Please go through the attachment containing a clarification on considering minimum wages as the basis for PF contribution. I could not understand how such a clarification can be given when both the EPF & MP Act and MW Act are defining the basic wage and wage differently. In the light of the prevailing law, how far can such clarification sustain?
Regards
From India, New Delhi
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From India, New Delhi
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This notification is for those organizations where minimum wages are bifurcated between Basic + DA + Special allowance and any other head, so they can reduce the employer's PF contribution. This is not the right practice. According to this notification, all organizations should pay minimum wages and give PF on the same. Allowances are added advantages for employees apart from minimum wages.
Regards,
Tejal Shah
Executive - HR
SRPL
From India, Vadodara
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Regards,
Tejal Shah
Executive - HR
SRPL
From India, Vadodara
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I am concerned about organizations where the salary includes basic and HRA, which would fall under the Minimum Wages Act but would not be considered for EPF & MA Act. In such circumstances, what would be the proper recourse?
From India, New Delhi
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From India, New Delhi
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It is a good topic, but there is not much to be discussed on it. The circular attached by you clarifies everything. Regarding PF, paragraph 6 reiterates the definition given in the PF Act, and paragraph 11 emphasizes the same by combining the MW Act with the above definition. The amount of basic wage and minimum wage should be one and the same. Basic wage consists of Basic wage + DA (which varies depending on the CPI every 6 months), and the total salary can include any other additional benefits offered by the employer. As mentioned in paragraph 10, the minimum amount an employee should receive for sustenance should be the Basic wage (Basic + DA - wherever applicable), and everything else is a bonus.
I hope this briefs you to some extent.
Regards,
Suresh
From India, Pune
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66I hope this briefs you to some extent.
Regards,
Suresh
From India, Pune
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Dear Amit, I am deeply concerned about this, and let me tell you that as per the latest judgment from the Punjab & Haryana High Court, we were allowed to bifurcate minimum wages into basic + DA + Allowances. In the purview of that, the notice issued by Add. Central Commissioner (Compl) is biased and against the court judgment. We had already written a strong reply to the Commissioner in this regard. The abstract is as below:
Dated: 25th May 2011 The Addl. Central P.F. Commissioner (Compliance) Bhavishya Nidhi Bhawan 14, Bhikaji Cama Place New Delhi - 110 066.
Splitting of Minimum Wages for Provident Fund Contributions
Sir, Our attention has been invited to your Circular No. Coord/4(6)2003/Clarification/Vol-II/7394 dated 23.5.2011 under the caption of "Splitting of minimum wages for the purpose of Provident Fund contribution not permissible."
While we appreciate the efforts made in digging out the old cases even from 1961 onwards and concluding, 'wherever the matter regarding splitting of wages is challenged or pending in a court of law, the stand of the department along with all rules and guidelines of Hon'ble Supreme Court should be effectively utilized to defend the case. It is also mentioned that nothing said above shall come in the way of implementation/execution of any order of a court of law.' However, we must say that the conclusion drawn in your circular is bereft of any merit, devoid of legality, and a sheer 'colourable exercise' by turning a blind eye to the latest judicial pronouncement directly on the subject.
Much emphasis has been laid down on the judgment of the Division Bench of Karnataka High Court in the matter of G4S Guardings Limited vs. RPFC and the judgment of the Supreme Court in Airfreight Ltd. vs. State of Karnataka & Ors. In fact, the main issue of 'wages' got obfuscated in the judgment of Karnataka High Court. It did not settle the law with regard to splitting of minimum wages for Provident Fund contributions; hence, no weightage can be accorded to it since it had been left open to the Authorities to decide. But it hardly needs to be underlined that they (Authorities) can never go beyond the parameters as laid down by the legislature defining 'wages' under clause (h) of the Minimum Wages Act, 1948, and subsection (b) of section 2 of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952. Needless to state, at the time of enactment of section 2(b) defining 'basic wages' under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952, the definition of wages was already there under the Minimum Wages Act, 1948.
So far as the case of Airfreight Limited (supra) is concerned, this has not been under the Employees' Provident Funds & Miscellaneous Provisions Act but in a different context.
Therefore, the recent judgment of Punjab and Haryana High Court, in the case of Assistant Provident Fund Commissioner, Gurgaon vs. G4S Security Services (India) Ltd. & Anr, 2011 LLR 316 (P&H HC), is the only direct judgment on the subject of splitting of wages for the purpose of provident fund contribution, which has unequivocally and unambiguously permitted for splitting the minimum wages for the purposes of the Provident Fund. Strangely, this landmark judgment has been overlooked in the Circular for reasons beyond anybody's comprehension, although one of the officers of the Provident Fund Department was the Party - rather Petitioner to it - and he was duly represented by an Advocate. The impugned circular, thus, appears to be motivated to supersede the judgment which could be only modified by an amendment in the Act and not by (a) overstepping a contested judgment of Punjab & Haryana High Court (b) by usurping the domain of the legislature. It is also inexplicable as to why this Circular was not issued for over seven long years after the judgment of the Karnataka High Court but issued with tearing haste i.e. within two months of the reported judgment of Punjab & Haryana High Court. The interpretations as given in the Circular are against the principles of interpretation.
It is pertinent to state here that both the cases of Karnataka High Court and the judgment of the Supreme Court in the Airfreight Limited as relied upon in the Circular have been discussed and distinguished by the Hon'ble Punjab and Haryana High Court in detail.
Hence, in the fitness of administrative wisdom and the obligations of an Autonomous Body to honor the sanctity of High Court judgment, the impugned Circular may kindly be withdrawn, and the gist of Punjab & Haryana High Court be circulated. It is desirable that a corrigendum be issued immediately in the larger interest of the public; otherwise, this so-called clarification Circular will confuse, confound, and complicate the matter, resulting in the opening of the sluice gate of litigation and harassment.
