Dear HR,
Please help me to understand, while working in a company, when we take earned leave, our PF is deposited by the employer. However, when we leave the company and the company settles everything in full and final, during leave encashment, the employer's side PF contribution is paid to the employee because it's part of the earned leave payment.
Please provide me with an answer.
Thank you.
From India, Gurgaon
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Please help me to understand, while working in a company, when we take earned leave, our PF is deposited by the employer. However, when we leave the company and the company settles everything in full and final, during leave encashment, the employer's side PF contribution is paid to the employee because it's part of the earned leave payment.
Please provide me with an answer.
Thank you.
From India, Gurgaon
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Dear friend,
Encashment of EL on termination of employment or otherwise does not attract contribution to EPF. When the employer is not statutorily required to contribute to EPF, he need not pay to the employee too on leave encashment. Ordinarily, the employer's contribution to EPF does not form part of the wages payable to the employee. Therefore, such a demand is not legally maintainable.
From India, Salem
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6185Encashment of EL on termination of employment or otherwise does not attract contribution to EPF. When the employer is not statutorily required to contribute to EPF, he need not pay to the employee too on leave encashment. Ordinarily, the employer's contribution to EPF does not form part of the wages payable to the employee. Therefore, such a demand is not legally maintainable.
From India, Salem
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Dear Umakanthan.M Sir,
Thank you for answering my question. My query is, if the employer's side PF contribution is shown as part of the employee's CTC, in that case, does the employer pay the employer's side PF share along with the leave encashment amount to the employee as an additional benefit? This is because PF contribution is not applicable to leave encashment.
Thank you
From India, Gurgaon
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Thank you for answering my question. My query is, if the employer's side PF contribution is shown as part of the employee's CTC, in that case, does the employer pay the employer's side PF share along with the leave encashment amount to the employee as an additional benefit? This is because PF contribution is not applicable to leave encashment.
Thank you
From India, Gurgaon
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Dear friend,
I think that if we understand the concept of CTC objectively, it is only a statement of projected annual expenses incurred by the employer in respect of an employee. As such, CTC would comprise the annual gross salary, all other statutory and non-statutory contributions, and all the other benefits which can be computed in terms of money spent by the employer. The employer's shares of statutory contributions to ESI and EPF are computed only on the basis of the sum total of the components in the wage structure which are treated as 'basic wages'. This principle equally applies to the payment of bonus and gratuity also subject to the statutory norms of eligibility. Thus the natural corollary would be that 'basic wages' do not include any of the expenses incurred by way of fringe benefits whether they are statutory or otherwise. Moreover, they are also not deductible from the gross wages and surrender leave salary or the amount of leave encashment is the salary payable but for the enjoyment of the leave surrendered only.
Hence just because the employer's contribution to EPF is shown in the CTC, it cannot be argued to be included in the leave encashment.
From India, Salem
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I think that if we understand the concept of CTC objectively, it is only a statement of projected annual expenses incurred by the employer in respect of an employee. As such, CTC would comprise the annual gross salary, all other statutory and non-statutory contributions, and all the other benefits which can be computed in terms of money spent by the employer. The employer's shares of statutory contributions to ESI and EPF are computed only on the basis of the sum total of the components in the wage structure which are treated as 'basic wages'. This principle equally applies to the payment of bonus and gratuity also subject to the statutory norms of eligibility. Thus the natural corollary would be that 'basic wages' do not include any of the expenses incurred by way of fringe benefits whether they are statutory or otherwise. Moreover, they are also not deductible from the gross wages and surrender leave salary or the amount of leave encashment is the salary payable but for the enjoyment of the leave surrendered only.
Hence just because the employer's contribution to EPF is shown in the CTC, it cannot be argued to be included in the leave encashment.
From India, Salem
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Employer-PF-res trict to wages of Rs 6500.pdf