We are following the Limit of 15000/- of BP+DA for PF contribution, commanlly applicable to all eligible employees in our company.
Now One new joinee who was contributing in his last / previous company 12 % on Basic salary (BP+DA) without any limit ,,, i.e. on 50,000/- BP + DA = 6000/- PF equal from Employee as well from Employer share i.e 12000/-.
Now the Q is that what will be legal complication from PF office on us ( Employer) - in case of
we maintain our limit of max 15000/- and contribute 12 % on Employee part + 12 % on Employer part, as a part of common policy for all employees in the company........
but it result in that :- in his (new joinee's) last co. PF contribution was 6000 + 6000 = 12000/- but now it reduced to 1800/- + 1800 = 3600......
Please clarify if it causes any risk of challenge from PF office due to lowering in contribution amount from 12000/- to 3600/- .... is it mandatory for us to maintain PF contribution according to his previous company policy of contributing PF on total Basic salary (BP+DA) without any limit.
Humble request for early reply from Labour law Professionals in the common benefit for all.....
Regards
Vikas
From India, Mumbai
Now One new joinee who was contributing in his last / previous company 12 % on Basic salary (BP+DA) without any limit ,,, i.e. on 50,000/- BP + DA = 6000/- PF equal from Employee as well from Employer share i.e 12000/-.
Now the Q is that what will be legal complication from PF office on us ( Employer) - in case of
we maintain our limit of max 15000/- and contribute 12 % on Employee part + 12 % on Employer part, as a part of common policy for all employees in the company........
but it result in that :- in his (new joinee's) last co. PF contribution was 6000 + 6000 = 12000/- but now it reduced to 1800/- + 1800 = 3600......
Please clarify if it causes any risk of challenge from PF office due to lowering in contribution amount from 12000/- to 3600/- .... is it mandatory for us to maintain PF contribution according to his previous company policy of contributing PF on total Basic salary (BP+DA) without any limit.
Humble request for early reply from Labour law Professionals in the common benefit for all.....
Regards
Vikas
From India, Mumbai
Lowering the PF qualifying salary or section 12 of EPF & Mis. provisions Act does not apply here because there is a change in member id. It is immaterial how much was his contribution in his previous company. What is to be taken care of is that whether you cover him or not. If you exclude him on the ground that his salary at the time of joining in your organisation itself is more than Rs 15000, then it is a legal issue. You are under an obligation to continue his PF but under no way you are liable to contribute in the same manner in which his previous employer was doing. Moreover, the Employees Provident Fund Organisation cannot demand contribution of any amount higher than Rs 15000. If they demand saying that the employee has been contributing on a salary of, say, Rs 50000, and therefore, you can not reduce it, you may just say that:
1. Since he is a member of PF who has not withdrawn the accumulations before joining our company, we have given him coverage.
2. As per our company policy, the contribution is restricted to 12% on a maximum qualifying salary of Rs 15000 and accordingly we contribute to his PF also. We are not under any obligation to pay it on a higher salary.
3. In Maratwada Gramin Bank karmachari Sanghatan and another Vs management of Maratwada Gramin Bank and others (SC 2011 LLR 1130), the Supreme court has ruled that EPF Organisation's right to demand contribution is restricted to Rs 6500( at the time of ruling the salary ceiling was Rs 6500, now it has been made Rs 15000) and as such if the Bank had changed the practice of contributing PF on a wages higher than Rs 6500 (make it as Rs 15000) and restricted it to 6500 (15000), it will not attract section 12 since the EPFO has no right to demand contribution on any amount higher than 6500 (15000). That means it is purely employer's decision and the EPFO cannot interfere in it.
Madhu.T.K
From India, Kannur
42491. Since he is a member of PF who has not withdrawn the accumulations before joining our company, we have given him coverage.
2. As per our company policy, the contribution is restricted to 12% on a maximum qualifying salary of Rs 15000 and accordingly we contribute to his PF also. We are not under any obligation to pay it on a higher salary.
3. In Maratwada Gramin Bank karmachari Sanghatan and another Vs management of Maratwada Gramin Bank and others (SC 2011 LLR 1130), the Supreme court has ruled that EPF Organisation's right to demand contribution is restricted to Rs 6500( at the time of ruling the salary ceiling was Rs 6500, now it has been made Rs 15000) and as such if the Bank had changed the practice of contributing PF on a wages higher than Rs 6500 (make it as Rs 15000) and restricted it to 6500 (15000), it will not attract section 12 since the EPFO has no right to demand contribution on any amount higher than 6500 (15000). That means it is purely employer's decision and the EPFO cannot interfere in it.
Madhu.T.K
From India, Kannur
Dear Vikas,
Statutory Rate of contribution is 12% for PF on Basic upto Rs 15000/- only. Beyond Rs 1800/- contribution (12%of 15000) its the called as Voluntary Contribution. Many companies limit to Rs 15000/- and don't make voluntary contribution as its an added burden to their pockets. If you are paying just Rs 3600/- as both contributions, there is no worries. You can have a sigh of relief and take a chill.
You will have to make the employee understand about the Company policy about not making voluntary contributions.
From India, Mumbai
Statutory Rate of contribution is 12% for PF on Basic upto Rs 15000/- only. Beyond Rs 1800/- contribution (12%of 15000) its the called as Voluntary Contribution. Many companies limit to Rs 15000/- and don't make voluntary contribution as its an added burden to their pockets. If you are paying just Rs 3600/- as both contributions, there is no worries. You can have a sigh of relief and take a chill.
You will have to make the employee understand about the Company policy about not making voluntary contributions.
From India, Mumbai
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