If an employee's basic pay is Rs. 70,000/- and PF contribution is voluntary, after reducing the basic by the employer, his basic pay is Rs. 50,000/-. According to the EPFO Act, an employer cannot reduce basic pay.
Kindly clarify if an employer can reduce the basic as per the EPF Act. Additionally, please help me understand if an employer can reduce the gross salary.
From India, Lucknow
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3Kindly clarify if an employer can reduce the basic as per the EPF Act. Additionally, please help me understand if an employer can reduce the gross salary.
From India, Lucknow
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You cannot reduce the basic of an employee on any terms irrespective of following EPF norms to him.
From India, Hyderabad
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From India, Hyderabad
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For the purpose of PF contribution of the employer, the rate is 12% of basic plus DA plus administration charges, etc. The EPF coverage is only up to Rs. 15,000/-, and this is the maximum limit on which the employer has to contribute. However, the employee may contribute his share more than the basic salary (he may volunteer to contribute up to 100%), but the employer is required to contribute only up to the statutory coverage limit, i.e., on basic of Rs. 15,000/-. Hence, whether you reduce his basic or not, your liability is fixed, i.e., 12% of Rs. 15,000/- only.
In support of this, the following lines have been picked up from the FAQs of the EPF website:
"What is the voluntary rate of Provident Fund contribution by the member? As per the Act, the member has to contribute at the rate of 10% or 12% of his basic pay, D.A. & retaining allowance if any. In case the member wants to contribute more than this, voluntarily he can do so at any rate he desires, i.e., up to 100% of basic and D.A. But the employer is not bound to contribute at the enhanced rate but only up to the maximum wage ceiling of Rs. 15,000/- only."
From India, Chandigarh
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In support of this, the following lines have been picked up from the FAQs of the EPF website:
"What is the voluntary rate of Provident Fund contribution by the member? As per the Act, the member has to contribute at the rate of 10% or 12% of his basic pay, D.A. & retaining allowance if any. In case the member wants to contribute more than this, voluntarily he can do so at any rate he desires, i.e., up to 100% of basic and D.A. But the employer is not bound to contribute at the enhanced rate but only up to the maximum wage ceiling of Rs. 15,000/- only."
From India, Chandigarh
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Employer-PF-res trict to wages of Rs 6500.pdf