Category Archives: Important Judgments & rulings

LLR brings important judgments passed by various Courts and Supreme Court of India pertaining to Labour Law, every month. Subscribe to Labour Law Reporter to keep yourself updated.

EMPLOYER, NOT PF AUTHORITY CAN FIX WAGES FOR CONTRIBUTIONS

The grievance of the appellant in the appeal is that the order dated 25.06.2010 passed by the EPF Authority under section 7A of the Act that the employer is liable to pay contributions under the Act on the wages as fixed under the Minimum Wages Act and not the actual wages paid to the workmen is illegal.

The Appellate Tribunal observed that the contribution under the Act is to be paid upon the ‘basic wages’ as defined under the Act and not upon the wages fixed under the Minimum Wages Act as also held by the Punjab & Haryana High Court in the case of APFC Gurgaon vs. M/s. G4S Security Services (I) Ltd., 2011 LLR 316. Hence, the impugned order of the EPF Authority is set aside and appeal allowed.

M/s. Black Panther Security Force vs APFC, Nagpur
ATA No.458(9)/2010 decided on 31.1.2012

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MINIMUM WAGES CAN BE SPLIT INTO ALLOWANCES


In the appeal against the order of the EPF Authority under section 7A of the Act the appellant have stated that directing the appellant to deposit the dues is illegal as the EPF Authority has assessed the dues considering the allowances as ‘basic wages’.

The EPF Appellate Tribunal observed that the provident fund contribution is to be calculated on the basic wages and not upon the wages fixed under the Minimum Wages Act as already settled by the Punjab & Haryana High Court in the case of APFC Gurgaon vs. M/s. G4S Security Services (I) Ltd., 2011 LLR 316. Fixation of wage structure is within the domain of the employer. Wages can be split into allowances. Hence, order of the EPF Authority cannot sustain and appeal is allowed.

M/s. SSM Fine Yarns vs. RPFC, Madurai
ATA No.734(13) 2010 decided on 7.2.2012

SPLITTING OF MINIMUM WAGES FOR PROVIDENT FUND CONTRIBUTIONS

 

It may be recollected that in Assistant Provident Fund Commissioner, Gurgaon Vs. G4S Security Services (India) Limited & Anr, 2011 LLR 316, the Punjab & Haryana High Court has held that the provident fund contributions are not necessarily to be paid on the wages which are fixed under the Minimum Wages Act.

 

Being aggrieved, the EPFO filed a Letters Patent Appeal No. 1139 of 2011 before the Division Bench challenging the order of learned Single Judge.  The Division Bench, comprising of the Hon’ble Chief Justice Adarsh Kumar and the Hon’ble Justice A.K. Mittal, on 20.07.2011 dismissed the appeal.


PF applicable on all Allowances

We, at the Labour Law Reporter, are flooded with the inquiries as to what should be done for provident fund contribution in view of the recent rulings of Madhya Pradesh High Court and the Madras High Court, which have clubbed almost every allowance with basic wages/dearness allowance for deduction and deposit of provident fund contributions.

The Provident Fund Authorities have leapt on it as if they have found the gold mines of El DoradoSluggish and lethargic otherwise; the authorities showed the remarkable agility and tearing hurry in sending the circulars in bulk for propagating the operative portions of the decisions forgetting the basic tenet of the legal system that those rulings have not attained the status of finality. This attitude of the authorities is nauseating; reflecting their impaired mentality towards the economic growth of the country.

However, we consider it our bounden duty to clarify the legal position (as gathered by the concerned advocates) which, as on today, is that:

1.      Review Petitions have been filed before the Madhya Pradesh High Court (Gwalior Bench) which would come up for hearing on 29th July, 2011.

 2.     A Writ Appeal has also been filed in the High Court of Madras which is likely to come up for hearing on or around 8th August, 2011.

In view of pendency of the aforesaid Petitions, the judgments of the High Courts are not definitive.  Accordingly, we have been sincerely advising that the existing arrangement should continue till the final outcome.

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