Dear Prasanna,
I was heading HR for more than 30 years in the private sector, including MNCs. But I left my job in 2001 and am not in touch very much with these things. Let me give you my opinion based on my experience. If an employee is suspended with "suspension pending enquiry" as per model standing order, he is to be paid a subsistence allowance on which no statutory deduction is made. I suggest you may refer to the standing order and make a decision.
Best wishes,
Dr. K K Anirudhan
Email: kkanirudhan@gmail.com
Phone: 9847925580
From India, Kochi
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10I was heading HR for more than 30 years in the private sector, including MNCs. But I left my job in 2001 and am not in touch very much with these things. Let me give you my opinion based on my experience. If an employee is suspended with "suspension pending enquiry" as per model standing order, he is to be paid a subsistence allowance on which no statutory deduction is made. I suggest you may refer to the standing order and make a decision.
Best wishes,
Dr. K K Anirudhan
Email: kkanirudhan@gmail.com
Phone: 9847925580
From India, Kochi
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Dear Mr. Varghese and Mr. Buwan Arya,
The Employee Provident Fund Scheme framed under the Employee Provident Fund Act provides in Para 26A that a member of the Fund continues to remain a member until he withdraws the money in his name from the Fund or until he is excluded from the Scheme under a scheme for exemption.
Thus, in light of the above, though it does not appear to have been expressly held as such by a court, it can be stated that a subsistence allowance ought to constitute wages under the Employee Provident Fund Act, and Provident Fund contributions ought to be made on the subsistence allowance since the suspended employee continues to remain a member of the Provident Fund, and the employer-employee relationship is not extinguished on suspension.
From India, Ahmadabad
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The Employee Provident Fund Scheme framed under the Employee Provident Fund Act provides in Para 26A that a member of the Fund continues to remain a member until he withdraws the money in his name from the Fund or until he is excluded from the Scheme under a scheme for exemption.
Thus, in light of the above, though it does not appear to have been expressly held as such by a court, it can be stated that a subsistence allowance ought to constitute wages under the Employee Provident Fund Act, and Provident Fund contributions ought to be made on the subsistence allowance since the suspended employee continues to remain a member of the Provident Fund, and the employer-employee relationship is not extinguished on suspension.
From India, Ahmadabad
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Dear Saji Sir,
I agree that if an employee is a member of the Fund, then he/she should continue to remain a member until he/she withdraws the money in his name from the Fund or is excluded from the Scheme. As you have mentioned that the employer-employee relationship is not extinguished on suspension, then I do not agree with you on this point. There is an order of APFC-EPFO in which it has clearly mentioned that "during the suspension period, the concerned workers are not on duty, and the employer-employee relationship is suspended."
Subsistence allowance is paid for the survival of the suspended workers, and during the suspension period, the concerned workers are not on duty, and the employer-employee relationship is suspended, since the decision does not overcome from the inquiry. Hence, subsistence allowances paid to the suspended employees do not constitute wages and are not liable for deduction of Provident Fund.
For your ready reference, here I am attaching The Order dt. 17-11-2009 passed by APFC, RO-Mumbai.
From India, Delhi
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I agree that if an employee is a member of the Fund, then he/she should continue to remain a member until he/she withdraws the money in his name from the Fund or is excluded from the Scheme. As you have mentioned that the employer-employee relationship is not extinguished on suspension, then I do not agree with you on this point. There is an order of APFC-EPFO in which it has clearly mentioned that "during the suspension period, the concerned workers are not on duty, and the employer-employee relationship is suspended."
Subsistence allowance is paid for the survival of the suspended workers, and during the suspension period, the concerned workers are not on duty, and the employer-employee relationship is suspended, since the decision does not overcome from the inquiry. Hence, subsistence allowances paid to the suspended employees do not constitute wages and are not liable for deduction of Provident Fund.
For your ready reference, here I am attaching The Order dt. 17-11-2009 passed by APFC, RO-Mumbai.
From India, Delhi
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Dear All,
In continuation of the above, I would like to add that if the employee who was under suspension is exonerated from the charges and reinstated, then he/she should be paid their full salary after deducting the subsistence allowance already paid. At that time, PF can be deducted and submitted to the department as per procedure.
Thank you.
From India, Delhi
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In continuation of the above, I would like to add that if the employee who was under suspension is exonerated from the charges and reinstated, then he/she should be paid their full salary after deducting the subsistence allowance already paid. At that time, PF can be deducted and submitted to the department as per procedure.
Thank you.
From India, Delhi
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Dear Mr. Arya,
I have gone through the order of the PF Authority. There are a few more orders from the Honorable Court of Chandigarh and Madras with the same topic. It is indeed a debatable topic. Here, I am of the opinion that as per the Order of the PF Authority, the employer-employee relationship is suspended but not extinguished or exhausted, which is a very thin line in the court of law. I am not against any orders but am of the opinion that the same can be heard or taken for litigation.
Also, if the employee is reinstated, the difference of Salary and Subsistence allowance is paid, so how would you bifurcate the PF contribution? Also, what about interest on late payment, the return filing, etc.? There are numerous queries related to this issue.
Last but not least, I am not against your comment. I may be wrong somewhere but need clarity in depth to satisfy my conscience.
From India, Ahmadabad
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I have gone through the order of the PF Authority. There are a few more orders from the Honorable Court of Chandigarh and Madras with the same topic. It is indeed a debatable topic. Here, I am of the opinion that as per the Order of the PF Authority, the employer-employee relationship is suspended but not extinguished or exhausted, which is a very thin line in the court of law. I am not against any orders but am of the opinion that the same can be heard or taken for litigation.
