Supreme Court Dismisses Review Petition Challenging PF Ruling

Background

• The SC had examined various allowances like conveyance allowance, special allowance, education allowance, medical allowance, management allowance, etc., being paid uniformly and universally by an employer to its employees and held that such allowances would form part of basic wages for computing the PF contribution.
• The SC had also held that amounts earned by an employee in accordance with employment contract, paid or payable in cash, are to be included for the purpose of the PF contribution unless such amounts are:
• Variable in nature and linked with extra efforts resulting in extra output/production.
• Not paid across the board to all employees in a particular category.
• Paid especially to those who avail a particular opportunity.
• One of the appellants aggrieved by the ruling had filed a review petition before the SC.

Dismissal of review petition by Supreme Court

• The SC has dismissed the review petition filed against its earlier ruling with the observation that there were no reasonable grounds or basis to admit the said review petition. The SC has not provided any further reason for dismissing the petition.

Circular issued by EPFO

• In a significant development, the Employee Provident Fund Organisation (EPFO) has issued a circular instructing its field offices on enquiries initiated as a result of the SC’s ruling.
• The instructions mainly direct the field offices:
• Not to initiate enquiry without having a prima facie evidence that such employer has indulged in an illegal practice to avoid its PF liability by splitting the basic wages of its employees.
• Not to pursue further enquiries, where prima facie evidence of arbitrary bifurcation of wages with the intention to avoid PF liability is not present.
• To initiate an enquiry only after taking requisite permissions and where credible basis is present in forming a view that the employer is involved in the practice of avoiding PF liability by splitting the wages.
• To assess the dues in the ongoing cases after consideration of the facts of the case.

Surya Roshni Ltd vs Employees Provident Fund