The circular dated November 30 stated that basic wages will include all allowances which are paid to the employees.
Mumbai/New Delhi: In what could bring respite to lakhs of employers, the government has decided to review the Employees Provident Fund Organisation’s (EPFO) decision that could render the people with a lesser take home pay.
A new circular issued by the EPFO had meant a lower pay because allowances paid to employees will have to be added back to the basic salary and provident fund (PF) contributions computed against this higher value.
The circular dated November 30 stated that basic wages will include all allowances which are paid to the employees. Thus, various allowances such as conveyance, educational allowance, medical allowance, etc. will have to be taken into consideration while computing the PF contribution.
However, as per a Times of India report, the government might ‘rethink’ the EPFO circular, citing reasons that the move was ‘largely meant to protect employees earning below Rs 6,500 per month’ (for whom EPF is mandatory).