Dear members, Can PF contribution be paid by splitting minimum wages ? Has any industry started this practice or it is legal now ? Regards,
From India, Delhi
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8From India, Delhi
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Dear Naresh Yes, U can split minimum wages but u can not split minimum wages in Gurgaon only ? because in gurgaon commissioner had issue notification that u cant split minimum wages? Brijesh Saxena
From India, Gurgaon
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From India, Gurgaon
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Dear Naresh,
Greetings for the day,
As per the Honorable Supreme Court judgment, minimum wages consist of basic+DA/VDA, so it can't be split; rather, contributions will be paid in full. If you are splitting the same, prosecution will be conducted under Section 7A of the EPF & Miscellaneous Provisions Act.
Thanks & Regards,
From,
Sumit Kumar Saxena
9899669071
From India, Ghaziabad
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Greetings for the day,
As per the Honorable Supreme Court judgment, minimum wages consist of basic+DA/VDA, so it can't be split; rather, contributions will be paid in full. If you are splitting the same, prosecution will be conducted under Section 7A of the EPF & Miscellaneous Provisions Act.
Thanks & Regards,
From,
Sumit Kumar Saxena
9899669071
From India, Ghaziabad
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definition of wages in Minimum Wages Act & definition of wages in PF Act is different.... pl refer the recent judgement of SC ... Minimum wages can be split up for PF contribution,
From India, Vadodara
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From India, Vadodara
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Yes, see the recent judgment of the Punjab and Haryana High Court, wherein the EPFO went for an appeal against the impugned order of the same court earlier on the decision of a Single judge.
Two-member judges passed an order stating that the Minimum Wages Act, 1948, and the EPF & MP Act, 1952 are two different Acts. One cannot interpret the Basic wages as they feel like.
See the judgment of the P & H High Court.
However, there are two other judgments (Madhya Pradesh High Court and Madras High Court) that are against this concept. It means they have given judgment in favor of EPFO, i.e., to include all allowances in the basic and pay contribution. Against this order (Madras High Court), the employers have gone for an appeal in the High Court, and the hearing is posted on the 26th or 29th (I do not remember correctly). We will come to know once this is heard.
Hitherto, organizations (including ours) are practicing the splitting of Minimum Wages. We are continuing with the same concept unless and until there comes a clear-cut ruling.
It is your wish whether you want to split Minimum Wages or otherwise.
Balaji
From India, Madras
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Two-member judges passed an order stating that the Minimum Wages Act, 1948, and the EPF & MP Act, 1952 are two different Acts. One cannot interpret the Basic wages as they feel like.
See the judgment of the P & H High Court.
However, there are two other judgments (Madhya Pradesh High Court and Madras High Court) that are against this concept. It means they have given judgment in favor of EPFO, i.e., to include all allowances in the basic and pay contribution. Against this order (Madras High Court), the employers have gone for an appeal in the High Court, and the hearing is posted on the 26th or 29th (I do not remember correctly). We will come to know once this is heard.
Hitherto, organizations (including ours) are practicing the splitting of Minimum Wages. We are continuing with the same concept unless and until there comes a clear-cut ruling.
It is your wish whether you want to split Minimum Wages or otherwise.
Balaji
From India, Madras
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No, the minimum wage can't be split, and the deduction of EPF is done on Basic+DA/VDA+Food Conc. (if any). If the minimum wage is a component of the same, how can it be split? Please forward a copy of the judgment to me so that we can go through it.
Thanks & Regards,
Sumit Kumar Saxena
9899669071
From India, Ghaziabad
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Thanks & Regards,
Sumit Kumar Saxena
9899669071
From India, Ghaziabad
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Mr. Sumit,
Assume Minimum Wages in a particular state are Rs. 5500/- (a hypothetical figure, okay?). You (we) are splitting this as:
Basic: 2000/-
HRA: 1500/-
Conv: 800/-
CCA: 1200/-
Total: 5500/- and paying PF contribution of Rs. 240/- p.m.
1. As per the Punjab and Haryana High Court, THERE IS NOTHING WRONG IN DOING IT as above. Please see my attachment now (previous judgment), and the recent judgment in my previous post.
2. Also, see other judgments of Madhya Pradesh (attached now) and Madras High Courts (this is voluminous and will send later).
3. See the chronological order:
Punjab and Haryana High Court judgment - favoring employer - 01/02/2011
Madras High Court favoring EPFO - 07/06/2011
Madhya Pradesh High Court - favoring EPFO - 21/06/2011
Punjab and Haryana High Court - favoring employer - 20/07/2011
You would understand there is a huge confusion in the orders itself. You go through the same and come back to me.
Balaji
From India, Madras
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Assume Minimum Wages in a particular state are Rs. 5500/- (a hypothetical figure, okay?). You (we) are splitting this as:
Basic: 2000/-
HRA: 1500/-
Conv: 800/-
CCA: 1200/-
Total: 5500/- and paying PF contribution of Rs. 240/- p.m.
1. As per the Punjab and Haryana High Court, THERE IS NOTHING WRONG IN DOING IT as above. Please see my attachment now (previous judgment), and the recent judgment in my previous post.
2. Also, see other judgments of Madhya Pradesh (attached now) and Madras High Courts (this is voluminous and will send later).
3. See the chronological order:
Punjab and Haryana High Court judgment - favoring employer - 01/02/2011
Madras High Court favoring EPFO - 07/06/2011
Madhya Pradesh High Court - favoring EPFO - 21/06/2011
Punjab and Haryana High Court - favoring employer - 20/07/2011
You would understand there is a huge confusion in the orders itself. You go through the same and come back to me.
Balaji
From India, Madras
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Here is the Madras High court order favouring EPFO. Read all judgments Balaji
From India, Madras
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From India, Madras
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Dear All,
Minimum wages cannot be split for PF contribution. PF calculation is done on minimum wages + basic salary. However, there was a recent proposal that all components of salary should be included in the calculation of PF contributions.
If the minimum wages after PF deduction are less than the minimum wages as per the government's notification on minimum wage rates, then such deduction shall be null and void. On the other hand, if the minimum wages are higher than the government's notified minimum wage rate, then the deduction shall be considered correct and valid.
Kindly refer to the Minimum Wages Act for more details.
Regards,
Octavious
From India, Mumbai
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Minimum wages cannot be split for PF contribution. PF calculation is done on minimum wages + basic salary. However, there was a recent proposal that all components of salary should be included in the calculation of PF contributions.
If the minimum wages after PF deduction are less than the minimum wages as per the government's notification on minimum wage rates, then such deduction shall be null and void. On the other hand, if the minimum wages are higher than the government's notified minimum wage rate, then the deduction shall be considered correct and valid.
Kindly refer to the Minimum Wages Act for more details.
Regards,
Octavious
From India, Mumbai
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Hi all,
There is a lot of controversy on this subject, and nobody could find a definition on this. Any which way it can be interpreted. However, in the recent notification from EPFO dated 23.05.2011, it clearly says for the PF contribution, at least to maintain the minimum wages and that cannot be split. I have enclosed the notification also for your reference.
But the problem here is all the PF officials are going according to section 2(b) of the act, which says all allowances paid to be included for PF contribution, whereas as per the recent notification, it's only minimum wages. But as per officials, you have to read both the sections together, i.e., section 2(b) and 7.
However, as said, a lot of interpretations are happening, and a lot of companies are getting affected, and I am also fighting with EPFO for the clarity as we got a notice for not contributing conveyance allowance.
Regards,
Pradeepan
From India, Raipur
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There is a lot of controversy on this subject, and nobody could find a definition on this. Any which way it can be interpreted. However, in the recent notification from EPFO dated 23.05.2011, it clearly says for the PF contribution, at least to maintain the minimum wages and that cannot be split. I have enclosed the notification also for your reference.
But the problem here is all the PF officials are going according to section 2(b) of the act, which says all allowances paid to be included for PF contribution, whereas as per the recent notification, it's only minimum wages. But as per officials, you have to read both the sections together, i.e., section 2(b) and 7.
However, as said, a lot of interpretations are happening, and a lot of companies are getting affected, and I am also fighting with EPFO for the clarity as we got a notice for not contributing conveyance allowance.
Regards,
Pradeepan
From India, Raipur
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