want to THANK TO ALL OF YOU for being a teacher to me and many others who are entering to the field of HR.
sir today for the first time i am daring to write something , please forgive if any mistake takes place and give your valuable guidance
to your obedient follower
sir i am working with a automobile parts manufacturing company which is been took over by new management just before one month.
all staff is been at the same place as previously.
now it is our first salary coming by 15 days later and in a very short period of time of 15 days management want me to restructure salary system as per rule and law they want to limit pf / esic contribution to the lowest to keep their liability limited as per govt.rule .
now the case is employees are having salary ranging from 5000/- to 75000/- as gross per month
and Basic + DA is kept 50% of gross to all . which is creating lot of statutory PF contributory burden on employer as there is no ceiling of 6500/-
but now new management want to decrease it up to legal limit of 780+1.61% of admin charges with deduction of employees pf amount as previously to maintain their savings in pf accounts cause many employee want their saving to increase in PF accounts.but employer share to be restricted to Rs.885/- (13.61% on 6500) .
is it possible legally as we respect the law and want to follow.
also provide some guidance on minimizing ISIC contribution.and how to prepare a leave policy.
Thanking you and eagerly awaiting for your guidance
From India, Pune
sir today for the first time i am daring to write something , please forgive if any mistake takes place and give your valuable guidance
to your obedient follower
sir i am working with a automobile parts manufacturing company which is been took over by new management just before one month.
all staff is been at the same place as previously.
now it is our first salary coming by 15 days later and in a very short period of time of 15 days management want me to restructure salary system as per rule and law they want to limit pf / esic contribution to the lowest to keep their liability limited as per govt.rule .
now the case is employees are having salary ranging from 5000/- to 75000/- as gross per month
and Basic + DA is kept 50% of gross to all . which is creating lot of statutory PF contributory burden on employer as there is no ceiling of 6500/-
but now new management want to decrease it up to legal limit of 780+1.61% of admin charges with deduction of employees pf amount as previously to maintain their savings in pf accounts cause many employee want their saving to increase in PF accounts.but employer share to be restricted to Rs.885/- (13.61% on 6500) .
is it possible legally as we respect the law and want to follow.
also provide some guidance on minimizing ISIC contribution.and how to prepare a leave policy.
Thanking you and eagerly awaiting for your guidance
From India, Pune
If the your new management continues with the old employer's name and PF & ESI A/C. It is not possible to reduce the PF and ESI contribution. If they change the concern Name and like to start the new PF and ESI A/C it may possible. Here also some problem will occur. That is employees will loss their continuation of their savings in PF. So inform both to your new management. They may take a decision on this wait for that. All the best.
From India, Salai
5From India, Salai
Dear Friend,
Kindly refer the recent judgement of the Bombay High Court regarding the restricting the Management's PF share only to pay on Rs. 6500/- though the employees salary is more than Rs. 6500/- (Basic +DA)
G.K.Manjunath
From India, Bangalore
Kindly refer the recent judgement of the Bombay High Court regarding the restricting the Management's PF share only to pay on Rs. 6500/- though the employees salary is more than Rs. 6500/- (Basic +DA)
G.K.Manjunath
From India, Bangalore
Dear vjnamdeorao,
As regards to your quey on PF, you can reduce the PF contribution amount and restrict it on 12 % on Rs. 6500/-i.e. Rs. 780/-.
There is a judgment of Supreme Court in case in Marathwada Gramin Bank Karmachari Sanghatana Vs Management of Maratwada Gramin Bank (SC 2011 LLR 1130) according to which you can reduce the PF contribution amount and restrict it on 12 % on Rs. 6500/-i.e. Rs. 780/-.
However, you are advised to take consent from all affected employees. Further, according to section 9A of ID Act, no employer, who purposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change without giving notice. Accordingly, you need to give notice of change under section 9A.
As regards to your ESI query, you have no scope to reduce your liability unless you restructure your entire salary package and convert certain emoluments in to annual terms (i.e. LTA, Medical etc.).
From India, Mumbai
As regards to your quey on PF, you can reduce the PF contribution amount and restrict it on 12 % on Rs. 6500/-i.e. Rs. 780/-.
There is a judgment of Supreme Court in case in Marathwada Gramin Bank Karmachari Sanghatana Vs Management of Maratwada Gramin Bank (SC 2011 LLR 1130) according to which you can reduce the PF contribution amount and restrict it on 12 % on Rs. 6500/-i.e. Rs. 780/-.
However, you are advised to take consent from all affected employees. Further, according to section 9A of ID Act, no employer, who purposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change without giving notice. Accordingly, you need to give notice of change under section 9A.
