The government is planning to introduce new rule that is employee and employer will contribute EPF on gross salary at present it is made on basic, DA and food concession. The government may be planning with a noble intention but I have a question?
As per my understanding this will have an huge financial impact on entire economy as company net profit will slow down, employee with a lower net take home pay, government will have burden of paying interest and may even be counterproductive to the EPFO.
Employer Part:
They may think of changing the pay structure and capacity to minimize the employee cost.
They may choose to opt out to employees receiving salaries above Rs.6,500.
Small organization may not enroll their employee name rather may make cash payment.
Employee Part:
Employee net salary will be reduced and may affect their family budget especially who are paid Minimum Wages.
On the other part, employees saving will be more and will be beneficial in future. The amount will be multiplying and will receive a handsome amount during retirement or withdrawal. I will personally prefer this part as my saving will be more.
This may be a challenge for HR to convince employee (Lower salary) as they don’t have any option without opting. We need to highlight the benefit part to them and show a dream of secure future.
I need to have your views and opinion for the same.
Regards,
Shaikh Abedeen
Human Resources Professional
From India, Bhubaneswar
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138As per my understanding this will have an huge financial impact on entire economy as company net profit will slow down, employee with a lower net take home pay, government will have burden of paying interest and may even be counterproductive to the EPFO.
Employer Part:
They may think of changing the pay structure and capacity to minimize the employee cost.
They may choose to opt out to employees receiving salaries above Rs.6,500.
Small organization may not enroll their employee name rather may make cash payment.
Employee Part:
Employee net salary will be reduced and may affect their family budget especially who are paid Minimum Wages.
On the other part, employees saving will be more and will be beneficial in future. The amount will be multiplying and will receive a handsome amount during retirement or withdrawal. I will personally prefer this part as my saving will be more.
This may be a challenge for HR to convince employee (Lower salary) as they don’t have any option without opting. We need to highlight the benefit part to them and show a dream of secure future.
I need to have your views and opinion for the same.
Regards,
Shaikh Abedeen
Human Resources Professional
From India, Bhubaneswar
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Dear Abedeen,
I respect the decision of government authorities. However, my personal view is that I would like to have a pleasant present rather than a secure future. The future is next to the present, which is very unpredictable and uncertain. The present is very important, and to survive this stage, a person needs money. I cannot starve today in the hope that I will have orange fields tomorrow.
From India, Hyderabad
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I respect the decision of government authorities. However, my personal view is that I would like to have a pleasant present rather than a secure future. The future is next to the present, which is very unpredictable and uncertain. The present is very important, and to survive this stage, a person needs money. I cannot starve today in the hope that I will have orange fields tomorrow.
From India, Hyderabad
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Dear Abedeen,
Greetings for the day.
It has been a long-time demand from various trade unions, and if the government is willing to accept this, it should be beneficial for all.
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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Greetings for the day.
It has been a long-time demand from various trade unions, and if the government is willing to accept this, it should be beneficial for all.
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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In my opinion, there is nothing to worry about as whatever the limit and inclusion of other items such as various allowances, etc., in the definition of Basic Wages, the employer is not bound to contribute his share over and above the prescribed limit (presently Rs 6500), provided the employee is already receiving a higher contribution benefit either in the present employment or had it in his earlier employment before joining the present employment.
Further, if the employer is contributing his share based on a higher salary beyond the statutory limit, he can reduce his share with the permission of the RPFC by providing suitable reasons.
AK Chandok RPFC (Retd.)
[Note: The link mentioned in the original text has been removed.]
From India, Chandigarh
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Further, if the employer is contributing his share based on a higher salary beyond the statutory limit, he can reduce his share with the permission of the RPFC by providing suitable reasons.
AK Chandok RPFC (Retd.)
[Note: The link mentioned in the original text has been removed.]
