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Minimum wages to be split for PF Contributions


In a democratic set-up, the hallmark of administration is to make a subject transparent, simple and free from intricacies as far as possible. It is, however, a different matter that our officials consider it a quality extra-ordinary to obfuscate the simple issue and make archaic what is straight one. Any important issue may hang in fire for any length of time but what can be waited is completed with tearing hurry. This mentality is also known Babucracy. It is a sad commentary indeed that our elected representatives either remain bogged down in petty politicking or do not understand the imports of administration. That is why; they have the least say in labyrinthine of governance leaving almost everything to the whims and fancies of the officials.
To cut the long story short, when the Employees’ Provident Fund Commissioner (Compliance) found that the grip of interference of the department is loosening due to catena of judicial pronouncements, his office worked overtime to find some excuses to tighten it and thereby avail the opportunity to heckle and harass the entrepreneurs. On 23rd May, 2011, the Addl. CPF Commissioner issued a circular wherein the minimum wages were not allowed to be split for the provident fund contributions with certain restrictions. This circular was enough to upset the apple cart and caused a lot of consternation and nervousness among employers.
Yours truly, who has always taken up the cudgels on behalf of the law-abiding employer, immediately wrote a letter within 48 hours of the issuance of the circular in question, requesting the Central Provident Fund Commissioner (Compliance) not to show any undue and undesirable haste and withdraw the said circular. He was also requested to properly assess and weigh the pros and cons of the judgment of Karnataka High Court, which was made the basis for the issuance of the circular so that no confusion could occur in the circle of employers. What was more intriguing was that the Nelson’s eye was turned towards more clear judgment on the subject delivered by the Punjab and Haryana High Court (This judgment is now upheld by the Division Bench of Punjab & Haryana High Court wherein the appeal filed by the Employees’ Provident Fund Organisation was dismissed, the intentions of administration were staring in the face, which were certainly different from what they suggested and our letter followed with reminders was also ignored.
Be that as it may, the same was subjected to judicial scrutiny and on 29th of September 2011; the Hon’ble Court of Andhra Pradesh in W.P. M.P. No. 28744 of 2011 in W.P. No. 23478 of 2011 as argued by advocate C. Niranjan Rao, passed the injunction order till the final disposal of the Writ Petition.
Earlier our colleagues Advocate Harvinder Singh and Advocate SK Gupta had filed a writ petition and the Hon’ble High Court of Delhi also found the prima facie infirmity in the circular dated 23.5.2011 of the Provident Fund Commissioner and stayed the same vide its judicial order dated 30th August 2011.
The representation of yours truly dated 25-5-2011 was not even acknowledged. However, when the Delhi High Court stayed the operation of the circular of EPFO dated 23-5-2011, the department issued a fresh circular on 27-9-2011 asking all the Regional Provident Fund Commissioners to keep the earlier circular in abeyance. Normal courtesy demands that the information about it should have been given to the Labour Law Reporter, being the whistle blower; but that was not done. We don't mind it but we certainly wish that had the decision for rectification of circular been timely taken the litigations could have been avoided.
The crux of the administrative law is that the principles of natural justice must be kept uppermost. Discretionary powers should not be reduced to arbitrariness. Bias of any type vitiates the fair play and justice. An administrative decision, that is bound to create confusion, must either be eschewed or be allowed to wait for some time to settle down the dust. It is hoped that the Authorities will not sit on the plank of any prestige and strive for promoting the congenial relationship between employers and employees with emphasis to growth and generation of employment. The minimum wages be allowed to be split in allowances for which either the EPFO should seek amendment of the ‘basic wages’ in the EPF & MP Act otherwise the order of Punjab & Haryana High Court be honoured wherein the EPFO has lost the battle firstly before EPF Appellate Tribunal, then before learned Single Judge and afterward in the Division Bench.
Highlights of some of the judgments to be reported in November, 2011 issue
  • Employers need not pay provident fund contribution higher than the prescribed ceiling. (Supreme Court)
  • A vague charge-sheet will vitiate enquiry. (Supreme Court)
  • Delinquent be heard when Disciplinary Authority differs with Enquiry Officer. (Supreme Court)
  • Gratuity can’t be claimed before Labour Court. (AP HC)
  • Travelling allowance is excluded from ‘wages’ under ESI Act. (AP HC)
  • Bias against enquiry officer untenable without supporting reasons. (P&H HC)
  • Gross indiscipline will justify termination. (P&H HC)
  • Nature of duties not designation is determining factor as to whether an employee is a ‘workman’ or not.
    (Karn. HC)
  • Dispensation of enquiry appropriate when holding is not possible. (Del. HC)
  • Removal justified when the employee neither complies transfer nor appears before medical board. (Del. HC)
  • Settlement for specific duration will continue to be effective till it is substituted. (Del. HC)
  • A charge-sheet for theft should be precise. (Mad. HC)
Also an informative article on drafting an agreement between Principal Employer and the Contractor so that it should not treated as sham contract.
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