just now i was giving the same lecture regarding minimum wages where in deduction of PF can be done.... it got confirmed thanks for the information with regards Niveditha
From India, Bangalore
From India, Bangalore
There are a lot of confusions taking place w.r.t. to PF deduction. Minimum Wages varies from industry to industry and also from state to state.
1. ASSUME, minimum wages applicable to a particular State is Rs. 160/- per day. This means An employer needs to pay Rs.4160/- per month (26 days a month). The employer exactly pays this. Then what should be the PF amount to be deducted?
2. ASSUME in the same case above, the employer pays Rs.4500/- and splits the salary structure as
Basic : Rs.2000
HRA : Rs.1500
Perf Allowance : Rs. 500
Conveyance : Rs. 500
and deducts Rs.240/- towards PF. Is it OK by doing so?
I have read both notes (the circular issued by PF authorities among their officers and also the judgement of Punjab and Harya High Court - copy of which enclosed here).
If anyone throws more light on this, we can have conceptual clarity.
Balaji
From India, Madras
1001. ASSUME, minimum wages applicable to a particular State is Rs. 160/- per day. This means An employer needs to pay Rs.4160/- per month (26 days a month). The employer exactly pays this. Then what should be the PF amount to be deducted?
2. ASSUME in the same case above, the employer pays Rs.4500/- and splits the salary structure as
Basic : Rs.2000
HRA : Rs.1500
Perf Allowance : Rs. 500
Conveyance : Rs. 500
and deducts Rs.240/- towards PF. Is it OK by doing so?
I have read both notes (the circular issued by PF authorities among their officers and also the judgement of Punjab and Harya High Court - copy of which enclosed here).
If anyone throws more light on this, we can have conceptual clarity.
Balaji
From India, Madras
Dear Balaji
As far knowledge and information goes :
1. If the Minimum Wages of a particular States is Rs. 160/- per day (Rs. 4160/- p.m/26 days), thats means the worker is required to work for 26 days to get Rs. 4160/- in a month @ Rs. 160/- per day but what happens if the worker work for suppose only 10 days in a month? Whether the company will pay him/her Rs. 4160/- instead of Rs. 160/- X 10 days = Rs. 1600/-?. the simple answer will be no, the company will pay him/her Rs. 1600/-. like wise if the worker works for 30 days in a month (though it is against factories act) then he/she will be getting Rs. 160/- X 30 days = Rs. 4800/- . So we can say rate of Rs. 160/- per day is fixed. But if the company splitting this Rs. 4160/- per month in different components for the purpose of arriving at Rs.4160/- is permissible as far as payment of Minimum Wages as per the Minimum Wages Act is concerned (as per the judgement made in the case of Bridge & Roof case by the Supreme Court) but this judgement never given splitting permission for the purpose of PF Contribution.
So PF deduction on Rs. 4160/- (Rs. 160/- X 26 days) will be Rs. 499/-
PF deduction on Rs. 4800/- (Rs. 160/- X 30 days) will be Rs. 576/-
PF deduction on Rs. 1600/- (Rs. 160/- X 10 days) will be Rs. 192/-
2. As per assumption: Basic : Rs.2000
HRA : Rs.1500
Perf Allowance : Rs. 500
Conveyance : Rs. 500
and deducts Rs.240/- towards PF. Is it OK by doing so?
If the worker belongs to same Rs. 160/- category and works only for 12.5 days in a month then deduction of Rs. 240/- is ok. But if the worker works for 26 days then this splitting is not permissible.
I hope I am correct..
Jawed Alam
From India, Dhanbad
As far knowledge and information goes :
1. If the Minimum Wages of a particular States is Rs. 160/- per day (Rs. 4160/- p.m/26 days), thats means the worker is required to work for 26 days to get Rs. 4160/- in a month @ Rs. 160/- per day but what happens if the worker work for suppose only 10 days in a month? Whether the company will pay him/her Rs. 4160/- instead of Rs. 160/- X 10 days = Rs. 1600/-?. the simple answer will be no, the company will pay him/her Rs. 1600/-. like wise if the worker works for 30 days in a month (though it is against factories act) then he/she will be getting Rs. 160/- X 30 days = Rs. 4800/- . So we can say rate of Rs. 160/- per day is fixed. But if the company splitting this Rs. 4160/- per month in different components for the purpose of arriving at Rs.4160/- is permissible as far as payment of Minimum Wages as per the Minimum Wages Act is concerned (as per the judgement made in the case of Bridge & Roof case by the Supreme Court) but this judgement never given splitting permission for the purpose of PF Contribution.
