Manish Singh (Advocate) 06 September 2008

ESI AND EPF

Dear Members,
Please throw some light on this Qery.

A COMPANY has been deducting PF/ESI voluntarily from the consolidated payment made to one of the Trainees for more than 1.5 years with proper registration and all that. Now they have offered the trainee a firm appointment on regular terms. Her revised emoluments were based on Company's Grades and other perquisites. Though the total revised salary is higher , yet the Basic salary is lower than the stipend previously given to her, resulting in less deduction of PF.
Is this allowed under the PF act? What are the implications and other rules on this behalf.

Please do the needful.

Reply Follow

2 Replies

PBS KUMAR (HR - PROFESSIONAL) 06 September 2008

Dear Manish ji,

Actually the RPF says 'No'. But you have to give your clarification on this issue before him , "stating that the person is 'Trainnee' so and so period, as such we have deducted PF on his stippend. Now the person is absorbed into company rols , for this the company is having policy of grads of salaty structes based on this we are deducting the PF" .

Regards,

PBS KUMAR

Saravana Rajan 07 September 2008

Hi,

PF act does not discuss the fluctuations in the basic component. But the contribution to be made is based on the basic salary the employee is paid by the organisation.

Now a days, many organisations even revise the salary packages of their existing employees and even reduce the basic pay which has been initially paid. This is basically to reduce the liability of the company in terms of PF / Gratuity / Bonus / OT if applicable.

-Saravana Rajan