Enhanced pension on actual salary not on ceiling salary, final verdict by SC

In view of the Supreme Court verdict reported in TOI today, which finally dismisses all the delaying tactics of EPFO & Govt, what actions can be expected? Logically, EPFO should independently calculate the arrears to be paid and the expected pension for all pensioners. They should seek consent from pensioners for paying arrears to receive a higher pension. Currently, EPFO is requesting details from pensioners to be certified by their employers. This requirement is practically impossible for retirees who changed jobs several times or for whom some employers may be unreachable. EPFO already possesses the necessary data to calculate pensions and return any excess EPS contributions made above the ceiling salary. Unfortunately, EPFO lacks transparency in communicating how they determine pension and EPF accumulation amounts.

I recommend that all pensioners write to their regional EPF offices, providing their PPO numbers (pension paying order), and requesting EPFO to disclose the arrears due, the anticipated increased pension, and any outstanding pension amounts. Several circulars issued by EPFO to regional offices, urging the disbursement of enhanced pension, have been swiftly withdrawn shortly after release. Pensioners should not rely solely on EPFO's prescribed forms.

TOI report dated 02/04/2019 is attached.

This benefit applies only to employees of those organizations that pay PF on actual salary without limiting the PF qualifying salary at Rs 15,000. For more details, please follow the link: [https://madhu-t-k.blogspot.com/2019/04/pension-based-on-actual-pf-contributing.html](https://madhu-t-k.blogspot.com/2019/04/pension-based-on-actual-pf-contributing.html).

Madhu T K

Madhu T. K,

Now that the Supreme Court, by their verdict dated 04/10/2016, has allowed opting for a higher contribution based on actual salary without any time restriction, is it not true that anyone, even those who have retired, can now choose to pay the difference amount in arrears of contribution between actual salary and the ceiling salary and thereby receive an enhanced pension?

Copy of the Supreme Court verdict is attached.

Certainly, any person can choose to pay back the amount already drawn in excess from the PF with interest (I believe the Supreme Court has set the interest rate at 6%). However, this option does not apply to employees of establishments that had remitted PF capping it at Rs 6,500 or Rs 15,000, depending on the case. For more information, please visit the following link: [Pension Based on Actual PF Contribution](https://madhu-t-k.blogspot.com/2019/04/pension-based-on-actual-pf-contributing.html)

As per the verdict of the Supreme Court (SC), the special allowance currently being paid to employees should be combined with the basic payment for PF contributions. Consequently, some employers are restructuring their employees' salaries without increasing the basic pay and redirecting the excess amount of the special allowance above the PF contribution ceiling of Rs. 15,000 into expenses such as telephone costs to reduce gratuity liability. I am seeking clarification on whether this practice aligns with the SC verdict.

Under these circumstances, could you please confirm whether the payment of the special allowance will also be considered a liability for gratuity payments in the future?

Regards, Sivadasan

Having decided the meaning of basic salary for the purpose of PF contribution, the next fight will be for an interpretation of the meaning of wages under the Payment of Gratuity Act. The definition of wages under Payment of Gratuity Act is identical to the one given in EPF & MP Act. As such, any amount earned by an employee while on duty or on leave is wages/salary. For example, if your salary is Rs 50,000 and it is broken into Rs. Basic Rs. 10,000, HRA Rs. 5,000, Conveyance Rs. 3,000, and Special allowance, the balance is Rs. 32,000. If you take a CL, you are paid for that day not on the basis of basic pay but on the basis of the whole salary. If you take a leave without pay, your day's salary is deducted not on the basis of basic pay or Rs. 333 (10,000/30) but it will be Rs. 1,667 (50,000/30) which is deducted from your salary. That means whatever the breakup, the salary agreed to be paid to the employee is the gross salary, and this is the amount on which gratuity should be calculated.

Now coming to the restructuring of the salary in order to avoid contribution, I would say that if you take the allowances like telephone, medical, etc., as 'reimbursements', then it will work in favor of the employers because reimbursement against bills produced will be out of the scope of wages. But how much can you pay for a telephone when a telephone with 4G data unlimited is available at Rs. 300 and 400 per month? Similarly, you cannot say that you pay more than the amount required for food for meeting medical bills and if so, how much will an employee spend on that? Therefore, whatever restructuring is done, it is not going to help the employer because at the end of the day it can be proved that the gross amount is the amount agreed as per the contract of employment.