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“Basic Wage” Conundrum:
Paragraph 2 (f) of the EPF & Misc Scheme defines an “Excluded Employee” to mean “an employee whose pay at the time he is otherwise entitled to become a member of the Fund exceeded the ceiling fixed under the said paragraph”.
According to Section 2(b) of the EPF Act Basic wage does not include dearness allowance, house rent allowance over-time allowance and other similar allowances.
All these days, the employers were led to believe on the basis of the interpretation accepted by all concerned that the allowances should not be taken into account for reckoning the coverage of employees and for payment of Contribution. Based on this, employees who would otherwise be “excluded employees”, got covered under the Act and contributions