Case Law Details
Regional Provident Fund Vs Vivekananda Vidyamandir And Others (Supreme Court of India)
The Supreme Court’s (SC) ruling on Provident Fund on Thursday (28 February, 2019) states that employers can’t segregate special allowances from basic salary. It has to be included for PF deductions under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, said a bench of Justices Arun Mishra and Naveen Sinha.
The Supreme Court held that variable earning which may vary from individual to individual according to their efficiency and diligence will stand excluded from the term “Basic Wages” under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (Provident Fund Act), according to a report in Bar & Bench.
This is expected to hit a large number of organisations where employees salary and special allowances are taken separately as employers will now have to match it with similar contributions.
What the SC ruling means is that those earning salary and special allowances together up to Rs 15,000 will now have to club it for purpose of PF deductions. Earlier, only the basic salary would be taken into account for PF calculation.
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for example, currently my company pays 25000/month as basic pay & another 25000/month as allowances. current Employer’s PF contribution is 12% of 25000= 3000 and same as mine contribution
will it now change to 12% of 50000=6000?
Is this judgement applicable for employees earning more than 15000 and base wages?