An employer can opt out of PF scheme if the employees give their consent. But for that many formalities have to be performed.
DA is part of basic salary of 50 per cent.
PF law & information on new wage code
I am having factory in Sinnar (Nasik), Maharashtra. I am having 83 employees on payroll. We follow all procedures of PF & Gratuity. My query : - 1) As per new Wage code it is compulsory to have basic salary 50% minimum of gross salary. I have read somewhere that 50% basic also includes Dearness Allowance. I want clarification whether 50% is only Basic or 50% is Basic & Dearness Allowance. 2) I want to enroll some more employees, someone told me that there is option that PF can be paid directly by employee themselves & not binding on Company to deduct & deposit same with Government if employee gives undertaking to not deduct the same. Is there any such waiver for non deduction of PF if employee gives undertaking that they do not want us to deduct PF.
Asked 3 years ago in Labour
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5 Answers
There is no law making payment of dearness allowance compulsory.
However, most minimum wage notifications of State Governments have a DA component linked to some Consumer Price Index Number. In case, you are paying as per these minimum wage notifications, then it is a statutory obligation as and when the State government raises the minimum wage by increasing the DA component to pay the same.
Also, if you have signed a long - term settlement with your union which includes a formula for payment of DA, then it becomes a contractual obligation to do so and any violation will be taken up by the union under Section 33C of the Industrial Disputes Act.
DA is not compulsory for private company. However you wish you can bifurcate basic in two parts, one is Basic and other is DA.
Any organisation that has 20 or more employees is liable to maintain a provident fund account for its employees.
However, if your employee draws a salary more than Rs.15,000 per month, then he/she can also choose to not contribute to the Provident Fund.
An employee can opt out of the provident fund if the following criteria are met:
- If he/she is a first-time employee i.e., at the time of joining the first job
- The employee has his or her Basic + DA (PF Wages) more than Rs.15000/- per month
- At the time of changing a job, only when he/she does not have an existing PF account number
- The basic pay should be 50 % of the total wages. The computation of wages as per the New Code includes Basic pay, Dearness Allowance and Retaining Allowance (if any). It specifically excludes House Rent Allowance, conveyance allowance, statutory bonus, overtime allowance and commissions.
Dear client you have to follow all the procedure in listed in the new wage code after its enactment.
1. No
2 you need to deduct pf if your no of employees comes under pf law along with other conditions
