Will Pf Be Applicable On Back Wages? - PDF Download

Hello All,

We made a revision for some employees in April 2012. All the employees were paid the revised salary except for one employee who was missed out. After 10 months, we realized this mistake. Therefore, we are paying the arrears for the 10 months to him this month, along with the revised salary.

I need to know if we also need to pay PF/ESI for him for the revised salary for the 10 months.

Thanks. All inputs will be greatly appreciated.

For PF, you have to pay arrears. For ESI, no need to pay arrears. Please refer to the attachment.

In your case, there is no revision of wages with retrospective effect for the employee who was missed out. However, you inadvertently omitted his case, and he should have been paid the revised salary effective from April 2012. Thus, it is a lapse on your part, and in my view, it does not qualify for exemption. You may have to pay the ESI contribution for the ten-month period as well.

B. Saikumar
Mumbai

Hi Sai,

I think it is retrospectively effective because they are revising the salary w.e.f. 01 April.

Hi Prasad,

What I understand from the post is that the company revised the salary in April 2012, and all but one were paid the revised salary in and from April 2012. Therefore, the company did not raise the issue of arrears in other cases but only in one case that was inadvertently omitted. He too should have received the revised salary from April 2012 but for the lapse on the part of the company. If the revised salaries are paid on a subsequent date or now to all employees, then the revision can be termed as retrospective. Therefore, the payment of arrears to the employee who was missed out on account of the company's lapse, in my view, cannot be strictly called a revision with retrospective effect. If so, there will be a discrepancy in the quantum of contribution paid. In the case of all others, the company might have paid contributions on the revised salary, and in one case, they will not pay on the revised salary for 10 months. However, the queriest should clarify to clear the confusion.

B. Saikumar

HR & Labour Law Advisor

Mumbai

We have to pay the PF to the employee. If the basic has increased, then the increased PF needs to be given to the employee for the 10 months.

Hi,

Is it necessary that PF will be deducted from the Basic Salary? Can this be skipped?

Thank you.

Yes, you need to pay ESI on arrears as you revised the salary, not the government. ESI is exempted on arrears if the government revised the wages from the back date.

Hello all,

If I give increments to all my employees from April 2012 due to a reason I forgot, why should I be exempted from PF & ESI? Definitely, I will add those amounts to arrears, so why should I not get the benefit? We have to pay the PF & ESI on arrears. Please do the needful if I am wrong.

Thanking you,

Regards,
Ashish

Yes, EPF should be compulsorily deducted and added manually in the EPF returns software. However, FPF is not compulsory because it is beyond Rs.6,500/-. The benefit of factor will be lost.