Hi all, Whether EPF is payable on Maternity Benefit (MB) paid by employer pursuant to provisions of Maternity Benefit Act 1961.
Going by the definition of wages under EPF Act, it provides
“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............"
Now the question is whether Maternity Benefit paid should be considered as paid in accordance with the terms of contract of employment?
Though MB is not directly arising out of employment contract. In most cases, it is because of legal requirement.
However, when maternity benefit is paid, the components of salary like basic, DA etc.. are shown as per agreed CTC. Therefore, I feel it will be considered wages and PF will be applicable.
On the contrary, incase MB is paid by ESI as per ESI act, it will not be wages since it is not pursuant to employment contract and is not paid by Employer as well. It is directly paid by ESI department and out of the purview of employment contract. Therefore, PF and ESI need not be paid on MB paid by ESI under ESI act.
Your views please.
From India, Bengaluru
3Going by the definition of wages under EPF Act, it provides
“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............"
Now the question is whether Maternity Benefit paid should be considered as paid in accordance with the terms of contract of employment?
Though MB is not directly arising out of employment contract. In most cases, it is because of legal requirement.
However, when maternity benefit is paid, the components of salary like basic, DA etc.. are shown as per agreed CTC. Therefore, I feel it will be considered wages and PF will be applicable.
On the contrary, incase MB is paid by ESI as per ESI act, it will not be wages since it is not pursuant to employment contract and is not paid by Employer as well. It is directly paid by ESI department and out of the purview of employment contract. Therefore, PF and ESI need not be paid on MB paid by ESI under ESI act.
Your views please.
From India, Bengaluru
Dear Rashmi,
The speciality of every labor law concerning employee benefits is that it introduces certain additional beneficial aspects of employment in the form of new rights to employees and imposes new obligations on the part of employers, if the contract of employment is devoid of such aspects. Therefore, the first and foremost assumption we have to adopt in a critical analysis of any statutory provision is that we have to re-read the contract accordingly.
Thus coming to the employer's contractual obligation to pay salary for the authorised period of leave of absence due to maternity gets reinforced by the provision for payment of maternity benefit for the 26 weeks of absence by the MBA, 1961. In my opinion it is, therefore, leave salary only and as such the contribution to EPF on that part of maternity benefit becomes mandatory.
When the ESIA, 1948 becomes applicable to the case, the ESIC becomes a sort of indemnifier for the employer and insurer for the employee and the eventual payment for the period of absence due to maternity becomes the insurance benefit only.
This is the reasoning from my perception in favor of your view.
From India, Salem
The speciality of every labor law concerning employee benefits is that it introduces certain additional beneficial aspects of employment in the form of new rights to employees and imposes new obligations on the part of employers, if the contract of employment is devoid of such aspects. Therefore, the first and foremost assumption we have to adopt in a critical analysis of any statutory provision is that we have to re-read the contract accordingly.
Thus coming to the employer's contractual obligation to pay salary for the authorised period of leave of absence due to maternity gets reinforced by the provision for payment of maternity benefit for the 26 weeks of absence by the MBA, 1961. In my opinion it is, therefore, leave salary only and as such the contribution to EPF on that part of maternity benefit becomes mandatory.
When the ESIA, 1948 becomes applicable to the case, the ESIC becomes a sort of indemnifier for the employer and insurer for the employee and the eventual payment for the period of absence due to maternity becomes the insurance benefit only.
This is the reasoning from my perception in favor of your view.
From India, Salem
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
EPF ON LINE REGN. USER MANUAL.pdf