The Provident Fund confusion

The Provident Fund confusion
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The Provident Fund Confusion. With effect from September 2014 the provident fund act was amended. The only figure that now rings a bell is 15000. But has the amendment been understood rightly? Queries have been mounting and I am still in the dark - how did this interpretation come to be ? - \"pay contribution on 15000\".

With effect from September 2014 the provident fund act was amended. The only figure that now rings a bell is 15000. But has the amendment been understood rightly? Queries have been mounting and I am still in the dark - how did this interpretation come to be ? - "pay contribution on 15000" .

Well it's time we infuse providence into minds and dispel the 15000 myth as I call it.

An employee is liable to covered under the provident fund act if his "basic wage" is less than or equal to 15000. This is the basic essence. This means if an employees' basic wage is less then 15000 he must be enrolled as a member of the provident fund scheme.

Next :- contribution must be on the actual basic wage. Not on a notional 15000. That's to say if the basic wage is 8496 then calculate contribution on 8496. If the basic wage is 17564 pay contribution on maximum of 15000.

Well there are some high class employers who want to pay on entire salary and some who deliberately want to contribute on a notional 15000 even though the basic wage might be lesser than 15000. It's not prevented by the provident fund act. But the desire of the high class employers is not a compulsion under law and that has to be remembered.

Then again there is a surge of repentance. The question arose " can we revert to paying contribution on 15000? The cost to company is increasing. " well the question is simple. But the answer is not !! As far as provident fund act is concerned the answer is crystal. Yes. You can revert to 15000. But there is a more monstrous proposition looming invisibly. The fourth schedule of the industrial disputes act. It includes contribution to provident fund.

Now what is is this fourth schedule ? It's a list of conditions of service for which notice has to be given before any change is implemented. So let's go to the root of the fourth schedule - section 9-A of the industrial disputes act.

Section 9-A says no change can be implemented in the conditions of service of an employee without following the proper procedure. However this section won't come into effect if there is a settlement or agreement between the employer and the employee.

Now one may ask what is the consequence of not following 9-A. Well it can lead to an industrial dispute or a prosecution against the employer for violation of the I D act .

So what's the end solution ? How do we get out of this maze ? Is a software company covered by the industrial disputes act ? Is the employer bound to pay contribution on the entire salary even though it's not mandatory under the provident fund act ?

Well the nail biting has begun. .let the provident confusion continue . . Just until next week where you will see a spicy solution . . . . .

Until then enjoy the spice of life !!!

By K.Sribhoomi Yesaswini

(The author is a practising lawyer with expertise in labour laws for the past 13 years.)

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