Employers are often faced with the daunting prospect of not ever knowing 100% whether they are compliant with the laws or may have to face some new kind of demand from the authorities on any day.

The recent ruling by Madhya Pradesh High Court is a case in point where well established practices about wages for PF contribution are being put to question. One is even likely to wonder as to who is the ultimate beneficiary of all this debate and quandaries that are thrown up.

One school of thought firmly believes that employers are within their rights to structure salary compensation in the best employee-friendly manner as they think fit. After all it is a competitive market and no person is forced to join any organisation if they feel the compensation policies are not fair.

On the other hand other renowned persons may well argue that employers take advantage of such ambiguity and the employee has little option but to accept the company policy in such matters.

It’s certain that this debate is not going to die down anytime soon. Employers are sure to feel a big pinch if this is left uncontested. The EPFO would feel they have identified a big lacuna which needs to be corrected. Either way, the Hon’ble courts will have the final say and the outcome is bound to throw up many a question.

For more opinions and news the following links may be useful:

1. CiteHR: http://www.citehr.com/348562-madras-high-court-ruling-applicability-pf-contb-certain-allowances.html

2. E&Y: http://www.de.ey.com/Publication/vwLUAssets/Alert_India_080711/$FILE/Alert_India_080711.pdf

3. KPMG: http://www.us.kpmg.com/microsite/tnf-asiapacific/2011/India-july5no3.pdf

4. News site Firstpost: http://www.firstpost.com/business/take-note-higher-pf-may-eat-into-your-take-home-pay-44695.html