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
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15a 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
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Hi, pls tell me how to break up in (Basic + DA + HRA + Conv & other allounces) of Delhi & Noida
From India, Delhi
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From India, Delhi
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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
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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
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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
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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
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Dear Madhu T.K. Sir,
The government declares the minimum wages for the workers (for unskilled, skilled, office staff, etc.). Can we break up that minimum wage and deduct the PF at a lower rate? For Maharashtra state: what are the minimum wages? Please tell me in detail.
From India, Miraj
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The government declares the minimum wages for the workers (for unskilled, skilled, office staff, etc.). Can we break up that minimum wage and deduct the PF at a lower rate? For Maharashtra state: what are the minimum wages? Please tell me in detail.
From India, Miraj
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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 the minimum PF? PF is payable on basic wages and dearness allowances, whereas the basic wage as per the EPF Act is the total wages. Therefore, there is no meaning in doing a bifurcation as 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 the cost of living and the rest, 95%, is for shelter!!
Madhu.T.K
From India, Kannur
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Why do you want to fix the minimum PF? PF is payable on basic wages and dearness allowances, whereas the basic wage as per the EPF Act is the total wages. Therefore, there is no meaning in doing a bifurcation as 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 the cost of living and the rest, 95%, is for shelter!!
Madhu.T.K
From India, Kannur
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If I have a Gross salary of Rs 11,000, in which I bifurcate the salary structure as below:- Basic (50% of Gross) = Rs 5,500 HRA (50% of basic) = Rs 2750 Conveyance (20% of basic) = Rs 1,100 Other Allowance = Rs 1650
My question is that my basic is less than the minimum wage fixed by the government. 1) If I do PF calculation as per my salary structure basic, will there be any problem since it is less than the minimum wage? 2) Is it compulsory to fix basic as per the minimum wage, and then bifurcate the rest of the gross amount in the salary structure?
From India, Bhopal
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My question is that my basic is less than the minimum wage fixed by the government. 1) If I do PF calculation as per my salary structure basic, will there be any problem since it is less than the minimum wage? 2) Is it compulsory to fix basic as per the minimum wage, and then bifurcate the rest of the gross amount in the salary structure?
From India, Bhopal
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As far as minimum wage compliance is concerned, there is no issue if you bifurcate the total amount. What is important is that the fixed part of the salary should be equal to or more than the basic + DA fixed by the government as minimum wages.
Many companies (even those that can bear a higher contribution to PF) contribute PF only on the basic salary. It is true that PF is payable on the basic wage only. However, what constitutes basic wages is very clearly defined in the EPF & Misc. Act as the total amounts received by an employee as per the contract of employment, excluding HRA. If you have agreed to pay your employee Rs. 11000 as salary, this amount is the salary as per the contract of employment. Even if you have shown the salary by breaking down the total amount into basic, HRA, etc., what does not qualify for PF contribution is the HRA part, and for the remaining amounts, like conveyance and other allowances, you are obligated to pay PF.
As mentioned, many companies follow the practice of paying it on the basic pay set by the respective companies. The dispute regarding basic wages or PF qualifying wages is still under review by the Apex Court, and in a recent ruling by the Madras High Court, it has been stated that until the Supreme Court reaches a verdict, the PF authorities are required not to interfere in this matter. Therefore, for the time being, you can contribute PF based on your basic pay, Rs. 5500.
From India, Kannur
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Many companies (even those that can bear a higher contribution to PF) contribute PF only on the basic salary. It is true that PF is payable on the basic wage only. However, what constitutes basic wages is very clearly defined in the EPF & Misc. Act as the total amounts received by an employee as per the contract of employment, excluding HRA. If you have agreed to pay your employee Rs. 11000 as salary, this amount is the salary as per the contract of employment. Even if you have shown the salary by breaking down the total amount into basic, HRA, etc., what does not qualify for PF contribution is the HRA part, and for the remaining amounts, like conveyance and other allowances, you are obligated to pay PF.
As mentioned, many companies follow the practice of paying it on the basic pay set by the respective companies. The dispute regarding basic wages or PF qualifying wages is still under review by the Apex Court, and in a recent ruling by the Madras High Court, it has been stated that until the Supreme Court reaches a verdict, the PF authorities are required not to interfere in this matter. Therefore, for the time being, you can contribute PF based 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