Hello Defination of Basic Wages changed on 30-11-2012. We are enclosing the paper cutting for your ready refference. Please follow it. Regards
From India, Delhi
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1From India, Delhi
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Hello,
Thank you for bringing to attention the changes in the definition of Basic Wages that took place on November 30, 2012. This change is fundamentally important as it impacts the calculation of the Provident Fund contribution.
Here's a simple explanation of the change:
🔒 Prior to the amendment, Basic Wages included all emoluments earned by an employee while on duty or on leave, excluding certain specific components like house rent allowance, overtime allowance, bonus, commission, or any other similar allowance.
🔒 However, post the amendment, the Supreme Court of India widened the definition of Basic Wages to include all allowances that are universally, necessarily, and ordinarily paid to all employees. This means that now, any payment to an employee which is not linked to the employee's individual performance is included in the Basic Wages.
Now, let's look at the practical impact of this change:
1️⃣ The change in the definition will increase the amount considered as Basic Wages.
2️⃣ As the Provident Fund contribution is a percentage of the Basic Wages, the contribution will increase correspondingly.
3️⃣ This change will result in a higher cost to the company but will also increase the retirement benefits of the employee.
To adapt to this change, please follow these steps:
🔍 Review your payroll structure and identify all components that will now be included in the Basic Wages.
🔍 Recalculate the Provident Fund contributions considering the new definition of Basic Wages.
🔍 Inform your employees about the change and its impact on their salary structure and retirement benefits.
🔍 Make the necessary adjustments in your payroll processing system to reflect these changes.
This change is in line with the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act), which governs the provident fund contribution in India.
In case you need further clarification or assistance with implementing these changes, don't hesitate to ask.
🙏 Thank you for your attention to this matter and for ensuring your company stays compliant with the updated labor laws.
From India, Gurugram
Acknowledge(0)Amend(0)
Thank you for bringing to attention the changes in the definition of Basic Wages that took place on November 30, 2012. This change is fundamentally important as it impacts the calculation of the Provident Fund contribution.
Here's a simple explanation of the change:
🔒 Prior to the amendment, Basic Wages included all emoluments earned by an employee while on duty or on leave, excluding certain specific components like house rent allowance, overtime allowance, bonus, commission, or any other similar allowance.
🔒 However, post the amendment, the Supreme Court of India widened the definition of Basic Wages to include all allowances that are universally, necessarily, and ordinarily paid to all employees. This means that now, any payment to an employee which is not linked to the employee's individual performance is included in the Basic Wages.
Now, let's look at the practical impact of this change:
1️⃣ The change in the definition will increase the amount considered as Basic Wages.
2️⃣ As the Provident Fund contribution is a percentage of the Basic Wages, the contribution will increase correspondingly.
3️⃣ This change will result in a higher cost to the company but will also increase the retirement benefits of the employee.
To adapt to this change, please follow these steps:
🔍 Review your payroll structure and identify all components that will now be included in the Basic Wages.
🔍 Recalculate the Provident Fund contributions considering the new definition of Basic Wages.
🔍 Inform your employees about the change and its impact on their salary structure and retirement benefits.
🔍 Make the necessary adjustments in your payroll processing system to reflect these changes.
This change is in line with the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act), which governs the provident fund contribution in India.
In case you need further clarification or assistance with implementing these changes, don't hesitate to ask.
🙏 Thank you for your attention to this matter and for ensuring your company stays compliant with the updated labor laws.
From India, Gurugram
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Basic wages & allw.-Madras High Court ruling on the applicability of Provident Fund.docx
Provident Fund - Excluded Employee - Definition.pdf