Dear Shubha,
This circular has no impact on ceiling limit of Basic Wages i.e. 6500 hence, it will remain same as 6500.
And yes, it is applicable on all type of industries & companies except the Sick industries as for them it is 650(10% of 6500).
Regards,
Pushkar Bisht
From India, Delhi
33This circular has no impact on ceiling limit of Basic Wages i.e. 6500 hence, it will remain same as 6500.
And yes, it is applicable on all type of industries & companies except the Sick industries as for them it is 650(10% of 6500).
Regards,
Pushkar Bisht
From India, Delhi
Whose company is deducting & contribute PF amount more than 6500. What will be rule for this. If now they take decision about ceiling of 6500 , may it be not against section 12 of PF act that say that Employer can not reduce to wages ?
Please share your view.
Regards
Mukund
From India, Delhi
Please share your view.
Regards
Mukund
From India, Delhi
Dear Mukund,
Deducting PF on actual wages i.e for cases above 6500 is under no obligation as it is voluntary and there is no violation of law if any employer at any time reduces the contribution back on 6500 which is the minimum PF liabilities for the employer to deduct and remit the contribution.
And there will be no objection under Section 12 of PF act cause the PF liabilities of an employer is being maintained as given in Para 26A of the PF scheme.
Regards,
Pushkar Bisht
From India, Delhi
Deducting PF on actual wages i.e for cases above 6500 is under no obligation as it is voluntary and there is no violation of law if any employer at any time reduces the contribution back on 6500 which is the minimum PF liabilities for the employer to deduct and remit the contribution.
And there will be no objection under Section 12 of PF act cause the PF liabilities of an employer is being maintained as given in Para 26A of the PF scheme.
Regards,
Pushkar Bisht
From India, Delhi
Dear Pushkar,
1. In the Section of 26A it is cleared that employee and employer can contribute PF on the basis of 6500,( based on some clause ) It is not mentioned that employer can reduce of basic of PF .
2. In the section 29 , it is cleared that rate of contribution in pf ( based on Basic wages ( whole basic ), employee can increase the rate of contribution but it is not forced to employer for increase the rate (12% or 10%). Limitation of basic may be reduce to any time, It is never mentioned.
3 Please think, if reduce is possible in the mid of employment than all company of India who are paying PF contribution on more than 6500 can take decision and it is malpractice and can create difficult relation between employee and employer. PF Office wants more contribution in PF and PF office will never allow this type of malpractice.
4 It is clearly mentioned that 26B , in the situation of any doubt, Regional PF Commissioner will be final, So we should take view of any regional commissioner.
5. I want to also clear that Supreme Court or any apex court decision is not fixed, It comes under review or reconsider. If any body is waiting for honorable court decision that it will only when possible than Apex Court gives stay order to EPFO. and Apex Court takes decision on based of Law that is already applicable.
Guidelines of EPFO dated on 30-11-12 is only clarification of law ( it is not new law ) because some person gives wrong explanation, and creates many allowances for less basic. PF Office is silent because no any amendment in law.
If any body has doubt or view, must be share.
Regards
Mukund
From India, Delhi
1. In the Section of 26A it is cleared that employee and employer can contribute PF on the basis of 6500,( based on some clause ) It is not mentioned that employer can reduce of basic of PF .
2. In the section 29 , it is cleared that rate of contribution in pf ( based on Basic wages ( whole basic ), employee can increase the rate of contribution but it is not forced to employer for increase the rate (12% or 10%). Limitation of basic may be reduce to any time, It is never mentioned.
3 Please think, if reduce is possible in the mid of employment than all company of India who are paying PF contribution on more than 6500 can take decision and it is malpractice and can create difficult relation between employee and employer. PF Office wants more contribution in PF and PF office will never allow this type of malpractice.
4 It is clearly mentioned that 26B , in the situation of any doubt, Regional PF Commissioner will be final, So we should take view of any regional commissioner.
5. I want to also clear that Supreme Court or any apex court decision is not fixed, It comes under review or reconsider. If any body is waiting for honorable court decision that it will only when possible than Apex Court gives stay order to EPFO. and Apex Court takes decision on based of Law that is already applicable.
Guidelines of EPFO dated on 30-11-12 is only clarification of law ( it is not new law ) because some person gives wrong explanation, and creates many allowances for less basic. PF Office is silent because no any amendment in law.
