SC reiterates that special allowances will form part of “basic wages” for the purpose of PF if it is not in the nature of variable pay
In a judgement that brings clarity to employers and officials alike, the Supreme Court (“SC”), in the case of The Regional Provident Fund Commissioner (II) West Bengal v. Vivekananda Vidyamandir and Others, ruled that any “special allowance” paid by employers to its employees would be considered as part of “basic wages” for the purposes of calculating provident fund contributions under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (“EPF Act”).
In the present case, the main question before the SC was whether “special allowances” paid by an establishment to its employees would fall under the definition of “basic wages” as prescribed in the EPF Act.
The SC, whilst determining the same, reiterated its previous judgments and held that the test to be adopted to determine if any “special allowance” was to be excluded from “basic wages” is that of universality and whether such allowance was in the nature of variable pay or an incentive payment that is not paid across the board to all employees in a particular category. If the salary/wages paid by an establishment are simply split into a “special allowance” but the employer has not produced any evidence/material to indicate that allowance is either variable or an incentive linked payment, then the “special allowance” will be included in “basic wages” and provident fund deductions are required to be made on these amounts as well.
Quick View
- This judgement may potentially increase the provident fund deductions and contributions of employees across the country, where monthly salary is split into various allowances, including an omnibus “special allowance” which is often paid across the board and is not subject to any special conditions/production targets, etc. Employers will now not be able to camouflage “basic wages” by paying a “special allowance” with the sole purpose of avoiding paying any provident fund.
Govt promulgates Aadhaar Ordinance: Aadhaar can now be used for obtaining a SIM card or opening a bank A/C
The Government of India (“Govt”), recently promulgated the Aadhaar Ordinance 2019 (“Ordinance”) after the Aadhaar and Other Laws (Amendment) Bill, 2018 failed to get the approval of the Rajya Sabha during the recently concluded budget session of parliament.
Some of the salient features of the Ordinance are:
- Allows Aadhaar to be a valid ID and address proof for obtaining a SIM card or opening a bank account;
- Children below the age of 18 who have an Aadhaar number will now have the right to cancel their Aadhaar number on attaining the age of 18;
- Permits entities to perform authentication only when they are compliant with the standards of privacy and security specified by the Unique Identification Authority of India.
Quick View:
- The Ordinance aims to provide a robust mechanism to ensure that there is no misuse of Aadhaar by any entity. Further, the Ordinance reiterates that people may use Aadhaar only voluntarily and that no person can be compelled to give his/her Aadhaar number for any purpose.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.