today, SSI Unit 's Employer and emploees both cannot afford 12.5% with max. limit of 6500, how EPF Limit increase to 13000 can be afford?
Either SSI Unit should be exempted to limit 6500 OR prtest if made 13000. Delay denied. Wake up and protest thru this Forom.
Rasiklal Parikh
From India, Mumbai
Either SSI Unit should be exempted to limit 6500 OR prtest if made 13000. Delay denied. Wake up and protest thru this Forom.
Rasiklal Parikh
From India, Mumbai
Dear Kumar ji, Thank you for providing the latest circular by EPFO in this forum. Sir, I have not understood your below given quote. Can you please elaborate or explain it?
From India, Mumbai
2556From India, Mumbai
Dear Kumar ji,
It seems there is a problem in quoting the statement. The quoted statement is as under:
"...in that event, section 12 of the Employees’ Provident Funds & Miscellaneous Provisions Act providing bar for not to reduce wages will not be attracted."
From India, Mumbai
It seems there is a problem in quoting the statement. The quoted statement is as under:
"...in that event, section 12 of the Employees’ Provident Funds & Miscellaneous Provisions Act providing bar for not to reduce wages will not be attracted."
From India, Mumbai
thanks for the information guys..
I have one more question. The company where I am working they are deducting both employer and employee contribution at 12 % on 6500.
If an employee wants to contribute 12% on their basic pay then can it be accepted.
and employer also in future, if they want to contribute on basic pay then can it be done.
thanks
Naveen.
From India, Hyderabad
I have one more question. The company where I am working they are deducting both employer and employee contribution at 12 % on 6500.
If an employee wants to contribute 12% on their basic pay then can it be accepted.
and employer also in future, if they want to contribute on basic pay then can it be done.
thanks
Naveen.
From India, Hyderabad
— — — — — - Ofcourse it’s EPF Rules made under the EPF Act but both are made by the Central Govt.
From India, Bangalore
From India, Bangalore
------------------
It's intriguing how your employer could deduct both the Employees' subscription and Employer's contribution from the salary of the employees. It's illegal and punishable.
12% on Rs.6500 (limited to 6500) or even more is OK but it should be calculated on both Basic + DA. Many companies include and contribute on OT salary also, it's legitimate.
From India, Bangalore
It's intriguing how your employer could deduct both the Employees' subscription and Employer's contribution from the salary of the employees. It's illegal and punishable.
12% on Rs.6500 (limited to 6500) or even more is OK but it should be calculated on both Basic + DA. Many companies include and contribute on OT salary also, it's legitimate.
From India, Bangalore
-------------------
Dear Mr.Keshav,
Pl.read the remarks together with Sec.12: reproduced here under:
Section 12 in The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
“ 1[12. Employer not to reduce wages, etc.—No employer in relation to 2[an establishment] to which any 3[Scheme or the Insurance Scheme] applies shall, by reason only of his liability for the payment of any contribution to 4[the Fund or the Insurance Fund] or any charges under this Act or the 3[Scheme or the Insurance Scheme], reduce, whether directly or indirectly, the wages of any employee to whom the 3[Scheme or the Insurance Scheme] applies or the total quantum of benefits in the nature of old age pension, gratuity 5[, provident fund or life insurance] to which the employee is entitled under the terms of his employment, express or implied.]”
In this background the present notification clarifies that –
Provident Fund Office has allowed companies to cap their per-month Provident Fund contribution to employees at Rs. 6,500. At present, companies contribute an amount equal to at least 12 per cent of an employee’s basic salary towards his/her PF. Now When an employer is deducting and depositing Employees’ Provident Fund contributions upon more than the prescribed salary, he can reduce it to Rs. 6,500 per month and in that event, section 12 of the Employees’ Provident Funds & Mis¬cellaneous Provisions Act providing bar for not to reduce wages will not be attracted.
In otherwords, e.g. an employee drawing Basic + DA say Rs.10000 and he is willing to contribute 12% on entire 10000 without restricting to 6500, since when a willing employee can contribute @ 12% on salary not limited to Rs.6500 whereas the employer can limit/cap the salary only upto Rs.6500/- in which case the employer will not be found fault as per Sec.12 as above and it wouldn’t be construed to mean the employer “reducing the wages”. This is nothing new now, this is an already existing proviso which only amplified quoting the Circular now issued.
