Whether special allowance will attract PF if the pf is already being deducted in basic that is much higher that the minimum wage or Rs. 6500.00, which is defined in PF..
From India, Mumbai
From India, Mumbai
Normally all allowances not specifically attributed to any specific thing (like House rent allowance, travelling allowance, etc) and that is paid to all employees are taken as part of wages for the purpose of PF contribution.
The Apex Court while giving verdict in Bridges and Roofs (India) Ltd Vs. Union of India [1963 (2) LLJ 490], has said that "it seems that the basis of inclusion in Section 6 (of Employees provident Fund and Miscellaneous provisions Act, 1952)and exclusion in Clause (ii) is that whatever is payable in all concerns and is earned by all permanent employees is included for the purpose of contribution under Section 6 but whatever is not payable by all concerns or may not be earned by all employees of concern is excluded for the purposes of contribution." That means if special allowance is paid to all employees then it will be treated as part of PF qualifying salary whereas if it is paid to any particular employee or a section of employees doing a work different from others, then it will not be regarded as part of wages.
In Associated Cement Company Ltd. and Ors. v. R.M. Gandhi, Regional Provident Fund Commissioner, Gujarat(1995-III-LLJ(Suppl.)-368), it has been held that ad hoc payments made to ‘eligible employees and not to all employees’ under agreement does not form part of basic wages for PF contribution.
In any case, the PF authorities cannot ask the company to pay PF on any wages above Rs 6500. In Marathwada Gramin Bank Karamchari Sanghatana and another Vs Management of Marathwada Gramin Bank and others (SC 2011 LLR 1130), the Supreme Court has said that the company can restrict its contribution to Rs 6500 and the EPFO has no right to direct the employer to remit PF on an amount over and above Rs 6500.
Regards,
Madhu.T.K
From India, Kannur
4249The Apex Court while giving verdict in Bridges and Roofs (India) Ltd Vs. Union of India [1963 (2) LLJ 490], has said that "it seems that the basis of inclusion in Section 6 (of Employees provident Fund and Miscellaneous provisions Act, 1952)and exclusion in Clause (ii) is that whatever is payable in all concerns and is earned by all permanent employees is included for the purpose of contribution under Section 6 but whatever is not payable by all concerns or may not be earned by all employees of concern is excluded for the purposes of contribution." That means if special allowance is paid to all employees then it will be treated as part of PF qualifying salary whereas if it is paid to any particular employee or a section of employees doing a work different from others, then it will not be regarded as part of wages.
In Associated Cement Company Ltd. and Ors. v. R.M. Gandhi, Regional Provident Fund Commissioner, Gujarat(1995-III-LLJ(Suppl.)-368), it has been held that ad hoc payments made to ‘eligible employees and not to all employees’ under agreement does not form part of basic wages for PF contribution.
In any case, the PF authorities cannot ask the company to pay PF on any wages above Rs 6500. In Marathwada Gramin Bank Karamchari Sanghatana and another Vs Management of Marathwada Gramin Bank and others (SC 2011 LLR 1130), the Supreme Court has said that the company can restrict its contribution to Rs 6500 and the EPFO has no right to direct the employer to remit PF on an amount over and above Rs 6500.
Regards,
Madhu.T.K
From India, Kannur
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Maharashtra Special allowance Notification July 14 to Dec 14.pdf