Dear friends,
Under the Employees Provident Fund Act, does leave encashment payment attract PF contribution? The Karnataka High Court has held that it is payable, whereas the Chennai High Court (Madurai Bench) says it is not payable. PF circulars state that when an employee settles the account on termination, it is not payable. The PF Organisation needs to clarify the position. Could you please shed some light on this issue?
Regards,
Srinivas
From Germany
Acknowledge(0)
Amend(0)
2Under the Employees Provident Fund Act, does leave encashment payment attract PF contribution? The Karnataka High Court has held that it is payable, whereas the Chennai High Court (Madurai Bench) says it is not payable. PF circulars state that when an employee settles the account on termination, it is not payable. The PF Organisation needs to clarify the position. Could you please shed some light on this issue?
Regards,
Srinivas
From Germany
Acknowledge(0)Amend(0)
Dear Srinivas,
You are correct. However, some employers still continue PF on leave encashment. As of now, I have attached the scanned copy of a newspaper cutting from the Madras High Court (Madurai Bench) on the above-mentioned topic. Maybe it will be useful? It is the employer's decision to decide. If anything goes to court, they have to face it.
Regards,
Muthu Vijayan A
Acknowledge(0)Amend(0)
You are correct. However, some employers still continue PF on leave encashment. As of now, I have attached the scanned copy of a newspaper cutting from the Madras High Court (Madurai Bench) on the above-mentioned topic. Maybe it will be useful? It is the employer's decision to decide. If anything goes to court, they have to face it.
Regards,
Muthu Vijayan A
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
PF Contribution on Leave Encashment - Clarification by EPFO.pdf
Case - PF on leave encashment.doc