Tags:
Journalism of Courage
The retirement kitty of employees could see a hefty rise,but at the cost of their take-home salaries. The Madhya Pradesh High Court has recently ruled that employers should include house rent and transport allowances,besides the basic pay of their staff,while calculating provident fund (PF) liabilities.
Contribution towards PF is mandatory for all workers earning upto Rs 6,500 per month,at a rate of 12 per cent. Employers match this by making an equal contribution. At present,most employers add only daily allowance with the basic wages while calculating the PF liability.
The Employees Provident Fund Organisation has now forwarded the HC ruling to all its regional offices and directed them to ensure it is followed. We will monitor PF deductions and ensure that conveyance and special allowances are included with basic pay, said an EPFO official.
The case pertains to Montage Enterprises Pvt Ltd versus the Employees Provident Fund,Indore,wherein the court ruled that if any allowance is being paid uniformly,necessarily and ordinarily,it should be included for calculating PF contribution. The Employees Provident Fund and Miscellaneous Provisions Act,1952,however,excludes many allowances like dearness allowance and HRA from the definition of basic wages.
