Dear Neelam,
The payment made for notice pay with full & final payments shall not attract the P. F. Contribution. As per wage definition of Employees Provident Fund & Misc. Provision Act -1952, the wage means Basic wages, dearness Allow. and any retaining allow. which is earned during the course of employement.
Since Notice pay is not being earned and paid as per the term of employemnt. therefore it is not earned wages as per act and will not attracts P.F. Cotribution.
For your future reference, it is well settled practice that the no employer deduct P.F. contribution on payment for Notice Period as it is not covered under wage definition.
Thanks
Mohd. Arif Khan
9891497178
13The payment made for notice pay with full & final payments shall not attract the P. F. Contribution. As per wage definition of Employees Provident Fund & Misc. Provision Act -1952, the wage means Basic wages, dearness Allow. and any retaining allow. which is earned during the course of employement.
Since Notice pay is not being earned and paid as per the term of employemnt. therefore it is not earned wages as per act and will not attracts P.F. Cotribution.
For your future reference, it is well settled practice that the no employer deduct P.F. contribution on payment for Notice Period as it is not covered under wage definition.
Thanks
Mohd. Arif Khan
9891497178
PF will not recovered on Notice Pay. If these things are going in your company that is wrong. regards rajnish sapra
From India, Delhi
From India, Delhi
Dear
If it is payment made by the Co , since it is a Statutory deduction,PF can be deducted.After all it will be re -paid later. The Employer will have to make his relevant contribution.
with kind regards,
V.Sounder Rajan
Chennai – 600 001.
Off : 044-42620864, 044-65874684
,
From India, Bangalore
If it is payment made by the Co , since it is a Statutory deduction,PF can be deducted.After all it will be re -paid later. The Employer will have to make his relevant contribution.
with kind regards,
V.Sounder Rajan
Chennai – 600 001.
Off : 044-42620864, 044-65874684
,
From India, Bangalore
Greetings to everybody.
Let’s first have a look at this most confusing term .Notice Pay’ so as to arrive at right kind of solution to the query raised.
Following points need to be noted in this regard :-
1) The Notice Pay can either be given by Employer to Employee (where employer doesn’t want the employee to serve notice period for various reasons) or recovered by Employer from Employee (when employee is not in a position to serve the required notice period).
2) The Notice Pay should be clearly defined in Service Code/Staff Rules of the Company and/or in the Appointment Letter. It should explicitly mention what kind of Pay & Allowances will be covered under ‘Notice Pay’. For traditional pay-scales (or for that matter in Govt. Cos./PSUs, only Basic Pay is reckoned for the purpose of ‘Notice Pay’. However, in the modern era of CTC concept, a company may include many other allowances under Notice Pay even though the CTC break up may contain ‘Basic Pay’. In absence of any such definition, the normal rule is to take into consideration only ‘Basic Pay’.
3) Whatever be the components included in the Notice Pay, the same should be construed
and understood as ‘Notice Pay’ only without assigning the features of any of the components included therein. As such, even when a Notice Pay is said to equivalent of ‘Basic Pay’, the same should be seen, construed, held and considered for any applications as ‘Notice Pay’ only and not viewed as ‘Basic Pay’ ( on which PF may be determined).
4) Notice pay is to be recovered on pro-rata basis for shortfall in notice period.
5) Notice Pay, when given by employer to employee it takes a form of Administrative Cost to the Company. On the other hand, when it is recovered from employee, it takes form of punitive measure for default in serving notice period.
6) So, unless the definition clearly includes PF in Notice Pay (rarest of rare case), we need not consider the same either for giving or recovering the amount of Notice Pay.
The query raised that, ‘if PF will be deducted on the Notice Pay being given on relieving an employee’ may be resolved accordingly.
With Best Wishes & Regards
Let’s first have a look at this most confusing term .Notice Pay’ so as to arrive at right kind of solution to the query raised.
Following points need to be noted in this regard :-
1) The Notice Pay can either be given by Employer to Employee (where employer doesn’t want the employee to serve notice period for various reasons) or recovered by Employer from Employee (when employee is not in a position to serve the required notice period).
