Is it possible to bifurcate the Minimum Wages to pay the PF Contribution or we have to take the minimum wage as Basic pay in case of calculating PF ?
From India, Durgapur
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From India, Durgapur
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You cannot bifurcate minimum wages. Please provide details of your proposed bifurcation along with the minimum wages notification. Also, inform about the impact of the bifurcation of minimum wages on PF contribution.
From India, New Delhi
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631From India, New Delhi
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Minimum wages are already minimal. If you split them, what will be the savings? There is a proverb in Marathi: "Don't carve your teeth to fill your stomach." Don't deprive poor individuals of the minimum social security amount!
From India, Mumbai
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From India, Mumbai
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PF contribution should be deducted and paid on minimum wages as whole.
From India, Pune
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From India, Pune
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Dear Friend, The answer to your posting is " N O ". Try to understand the "Rate of Wages" declared under minimum wages is only the basic, which can not be break into peices.
From India, Mumbai
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From India, Mumbai
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Dear Prabhat , Aniket, Shrikant, Shrinath. Your contention on the splitting of Minimum Wages is otherwise as decided by SC in Airfreight Case. Need your views on the Case decided by Apex Court.
From India, Mumbai
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From India, Mumbai
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Yes, rightly said. Airfreight and Bridge & Bridge case are quite clear on this contention. On a legal basis, wages defined under the EPF Act differ from the Minimum Wages Act.
R K Singh Sr. General Manager (HR & Admin) Sel Manufacturing Co Ltd.
From India, undefined
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R K Singh Sr. General Manager (HR & Admin) Sel Manufacturing Co Ltd.
From India, undefined
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Dear All,
Please find attached a copy of the Supreme Court Judgement in the Airfreight Ltd case, wherein the Hon'ble SC has ruled that Minimum Wages (MW) must be in accordance with Section 2 (h) of the Minimum Wages Act 1948. It is noted that as per Section 2 (h) of the Act, House Rent Allowance (HRA) is considered a part of MW (refer to the attached copy). Therefore, the MW should include Basic, Dearness Allowance (DA) as notified by the Government, and HRA (up to 40% of the MW).
The PF Appellate Tribunal has also determined that MW can be divided for PF contributions, similar to the decision of the Kerala High Court (copies of relevant documents attached). It is suggested that we split the MW and make PF contributions accordingly until the final judgement of the Hon'ble Supreme Court.
Regards,
N. Nataraajhan
Sakthi Management Services
Mobile: +91 94835 17402
Email: natraj@sakthimanagement.com
From India, Bangalore
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Please find attached a copy of the Supreme Court Judgement in the Airfreight Ltd case, wherein the Hon'ble SC has ruled that Minimum Wages (MW) must be in accordance with Section 2 (h) of the Minimum Wages Act 1948. It is noted that as per Section 2 (h) of the Act, House Rent Allowance (HRA) is considered a part of MW (refer to the attached copy). Therefore, the MW should include Basic, Dearness Allowance (DA) as notified by the Government, and HRA (up to 40% of the MW).
The PF Appellate Tribunal has also determined that MW can be divided for PF contributions, similar to the decision of the Kerala High Court (copies of relevant documents attached). It is suggested that we split the MW and make PF contributions accordingly until the final judgement of the Hon'ble Supreme Court.
Regards,
N. Nataraajhan
Sakthi Management Services
Mobile: +91 94835 17402
Email: natraj@sakthimanagement.com
From India, Bangalore
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The question was "is it possible to Bifurcate the Minimum wages to pay the PF Contribution?"
Minimum Wages comprises of Basic+DA/VDA. Consequently, PF Contribution is payable on Basic+DA/VDA. Minimum Wages is notified by the appropriate Government. The vital question here is "Does Employer have the right to alter Minimum Wages and split up into other allowances to Subterfuge EPF Contribution."
Further, what is the objective of the enactment of the Minimum Wages Act? To ensure bare Minimum Wages+EPF+BONUS+Gratuity. The Bonus Act was recently amended by inserting "Bonus payable on Rs7,000/- or Applicable Minimum Wages, whichever is higher."
We all have social responsibility apart from educating forum members. Keeping that in view, I still hold that we cannot suggest splitting of Minimum wages for the purpose of Reducing EPF Contribution which is the only Retirement Fund for Private Security Employees.
From India, New Delhi
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Minimum Wages comprises of Basic+DA/VDA. Consequently, PF Contribution is payable on Basic+DA/VDA. Minimum Wages is notified by the appropriate Government. The vital question here is "Does Employer have the right to alter Minimum Wages and split up into other allowances to Subterfuge EPF Contribution."
Further, what is the objective of the enactment of the Minimum Wages Act? To ensure bare Minimum Wages+EPF+BONUS+Gratuity. The Bonus Act was recently amended by inserting "Bonus payable on Rs7,000/- or Applicable Minimum Wages, whichever is higher."
We all have social responsibility apart from educating forum members. Keeping that in view, I still hold that we cannot suggest splitting of Minimum wages for the purpose of Reducing EPF Contribution which is the only Retirement Fund for Private Security Employees.
From India, New Delhi
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I agree with both the seniors, but I want to ask, what if the HRA Act is applicable separately to the state? Then there is no question of considering HRA in minimum wages. Also, PF should be deducted on Basic + DA. But in some cases, I have seen that employers are bifurcating the Basic to lessen the PF liability, although they are paying well above the minimum wages. They do this under the head of washing allowance, heat allowance, or canteen allowance. This practice surely reduces the PF liability on them. When asked about the legality of this practice, they mention that they have the approval letter from the local Labour Commissioner.
For example, if the Basic minimum wage is 7000, then 5000 as basic & 2000 as allowances. Can this be done?
From India, Pune
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For example, if the Basic minimum wage is 7000, then 5000 as basic & 2000 as allowances. Can this be done?
From India, Pune
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Splitting of Minimum Wages for the purpose of PF contribution not permissible.doc x
EPF-Circular-da ted-23-May-2011 -Splitting-of-M inimum-Wages-fo r-the-Purpose-o f-PF-Contributi on-Not.pdf