Thanking you,
Regards, Manish Gupta
From India, Mumbai
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Dated: 25th May 2011 The Addl. Central P.F. Commissioner (Compliance) Bhavishya Nidhi Bhawan 14, Bhikaji Cama Place New Delhi - 110 066.
Splitting of Minimum Wages for Provident Fund Contributions
Sir, Our attention has been invited to your Circular No. Coord/4(6)2003/Clarification/Vol-II/7394 dated 23.5.2011 under the caption of "Splitting of minimum wages for the purpose of Provident Fund contribution not permissible."
While we appreciate the efforts made in digging out the old cases even from 1961 onwards and concluding, 'wherever the matter regarding splitting of wages is challenged or pending in a court of law, the stand of the department along with all rules and guidelines of Hon'ble Supreme Court should be effectively utilized to defend the case. It is also mentioned that nothing said above shall come in the way of implementation/execution of any order of a court of law.' However, we must say that the conclusion drawn in your circular is bereft of any merit, devoid of legality, and a sheer 'colourable exercise' by turning a blind eye to the latest judicial pronouncement directly on the subject.
Much emphasis has been laid down on the judgment of the Division Bench of Karnataka High Court in the matter of G4S Guardings Limited vs. RPFC and the judgment of the Supreme Court in Airfreight Ltd. vs. State of Karnataka & Ors. In fact, the main issue of 'wages' got obfuscated in the judgment of Karnataka High Court. It did not settle the law with regard to splitting of minimum wages for Provident Fund contributions; hence, no weightage can be accorded to it since it had been left open to the Authorities to decide. But it hardly needs to be underlined that they (Authorities) can never go beyond the parameters as laid down by the legislature defining 'wages' under clause (h) of the Minimum Wages Act, 1948, and subsection (b) of section 2 of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952. Needless to state, at the time of enactment of section 2(b) defining 'basic wages' under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952, the definition of wages was already there under the Minimum Wages Act, 1948.
So far as the case of Airfreight Limited (supra) is concerned, this has not been under the Employees' Provident Funds & Miscellaneous Provisions Act but in a different context.
Therefore, the recent judgment of Punjab and Haryana High Court, in the case of Assistant Provident Fund Commissioner, Gurgaon vs. G4S Security Services (India) Ltd. & Anr, 2011 LLR 316 (P&H HC), is the only direct judgment on the subject of splitting of wages for the purpose of provident fund contribution, which has unequivocally and unambiguously permitted for splitting the minimum wages for the purposes of the Provident Fund. Strangely, this landmark judgment has been overlooked in the Circular for reasons beyond anybody's comprehension, although one of the officers of the Provident Fund Department was the Party - rather Petitioner to it - and he was duly represented by an Advocate. The impugned circular, thus, appears to be motivated to supersede the judgment which could be only modified by an amendment in the Act and not by (a) overstepping a contested judgment of Punjab & Haryana High Court (b) by usurping the domain of the legislature. It is also inexplicable as to why this Circular was not issued for over seven long years after the judgment of the Karnataka High Court but issued with tearing haste i.e. within two months of the reported judgment of Punjab & Haryana High Court. The interpretations as given in the Circular are against the principles of interpretation.
It is pertinent to state here that both the cases of Karnataka High Court and the judgment of the Supreme Court in the Airfreight Limited as relied upon in the Circular have been discussed and distinguished by the Hon'ble Punjab and Haryana High Court in detail.
Hence, in the fitness of administrative wisdom and the obligations of an Autonomous Body to honor the sanctity of High Court judgment, the impugned Circular may kindly be withdrawn, and the gist of Punjab & Haryana High Court be circulated. It is desirable that a corrigendum be issued immediately in the larger interest of the public; otherwise, this so-called clarification Circular will confuse, confound, and complicate the matter, resulting in the opening of the sluice gate of litigation and harassment.
Thanking you,
Regards, Manish Gupta
From India, Mumbai
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Dear all, I would like to know that we can deduct the amout of pf enployee contribution from the employee wages where the company is paying employee minimum wage.
From India, New Delhi
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From India, New Delhi
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Thank you, M.G. I have gone through the judgment by the Chandigarh High Court. I just could not understand how EPFO overlooked such a straightforward and to-the-point judgment. Moreover, by overlooking the judgment and providing such clarification, the concerned officer is committing contempt of court.
From India, New Delhi
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From India, New Delhi
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Sir,
The Addl. Central PF Commissioner-I (Compliance), New Delhi issued Order No. Co-ord/3(6)2011/Amendment Scheme/13637, Dtd. 28.8.2014, on enhancing the statutory wage ceiling from the existing Rs. 6,500/- to Rs. 15,000/-, fixing a minimum pension of Rs. 1,000/- per month, and providing 20% additional relief on the amount of assurance benefit admissible under the EDLI Scheme 1976.
I request clarification on whether I am eligible for the revised pension from the present Rs. 1900/- since August 2014.
From India, Visakhapatnam
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The Addl. Central PF Commissioner-I (Compliance), New Delhi issued Order No. Co-ord/3(6)2011/Amendment Scheme/13637, Dtd. 28.8.2014, on enhancing the statutory wage ceiling from the existing Rs. 6,500/- to Rs. 15,000/-, fixing a minimum pension of Rs. 1,000/- per month, and providing 20% additional relief on the amount of assurance benefit admissible under the EDLI Scheme 1976.
I request clarification on whether I am eligible for the revised pension from the present Rs. 1900/- since August 2014.
From India, Visakhapatnam
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf