Dear HRs
I work in an MNC in gurgaon, we are a co. of 13 PPL, earlier we do not have PF policy but now our employeer wants to implement it. So they have decided to deduct Rs 1560 ( taking 6500 as Basic for all employees even if somebody has higher basic, 6500/12*100= 780 ( 780 +780= 1560)
Now is it justified to deduct entire pf from ur salary i.e employeers share as well??
I find it very wrong as they want to implement this system without changing current CTC of all employees.
I work as HR manager in the firm and i did not like this system, is there any way to oppose it.
From India, Gwalior
1I work in an MNC in gurgaon, we are a co. of 13 PPL, earlier we do not have PF policy but now our employeer wants to implement it. So they have decided to deduct Rs 1560 ( taking 6500 as Basic for all employees even if somebody has higher basic, 6500/12*100= 780 ( 780 +780= 1560)
Now is it justified to deduct entire pf from ur salary i.e employeers share as well??
I find it very wrong as they want to implement this system without changing current CTC of all employees.
I work as HR manager in the firm and i did not like this system, is there any way to oppose it.
From India, Gwalior
Hi Lista
As per PF rules Only Employee contribution of Rs. 780/- ie. 12% on 6500/- has to be deducted from Employee and the same Employer has to contribute. Even in this case Net Salary will be reduced.
But in current CTC trend Employers are calculating both the contribution in ctc and they reduce Gross salary.
Cheerz
From India, Bangalore
As per PF rules Only Employee contribution of Rs. 780/- ie. 12% on 6500/- has to be deducted from Employee and the same Employer has to contribute. Even in this case Net Salary will be reduced.
But in current CTC trend Employers are calculating both the contribution in ctc and they reduce Gross salary.
Cheerz
From India, Bangalore
Dear Lista
One way it is good as per the EPF rules you can deduct 780 from employee but employer has to pay 780 towards contribution but most of the companies are deducting the both contribution by the employee. As after leaving the job employee is getting 780+780 + Interest+ Pension so that you educate the employees and can do as per your management decisions. If you need some more information you may contact me
9866917232
Laxmi
From India, Hyderabad
One way it is good as per the EPF rules you can deduct 780 from employee but employer has to pay 780 towards contribution but most of the companies are deducting the both contribution by the employee. As after leaving the job employee is getting 780+780 + Interest+ Pension so that you educate the employees and can do as per your management decisions. If you need some more information you may contact me
9866917232
Laxmi
From India, Hyderabad
Dear Lista,
Nothing wrong in it. Employer's can deduct 12% on PF Base salary as per the limt given in the Act upto Rs.6500/-. Most of the employers consider 12% amount of PF in CTC though actually they pay 13.61% on Rs.6500/-. In case an employee interested to deduct more amount, VPF option available to employee, without any burden on employer.
Ravindra Chaubal
Sr. Manager - HR
From India, Delhi
Nothing wrong in it. Employer's can deduct 12% on PF Base salary as per the limt given in the Act upto Rs.6500/-. Most of the employers consider 12% amount of PF in CTC though actually they pay 13.61% on Rs.6500/-. In case an employee interested to deduct more amount, VPF option available to employee, without any burden on employer.
Ravindra Chaubal
Sr. Manager - HR
From India, Delhi
Hi All,
To some extent we can accept the logic of calculating employer's share of EPF, But nowadays employers even include gratuity which is paid after 5 years and which is totally employers liability in CTC. The most affected is the employees who leave the organisation by any reason on or before 5 years and even their net pay is affected.
Can anybody help me out with the steps to eliminate this?
From India, Madras
To some extent we can accept the logic of calculating employer's share of EPF, But nowadays employers even include gratuity which is paid after 5 years and which is totally employers liability in CTC. The most affected is the employees who leave the organisation by any reason on or before 5 years and even their net pay is affected.
Can anybody help me out with the steps to eliminate this?
From India, Madras
Hi Narayanan,
I know few employers pays Gratuity as an exgratia even if an employee has worked for less than 5 years and left the organisation, considering the fact of it is counted in CTC. However, it is purly a call of employer. Govt. is also planning reducing the 5 years service to 3 years, which is still not a law. The question remain the same, what if some one leaves after 2 years? Hence, my views are it is a call of employer, since the provisions are already made in the books of a/cs by the employer, though legally it is not binding to pay Gratuity before completion of 5 years of service.
Ravindra Chaubal
From India, Delhi
I know few employers pays Gratuity as an exgratia even if an employee has worked for less than 5 years and left the organisation, considering the fact of it is counted in CTC. However, it is purly a call of employer. Govt. is also planning reducing the 5 years service to 3 years, which is still not a law. The question remain the same, what if some one leaves after 2 years? Hence, my views are it is a call of employer, since the provisions are already made in the books of a/cs by the employer, though legally it is not binding to pay Gratuity before completion of 5 years of service.
Ravindra Chaubal
From India, Delhi
Hi Ravindra,
Thanks for the clarification. But I feel very sad that the employee's who are not aware of the fact that this is reducing their net pay amount which is not fair on the employers.
Is there any way that the employee extend their views that they do not want to include in the CTC ? Please do clarify.
Regards
Narayanan
From India, Madras
Thanks for the clarification. But I feel very sad that the employee's who are not aware of the fact that this is reducing their net pay amount which is not fair on the employers.
Is there any way that the employee extend their views that they do not want to include in the CTC ? Please do clarify.
Regards
Narayanan
From India, Madras
Are you not making budget at your home? For provisions such and such amount, for milk some X amount, etc. The CTC concept is the same way that an employer budgets his cash outflow. When someone is recruited, employer wants him on a long term basis and no employer recruits or intends to recruit someone for a year or two (except on specific assignments).
So, he needs to plan his cash/fund flow Law provides him to pay for statutory benefits such as Gratuity, PF contribution, etc. When an employer actually paid the employee (for example after resignation of 5 year's service), he would have sourced this from the accumulation from the LIC fund or something.
There is nothing wrong in showing the components that are going to cost his exchequer as "cost to company". It is the employee's wish to work for 5 years and more to avail the benefit. If he is money minded or job hopper, he keeps changing his job every 2/3 years once and still he wants to be paid Gratuity (in each company) signals his different attitude.
Balaji
From India, Madras
So, he needs to plan his cash/fund flow Law provides him to pay for statutory benefits such as Gratuity, PF contribution, etc. When an employer actually paid the employee (for example after resignation of 5 year's service), he would have sourced this from the accumulation from the LIC fund or something.
There is nothing wrong in showing the components that are going to cost his exchequer as "cost to company". It is the employee's wish to work for 5 years and more to avail the benefit. If he is money minded or job hopper, he keeps changing his job every 2/3 years once and still he wants to be paid Gratuity (in each company) signals his different attitude.
Balaji
From India, Madras
Dear Lista,
I agreed with Laxmi but before going to implement ,you should revise Salary Annexure of all employees showing EPF share etc on CTC based.So that employee should be aware about their deduction and take home amounts.
Regards,
From India, Gurgaon
I agreed with Laxmi but before going to implement ,you should revise Salary Annexure of all employees showing EPF share etc on CTC based.So that employee should be aware about their deduction and take home amounts.
Regards,
From India, Gurgaon
Dear lista,
CTC means cost to the company. any amount that forms part of the compensation to the employee will ideally be part of the CTC. The employers component of EPF is part of the earnings of the employee and as such is part of the CTC also the employees contribution is part of the deductions on the salary earned. What was happening earlier in your case was since there was no EPF the entire ctc or most of it was part of the earnings and hence a higher in hand. The implementation of EPf has reduced the in hand component. considering that the EPF contribution is a benefit which accrues to the employee on exit from the organization or on superannuation it acts as a saving. So at the end of the day the employee will get this payment without being taxed on the entire amount if he withdraws it after 3 years.
That being said the principle followed by many organizations is not to reduce the take home salary of the employees. They introduce these kinds of benefits with the increments or by increasing the CTC to the extent of the additional components.
It is the duty of the HR person to give this advice to the company. As such it was your duty to give this advice to the management. Or is it that they didn't consult you before rolling this out. There is no point opposing it after not having done about speaking up at the time the decision was taken.
There is a way out though.
Every employee whose Basic is above Rs. 6500 a month is an excluded employee for the purpose of the act. As such without the employees explicit request the employee cannot be forcibly be made a member under the scheme.
Kindly for your own benefit read up the relevant acts.
I hope this solves your query.
Regards
Savio
From India, Mumbai
CTC means cost to the company. any amount that forms part of the compensation to the employee will ideally be part of the CTC. The employers component of EPF is part of the earnings of the employee and as such is part of the CTC also the employees contribution is part of the deductions on the salary earned. What was happening earlier in your case was since there was no EPF the entire ctc or most of it was part of the earnings and hence a higher in hand. The implementation of EPf has reduced the in hand component. considering that the EPF contribution is a benefit which accrues to the employee on exit from the organization or on superannuation it acts as a saving. So at the end of the day the employee will get this payment without being taxed on the entire amount if he withdraws it after 3 years.
That being said the principle followed by many organizations is not to reduce the take home salary of the employees. They introduce these kinds of benefits with the increments or by increasing the CTC to the extent of the additional components.
It is the duty of the HR person to give this advice to the company. As such it was your duty to give this advice to the management. Or is it that they didn't consult you before rolling this out. There is no point opposing it after not having done about speaking up at the time the decision was taken.
There is a way out though.
Every employee whose Basic is above Rs. 6500 a month is an excluded employee for the purpose of the act. As such without the employees explicit request the employee cannot be forcibly be made a member under the scheme.
Kindly for your own benefit read up the relevant acts.
I hope this solves your query.
Regards
Savio
From India, Mumbai
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
HC All - Trainees not covered for PF -2010.pdf
PF Ledger.xls