From India, Chandigarh
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Dear All,
As with most policies, I am sure the government will provide some scope for creativity within the law. From the current perspective, if an employer is paying Rs 780 per month towards the PF contribution of an associate, they are fulfilling compliance with the law. Therefore, the government either needs to remove this ceiling or allow Compensation and Benefits Managers to apply their own creativity to resolve the matter in the best interest of both their employees and the employer.
Best Regards,
Himanshu Pant
From India, Delhi
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As with most policies, I am sure the government will provide some scope for creativity within the law. From the current perspective, if an employer is paying Rs 780 per month towards the PF contribution of an associate, they are fulfilling compliance with the law. Therefore, the government either needs to remove this ceiling or allow Compensation and Benefits Managers to apply their own creativity to resolve the matter in the best interest of both their employees and the employer.
Best Regards,
Himanshu Pant
From India, Delhi
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Dear All,
The government was planning to implement the same in the month of November '12, but the employers denied its implementation, citing various reasons (as mentioned by Abedeen7). Don't worry, as it won't be implemented. Even if the government tries to force it, employers and employees always have the choice of moving out, as PF is voluntary.
Regards,
Bhavik Mehta
From India, Mumbai
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The government was planning to implement the same in the month of November '12, but the employers denied its implementation, citing various reasons (as mentioned by Abedeen7). Don't worry, as it won't be implemented. Even if the government tries to force it, employers and employees always have the choice of moving out, as PF is voluntary.
Regards,
Bhavik Mehta
From India, Mumbai
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Hello friends,
I have also seen the news on the news channel regarding the government's plan to implement this. It will definitely affect all sections, whether they receive low or high salaries. However, the weaker sections will be more affected for their current survival because even they do not want to contribute to the PF on the basic, and what if it will be deducted from the gross?
They will receive a lower take-home salary, making it tougher for them to support their families. For high-paid individuals, it will also have an impact because they already have their own personal savings/insurances for future contingencies. If they receive a reduced salary due to the new PF impact, it will lead to mismanagement of funds for them due to high premiums on insurance and other expenses.
In short, an HR person can differentiate and understand the new rule and the previous one of PF and may prefer the new one (I suppose), but the majority will likely be against it.
Best regards,
Sunita Dhoundiyal
From India, Delhi
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I have also seen the news on the news channel regarding the government's plan to implement this. It will definitely affect all sections, whether they receive low or high salaries. However, the weaker sections will be more affected for their current survival because even they do not want to contribute to the PF on the basic, and what if it will be deducted from the gross?
They will receive a lower take-home salary, making it tougher for them to support their families. For high-paid individuals, it will also have an impact because they already have their own personal savings/insurances for future contingencies. If they receive a reduced salary due to the new PF impact, it will lead to mismanagement of funds for them due to high premiums on insurance and other expenses.
In short, an HR person can differentiate and understand the new rule and the previous one of PF and may prefer the new one (I suppose), but the majority will likely be against it.
Best regards,
Sunita Dhoundiyal
From India, Delhi
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Hello friends!
I understand there is already a concept of VPF where an employee can opt to deposit more EPF from his salary apart from the standard percentage, which stands good enough. However, imposing EPF deposit on gross shall actually affect both the employer and employee at large. Securing financial future is an important aspect, but in that direction, a minimum contribution is viable enough. The later part should be left to the subject person as a working professional or even a worker nowadays smart enough to plan their future.
I think this proposal requires serious reconsideration.
Anil Richhariya
Associate Manager - GMR Group
From India, Gurgaon
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I understand there is already a concept of VPF where an employee can opt to deposit more EPF from his salary apart from the standard percentage, which stands good enough. However, imposing EPF deposit on gross shall actually affect both the employer and employee at large. Securing financial future is an important aspect, but in that direction, a minimum contribution is viable enough. The later part should be left to the subject person as a working professional or even a worker nowadays smart enough to plan their future.
I think this proposal requires serious reconsideration.
Anil Richhariya
Associate Manager - GMR Group
From India, Gurgaon
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