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Ajay Agarwal (Executive)     05 July 2012

Is pf applicable on washing , conveyance and special allowan


Our PF officer has served  an order demanding PF contribution on washing allowance, conveyance and special allowance ( because his palm was not greased ) . Is it as per law ? Can some one give some references to help us fight this order.

Will it be helpful if we collect data of his others eshtablisments using RTI act and put a case for misusing office. We believe that he did not demand the same from many other eshtabisments.


 7 Replies

Hemachandra (Head - HR)     05 July 2012

Dear Ajay,

Similar kind of case I have come across. The PF authorities will question, when the employee Basic & DA is less than Rs.6500-00 or less than minimum wages and paid the remaining amount in other headings like special allowance and others. Their contention is, in order to deny the PF benefit, the companies are paying the salary in different names like special allowance and others.

It is better to have good understanding with the PF authorities and close the old cases. In future, it is good to ensure to pay the salary in the exempted salary headings like HRA, Washing allowance and others, but maintaining Basic and DA at Rs.6500-00 or minimum wages.





Kumar Doab (FIN)     05 July 2012

Mr. Hemachandra has given valuable advice. Kindly follow it.

The authority might have treated the special allowances as undefined allowance/VDA, and might have asked to merge it with DA. Washing allowance is not included.

You may check minimum wages rules applicable to your state. You may consult your labor law consultant, and your consultant shall provide you the reference of various circulars, notifications, judgments and help you to arrive at logical/correct decision.


Rates of Contribution:

a) The Employees' Provident Fund Scheme

In respect of establishments employing 20 or more persons and engaged in industry notified under  Section 6  of Act ( other than the Establishments. declared as sick ) 12% of the basic pay DA , Cash value of food concession and retaining allowance , if any, subject to a maximum of Rs.6500/- per month. Voluntary higher contributions are also acceptable at the joint request of the member and the employer .


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.


You can visit my blogger: for the question "what is basic wages" and the perspective by the EPFC.


radha krishna (vp-hr)     20 July 2012

Dear Friends,

Understand Hon'ble Supreme Court of India has delivered a decision on the issue of whether teh allowances also come udner the category of Basic. Can any one post the copy of Judgement.




EPFC had issued Circular bearing No. Coord/4 (6) 2003/Clarification/Vol. III/7394  regarding the PF contribution on allowances. This has been stayed by their circular  dated 27.9.2011. As members be aware,, a revision petition has been filed  Surya Roshni Limited  in the Supreme Court, wherein the Supreme Court has given interim stay to the Order of he Madhya Pradesh High Court (13th July 2012).


Kumar Doab (FIN)     20 July 2012

Many Thanks to Mr. Vasudevan for valuable input.

The circular and HC order is enclosed.

The SC decision and stay as pointed out by Mr. Radha Krishna and Mr. Vasudevan is sought.

Attached File : 1069817952 delhi hc order splitting of min wages oolc.pdf downloaded: 639 times








It may be recollected that in a Review Petition by Surya Roshni Limited vs. Employees’ Provident Fund and Another, 2012 LLR 42, Division Bench of Madhya Pradesh High Court has held that Section 2(b) and 6 of the Employees’ Provident Funds & Miscellaneous Provisions Act define basic wages and HRA, overtime allowance, bonus, commission or any other similar allowance are not covered in the definition of basic wages but when special allowance, dearness allowance, conveyance allowance and other allowances are paid universally to all the employees, they would be treated as part and parcel of basic wages.