With regards
From India, Bangalore
Dear Mr.Keshav,
Pl.read the remarks together with Sec.12: reproduced here under:
Section 12 in The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
“ 1[12. Employer not to reduce wages, etc.—No employer in relation to 2[an establishment] to which any 3[Scheme or the Insurance Scheme] applies shall, by reason only of his liability for the payment of any contribution to 4[the Fund or the Insurance Fund] or any charges under this Act or the 3[Scheme or the Insurance Scheme], reduce, whether directly or indirectly, the wages of any employee to whom the 3[Scheme or the Insurance Scheme] applies or the total quantum of benefits in the nature of old age pension, gratuity 5[, provident fund or life insurance] to which the employee is entitled under the terms of his employment, express or implied.]”
In this background the present notification clarifies that –
Provident Fund Office has allowed companies to cap their per-month Provident Fund contribution to employees at Rs. 6,500. At present, companies contribute an amount equal to at least 12 per cent of an employee’s basic salary towards his/her PF. Now When an employer is deducting and depositing Employees’ Provident Fund contributions upon more than the prescribed salary, he can reduce it to Rs. 6,500 per month and in that event, section 12 of the Employees’ Provident Funds & Mis¬cellaneous Provisions Act providing bar for not to reduce wages will not be attracted.
In otherwords, e.g. an employee drawing Basic + DA say Rs.10000 and he is willing to contribute 12% on entire 10000 without restricting to 6500, since when a willing employee can contribute @ 12% on salary not limited to Rs.6500 whereas the employer can limit/cap the salary only upto Rs.6500/- in which case the employer will not be found fault as per Sec.12 as above and it wouldn’t be construed to mean the employer “reducing the wages”. This is nothing new now, this is an already existing proviso which only amplified quoting the Circular now issued.
With regards
From India, Bangalore
Dear Kumar ji,
Thank you very much for your response.
I have gone through Sec12, SC judgement in Marathwada Gramin Bank Employees Union, a circular by EPFO dated 27.05.2014 and also your posts in this thread very carefully.
I am confused on your comments which say- "...in that event, section 12 of the Employees’ Provident Funds & Miscellaneous Provisions Act providing bar for not to reduce wages will not be attracted" and therefore I raised the issue.
Even your explanation as above is not clearing the confusion in my mind.
Here with due respect to you Sir, I would like to ask you, do you mean to say that with this circular one can reduce the wages of any employee? At-least, to my understanding, you are saying that one can now reduce the wages of any employee.
I also raised one more query on your one of the posts in this thread which is deleted by the site administrator for the reason not known to me. You said in one of the above posts that many companies include and contribute (PF) on OT salary also and it is legitimate. I would like to know, on what basis you say it?
I am raising this issues only with an intention to correct ourselves.
From India, Mumbai
Thank you very much for your response.
I have gone through Sec12, SC judgement in Marathwada Gramin Bank Employees Union, a circular by EPFO dated 27.05.2014 and also your posts in this thread very carefully.
I am confused on your comments which say- "...in that event, section 12 of the Employees’ Provident Funds & Miscellaneous Provisions Act providing bar for not to reduce wages will not be attracted" and therefore I raised the issue.
Even your explanation as above is not clearing the confusion in my mind.
Here with due respect to you Sir, I would like to ask you, do you mean to say that with this circular one can reduce the wages of any employee? At-least, to my understanding, you are saying that one can now reduce the wages of any employee.
I also raised one more query on your one of the posts in this thread which is deleted by the site administrator for the reason not known to me. You said in one of the above posts that many companies include and contribute (PF) on OT salary also and it is legitimate. I would like to know, on what basis you say it?
I am raising this issues only with an intention to correct ourselves.
From India, Mumbai
The present circular dated 27/05/2014 is bye product of Hon'ble Supreme Court judgment in case titled as Marathwada Gramin Bank Employees Union V/s Marathwada Gramin Bank Management.
and if you have carefully gone through the judgment than its very easy to understand, in cited case the employer formed their PF trust after getting exemption under section 17 of Act and starts contributing on actual basic salary per say 10K or 20K or more, but after few year due to having huge financial crisis the request of management for withdrwal of exemption was allowed and management started compliance with RPFC. Further the management reduced contribution form actual salary to satutory limit of Rs 6500/- and employees were informed through notice in writing which was opposed by the employee union as well as by PF Department in view of section 12 of EPF&MP Act, which placed a bar for reduction of benefit which employees were getting.
The Supreme Court in above said judgment held that an employer can reduced the PF contribution from actual basic to statutory wages ceiling i.e Rs 6500/-. and employer is not under legal obligation to contribute on actual basic wages per se Rs 10K/20K or whatever be. Employer is only bound to contribute on Rs 6500/-,and PF department can not force the employer to contribute on actual wages. however an employee can contribute on more than the statutory wage ceiling subject to condition mentioned in para 26(6).
