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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.



Learning

 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


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