17-08-2023 by the Honorable Supreme Court of India.
If this ruling is implemented, will it not be in the interest of employees?
Attachment: Court Order
From India, Bengaluru
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4Whether there is any official circular or guidelines from the government regarding the splitting of minimum wages into HRA and CCA to ease the burden of employers from contributing higher PF as per the court order in the appeal NO 9284/2013 in the case between APF Commissioner Vs M/S Gas Security Services (India) Ltd and others. The appeal was dismissed on 17-08-2023 by the Honorable Supreme Court of India.
If this ruling is implemented, will it not be in the interest of employees?
Attachment: Court Order
From India, Bengaluru
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The Management of Trident Facility Services Pvt Ltd vs. The PO, EPF Appellate Tribunal, New Delhi and Others Madras High Court – 2023 LLR 344:
Gist of the Case:
EPF Act, 1952 – Section 7 A - EPF Authority discarded splitting the wages into Basic, HRA, Overtime Allowance, etc. - Further, petitioner was paying wages less than the notified Minimum Wages - Hence, the petitioner was directed to remit EPF contributions on the notified MW - Appeal filed by the petitioner was rejected by the Appellate Authority - Petitioner challenges order before the High Court.
Held as follows: Basic wages under sec. 2 (b) read with sec. 6 of the Act do not include HRA and OTA. The contention of the EPF authority is that the petitioner is required to comply with the labor laws, including the MW Act. As per the settled law, basic wages defined under section 2(b) contain exceptions and will not include what would not ordinarily be earned in accordance with the terms of the contract of employment. However, whatever is payable in all concerns and is earned by all permanent employees is included in “basic wages” – But whatever is not payable by all concerns or not earned by all employees of a concern are excluded for the purpose of “basic wages,” attracting EPF contributions. Dearness Allowance and Retaining Allowance payable to all permanent employees will attract EPF contribution – But, house rent allowance, not paid in many concerns and sometimes in the same concern, paid to some employees but not to others, is excluded from basic wage – Overtime allowance not earned by all employees is excluded from basic wages – Emoluments earned by an employee in accordance with the terms of employment would qualify as basic wage and discretionary allowances not earned in accordance with the terms of employment would not be covered by basic wage – As such, the contributions made by petitioner on the basic pay excluding these allowances cannot be strictly found fault with.
Requirement of EPF contributions on notified minimum wages is not proper since there is no enabling power conferred on the EPF authority to adopt such powers for the purpose of the calculation of the EPF contributions. Wages paid less than the MW in violation of the law cannot be paid, but it does not imply that for the calculation of EPF contributions, the employer could not follow statutory provisions of the EPF Act – Minimum Wages Act is a self-contained Act providing for payment of minimum rates of wages. Sec. 22 of the MW Act takes care of the instances when an establishment contravenes the mandatory requirements of the payment of MW and is imposed penalty thereunder.
But failure to pay MW would not empower the EPF Commissioner to step into the shoes of the authorities under the MW Act and determine the contributions, as per the notified MW. In the absence of any enabling provisions under the EPF Act to do so, the entire exercise of the inquiry conducted under Sec. 7 A of the Act is deemed to be without authority and jurisdiction and therefore, the consequential demand for the payment of the difference of contributions cannot be sustained.
From India, Madras
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Gist of the Case:
EPF Act, 1952 – Section 7 A - EPF Authority discarded splitting the wages into Basic, HRA, Overtime Allowance, etc. - Further, petitioner was paying wages less than the notified Minimum Wages - Hence, the petitioner was directed to remit EPF contributions on the notified MW - Appeal filed by the petitioner was rejected by the Appellate Authority - Petitioner challenges order before the High Court.
Held as follows: Basic wages under sec. 2 (b) read with sec. 6 of the Act do not include HRA and OTA. The contention of the EPF authority is that the petitioner is required to comply with the labor laws, including the MW Act. As per the settled law, basic wages defined under section 2(b) contain exceptions and will not include what would not ordinarily be earned in accordance with the terms of the contract of employment. However, whatever is payable in all concerns and is earned by all permanent employees is included in “basic wages” – But whatever is not payable by all concerns or not earned by all employees of a concern are excluded for the purpose of “basic wages,” attracting EPF contributions. Dearness Allowance and Retaining Allowance payable to all permanent employees will attract EPF contribution – But, house rent allowance, not paid in many concerns and sometimes in the same concern, paid to some employees but not to others, is excluded from basic wage – Overtime allowance not earned by all employees is excluded from basic wages – Emoluments earned by an employee in accordance with the terms of employment would qualify as basic wage and discretionary allowances not earned in accordance with the terms of employment would not be covered by basic wage – As such, the contributions made by petitioner on the basic pay excluding these allowances cannot be strictly found fault with.
Requirement of EPF contributions on notified minimum wages is not proper since there is no enabling power conferred on the EPF authority to adopt such powers for the purpose of the calculation of the EPF contributions. Wages paid less than the MW in violation of the law cannot be paid, but it does not imply that for the calculation of EPF contributions, the employer could not follow statutory provisions of the EPF Act – Minimum Wages Act is a self-contained Act providing for payment of minimum rates of wages. Sec. 22 of the MW Act takes care of the instances when an establishment contravenes the mandatory requirements of the payment of MW and is imposed penalty thereunder.
But failure to pay MW would not empower the EPF Commissioner to step into the shoes of the authorities under the MW Act and determine the contributions, as per the notified MW. In the absence of any enabling provisions under the EPF Act to do so, the entire exercise of the inquiry conducted under Sec. 7 A of the Act is deemed to be without authority and jurisdiction and therefore, the consequential demand for the payment of the difference of contributions cannot be sustained.
From India, Madras
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Court Order on Splitting of Minimum Wages for PF.pdf