If any body has doubt or view, must be share.
Regards
Mukund
From India, Delhi
Dear Mukund,
I would like you to see my point once again what i have written:-
In my post i have not mentioned about the reduction in Basic Wages i have only mentioned about the minimum contribution and voluntary contribution and the section and laws which you have shared are absolutely correct and stand by it.
And malpractice in reduction back to mandate contribution of PF is being mentioned in your post, i think we will have to see and find any case law where such kind of scenario is jotted or raised. Will be grateful if you can share such.
Please share as the law itself has no section for such cases and it just like a open ended law.
Regards,
Pushkar Bisht
From India, Delhi
I would like you to see my point once again what i have written:-
In my post i have not mentioned about the reduction in Basic Wages i have only mentioned about the minimum contribution and voluntary contribution and the section and laws which you have shared are absolutely correct and stand by it.
And malpractice in reduction back to mandate contribution of PF is being mentioned in your post, i think we will have to see and find any case law where such kind of scenario is jotted or raised. Will be grateful if you can share such.
Please share as the law itself has no section for such cases and it just like a open ended law.
Regards,
Pushkar Bisht
From India, Delhi
Mr.Mukund
Para 26-A and para 29- deal with different apects of contribution. Para 26-A deals with the quantum of wages on which an employer is not obliged under P.F Act to contribute and Para deal with the rate of contribution which an employer is not obliged under P.F Act to contribute.An employee can opt for higher contributions in two ways 1) by contributiing on wages higher than Rs.6500/-p.m and 2) by increasing the rate of contributiin beyond 12%.
Even though an employee contributes on more than Rs.6500/-p.m voluntarily, Para 26-A says that the employer is not obliged to contribute on more than Rs.6500/-p.m. Even though an employee seeks to cotribute at a rate more than 12% of basic+DA, Para 29 says that the employe ris notunder obligation to contribute more than 12%.
What Sec.12 bars is that the employer cannot reduce the wages of an employee to reduce his liablity for payment of contribution. Accordingly he cannot tinker with the slary structure of the employee by reducing his basic pay or DA etc so as to reduce his liabilty for payment of contribution. An employer need not resort to this when he is not obliged to contribute on more than Rs.6500/-p.m or more than 12% there on.
Now, the Madhya Pradesh High Court in Surya Roshni's case held that other allowances except HRA or bonus or O.T form part of the basic wages and thus rank for P.F contribution.It aapears the decison in this case has been appealed against in Supreme Court.It needs to be confirmed and also the developmenst there in to have a clear legal position.
From India, Mumbai
Para 26-A and para 29- deal with different apects of contribution. Para 26-A deals with the quantum of wages on which an employer is not obliged under P.F Act to contribute and Para deal with the rate of contribution which an employer is not obliged under P.F Act to contribute.An employee can opt for higher contributions in two ways 1) by contributiing on wages higher than Rs.6500/-p.m and 2) by increasing the rate of contributiin beyond 12%.
Even though an employee contributes on more than Rs.6500/-p.m voluntarily, Para 26-A says that the employer is not obliged to contribute on more than Rs.6500/-p.m. Even though an employee seeks to cotribute at a rate more than 12% of basic+DA, Para 29 says that the employe ris notunder obligation to contribute more than 12%.
What Sec.12 bars is that the employer cannot reduce the wages of an employee to reduce his liablity for payment of contribution. Accordingly he cannot tinker with the slary structure of the employee by reducing his basic pay or DA etc so as to reduce his liabilty for payment of contribution. An employer need not resort to this when he is not obliged to contribute on more than Rs.6500/-p.m or more than 12% there on.
Now, the Madhya Pradesh High Court in Surya Roshni's case held that other allowances except HRA or bonus or O.T form part of the basic wages and thus rank for P.F contribution.It aapears the decison in this case has been appealed against in Supreme Court.It needs to be confirmed and also the developmenst there in to have a clear legal position.
From India, Mumbai
There was a newspaper report today that the said circular of EPFO, under discussion in this thread, has been kept in abeyance. If that is so, it will be really deplorable, The said circular was pro-employee in so far as it tried to put an end to the malpractice of some employers to reduce their PF contribution. With a view to keep the employer's contribution as low as possible some of them were making the basic pay very low and increasing other allowances that donot come under the definition of salary/pay for the purpose of EPF contribution. By this way they could satisfy the employees that they are not getting less wages in total. At the same time they were restricting their contribution to the EPF very low. This in fact was reducing the savings of the employees in the EPF, which would otherwise have helped them in difficult times.
