Supreme Court Rules ‘Basic Wage’ Under EPF Act Distinct From ‘Minimum Wage’ Under Minimum Wages Act

LI Network

Published on: 29 August 2023 at 14:30 IST

The Supreme Court has rejected an appeal by the Assistant Provident Fund Commissioner against a Punjab and Haryana High Court division bench order.

The High Court had maintained that the definition of ‘basic wage‘ provided in Section 2(b) of the Employee Provident Fund Act, 1952, does not require referencing the definition of ‘minimum rate of wages’ under Section 4 of the Minimum Wages Act, 1948, to give it a broader interpretation.

The appellant’s argument centered on the improper division of the wage structure by the employer (respondent in the appeal) for determining the provident fund amount.

Allegedly, the employer treated the reduced wage as the basic wage to evade correct provident fund contributions, disadvantaging the employees.

However, the Appellate Tribunal, along with a single bench and division bench of the High Court, rejected the appellant’s claim.

A division bench comprising Justice Hima Kohli and Rajesh Bindal, while dismissing the appeal, stated:

“In our opinion, once the EPF Act contains a specific provision defining the words ‘basic wage’ (under Section 2b), then there was no occasion for the appellant to expect the Court to have travelled to the Minimum Wages Act, 1948, to give it a different connotation or an expansive one, as sought to be urged. Clearly, that was not the intention of the legislature.”

Vikramjeet Banerjee, Additional Solicitor General, argued before the Supreme Court that in determining the basic wage under the EPF Act, the ‘minimum rate of wages‘ as defined in Section 4 of the Minimum Wages Act, 1948, should be referred to. However, the Supreme Court rejected this argument, concurring with the High Court’s stance that ‘basic wage’ should not be equated with ‘minimum wage’:

“This aspect has been considered in paragraph 6 of the impugned judgment and turned down holding that there was no compulsion to hold the definition of ‘basic wage’ to be equated with the definition of ‘minimum wage’ under the Minimum Wages Act, 1948.”

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