Notice pay subject to pension deduction
I work for a private company and recently signed a mutual separation agreement with my employer. One of the terminal dues agreed upon was 3 months’ remuneration in lieu of notice of termination of my employment. When I went to collect my terminal dues I was surprised to be told that my 3 months’ notice pay was subjected to pension contribution deduction. Is this correct?
This is correct. Notice pay is indeed subject to pension contribution deduction because it is a wage. Section 2 of the NSSF Act makes it clear that payment made by the employer to the employee in lieu of notice of termination of employment is a wage and is subject to pension contribution deduction.