SC rules that leave encashment shoul not be included in wages for PF calculation

Read the article at the Times of India.

In a significant ruling reducing the deductions on the salary sheet, the Supreme Court has held that the money got by an employee from encashing earned leave could not be taken as wages for calculation of provident fund (PF) contributions. Deciding a bunch of petitions in favour of the employees, a bench comprising Justices Arijit Pasayat and P Sathasivam rejected the stand of regional PF commissioner that the amount received on encashment of earned leave had to be taken into account for the purpose of calculating PF contributions. The bench allowed the appeals — the lead case being the one filed by Manipal Academy of Higher Education — saying "the inevitable conclusion is that basic wage was never intended to include amounts received for leave encashment". It took note of a Mumbai case where an employer was including the amount of leave encashment as emoluments for the purpose of calculating PF dues from the employer as well as employees’ contribution. When the Employees’ Union took up the issue with the commissioner, it was informed that the provision did not provide for deduction of PF on leave encashment. "Where the wage is universally, necessarily and ordinarily paid to all across the board, such emoluments are basic wages. Conversely, any payment by way of a special incentive or work, is not basic wages," the court said. dhananjay.mahapatra@timesgroup.com The judges have, significantly, also held that not just offences under 498-A, but also other offences such as murder, rape, attempt to murder and causing grievous hurt — which are not specifically mentioned in the law as ‘compoundable’ offences — cannot be settled between the complainant and the accused. Section 320 of the CrPC lists offences that can be settled between parties at any stage of the prosecution.