Dear Sirs.
As per sub-section (kk) of Section 2 of the Employees Provident Funds Scheme, 1952, sugar industries are fall under seasonal factory. Being a seasonal establishment, the crushing season is usually run intermediately. Accordingly, seasonal employees are used to give seasonal break during off-season. However, they are eligible for Retention Allowance up-to 50% category-wise for off-season period to retain their services.
This allowance is paid, if they report for duties during the next season, subject to completion about 40 days from joining the duties during the next season. Under the circumstances, it is not feasible for employer to consider PF contribution on Ret. Allowance during off-season. The employer is used to generate common separate ECR & Chalan of Ret. allowance and remit to EPF, after completion of 40 days in next season. While generating online ECR the PF contribution considered on cap of Rs.15,000/-, there is no other way to consider monthly contribution on Ret. allowance of off-season period.
The EPF authority has issued Notice under Sec 7 A & 14 B for interest and damages on delayed payment of Ret. Allowance. As per their contentions, the Ret. Allowance is salary & it is obligatory on part of employer to consider PF contribution on Ret. Allowance in each month of off-season.
Now the question is, if we consider PF contribution for each month only sake of PF contributions, later if the employee is failed to join duties in next season, he will not be eligible for Ret. Allowance, but he may claim, as we have paid PF contributions on the same.
Kindly guide us in- light of provisions of applicable law to defend the case.
From India, Nashik
5As per sub-section (kk) of Section 2 of the Employees Provident Funds Scheme, 1952, sugar industries are fall under seasonal factory. Being a seasonal establishment, the crushing season is usually run intermediately. Accordingly, seasonal employees are used to give seasonal break during off-season. However, they are eligible for Retention Allowance up-to 50% category-wise for off-season period to retain their services.
This allowance is paid, if they report for duties during the next season, subject to completion about 40 days from joining the duties during the next season. Under the circumstances, it is not feasible for employer to consider PF contribution on Ret. Allowance during off-season. The employer is used to generate common separate ECR & Chalan of Ret. allowance and remit to EPF, after completion of 40 days in next season. While generating online ECR the PF contribution considered on cap of Rs.15,000/-, there is no other way to consider monthly contribution on Ret. allowance of off-season period.
The EPF authority has issued Notice under Sec 7 A & 14 B for interest and damages on delayed payment of Ret. Allowance. As per their contentions, the Ret. Allowance is salary & it is obligatory on part of employer to consider PF contribution on Ret. Allowance in each month of off-season.
Now the question is, if we consider PF contribution for each month only sake of PF contributions, later if the employee is failed to join duties in next season, he will not be eligible for Ret. Allowance, but he may claim, as we have paid PF contributions on the same.
Kindly guide us in- light of provisions of applicable law to defend the case.
From India, Nashik
Retaining allowance means allowance payable for the time being to an employee during any period in which the establishment is not working. This is paid just to retain the services of the employees. It is paid every month and not when the establishment resumes work. If you pay retaining allowance in a month, then why don't you pay contribution on that in the same month? If you do not pay any wages or retaining allowance, then file NIL return for that month. Pay contribution only when you pay retaining allowance. If you do not pay it every month/ during off season, there is no need to remit contribution. The question will arise only when you pay retaining allowance every month but hold payment of contribution when the season starts.
The demand of the PF authorities is correct because retaining allowance is part of PF qualifying wages as per EPF Act. In the 7A enquiry you can say that you do not pay any such allowance during off season. But when the season starts we pay an amount to those who rejoin us. That is not part of remuneration but a gift. It is a bonus to employees who are committed to come back and work for us. You can also say that it is available only to those employees who completes 40 days in the season.
From India, Kannur
The demand of the PF authorities is correct because retaining allowance is part of PF qualifying wages as per EPF Act. In the 7A enquiry you can say that you do not pay any such allowance during off season. But when the season starts we pay an amount to those who rejoin us. That is not part of remuneration but a gift. It is a bonus to employees who are committed to come back and work for us. You can also say that it is available only to those employees who completes 40 days in the season.
From India, Kannur
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf