THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 _
Sec 2. Definitions.—In this Act, unless the context otherwise requires,—
11[(a) “appropriate Government” means—
1. This Act has been extended to Dadra and Nagar Haveli by Reg. 6 of 1963,
s. 2 and the First Schedule: Pondicherry by Reg. 7 of 1963,
s. 3 and the First Schedule and Goa, Daman and Diu by Reg. 11 of 1963,
s. 3 and Schedule (1-7-1964). 2. Subs. by Act 99 of 1976,
s. 16, for “and family pension fund” (w.e.f. 1-8-1976). 3. Subs. by Act 25 of 1996, s. 2, for “family pension fund” (w.e.f. 16-11-1995). 4. Subs. by Act 99 of 1976,
s. 17, for sub-section (1) (w.e.f. 1-8-1976). 5. The Words “except the State of Jammu and Kashmir” omitted by Act 34 of 2019,
s. 95 and the Fifth Schedule (w.e.f. 31-10- 2019) and extended to the Union territory of Jammu and Kashmir and Union territory of Ladakh by notification No. S.O. 3962(E), Part II-section 3-Sub-section (ii) dated 31-10-20 (w.e.f. 1-1-2020). 6. Subs. by Act 94 of 1956, s. 2, for sub-section (3). 7. Subs. by Act 46 of 1960,
s. 2, for “fifty” (w.e.f. 31-12-1960). 8. Subs. by Act 33 of 1988, s. 2, for sub-section (4) (w.e.f. 1-8-1988). 9. Ins. by Act 46 of 1960,
s. 2 (w.e.f. 31-12-1960). 10. The proviso omitted by Act 16 of 1971,
s. 13 (w.e.f. 23-4-1971). 11. Subs. by Act 22 of 1958,
s. 2, for clause (a). 4 (i) in relation to an establishment belonging to, or under the control of, the Central Government or in relation to an establishment connected with a railway company, a major port, a mine or an oilfield or a controlled industry, 1 [or in relation to an establishment having departments or branches in more than one State,] the Central Government; and (ii) in relation to any other establishment, the State Government;] 2 [(aa) “authorised officer” means the Central Provident Fund Commissioner, Additional Central Provident Fund Commissioner, Deputy Provident Fund Commissioner, Regional Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette.
(b) “basic wages” means all emoluments which are earned by an employee while on duty or 3 [ 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 does 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 rise 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 work done in such employment;
(iii) any presents made by the employer; (c) “contribution” means a contribution payable in respect of a member under a Scheme 4 [or the contribution payable in respect of an employee to whom the Insurance Scheme applies];
Nitin S Parab
Since 1952, employers, employees, unions, consultants, and professionals have been struggling with this definition, on which we should pay contribution to EPF. There is no clarity about what is to be called EPF wages.
It’s very surprising,
Your opinion, please.
From India, Mumbai
Sec 2. Definitions.—In this Act, unless the context otherwise requires,—
11[(a) “appropriate Government” means—
1. This Act has been extended to Dadra and Nagar Haveli by Reg. 6 of 1963,
s. 2 and the First Schedule: Pondicherry by Reg. 7 of 1963,
s. 3 and the First Schedule and Goa, Daman and Diu by Reg. 11 of 1963,
s. 3 and Schedule (1-7-1964). 2. Subs. by Act 99 of 1976,
s. 16, for “and family pension fund” (w.e.f. 1-8-1976). 3. Subs. by Act 25 of 1996, s. 2, for “family pension fund” (w.e.f. 16-11-1995). 4. Subs. by Act 99 of 1976,
s. 17, for sub-section (1) (w.e.f. 1-8-1976). 5. The Words “except the State of Jammu and Kashmir” omitted by Act 34 of 2019,
s. 95 and the Fifth Schedule (w.e.f. 31-10- 2019) and extended to the Union territory of Jammu and Kashmir and Union territory of Ladakh by notification No. S.O. 3962(E), Part II-section 3-Sub-section (ii) dated 31-10-20 (w.e.f. 1-1-2020). 6. Subs. by Act 94 of 1956, s. 2, for sub-section (3). 7. Subs. by Act 46 of 1960,
s. 2, for “fifty” (w.e.f. 31-12-1960). 8. Subs. by Act 33 of 1988, s. 2, for sub-section (4) (w.e.f. 1-8-1988). 9. Ins. by Act 46 of 1960,
s. 2 (w.e.f. 31-12-1960). 10. The proviso omitted by Act 16 of 1971,
s. 13 (w.e.f. 23-4-1971). 11. Subs. by Act 22 of 1958,
s. 2, for clause (a). 4 (i) in relation to an establishment belonging to, or under the control of, the Central Government or in relation to an establishment connected with a railway company, a major port, a mine or an oilfield or a controlled industry, 1 [or in relation to an establishment having departments or branches in more than one State,] the Central Government; and (ii) in relation to any other establishment, the State Government;] 2 [(aa) “authorised officer” means the Central Provident Fund Commissioner, Additional Central Provident Fund Commissioner, Deputy Provident Fund Commissioner, Regional Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette.