The PF deparment was thinking to go for review petition against the above said judgment of Supreme Court, but vide above mentioned circular they have given up the idea for going for reivew petition and has directed their officer to implement the judgment and should not force the employers to contribute on higher wages, if they are not willing to do so.
However in case employer for better benefit can continue and contribute on actual subject to condition of joint request under para 26(6) of PF Scheme.
Only the last para of the circular is relevant, nothing else.
Regards
Sanjay Kumar
and if you have carefully gone through the judgment than its very easy to understand, in cited case the employer formed their PF trust after getting exemption under section 17 of Act and starts contributing on actual basic salary per say 10K or 20K or more, but after few year due to having huge financial crisis the request of management for withdrwal of exemption was allowed and management started compliance with RPFC. Further the management reduced contribution form actual salary to satutory limit of Rs 6500/- and employees were informed through notice in writing which was opposed by the employee union as well as by PF Department in view of section 12 of EPF&MP Act, which placed a bar for reduction of benefit which employees were getting.
The Supreme Court in above said judgment held that an employer can reduced the PF contribution from actual basic to statutory wages ceiling i.e Rs 6500/-. and employer is not under legal obligation to contribute on actual basic wages per se Rs 10K/20K or whatever be. Employer is only bound to contribute on Rs 6500/-,and PF department can not force the employer to contribute on actual wages. however an employee can contribute on more than the statutory wage ceiling subject to condition mentioned in para 26(6).
The PF deparment was thinking to go for review petition against the above said judgment of Supreme Court, but vide above mentioned circular they have given up the idea for going for reivew petition and has directed their officer to implement the judgment and should not force the employers to contribute on higher wages, if they are not willing to do so.
However in case employer for better benefit can continue and contribute on actual subject to condition of joint request under para 26(6) of PF Scheme.
Only the last para of the circular is relevant, nothing else.
Regards
Sanjay Kumar
Re:
"Here with due respect to you Sir, I would like to ask you, do you mean to say that with this circular one can reduce the wages of any employee? At-least, to my understanding, you are saying that one can now reduce the wages of any employee.
attribution https://www.citehr.com/495426-provident-fund-basic-pay-pg2.html#ixzz33eExCHml"
Pardon me Mr.Keshav, I didn't mean that the employer can reduce the Gross salary of the actual entitlement and take home pay which has to be accounted in the Pay roll. It really mean in effect to reckon the proforma salary @ Rs.6500 for the purpose of calculating EPF of @ 12 % (to the maximum of Rs.6,500/-) This in other words will not effect the Pay roll emoluments of the employee concerned in any way. Moreover, this practice is nothing new I think every employer follow this as the employer is not bound to contribute for more than the salary @ Rs.6500/-. At the same time it's left to the discretion of the employers whether to limit or not to limit at 6500/-. We are one of many such employers who liberally contribute even for more than 6500/-
Secondly, We in our co. for long have been contributing PF on the OT wages also. In fact a group of our unions won a case at the Tribunal on this and thereafter we have reckoned OT wages also for the purpose of calculating the Co's contribution to EPF. I'll try to trace the relevant orders/case law and post here aeap.
Regards
From India, Bangalore
"Here with due respect to you Sir, I would like to ask you, do you mean to say that with this circular one can reduce the wages of any employee? At-least, to my understanding, you are saying that one can now reduce the wages of any employee.
attribution https://www.citehr.com/495426-provident-fund-basic-pay-pg2.html#ixzz33eExCHml"
Pardon me Mr.Keshav, I didn't mean that the employer can reduce the Gross salary of the actual entitlement and take home pay which has to be accounted in the Pay roll. It really mean in effect to reckon the proforma salary @ Rs.6500 for the purpose of calculating EPF of @ 12 % (to the maximum of Rs.6,500/-) This in other words will not effect the Pay roll emoluments of the employee concerned in any way. Moreover, this practice is nothing new I think every employer follow this as the employer is not bound to contribute for more than the salary @ Rs.6500/-. At the same time it's left to the discretion of the employers whether to limit or not to limit at 6500/-. We are one of many such employers who liberally contribute even for more than 6500/-
Secondly, We in our co. for long have been contributing PF on the OT wages also. In fact a group of our unions won a case at the Tribunal on this and thereafter we have reckoned OT wages also for the purpose of calculating the Co's contribution to EPF. I'll try to trace the relevant orders/case law and post here aeap.
Regards
From India, Bangalore
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