Section 12 of EPFMA : Section 12: Employer Not To Reduce Wages, Etc

Explanation using Example

Imagine a company, XYZ Pvt. Ltd., that is registered under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The company is required to contribute to the Provident Fund (PF) and Employees' State Insurance (ESI) for its employees. Due to the increase in PF and ESI contributions mandated by the government, the company decides to cut the salaries of its employees to offset the additional costs.

However, under Section 12 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, XYZ Pvt. Ltd. is prohibited from reducing the wages of its employees or the total benefits they are entitled to, such as old age pension, gratuity, Provident Fund, or Life Insurance, just because the company needs to contribute more to the PF and ESI. This means that despite the increased costs to the employer, the employees' take-home pay and benefits should remain unaffected.