(b) “basic wages” means all emoluments which are earned by an employee while on duty or 3 [ 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 does 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 rise 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 work done in such employment;
(iii) any presents made by the employer; (c) “contribution” means a contribution payable in respect of a member under a Scheme 4 [or the contribution payable in respect of an employee to whom the Insurance Scheme applies];
Nitin S Parab
Since 1952, employers, employees, unions, consultants, and professionals have been struggling with this definition, on which we should pay contribution to EPF. There is no clarity about what is to be called EPF wages.
It’s very surprising,
Your opinion, please.
From India, Mumbai
You are not right, there were no confusions with regard to the definition of basic wages when the Act was passed. All the confusions started only when the new generation HR Managers and HR Consultants started bifurcating the total salary in to compartments like basic wages, HRA, Conveyance, Special allowance etc, and putting the least amount into basic wages on the interpretation of section 6 which says that "contribution is payable on 'basic wages' and dearness allowance only. But they failed to understand that the term basic wage should include all emoluments which an employee gets as per the terms of agreement. various courts have also interfered and finally the Apex Court also came with the interpretation that PF is to be contributed on the total salary. The only component which can be excluded is HRA. That does not mean that you can have maximum amount as HRA and minimum amount as Basic, DA, Special allowance etc, in order to be excluded from the scope of Pf qualifying wages, the HRA should be a compensatory allowance, an allowance paid to those who reside in leased accommodation and not to those who reside in their own houses or houses owned by their spouses. But in many organisations, HRA is paid even to those who are residing in their own houses, and without considering whether their spouses get it or not.
Therefore, it is not the Act which is incorrect but it is the persons whose interpretation of the Act which is incorrect. If you again go through Bridge & Roof Co. (India) Ltd vs Union Of India, the landmark judgement of the Supreme Court. you will see that " all allowances paid universally to all employees are part of basic wages". It is the trend of employers to put the balance amount after putting basic wages, HRA, conveyance etc into a component called "special allowance". The Courts have said that if the special allowance is paid only to some employees considering some special skill they contribute to perform their work, then that only shall be excluded from the scope of PF qualifying wages, and if it is paid universally to all employees, then it is part of wages only.
If you analyse the establishments who have been paying PF on actuals and thereby the employees of which got the benefits of higher pension, you will understand that such companies had trade unions and a strong Personnel Department to take care of the employee benefits. Those companies which found the EPF etc as a statutory burden and employees add to COST only, and therefore offer the remuneration as Cost To Company (CTC) are those who interpreted the Act wrongly and restricted their contribution to the bare minimum. Therefore, there is no confusion with regard to definition of wages, but all these happened because the HR professionals are doing intensive experiments to satisfy their employers so that they can ensure increments and other benefits at the cost of employees!!
From India, Kannur
4239Therefore, it is not the Act which is incorrect but it is the persons whose interpretation of the Act which is incorrect. If you again go through Bridge & Roof Co. (India) Ltd vs Union Of India, the landmark judgement of the Supreme Court. you will see that " all allowances paid universally to all employees are part of basic wages". It is the trend of employers to put the balance amount after putting basic wages, HRA, conveyance etc into a component called "special allowance". The Courts have said that if the special allowance is paid only to some employees considering some special skill they contribute to perform their work, then that only shall be excluded from the scope of PF qualifying wages, and if it is paid universally to all employees, then it is part of wages only.
If you analyse the establishments who have been paying PF on actuals and thereby the employees of which got the benefits of higher pension, you will understand that such companies had trade unions and a strong Personnel Department to take care of the employee benefits. Those companies which found the EPF etc as a statutory burden and employees add to COST only, and therefore offer the remuneration as Cost To Company (CTC) are those who interpreted the Act wrongly and restricted their contribution to the bare minimum. Therefore, there is no confusion with regard to definition of wages, but all these happened because the HR professionals are doing intensive experiments to satisfy their employers so that they can ensure increments and other benefits at the cost of employees!!
From India, Kannur
After Apex court verdict, it is now crystal clear to understand what constitutes PF Gross. It is monthly gross - HRA - if any payment related to production/productivity - if any special payment to some specific group of employees but not across the board. Any payment in monthly gross paid across the board should be considered as PF Gross.
S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
From India, New Delhi
S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
+91 98310 81531
skb@usdhrs.in
From India, New Delhi
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EPF Wages Ceiling enhancement_Not ification_28 08 2014.pdf