‘Don’t cut salaries’: Govt’s clear directive to companies as EPF wage ceiling rises
The Indian government has directed employers not to reduce employee salaries following an increase in the EPFO wage ceiling from Rs 15,000 to Rs 25,000. The ministry emphasized that statutory contributions should be viewed as an investment in human resources rather than a cost to be passed on to workers.
Why it matters
This policy change impacts the take-home pay and social security coverage of over 10 million workers in India, aiming to formalize the labor market.
Will your take home salary come down with the Employees' Provident Fund Organisation (EPFO) raising the wage ceiling for provident fund calculation purposes from Rs 15,000 to Rs 25,000?On September 17, the government increased the EPFO wage threshold from Rs 15,000 to Rs 25,000. The revision is expected to extend mandatory coverage to more than 10 million additional workers and give another push to workforce formalisation.‘Don’t cut salaries’The labour and employment ministry has instructed employers not to cut employees' statutory wages following the increase in the EPFO wage ceiling to Rs 25,000.The directive seeks to address concerns that companies may try to absorb the additional employer contribution arising from the revised ceiling by adjusting it against employees' cost to company (CTC).Also Read | Provident Fund wage ceiling rises to Rs 25,000: What does this mean for you?
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