So PF deduction on Rs. 4160/- (Rs. 160/- X 26 days) will be Rs. 499/-
PF deduction on Rs. 4800/- (Rs. 160/- X 30 days) will be Rs. 576/-
PF deduction on Rs. 1600/- (Rs. 160/- X 10 days) will be Rs. 192/-
2. As per assumption: Basic : Rs.2000
HRA : Rs.1500
Perf Allowance : Rs. 500
Conveyance : Rs. 500
and deducts Rs.240/- towards PF. Is it OK by doing so?
If the worker belongs to same Rs. 160/- category and works only for 12.5 days in a month then deduction of Rs. 240/- is ok. But if the worker works for 26 days then this splitting is not permissible.
I hope I am correct..
Jawed Alam
From India, Dhanbad
Mr. Jawed,
The assumption here is he works for the entire 26 days. Secondly the salary / wages are paid based on one's attendance. I do not think different yardstick shall be maintained for someone who worked for 10 days in a month and for someone worked for whole month without any loss of pay.
My question is here, when an employer pays the minimum wages more than the prescribed (by the respective Government) limit, whether splitting of wages in the way that I quoted in the example, is permissible or not.
If not permissible, what is the sanctitiy of the judgment of Punjab and Haryana High Court that I attached in my previous post?
Other members of HR formum can also put in their views, please.
Balaji
From India, Madras
The assumption here is he works for the entire 26 days. Secondly the salary / wages are paid based on one's attendance. I do not think different yardstick shall be maintained for someone who worked for 10 days in a month and for someone worked for whole month without any loss of pay.
My question is here, when an employer pays the minimum wages more than the prescribed (by the respective Government) limit, whether splitting of wages in the way that I quoted in the example, is permissible or not.
If not permissible, what is the sanctitiy of the judgment of Punjab and Haryana High Court that I attached in my previous post?
Other members of HR formum can also put in their views, please.
Balaji
From India, Madras
i am agree with pbs as its the exploitation of industry by govt departments without disclosing all the facts.
From India, Panipat
From India, Panipat
Mr. Balaji
When an Employer pays mothly Wages more than Minimum Wages then it is always permissible as far as the Minimum Wages Act is concerned because the Act defines Minimum limit of Wages for a particular job and if an employer pays more than prescribed minimum limit then there is no harm.
The splitting of Wages in different components has been permissible by different labour judgement (as u posted) but the portion of Bisc Wages in splitting of Basic Wgaes + DA + HRA and other allowances, may not be less than the Minimum Wages Rate for the purpose of deduction of PF Contribution, which has been clarified by EPFO. So splitting of Minimum Wages for the sake of only to avoid PF Liabilties is not permissible.
Others member's view in this regard is expected.
Jawed Alam.
From India, Dhanbad
When an Employer pays mothly Wages more than Minimum Wages then it is always permissible as far as the Minimum Wages Act is concerned because the Act defines Minimum limit of Wages for a particular job and if an employer pays more than prescribed minimum limit then there is no harm.
The splitting of Wages in different components has been permissible by different labour judgement (as u posted) but the portion of Bisc Wages in splitting of Basic Wgaes + DA + HRA and other allowances, may not be less than the Minimum Wages Rate for the purpose of deduction of PF Contribution, which has been clarified by EPFO. So splitting of Minimum Wages for the sake of only to avoid PF Liabilties is not permissible.
Others member's view in this regard is expected.
Jawed Alam.
From India, Dhanbad
Dear Freinds,
Thanks for all the discussions and informations shared.
However, I would like to Know if any reply has been issued or published for Advocate Mr.H.L.Kumar's letter to PF commissioner regarding permissibility of splitting the minimum wages.
Thanks for letting me know current status.
From India, Coimbatore
Thanks for all the discussions and informations shared.
However, I would like to Know if any reply has been issued or published for Advocate Mr.H.L.Kumar's letter to PF commissioner regarding permissibility of splitting the minimum wages.
Thanks for letting me know current status.
From India, Coimbatore
Dear All,
The Delhi PF Tribunal has quashed the circular issued by the PF commissioner and the judgement is expected within 2 days.
Hence the circular issued by the PF commissioner stands annulled with the quashing of the circular by tribunal and bifurcation has been allowed under the PF Act. Once I receive the judgement I will post it on the net.
Thanks
From India, Mumbai
The Delhi PF Tribunal has quashed the circular issued by the PF commissioner and the judgement is expected within 2 days.
Hence the circular issued by the PF commissioner stands annulled with the quashing of the circular by tribunal and bifurcation has been allowed under the PF Act. Once I receive the judgement I will post it on the net.
Thanks
From India, Mumbai
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Delhi - Minimum Wages w.e.f. 01.10.2012 (1).pdf
Minimum Wages in Maharashtra for the period January 2018 to June 2018.xls