Seniors,
Please find the below and advise whether splitting of minimum wages for EPF contributions is not illegal. Can we split 50% of the basic minimum wages of the concerned state and central wages, so the EPF contribution will be 12% of 50% of the minimum wages.
(**) M/s Gaurav Enterprises vs. Regional Provident Fund Commissioner, ATA NO. 71(4)2015 decided on 5.9.2016
Splitting of minimum wages for EPF contributions is not illegal.
Brief Facts:
The appellant challenged the order of the Regional Provident Fund Commissioner dated 31.12.2014 under Section 7A of the Act whereby it was contended that basic wages, as defined under the Act, specifically exclude House Rent Allowances, Conveyance, and other similar allowances. Accordingly, the appellant establishment was supposed to remit the PF dues on the basic wages actually given to employees. The amount paid by the client to the appellant for providing its services was not relevant for determining the PF liability of the appellant. It was the actual emoluments being paid by the appellant, including its components, that were required to be considered by the respondent. The appellant establishment is remitting PF dues in accordance with the provisions of the Act, and there is no evasion of any kind of PF dues by the appellant establishment. During the course of the inquiry, all the relevant records were duly produced by the appellant establishment. However, the respondent, without considering such records, was adamant in passing an illegal order just to harass the appellant establishment. No subterfuge of any kind had been proved against the appellant during the 7A proceedings. The contracts for service between the appellant and its clients are on a principal-to-principal basis; therefore, whatever charges are paid by the clients to the appellant are not emoluments paid to the appellant's employees, and no PF dues are liable to be deposited in the fund on the monthly charges paid by its client to the appellant.
The appellant relied upon the judgment of Assistant PF Commissioner vs. Gas Securities Services (India) Limited, 2011 LLR 316 (P&HHC), Group 4 Securitas Guarding Limited vs. Employees' Provident Fund Appellate Tribunal and Others, WP(C) No. 4408 of 2000 (Del. HC).
Reasons & Decision:
The Hon'ble EPF Appellate Tribunal allowed the appeal with the following observations:
Section 2(b) of the Act does not prescribe how much amount shall be considered as basic wages. So now it is to be seen by this Tribunal whether the respondent is empowered to direct the appellant establishment to pay minimum wages to the employees. During the course of the argument, no provisions of the Act were cited by the counsel for the respondent which could reveal that the 'Commissioner' is empowered to direct the employer to pay minimum wages to the employee. Bifurcation of wages below minimum wages or basic wages and DA, etc., are issues completely out of the purview of PF authorities. PF authorities have no jurisdiction to ensure compliance with the Minimum Wages Act or issue any direction in this regard.
From India, Delhi
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3Please find the below and advise whether splitting of minimum wages for EPF contributions is not illegal. Can we split 50% of the basic minimum wages of the concerned state and central wages, so the EPF contribution will be 12% of 50% of the minimum wages.
(**) M/s Gaurav Enterprises vs. Regional Provident Fund Commissioner, ATA NO. 71(4)2015 decided on 5.9.2016
Splitting of minimum wages for EPF contributions is not illegal.
Brief Facts:
The appellant challenged the order of the Regional Provident Fund Commissioner dated 31.12.2014 under Section 7A of the Act whereby it was contended that basic wages, as defined under the Act, specifically exclude House Rent Allowances, Conveyance, and other similar allowances. Accordingly, the appellant establishment was supposed to remit the PF dues on the basic wages actually given to employees. The amount paid by the client to the appellant for providing its services was not relevant for determining the PF liability of the appellant. It was the actual emoluments being paid by the appellant, including its components, that were required to be considered by the respondent. The appellant establishment is remitting PF dues in accordance with the provisions of the Act, and there is no evasion of any kind of PF dues by the appellant establishment. During the course of the inquiry, all the relevant records were duly produced by the appellant establishment. However, the respondent, without considering such records, was adamant in passing an illegal order just to harass the appellant establishment. No subterfuge of any kind had been proved against the appellant during the 7A proceedings. The contracts for service between the appellant and its clients are on a principal-to-principal basis; therefore, whatever charges are paid by the clients to the appellant are not emoluments paid to the appellant's employees, and no PF dues are liable to be deposited in the fund on the monthly charges paid by its client to the appellant.
The appellant relied upon the judgment of Assistant PF Commissioner vs. Gas Securities Services (India) Limited, 2011 LLR 316 (P&HHC), Group 4 Securitas Guarding Limited vs. Employees' Provident Fund Appellate Tribunal and Others, WP(C) No. 4408 of 2000 (Del. HC).
Reasons & Decision:
The Hon'ble EPF Appellate Tribunal allowed the appeal with the following observations:
Section 2(b) of the Act does not prescribe how much amount shall be considered as basic wages. So now it is to be seen by this Tribunal whether the respondent is empowered to direct the appellant establishment to pay minimum wages to the employees. During the course of the argument, no provisions of the Act were cited by the counsel for the respondent which could reveal that the 'Commissioner' is empowered to direct the employer to pay minimum wages to the employee. Bifurcation of wages below minimum wages or basic wages and DA, etc., are issues completely out of the purview of PF authorities. PF authorities have no jurisdiction to ensure compliance with the Minimum Wages Act or issue any direction in this regard.
From India, Delhi
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Delhi - Minimum Wages w.e.f. 01.10.2012 (1).pdf
Minimum Wages in Maharashtra for the period January 2018 to June 2018.xls