Professional Documents
Culture Documents
RELEVANT PROVISIONS
(ii)
discover some basis for the exclusion in clause (ii) as also inclusion of DA
and retaining allowance (if any) in Sec.6. The Supreme Court answered
it as follows:
It seems therefore that the basis for the exclusion in clause (ii) of the
exceptions in sec.2 (b) is that all that is not earned in all concerns or by
all employees of a concern, is excluded from basic wages.
exclusion of DA in Clause (ii) is an exception.
To this the
ordinarily paid to all across the board such emoluments are basic wages.
Where payment is available to be specifically paid to those who availed
the opportunity is not basic wage.
In that view the Supreme Court held that the leave
encashment would not come within the scope of basic wages under
Sec.2(b).
The 3rd decision which
before the Supreme Court is in Kichha Sugar Company Limited (2014 (1)
LLJ 257) wherein the issue was whether field development allowance, OT
allowance and leave encashment would be included for the purpose of
contribution.
Court, it was held that in our opinion those wages which are universally
necessarily or ordinarily paid across the board are basic wages. When the
payment made to those who availed the opportunity, the amount paid for
that cannot be included in the basic wage.
The Supreme Court held that the above allowances are not to
be treated as Basic Wages.
Therefore the above 3 decisions of the Supreme Court makes
it appear that if an emolument is paid routinely to all employees in an
organisation or in the entire industry that would be basic wages.
Some High
Courts have held in favour of the EPFO and some High Courts have held
in favour of the employers rejecting the stand of the EPFO. The appeals
of employers as well as EPFO is pending before Supreme Court in SLP
No.8781 of 212, etc which was lastly listed on 13.11.2013 and thereafter
it has not been heard.
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