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Hi,
Pls have a look @ <link no longer exists - removed> and <link no longer exists - removed>
Please give me your opinion in the matter of provident fund :- The employee opts for leave encashment while in service, whether PF is deductible on the amount of leave encashment. If the employee resigns whether PF is deductible on leave encashment payable to him when he leaves the office
The employee opts for leave encashment while in service, whether PF is deductible on the amount of leave encashment? YES
If the employee resigns whether PF is deductible on leave encashment payable to him when he leaves the office? YES
Provident fund contribution is payable and shall be calculated on basic wages as per Section 29(3) of the employees provident fund Scheme. The definition on the basic wages in given in Sec2 (b) of the employees provident fund and miscellaneous provisions Act Which reads as follows:
"Basic wages means all emoluments which are 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, but dose not include --
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 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 the work done in such employment;
iii) Any present made by the employer;
Aforesaid definition of basic wages is explained by Hon''ble apex court in the case of Shree Changdeo Sugar Mills V/s Union Of India Reported in AIR 2001 SC 557 which says that wages includes all payments payable to the employee when he was not on duty but is regarded as deemed to be on duty.
An identical question cropped up before Hon''ble high Court of Karnataka in the case of Manipal Academy of Higher Education Manipal V/s Provident fund Commissioner, Employees provident fund Organization Manglore reported in 2004 (I) CLR 425 (kar DB) in which it is held that, "An encashment of earn leave by the employee is basic wage"
In view of aforesaid ruling and definition it is clear that on encashment of leave the PF is always required to be paid. And even if the employee resigns from the service, since he is seeking benefit when he was in service of leave encashment PF is also payable on such amount.
Rgds - Jothi
From India, Coimbatore
Pls have a look @ <link no longer exists - removed> and <link no longer exists - removed>
Please give me your opinion in the matter of provident fund :- The employee opts for leave encashment while in service, whether PF is deductible on the amount of leave encashment. If the employee resigns whether PF is deductible on leave encashment payable to him when he leaves the office
The employee opts for leave encashment while in service, whether PF is deductible on the amount of leave encashment? YES
If the employee resigns whether PF is deductible on leave encashment payable to him when he leaves the office? YES
Provident fund contribution is payable and shall be calculated on basic wages as per Section 29(3) of the employees provident fund Scheme. The definition on the basic wages in given in Sec2 (b) of the employees provident fund and miscellaneous provisions Act Which reads as follows:
"Basic wages means all emoluments which are 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, but dose not include --
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 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 the work done in such employment;
iii) Any present made by the employer;
Aforesaid definition of basic wages is explained by Hon''ble apex court in the case of Shree Changdeo Sugar Mills V/s Union Of India Reported in AIR 2001 SC 557 which says that wages includes all payments payable to the employee when he was not on duty but is regarded as deemed to be on duty.
An identical question cropped up before Hon''ble high Court of Karnataka in the case of Manipal Academy of Higher Education Manipal V/s Provident fund Commissioner, Employees provident fund Organization Manglore reported in 2004 (I) CLR 425 (kar DB) in which it is held that, "An encashment of earn leave by the employee is basic wage"
In view of aforesaid ruling and definition it is clear that on encashment of leave the PF is always required to be paid. And even if the employee resigns from the service, since he is seeking benefit when he was in service of leave encashment PF is also payable on such amount.
Rgds - Jothi
From India, Coimbatore
PF Contribution on leave enchashment clarification
Recent verdict
Employees Provident Fund organisation
(Ministry of Labour, Government of India)
The dispute before the Hon'ble supereme Court of india in Appeal (Civil) No. 1832/2004(Manipal Academy of Higher Education versus Provident Fund Commissioner) was whether the amount received by encashing the earned leave is a part of "basic wages" under Section 2(b) of the employee Provident Fund and Miscellaneous Provision Act, 1952, requiring pro rata employer's contribution.
Hon'ble Supereme Court of India has delivered the judgement on 12.03.2008 in the case and concluded that the basic wage was never intended to include amounts received for leave encashment.
The appeal has been allowed by the Hon'ble Apex Court but it has also been decided that if any payment has already been made it can be adjusted for future liabilities and there shall not be any refund claim since the fund is running one.
In view of the Hon'ble supereme courts' judgement dated 12.03.2008 in Appeal (Civil) No. 1832/2004, this is a convey that it is decided (a) to discontinue PF deduction on leave encashment with immediate effect and (b) where Pf contribution of the employers' share has been received in the offices EPFO, the same shall be adjusted against future liabilities.
Sd/ K C J P Narayanan), Regional PF commissioner
From India, Delhi
Recent verdict
Employees Provident Fund organisation
(Ministry of Labour, Government of India)
The dispute before the Hon'ble supereme Court of india in Appeal (Civil) No. 1832/2004(Manipal Academy of Higher Education versus Provident Fund Commissioner) was whether the amount received by encashing the earned leave is a part of "basic wages" under Section 2(b) of the employee Provident Fund and Miscellaneous Provision Act, 1952, requiring pro rata employer's contribution.
Hon'ble Supereme Court of India has delivered the judgement on 12.03.2008 in the case and concluded that the basic wage was never intended to include amounts received for leave encashment.
The appeal has been allowed by the Hon'ble Apex Court but it has also been decided that if any payment has already been made it can be adjusted for future liabilities and there shall not be any refund claim since the fund is running one.
In view of the Hon'ble supereme courts' judgement dated 12.03.2008 in Appeal (Civil) No. 1832/2004, this is a convey that it is decided (a) to discontinue PF deduction on leave encashment with immediate effect and (b) where Pf contribution of the employers' share has been received in the offices EPFO, the same shall be adjusted against future liabilities.
Sd/ K C J P Narayanan), Regional PF commissioner
From India, Delhi
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Online payment of PF mandatory from 1.1.2016.pdf