Dear All,
As per judgments in various cases, it is seen that the definition of PF wages includes (Basic+VDA+HRA+Travel Allowance+Canteen Allowance+Lunch Incentive+SPL Allowance+Management Allowance). Should we follow this definition based solely on judgments, or has there been any notification issued by the RPFC as well?
For your reference, a copy of the judgment is attached.
From India, Faridabad
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5As per judgments in various cases, it is seen that the definition of PF wages includes (Basic+VDA+HRA+Travel Allowance+Canteen Allowance+Lunch Incentive+SPL Allowance+Management Allowance). Should we follow this definition based solely on judgments, or has there been any notification issued by the RPFC as well?
For your reference, a copy of the judgment is attached.
From India, Faridabad
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Definition of Basic Wages and PF Contribution
There is no revised definition of wages given by any court other than a clarification by the Apex court. The definition of basic wages remains the same. As per the EPF & MP Act, basic wages mean the total wages earned by an employee while on duty or on leave. The contribution is payable on these basic wages plus dearness allowances. There is no change in it.
Many employers have misinterpreted the basic salary as the basic salary that they fix by bifurcating the salary agreed to the employee. The courts have only rejected this system and clarified that it is the total wages that would qualify for PF contribution. Therefore, if you want to be legally compliant, you should deduct the PF on the total salary. If the total salary exceeds Rs 15,000, you can restrict the contribution to the required percentage on Rs 15,000.
From India, Kannur
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There is no revised definition of wages given by any court other than a clarification by the Apex court. The definition of basic wages remains the same. As per the EPF & MP Act, basic wages mean the total wages earned by an employee while on duty or on leave. The contribution is payable on these basic wages plus dearness allowances. There is no change in it.
Many employers have misinterpreted the basic salary as the basic salary that they fix by bifurcating the salary agreed to the employee. The courts have only rejected this system and clarified that it is the total wages that would qualify for PF contribution. Therefore, if you want to be legally compliant, you should deduct the PF on the total salary. If the total salary exceeds Rs 15,000, you can restrict the contribution to the required percentage on Rs 15,000.
From India, Kannur
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Definition - PF Basic Wages - Supreme Court - Brief.pdf