Also, if the employee is reinstated, the difference of Salary and Subsistence allowance is paid, so how would you bifurcate the PF contribution? Also, what about interest on late payment, the return filing, etc.? There are numerous queries related to this issue.
Last but not least, I am not against your comment. I may be wrong somewhere but need clarity in depth to satisfy my conscience.
From India, Ahmadabad
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As I said, from the definition of basic itself, it is clear that subsistence allowance is not wages as it is not earned while on duty, leave, or holidays. It is based on this logic that courts have held that EL surrender, lay off, and retrenchment compensations are not wages for EPF. When a suspended employee is taken back, his contribution for the suspended period can be paid in the same way the contribution on arrears of wage revision is paid.
Varghese Mathew
09961266966
From India, Thiruvananthapuram
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Varghese Mathew
09961266966
From India, Thiruvananthapuram
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Dear Saji Sir,
If the employee is reinstated, there should be no question raised for the bifurcation of PF contributions. The management can decide the salary structure for the suspension period as per company policy for all, or the EPF contribution can be simply calculated based on the Minimum Wages of the State or Rs. 6,500/-, whichever is less.
Regarding the question of late payment, if I am not mistaken, there should be no interest charged on clearing the dues upon reinstatement, as it cannot be considered late payment.
As of now, EPFO has already introduced an online portal for filing monthly contributions. It is not a hectic job and can be done very easily.
I hope I have satisfied your conscience.
From India, Delhi
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If the employee is reinstated, there should be no question raised for the bifurcation of PF contributions. The management can decide the salary structure for the suspension period as per company policy for all, or the EPF contribution can be simply calculated based on the Minimum Wages of the State or Rs. 6,500/-, whichever is less.
Regarding the question of late payment, if I am not mistaken, there should be no interest charged on clearing the dues upon reinstatement, as it cannot be considered late payment.
As of now, EPFO has already introduced an online portal for filing monthly contributions. It is not a hectic job and can be done very easily.
I hope I have satisfied your conscience.
From India, Delhi
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Dear Mr. Arya,
Your statement contradicts, "The management can decide the Salary Structure for the suspension period, as per company policy for all OR the EPF Contribution can be simply calculated based on the Minimum Wages of the State / on Rs. 6,500/-; whichever is less."
If the management can decide the salary structure for the suspension period, why can the company decide on the subsistence allowance and contribute to EPF based on Minimum Wage/Rs. 6500/-, whichever is applicable?
I hope the PF authority will not prevent you from contributing on subsistence allowance if you consider the Minimum Wage/Rs. 6500/- as the basic pay. Please clarify if I am mistaken.
From India, Ahmadabad
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Your statement contradicts, "The management can decide the Salary Structure for the suspension period, as per company policy for all OR the EPF Contribution can be simply calculated based on the Minimum Wages of the State / on Rs. 6,500/-; whichever is less."
If the management can decide the salary structure for the suspension period, why can the company decide on the subsistence allowance and contribute to EPF based on Minimum Wage/Rs. 6500/-, whichever is applicable?
I hope the PF authority will not prevent you from contributing on subsistence allowance if you consider the Minimum Wage/Rs. 6500/- as the basic pay. Please clarify if I am mistaken.
From India, Ahmadabad
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Dear Sir,
When an employee joins the organization, at that time also the management/HR Dept. decides the salary structure as per company policy, under the views of law. As the EPF is deducted on the Basic+DA, then as per the revised structure, if the Basic+DA goes above Rs. 6,500/-, then EPF can be contributed on Rs. 6,500/-, as it is the wages ceiling for EPF currently.
However, in some cases, the Honorable High Court and Supreme Court have given judgments that "Basic Wage" for the purposes of the EPF Act could not be less than the Minimum Wage. That's why it is suggested that "Basic Wage" should not be less than State Min. Wages. The EPF Contribution can be calculated on that "Basic Wage" or on Rs. 6,500/-; whichever is less. Two judgments are also attached in this regard. Hope this will shed more light on the matter.
From India, Delhi
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When an employee joins the organization, at that time also the management/HR Dept. decides the salary structure as per company policy, under the views of law. As the EPF is deducted on the Basic+DA, then as per the revised structure, if the Basic+DA goes above Rs. 6,500/-, then EPF can be contributed on Rs. 6,500/-, as it is the wages ceiling for EPF currently.
However, in some cases, the Honorable High Court and Supreme Court have given judgments that "Basic Wage" for the purposes of the EPF Act could not be less than the Minimum Wage. That's why it is suggested that "Basic Wage" should not be less than State Min. Wages. The EPF Contribution can be calculated on that "Basic Wage" or on Rs. 6,500/-; whichever is less. Two judgments are also attached in this regard. Hope this will shed more light on the matter.
From India, Delhi
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Suspend is not a punishment, so in the case of suspension, statutory deductions will continue from the subsistence allowance.
During the course of suspension, employees give an undertaking to the employer regarding the payment of subsistence allowance, stating that they will not engage in a different job and will be wholly dependent on the current job. Consequently, payments will continue as per the rules, and all statutory deductions will be made from the payment.
Badal Moharana Bharatiya Mazdoor Sangh 9439020587
From India, Bangalore
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During the course of suspension, employees give an undertaking to the employer regarding the payment of subsistence allowance, stating that they will not engage in a different job and will be wholly dependent on the current job. Consequently, payments will continue as per the rules, and all statutory deductions will be made from the payment.
Badal Moharana Bharatiya Mazdoor Sangh 9439020587
From India, Bangalore
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