HomeLAWS & SCHEMESSupreme Court EPF Judgement 2019 | Is PF on special allowances applicable?

Supreme Court EPF Judgement 2019 | Is PF on special allowances applicable?

Labour Law Advisor views on Supreme Court EPF Judgement 2019, PF Payable on special allowances, Surya Roshni V/S EPFO 28/02/2019.

The Supreme Court delivered a landmark judgment which thus curtailed unjustified use of various allowances to curb PF. Since employers have a tendency to split wages into various allowances without any basis or discretion, henceforth, allowances which are payable to all employees without any discrimination or variation in different trade categories or nature of work will attract PF. Refer the table below to understand the difference.

pf special allowances

Supreme Court EPF Judgement 2019 Precautionary measures which the establishment has to demonstrate to avoid payment of PF contribution on allowances :

  • Ensure the allowances paid to employees are variable.
  • The allowance links to any incentive for production which furthermore results in greater output by an employee.
  • Allowances are not payable to all employees in a particular category.
  • Additionally, the allowances are payable especially to those employees who avail the opportunity by fulfilling the extra condition.
  • Workman concerned is eligible to get this extra amount beyond the normal work which he was supposed to do otherwise.
  • The extra amount payable to the workman was in fact paid for the extra work which he completed and it exceeded the normal output prescribed for the workman.
  • Allowances in question were not an essential part of the basic wages.

Furthermore, a specific mention of the particular allowance that would be payable to only those employees who will fulfill “Predetermined” conditions and would not be payable to those not qualifying for the above “Predetermined” conditions. Just by giving a different name to the allowance in the wage sheet would not exempt the allowance from PF. 

You can download the Supreme court EPF judgment 2019 on PF special allowances and its interpretation by various advocates below:

What do you think about this judgment? Let us know in the comments below.

For more PF related queries check out our blog Labour Law Advisor.

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