Implication of the Supreme Court Judgements on Employee Provident Fund in India

Jayant Thakur, India Country Counsel, Dimension Data India Private Limited

In India, there is a long-standing dispute between Employers and Employee’s Provident Fund Organization (EPFO) on the amount on which Provident Fund (PF) is to be deducted. The dispute is essentially due to ambiguity in section 2(b) and section 6 of the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952. Section 2 (b): “Basic Wages” means all emoluments which are earned by an employee while on duty or (on leave or on holidays with wages in either case) in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include (i) The cash value of any food concession; (ii) Any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment. (iii) Any presents made by the employer;