# Is PF to be deducted on the notice pay amount

**URL:** <https://community.greythr.com/t/is-pf-to-be-deducted-on-the-notice-pay-amount/17298>\
**Category:** Ask the Community\
**Created:** [March 21, 2025, 8:18am UTC](https://community.greythr.com/t/is-pf-to-be-deducted-on-the-notice-pay-amount/17298 "2025-03-21T08:18:49Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![Malathy](https://avatars.discourse-cdn.com/v4/letter/m/9dc877/32.png) [@Malathy](https://community.greythr.com/u/Malathy)\
**Post date:** [March 21, 2025, 8:18am UTC](https://community.greythr.com/t/is-pf-to-be-deducted-on-the-notice-pay-amount/17298/1 "2025-03-21T08:18:49Z")

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Hi Team, Please advise whether PF to be deducted on the notice pay amount.

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**Author:** ![Kaulin](https://sea2.discourse-cdn.com/flex024/user_avatar/community.greythr.com/kaulin/32/2425_2.png) [@Kaulin](https://community.greythr.com/u/Kaulin)\
**Post date:** [March 21, 2025, 8:19am UTC](https://community.greythr.com/t/is-pf-to-be-deducted-on-the-notice-pay-amount/17298/2 "2025-03-21T08:19:59Z")

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**Author:** ![Kaulin](https://sea2.discourse-cdn.com/flex024/user_avatar/community.greythr.com/kaulin/32/2425_2.png) [@Kaulin](https://community.greythr.com/u/Kaulin)\
**Post date:** [March 21, 2025, 8:20am UTC](https://community.greythr.com/t/is-pf-to-be-deducted-on-the-notice-pay-amount/17298/3 "2025-03-21T08:20:13Z")

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**Author:** ![Bhuvana\_Anand](https://sea2.discourse-cdn.com/flex024/user_avatar/community.greythr.com/bhuvana_anand/32/4444_2.png) [@Bhuvana\_Anand](https://community.greythr.com/u/Bhuvana_Anand)\
**Post date:** [March 21, 2025, 8:44am UTC](https://community.greythr.com/t/is-pf-to-be-deducted-on-the-notice-pay-amount/17298/4 "2025-03-21T08:44:05Z")

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Hi Malathy,

In my opinion -

### **1. If Notice Pay is Recovered from the Employee**

- **Scenario** : The employee resigns without serving the notice period, and the company recovers the notice pay from the employee’s final settlement.
- **PF Deduction** : **No PF is deducted** on this amount because:
  - It is not paid as salary or wages.
  - It’s a recovery, not a payment.
  - PF is deducted only on amounts paid to the employee as part of “wages” under Section 2(b) of the EPF Act.

### **2. If Notice Pay is Paid to the Employee**

- **Scenario** : The employer terminates the employee and pays notice pay in lieu of actual notice period.
- **PF Deduction** : **Yes, PF is to be deducted** , because:
  - The amount is paid to the employee in lieu of salary.
  - It falls under the broad definition of “wages,” as it compensates for service.

As per **Employees’ Provident Funds & Miscellaneous Provisions Act, 1952**

- _“Basic wages”_ under **Section 2(b)** includes all emoluments earned by an employee while on duty or on leave with wages in accordance with the terms of employment.
- Notice pay, if paid to the employee, is generally considered a wage substitute.

Regards,  
Bhuvana Anand