On 27 May 2014, the Indian Provident Fund Office has issued a circular clarifying that an employer cannot be forced to contribute towards Provident Fund beyond the statutory ceiling (presently, INR 6,500 per month) as specified under the Provident Fund law.
The circular is based on a 2011 Supreme Court ruling wherein the court held that an employer paying Provident Fund in excess of statutory liability, as per it own scheme, can, at any time discontinue the same.
The circular is a welcome step as it may allow an employer to limit Provident Fund contribution on INR 6,500 per month where the contribution was made on full monthly pay earlier.
However, such an option may not be available where there is an agreement with the employee to contribute on full monthly pay.
The employers and their employees may opt to take advantage of the 2011 Supreme Court ruling and the circular. In such cases, it is essential that the terms of employment with the employees and the other facts are analysed to determine the applicability of the said ruling and the circular
The circular is based on a 2011 Supreme Court ruling wherein the court held that an employer paying Provident Fund in excess of statutory liability, as per it own scheme, can, at any time discontinue the same.
The circular is a welcome step as it may allow an employer to limit Provident Fund contribution on INR 6,500 per month where the contribution was made on full monthly pay earlier.
However, such an option may not be available where there is an agreement with the employee to contribute on full monthly pay.
The employers and their employees may opt to take advantage of the 2011 Supreme Court ruling and the circular. In such cases, it is essential that the terms of employment with the employees and the other facts are analysed to determine the applicability of the said ruling and the circular
No comments:
Post a Comment