Dear all,
a nice information on PF and bifurcation of min wages. since this bifurcation notice has come into existence, I m still trying to find out an answer to my query. would request you all to look in to it and please reply if you can.
we all are aware that
1. min wages is basic+DA. ( as per the above comment, you can also add HRA to it, if you don't add, no issues)
2. as per the notification you cannot bifurcate min wages as it leads to less PF contribution. so PF should be paid on min wages only.
please note that there is one more fact that PF ceiling is Rs. 6500/ to contribute. if your salary is more that Rs. 6500, you need not to contribute in PF. now Delhi govt has again revised min wages effective from April 2011 wherein only unskilled category will earn less then 6500 which is Rs. 6422. it means you can calculate PF on 6422.
1) other categories will earn more then 7000 Rs. as min wages (for semi skilled it is 7098). so what we should do here. should we pay PF on only 6500 (ceiling) or 7098 (min wages) ?
2) if you pay PF on min wages which is now higher then the ceiling then where is the exemption from PF. Then you cannot exempt employees who are getting more then 6500 as basic salary. Please clear
Also please correct:
what if you put whole amount of min wages under one head (basic) only. does it make the difference if PF has to be calculated on whole amount....what is the need to divide it into basic and DA and calculate PF on two heads. as its only HR people who know that PF is calculate on Basic+DA. a common man only knows that it is calculated is on basic salary.
looking forward for responses from seniors in forum...please help.
regards,
Saunee
From India, New Delhi
12a nice information on PF and bifurcation of min wages. since this bifurcation notice has come into existence, I m still trying to find out an answer to my query. would request you all to look in to it and please reply if you can.
we all are aware that
1. min wages is basic+DA. ( as per the above comment, you can also add HRA to it, if you don't add, no issues)
2. as per the notification you cannot bifurcate min wages as it leads to less PF contribution. so PF should be paid on min wages only.
please note that there is one more fact that PF ceiling is Rs. 6500/ to contribute. if your salary is more that Rs. 6500, you need not to contribute in PF. now Delhi govt has again revised min wages effective from April 2011 wherein only unskilled category will earn less then 6500 which is Rs. 6422. it means you can calculate PF on 6422.
1) other categories will earn more then 7000 Rs. as min wages (for semi skilled it is 7098). so what we should do here. should we pay PF on only 6500 (ceiling) or 7098 (min wages) ?
2) if you pay PF on min wages which is now higher then the ceiling then where is the exemption from PF. Then you cannot exempt employees who are getting more then 6500 as basic salary. Please clear
Also please correct:
what if you put whole amount of min wages under one head (basic) only. does it make the difference if PF has to be calculated on whole amount....what is the need to divide it into basic and DA and calculate PF on two heads. as its only HR people who know that PF is calculate on Basic+DA. a common man only knows that it is calculated is on basic salary.
looking forward for responses from seniors in forum...please help.
regards,
Saunee
From India, New Delhi
Hi, pls tell me how to break up in (Basic + DA + HRA + Conv & other allounces) of Delhi & Noida
From India, Delhi
From India, Delhi
Dear Pallavidas07 and others
Why do you (read, your company) want to break up even the prescribed MINIMUM WAGES into such components as "HRA + Conv & other allowances" ??
Is your company not in a position (financially) to ADD these components from their own resources ??
What is the intention ??
If you are not able to give these; then why DEPRIVE the workers from THEIR RIGHTFUL CLAIM ON PF CONTRIBUTION (by reducing their Basic Pay ???
Such exploitative attitude is shameful, to say the least.
As conscientious HR professionals, and to gain professional respect, we should not endorse/recommend such un-ethical acts (even though it may not strictly be illegal).
Kindly think over these issues.
Regards.
From India, Delhi
Why do you (read, your company) want to break up even the prescribed MINIMUM WAGES into such components as "HRA + Conv & other allowances" ??
Is your company not in a position (financially) to ADD these components from their own resources ??
What is the intention ??
If you are not able to give these; then why DEPRIVE the workers from THEIR RIGHTFUL CLAIM ON PF CONTRIBUTION (by reducing their Basic Pay ???
Such exploitative attitude is shameful, to say the least.
As conscientious HR professionals, and to gain professional respect, we should not endorse/recommend such un-ethical acts (even though it may not strictly be illegal).
Kindly think over these issues.
Regards.
From India, Delhi
Dear All,
My query is that
1.Would it be fair to not include DA in minimum wages, (as our org does not include DA in the basic)?
2.if we pay an employee more than the daily wage rate, would it be fair to deduct PF only on basic excluding DA?
From India, Mumbai
My query is that
1.Would it be fair to not include DA in minimum wages, (as our org does not include DA in the basic)?
2.if we pay an employee more than the daily wage rate, would it be fair to deduct PF only on basic excluding DA?