A special leave petition to appeal, as filed, came up for hearing on 13.7.2012, in which the following order was passed :


ITEM NO.MM-128            COURT NO.12            SECTION XV

S U P R E M E      C O U R T      O F       I N D I A

I.A. NOS.4-5 in
Petition(s) for Special Leave to Appeal (Civil) No(s).8781-8782/2012

(From the judgment and order dated 24-3-2011 in WPC No.1891/2011 and dated 22-11-2011 in RP No.117/2011 of the High Court of M.P. at Gwalior)

SURYA ROSHNI LTD.                                                                                                     Petitioner(s)


EMP. PROVIDENT FUND & ANR.                                                                                    Respondent(s)



Date: 13-7-2012 These I.As were mentioned today



For Petitioner(s) : Mr. Rohit Arya, Sr. Adv., Mr. Gagan Gupta, Adv., Mr. Harvinder Singh, Adv., Mr. Sunil Singh Parihar, Adv., Mr. Nitin Gaur, Adv.

For Respondent(s) : Ms. Liz Mathew

Upon being mentioned the Court made the following



Considering the facts and circumstances of the case we are inclined to direct the petitioner to deposit 60% of the amount demanded, after getting credit to the amount already paid, within a period of two weeks.

On the above facts, we are inclined to grant stay of the High Court judgment.

The I.As are, accordingly, disposed of.

(NARENDRA PRASAD)                                                                                 (RENUKA SADANA)

COURT MASTER                                                                                           COURT MASTER

Some of the appeals, as decided by The EPF Appellate Tribunal, are summarized and published under following captions :

  • Contributions, as recovered without identification of employees, is liable to be refunded by EPFO
  • Levy of damages not proper when there was no conscious failure of employer
  • Apprentices not to be covered as employees
  • Workers to be identified before the assessment is made
  • EPF Tribunal can allow installment for payable dues for employer
  • Damages for delayed payment of contributions to be quashed

As usual, amongst others, the following latest judgments (as decided in 2012) are being published in August 2012 issue of Labour Law Reporter. The salient features are given below :


>> Dismissal for taking bribe not harsh. Jhar. HC 814

>> Demand of ESI contributions not tenable in absence of identification of employees and their wages.Pat. HC 842

>> No back-wages when reinstatement is on technical reason.Del. HC 791

>> Relationship of employer and employee, when disputed it is for the workman to establish by evidence.All. HC 878

>> Compensation rightly awarded when the employee was murdered by striking workers. Chhatt. HC 886

>> Validity of enquiry shall be decided as preliminary issue. Mad. HC 866

>> An accountant, assigned for realization of amounts from other companies, is a ‘workman’. Jhar. HC 813

>> Territorial jurisdiction of Insurance Court is restricted to where insured workman was working. Guj. HC 807

>> An enquiry will be vitiated when delinquent is denied reasonable opportunity. Guj. HC 801

>> For proving that workman was engaged through contractor, there must be a valid agreement. Mad. HC 824

>> When procedure prescribed for termination not followed, workman would be reinstated. All. HC 878

>> Higher Court to quash an Award when the Tribunal committed any error of law. Mad. HC 872

>> After 30 days of publication of an Award, the Labour Court becomes functus officio. All. HC 798

>> 240 days continuous service insignificant when the termination is for misconduct. P&H HC 830

>> For determining ‘workman’, it is immaterial whether he is full-time, part-time, casual or contractual. Mad. HC 820

>> Reinstatement appropriate when enquiry is vitiated. Karn. HC 854

>> Tribunal can’t re-appreciate findings in enquiry. Del. HC 785

>> Minimum wages for shops & establishments would also apply to unscheduled employments. Del. HC 789

>> Awarding of back-wages with reinstatement not justified, when charges are serious and proved. Uttr. HC 846

>> Simultaneous payment of closure compensation is not a condition precedent. Del. HC 792

>> Non-supply of report of Enforcement Officer will vitiate order under section 7A of Provident Fund Act. Cal. HC 835

>> An objection, not raised before the Labour Court, cannot be taken in High Court. Mad. HC 866


As an annual event, the HRD & Labour Law Referencer cum Diary, 2013 (Revised) with more proformas has been printed for the subscribers who will get free on renewal of their subscripttion for 2013 by remitting Rs.2950 only.

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