Kerala High Court upholds exclusion of site allowance from PF wage calculation, dismisses EPFO writ

In a dispute over whether “site allowance” should be treated as part of basic wages for provident fund computation, on July 17, 2025 the Kerala High Court upheld an Employees’ Provident Fund Appellate Tribunal order in favour of M/s Gobins India Engineering Pvt. Ltd., rejecting the Employees’ Provident Fund Organisation’s (“EPFO”) challenge. The controversy arose from a 2011 order by the Assistant Provident Fund Commissioner, Kochi, under Section 7A of the EPF & MP Act, 1952, which included site allowance in the wage base. On appeal, the Tribunal set aside this inclusion, noting the absence of findings that the allowance was universally paid to all employees or mandated under the contract of employment.

Before the High Court, EPFO argued that the Tribunal should have remanded the matter for evidence rather than outright exclusion, citing Regional Provident Fund Commissioner (II) v. Vivekananda Vidyamandir (2020). The company countered with records showing the allowance was paid only to select employees, relying on Manipal Academy of Higher Education v. PF Commissioner (2008). Justice S. Manu held that the “universality” test, as clarified in TI Cycles of India v. Gurumani (2001), was not satisfied and that the Tribunal’s finding aligned with precedent.

Noting the long pendency of proceedings since 2011, the Court declined to order a remand and dismissed the writ petition. The ruling reaffirms that allowances not universally paid across a category of employees cannot be included in the provident fund wage base.