From India, Mumbai
Dear madhu t.k sir
Govt. Declares The Minimum Wages For The Workers( For Unskilled, Skilled, Office Staff Etc.) .Can We Make The Breakup Of That Minimum Wages And Deduct The PF, At A Lower Rate.
for maharashtra state : minimum Wages? please tell me in details
From India, Miraj
Govt. Declares The Minimum Wages For The Workers( For Unskilled, Skilled, Office Staff Etc.) .Can We Make The Breakup Of That Minimum Wages And Deduct The PF, At A Lower Rate.
for maharashtra state : minimum Wages? please tell me in details
From India, Miraj
I think we have been discussing the same only through these posts which was started sometime in 2011. Please go through the posts.
Why do you want to fix minimum PF? PF is payable on basic wages and dearness allowances whereas the basic wage as per EPF Act is the total wages. Therefore, there is no meaning in doing a bifurcation you like. If HRA is excluded, that does not mean that you can pay say 5% basic salary and 95% for house rent allowance. It is just like saying that food and clothing will account for 5 percent of cost of living and the rest, 95% is for shelter!!
Madhu.T.K
From India, Kannur
Why do you want to fix minimum PF? PF is payable on basic wages and dearness allowances whereas the basic wage as per EPF Act is the total wages. Therefore, there is no meaning in doing a bifurcation you like. If HRA is excluded, that does not mean that you can pay say 5% basic salary and 95% for house rent allowance. It is just like saying that food and clothing will account for 5 percent of cost of living and the rest, 95% is for shelter!!
Madhu.T.K
From India, Kannur
If i have Gross salary of Rs 11,000 , in which i bifurcate salary structure as below:-
Basic (50% ofGross)= Rs 5,500
HRA(50% of basic)= Rs 2750
Conveyance(20% of basic) = Rs 1,100
Other Alloweyance = Rs 1650
My ques is that my basic is less than minimum wage fixed by govt.
1) If i do pf calculation as per my salary structure basic , is there will be any problem since it is less than minimum wage ????
2) Is it compulsory to fix basic as per minimum wage , and than bifurcate rest gross amount in salary structure?????
From India, Bhopal
Basic (50% ofGross)= Rs 5,500
HRA(50% of basic)= Rs 2750
Conveyance(20% of basic) = Rs 1,100
Other Alloweyance = Rs 1650
My ques is that my basic is less than minimum wage fixed by govt.
1) If i do pf calculation as per my salary structure basic , is there will be any problem since it is less than minimum wage ????
2) Is it compulsory to fix basic as per minimum wage , and than bifurcate rest gross amount in salary structure?????
From India, Bhopal
As far as minimum wages compliance part is concerned there is no issue if you bifurcate the total amount. What is important is the fixed part of salary should be equal to or more than the basic + DA fixed by the government as minimum wages.
Many companies (even companies who can bear a higher contribution of PF) contribute PF only on basic salary. It is true that PF is payable on basic wage only. But what is basic wages is very clearly defined in the EPF & Misc. Act as the whole amounts received by an employee as per contract of employment excluding HRA. If you have agreed to give your employee Rs 11000 as salary, this is the salary as per contract of employment. If you have shown the salary by bifurcating the total amounts into basic, HRA, etc, then also what will not qualify for PF contribution is the HRA part and for the remaining amounts,like conveyance and other allowance you are bound to pay PF. As already said many companies follow the practice of paying it on the basic pay fixed by the respective companies. The dispute regarding basic wages or PF qualifying wages is still under the perusal o the Apex Court and in a recent ruling by the Madras High Court, till the verdict from the Supreme Court comes, it is said that till the verdict of the Supreme Court comes the PF authorities are required not to interfere in this matter. therefore, for the time being you can contribute PF on your basic pay, Rs 5500.
From India, Kannur
Many companies (even companies who can bear a higher contribution of PF) contribute PF only on basic salary. It is true that PF is payable on basic wage only. But what is basic wages is very clearly defined in the EPF & Misc. Act as the whole amounts received by an employee as per contract of employment excluding HRA. If you have agreed to give your employee Rs 11000 as salary, this is the salary as per contract of employment. If you have shown the salary by bifurcating the total amounts into basic, HRA, etc, then also what will not qualify for PF contribution is the HRA part and for the remaining amounts,like conveyance and other allowance you are bound to pay PF. As already said many companies follow the practice of paying it on the basic pay fixed by the respective companies. The dispute regarding basic wages or PF qualifying wages is still under the perusal o the Apex Court and in a recent ruling by the Madras High Court, till the verdict from the Supreme Court comes, it is said that till the verdict of the Supreme Court comes the PF authorities are required not to interfere in this matter. therefore, for the time being you can contribute PF on your basic pay, Rs 5500.
From India, Kannur
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Minimum wages breakup.xls
Delhi - Minimum Wages w.e.f. 01.10.2012 (1).pdf