Special allowance - 1.1.2016-30.6.2016 maharashtra under minimum wages act
From India, Thana
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Good Morning, PFA the Revised Special Allowance for Maharahstra for the period 01 July 2016 to 31 Dec 2016. Minimum wage remains as per earlier notifications. Warm Regards, Deena
From India, Mumbai
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Supreme Court Ruling on 'Special Allowance' and EPF
Supreme Court judgement on PF contribution: How it impacts your PF and take-home pay
By: Sunil Dhawan | Updated: March 1, 2019, 12:32 PM
Currently, as per the salary structure, employees are supposed to contribute the mandatory 12 percent of their Basic Salary or Wage (10 percent for certain establishments) towards their PF. In addition to the basic salary, other emoluments are shown as different allowances such as house rent allowance, special allowance, etc., in the salary structure.
Impact of Supreme Court Judgement
The recent Supreme Court judgement on PF contributions may have a substantial impact on your PF kitty and even your take-home pay. Presently, employees contribute 12 percent of their Basic Salary or Wage (10 percent for certain establishments) towards their PF. Other emoluments are shown as different allowances, even though they form a part of the total salary or cost to the company.
Presenting a judgment related to EPFO and certain establishments, the Court has ruled that the allowances in question were essentially a part of the basic wage camouflaged as part of an allowance to avoid deduction and contribution to the provident fund account of the employees. Essentially, it means that the PF contribution will be on the total amount, including all the allowances paid to an employee, and not just on the basic salary.
The Matter of Concern
The appeals made by various establishments to the SC raised a common question of law: if the special allowances paid by an establishment to its employees would fall within the expression "basic wages" under Section 2(b)(ii) read with Section 6 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, for computation of contribution towards employees' provident fund.
SC Version
SC stated that "No material has been placed by the establishments to demonstrate that the allowances in question being paid to its employees were either variable or were linked to any incentive for production resulting in greater output by an employee." The Court also felt that "In order that the amount goes beyond the basic wages, it has to be shown that the workman concerned had become eligible to get this extra amount beyond the normal work which he was otherwise required to put in."
Definition of Wages
As per the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, "basic wages" means all emoluments earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him. However, the Act excludes these two important emoluments from the definition of Basic Wages or Salary:
(i) the cash value of any food concession;
(ii) any dearness allowance, that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or of work done in such employment.
Impact
The impact of such a decision could be two-fold. One, the contribution towards EPF will be on a higher amount and hence less take-home pay for the employee. Secondly, the retirement kitty will see more inflows as higher monthly PF contributions will move into the employee’s PF account.
From India, Bangalore
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Supreme Court judgement on PF contribution: How it impacts your PF and take-home pay
By: Sunil Dhawan | Updated: March 1, 2019, 12:32 PM
Currently, as per the salary structure, employees are supposed to contribute the mandatory 12 percent of their Basic Salary or Wage (10 percent for certain establishments) towards their PF. In addition to the basic salary, other emoluments are shown as different allowances such as house rent allowance, special allowance, etc., in the salary structure.
Impact of Supreme Court Judgement
The recent Supreme Court judgement on PF contributions may have a substantial impact on your PF kitty and even your take-home pay. Presently, employees contribute 12 percent of their Basic Salary or Wage (10 percent for certain establishments) towards their PF. Other emoluments are shown as different allowances, even though they form a part of the total salary or cost to the company.
Presenting a judgment related to EPFO and certain establishments, the Court has ruled that the allowances in question were essentially a part of the basic wage camouflaged as part of an allowance to avoid deduction and contribution to the provident fund account of the employees. Essentially, it means that the PF contribution will be on the total amount, including all the allowances paid to an employee, and not just on the basic salary.
The Matter of Concern
The appeals made by various establishments to the SC raised a common question of law: if the special allowances paid by an establishment to its employees would fall within the expression "basic wages" under Section 2(b)(ii) read with Section 6 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, for computation of contribution towards employees' provident fund.
SC Version
SC stated that "No material has been placed by the establishments to demonstrate that the allowances in question being paid to its employees were either variable or were linked to any incentive for production resulting in greater output by an employee." The Court also felt that "In order that the amount goes beyond the basic wages, it has to be shown that the workman concerned had become eligible to get this extra amount beyond the normal work which he was otherwise required to put in."
Definition of Wages
As per the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, "basic wages" means all emoluments earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him. However, the Act excludes these two important emoluments from the definition of Basic Wages or Salary:
(i) the cash value of any food concession;
(ii) any dearness allowance, that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or of work done in such employment.
Impact
The impact of such a decision could be two-fold. One, the contribution towards EPF will be on a higher amount and hence less take-home pay for the employee. Secondly, the retirement kitty will see more inflows as higher monthly PF contributions will move into the employee’s PF account.
From India, Bangalore
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Minimum Wages -Special Allowance.pdf
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