From India, Madras
From India, Madras
Yes, there seems to be an announcement by Hon'ble Union Minister Mallikarjun that this circular is kept in abeyance.
Now, let's not pass on our judgement what is right or wrong. it is the law that has to take course. If an Act is enacted in the parliament with some benefits to employees in mind, if amendment is required, it is them to decide to change or inserst some clauses, if any.
No one can take the law in their hand. Indian policies have their own loop holes and employers / employees take that route without disturbing the same. This means they are right as per the law and discussions, deliberations and arguments (at different forums) go on and on. When you look at the employees, yes, they need to save more money to take care of their security in their old age. When you look at the employer, there seems to be huge expenses involved. But certainly not at the cost of each other.
It is basically a question of intrepretation of law by legal experts and turning the issue in their favour. We need to wait and watch. There are already a couple of cases pending at Supreme court. There are alomost a dozen cases pending in Madras High Court, that are likely to be shifted to Supreme Court for its decision.
Therefore sending an internal circular by EPFO and they in turn sending another circular to the stakeholders, etc. are not requied at this point of time. It is ultimately one needs to be clear as to what system that an employer has to follow. We need to have patience till then. Unless the pressure gets mounted either by the EPFO or by employers, I do not think any decision will come through in the near futue from Hon'ble Supreme Court too.
V. Balaji
From India, Madras
Now, let's not pass on our judgement what is right or wrong. it is the law that has to take course. If an Act is enacted in the parliament with some benefits to employees in mind, if amendment is required, it is them to decide to change or inserst some clauses, if any.
No one can take the law in their hand. Indian policies have their own loop holes and employers / employees take that route without disturbing the same. This means they are right as per the law and discussions, deliberations and arguments (at different forums) go on and on. When you look at the employees, yes, they need to save more money to take care of their security in their old age. When you look at the employer, there seems to be huge expenses involved. But certainly not at the cost of each other.
It is basically a question of intrepretation of law by legal experts and turning the issue in their favour. We need to wait and watch. There are already a couple of cases pending at Supreme court. There are alomost a dozen cases pending in Madras High Court, that are likely to be shifted to Supreme Court for its decision.
Therefore sending an internal circular by EPFO and they in turn sending another circular to the stakeholders, etc. are not requied at this point of time. It is ultimately one needs to be clear as to what system that an employer has to follow. We need to have patience till then. Unless the pressure gets mounted either by the EPFO or by employers, I do not think any decision will come through in the near futue from Hon'ble Supreme Court too.
V. Balaji
From India, Madras
Please find the latest circular.
Hi Latest Updation.Circular with held by labour minister
PROVIDENT FUND CIRCULAR KEPT IN ABEYANCE : LABOUR MINISTER
Union Labour and Employment Minister Mallikarjun Kharge on 13th December, 2012 said that the Circular November 30th, 2012 pertaining to Guidelines for Quasi-judicial proceedings under section 7A of the EPF&MP Act, 1952 issued by the EPFO on the inclusion of certain allowances etc. for calculating Provident Fund contribution is to be kept in abeyance. So the status quo will continue.
Editor
LABOUR LAW REPORTER
A-43, Lajpat Nagar-2, New Delhi - 110 024.
Ph.011-29830000, 29840000 E-mail :
Website : Labour Law Reporter
Labour Law Reporter always keeps you ahead of others
Eswar
From India, Chennai
Hi Latest Updation.Circular with held by labour minister
PROVIDENT FUND CIRCULAR KEPT IN ABEYANCE : LABOUR MINISTER
Union Labour and Employment Minister Mallikarjun Kharge on 13th December, 2012 said that the Circular November 30th, 2012 pertaining to Guidelines for Quasi-judicial proceedings under section 7A of the EPF&MP Act, 1952 issued by the EPFO on the inclusion of certain allowances etc. for calculating Provident Fund contribution is to be kept in abeyance. So the status quo will continue.
Editor
LABOUR LAW REPORTER
A-43, Lajpat Nagar-2, New Delhi - 110 024.
Ph.011-29830000, 29840000 E-mail :
Website : Labour Law Reporter
Labour Law Reporter always keeps you ahead of others
Eswar
From India, Chennai
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf