Dear Cite HR Members, Please suggest me that can we deduct PF/ESI/LWF deductions from Minimum Wage Salary. Regards Neeraj Kumar
From India, Mohali
From India, Mohali
Out of these three, labour welfare fund contribution seems to be a fixed amount and not a percentage of (gross/ basic) salary.
Now coming to the question, I would say that ESI and EPF are contributed on total salary. The salary/ wages qualifying the contribution cannot be confined to the statutory minimum wages alone. When an employer is not expected to pay a wages which is below the statutory minimum wages, a contribution below the minimum wages is not at all acceptable. But in respect of employees whose actual salary exceed the minimum wages, the earned salary should be the base for contribution. After all, The EPF & MP Act does not say that PF is payable on actual salary but it can be restricted to the prescribed percentage of Rs 15000. Moreover, HRA is excluded from the scope of wages. Though the HRA excluded should be a component of salary paid as compensatory allowance, the same is permitted in general. Therefore, if the HRA is the element which makes the wages equal to Rs 15000 on the minimum wages, then a contribution on that minimum wages will be permissible. For example, if the minimum wages fixed (basic and DA put together) is Rs 12000. If you have Rs 3000 as HRA but no other allowance, then the gross salary would be Rs 15000. In this case you can contribute PF on the minimum wages, ie, Rs 12000. But if you have Rs 2000 as Conveyance allowance, then you will have to pay PF on Rs 14000 (12000+2000)
For ESI, the two components of salary which can be excluded are conveyance allowance and washing allowance. Washing allowance is excluded only if you have provided uniforms to the employees. If your minimum wages is Rs 12000, in order to make your ESI qualifying salary equal to minimum wages, you should keep the balance of Rs 9000 as conveyance allowance. It is not at all reasonable to say that for an employee whose wages is Rs 12000 you pay Rs 9000 as conveyance allowance. Therefore, it is not practical to bring the ESI and EPF qualifying salary to minimum wages notified by the government. Since the minimum wages is almost equal to the threshold limit of wages of PF, ie, Rs 15000, an adjustment for PF is practical.
From India, Kannur
4193Now coming to the question, I would say that ESI and EPF are contributed on total salary. The salary/ wages qualifying the contribution cannot be confined to the statutory minimum wages alone. When an employer is not expected to pay a wages which is below the statutory minimum wages, a contribution below the minimum wages is not at all acceptable. But in respect of employees whose actual salary exceed the minimum wages, the earned salary should be the base for contribution. After all, The EPF & MP Act does not say that PF is payable on actual salary but it can be restricted to the prescribed percentage of Rs 15000. Moreover, HRA is excluded from the scope of wages. Though the HRA excluded should be a component of salary paid as compensatory allowance, the same is permitted in general. Therefore, if the HRA is the element which makes the wages equal to Rs 15000 on the minimum wages, then a contribution on that minimum wages will be permissible. For example, if the minimum wages fixed (basic and DA put together) is Rs 12000. If you have Rs 3000 as HRA but no other allowance, then the gross salary would be Rs 15000. In this case you can contribute PF on the minimum wages, ie, Rs 12000. But if you have Rs 2000 as Conveyance allowance, then you will have to pay PF on Rs 14000 (12000+2000)
For ESI, the two components of salary which can be excluded are conveyance allowance and washing allowance. Washing allowance is excluded only if you have provided uniforms to the employees. If your minimum wages is Rs 12000, in order to make your ESI qualifying salary equal to minimum wages, you should keep the balance of Rs 9000 as conveyance allowance. It is not at all reasonable to say that for an employee whose wages is Rs 12000 you pay Rs 9000 as conveyance allowance. Therefore, it is not practical to bring the ESI and EPF qualifying salary to minimum wages notified by the government. Since the minimum wages is almost equal to the threshold limit of wages of PF, ie, Rs 15000, an adjustment for PF is practical.
From India, Kannur
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