2) The Notice Pay should be clearly defined in Service Code/Staff Rules of the Company and/or in the Appointment Letter. It should explicitly mention what kind of Pay & Allowances will be covered under ‘Notice Pay’. For traditional pay-scales (or for that matter in Govt. Cos./PSUs, only Basic Pay is reckoned for the purpose of ‘Notice Pay’. However, in the modern era of CTC concept, a company may include many other allowances under Notice Pay even though the CTC break up may contain ‘Basic Pay’. In absence of any such definition, the normal rule is to take into consideration only ‘Basic Pay’.
3) Whatever be the components included in the Notice Pay, the same should be construed
and understood as ‘Notice Pay’ only without assigning the features of any of the components included therein. As such, even when a Notice Pay is said to equivalent of ‘Basic Pay’, the same should be seen, construed, held and considered for any applications as ‘Notice Pay’ only and not viewed as ‘Basic Pay’ ( on which PF may be determined).
4) Notice pay is to be recovered on pro-rata basis for shortfall in notice period.
5) Notice Pay, when given by employer to employee it takes a form of Administrative Cost to the Company. On the other hand, when it is recovered from employee, it takes form of punitive measure for default in serving notice period.
6) So, unless the definition clearly includes PF in Notice Pay (rarest of rare case), we need not consider the same either for giving or recovering the amount of Notice Pay.
The query raised that, ‘if PF will be deducted on the Notice Pay being given on relieving an employee’ may be resolved accordingly.
With Best Wishes & Regards
Deaqr Neelam,
If notice pay paid by the employer to employee the PF will be calculated Basic+DA @ 12% for Employee and Employer.
In case employee is paying the noticie pay to employer the PF will not attract and it is the compensation given by the emloyee.
Regards,
Rapolu HS
From India, Hyderabad
If notice pay paid by the employer to employee the PF will be calculated Basic+DA @ 12% for Employee and Employer.
In case employee is paying the noticie pay to employer the PF will not attract and it is the compensation given by the emloyee.
Regards,
Rapolu HS
From India, Hyderabad
trisha's right....notice pay is given with the intention of enabling employees sustain themselves during the period his relationship with one emplyer has ended and that with another is yet to begin.....as the employer- employee relationship has ended, notice pay is not liable to PF deduction.
cheers,
Meghana
From India
cheers,
Meghana
From India
Dear Member,
Notice period wages must be covered for EPF contribution. Notice pay/wages are comes under the salary and wages part. In fact, I feel you are aware that, the EPF is applicable to Leave Encashment salary/wage.
Regards,
Murugavel.B
From India, Madras
Notice period wages must be covered for EPF contribution. Notice pay/wages are comes under the salary and wages part. In fact, I feel you are aware that, the EPF is applicable to Leave Encashment salary/wage.
Regards,
Murugavel.B
From India, Madras
What ever compensation you pay to employees is subjected to PF. And PF is payable on Basic rate only.
Dear Collegues and seniors,
Some of are beleif that since the notice pay is part od salary /wage hence PF/ESI be included. Others are of belief that since wages/salary are against work done or during period of work and the notice pay does include workdays (rather taken as after last working day).
Hence I am still in confusion about "exact" implecation of same.
Kindly guide in such case what should happen whether ESI/PF be deducted or not from notice pay, with adequete logical/statury support to it.
regards
From India, Jalandhar
Some of are beleif that since the notice pay is part od salary /wage hence PF/ESI be included. Others are of belief that since wages/salary are against work done or during period of work and the notice pay does include workdays (rather taken as after last working day).
Hence I am still in confusion about "exact" implecation of same.
Kindly guide in such case what should happen whether ESI/PF be deducted or not from notice pay, with adequete logical/statury support to it.
regards
From India, Jalandhar
Dear Seniors and Collegues,
one more point that I would like to put. If we are treating it in books of accounts as salary then quite obviosuly we have to take into consideration ESI/PF, else if taken into other head then need not consider ESI/Pf.
What may be the heads in books of accounts that one can put considering both queries of mine herewith and above....
regards
From India, Jalandhar
one more point that I would like to put. If we are treating it in books of accounts as salary then quite obviosuly we have to take into consideration ESI/PF, else if taken into other head then need not consider ESI/Pf.
What may be the heads in books of accounts that one can put considering both queries of mine herewith and above....
regards
From India, Jalandhar
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.
PF notice to establishments 28082019.pdf
Pf notice.jpg