As regards to your ESI query, you have no scope to reduce your liability unless you restructure your entire salary package and convert certain emoluments in to annual terms (i.e. LTA, Medical etc.).
From India, Mumbai
Dear Friend,
The S.C. has upheld that even if the Mangement has been paying contribution over and above 6500/- , it can be brought back and pay only on 6500/-. The decions is in respect of the case by the workmen of Marathawada Gramina Bank Krmachari Sangatana Vs. Management of Marathawada Gramina Bank - 2011 LLR 1130 (SC).
Citing the above judgement, you can also implement the same in your organisation.
This could save lot of money to the Management . The present system will have cascading effect as the VDA and Wages would go on increasing due to inflation and wages settlement.
In view of all these it is adviisiabe to have a detailed dicussion with your advocate.
With kind regards.
From India, Bangalore
The S.C. has upheld that even if the Mangement has been paying contribution over and above 6500/- , it can be brought back and pay only on 6500/-. The decions is in respect of the case by the workmen of Marathawada Gramina Bank Krmachari Sangatana Vs. Management of Marathawada Gramina Bank - 2011 LLR 1130 (SC).
Citing the above judgement, you can also implement the same in your organisation.
This could save lot of money to the Management . The present system will have cascading effect as the VDA and Wages would go on increasing due to inflation and wages settlement.
In view of all these it is adviisiabe to have a detailed dicussion with your advocate.
With kind regards.
From India, Bangalore
Dear friends
As far as PF contribution is concerned, PF authorities are not at all bothered whether you are increasing the salary or decreasing the salary. They matter whether the company covers PF & ESIC to all its employees, including the contract labours. More importantly, the current yearly CTC offered to its employees shall not come down. For this, you may introduce any other yearly benefits like LTA, Incentive etc. to match the earlier yearly CTC.
Regards
Vijayan
As far as PF contribution is concerned, PF authorities are not at all bothered whether you are increasing the salary or decreasing the salary. They matter whether the company covers PF & ESIC to all its employees, including the contract labours. More importantly, the current yearly CTC offered to its employees shall not come down. For this, you may introduce any other yearly benefits like LTA, Incentive etc. to match the earlier yearly CTC.
Regards
Vijayan
can anyone help me in knowing that can we split minimum wages for not contributing more PF amount. if anyone has a answer then please revert with some notification. Thanks Deepa Gusain
From India, Delhi
From India, Delhi
Dear Deepa Gusain
you can find prevailing minimum wages at Delhi thru Google (attached pls find a screen shot saved in word file) and as it is known that PF authority is not bothered about contribution on basic. Please remember that the minimum wages payable are mandatory. The gross wages should not be less than the wages mentioned in the notification.
The basic can be reduced in order to reduce the PF contribution. ESI however it based on the total wages paid excluding washing allowance and hence as suggested by other member, restructure CTC and make components into Medical and LTA.
I understood from your posting that u r aking for puts to reduce the burden of pf and esi contributions by your employer.
From India, Hyderabad
you can find prevailing minimum wages at Delhi thru Google (attached pls find a screen shot saved in word file) and as it is known that PF authority is not bothered about contribution on basic. Please remember that the minimum wages payable are mandatory. The gross wages should not be less than the wages mentioned in the notification.
The basic can be reduced in order to reduce the PF contribution. ESI however it based on the total wages paid excluding washing allowance and hence as suggested by other member, restructure CTC and make components into Medical and LTA.
I understood from your posting that u r aking for puts to reduce the burden of pf and esi contributions by your employer.
From India, Hyderabad
Dear Subbarao ji,
With due respect to you, I differ with your fllowing statments.
I am reproducing the para 12 of EPF&MP Act 1952 as under verbatim for your ready reference:
12. Employer not to reduce wages, etc.
No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies shall, by reason only of his liability for the payment of any contribution to the Fund or the Insurance Fund or any charges under this Act or the Scheme or the Insurance Scheme reduce whether directly or indirectly, the wages of any employee to whom the Scheme or the Insurance Scheme applies or the total quantum of benefits in the nature of old age pension, gratuity, provident fund or life insurance to which the employee is entitled under the terms of his employment, express or implied.
From India, Mumbai
With due respect to you, I differ with your fllowing statments.
I am reproducing the para 12 of EPF&MP Act 1952 as under verbatim for your ready reference:
12. Employer not to reduce wages, etc.
No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies shall, by reason only of his liability for the payment of any contribution to the Fund or the Insurance Fund or any charges under this Act or the Scheme or the Insurance Scheme reduce whether directly or indirectly, the wages of any employee to whom the Scheme or the Insurance Scheme applies or the total quantum of benefits in the nature of old age pension, gratuity, provident fund or life insurance to which the employee is entitled under the terms of his employment, express or implied.
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