can any one guide me what are the allowances that are exempted from E.S.I and P.F.DEDUCTIONS - D.BALAVINAYAGAM
From India, Madras
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3From India, Madras
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As regards ESI coverage, there is no exclusion for nomenclature. All allowances are includible for ESI purposes. The annual payout will be exempted from ESI (e.g., Diwali bonus, attendance bonus, LTA paid bi-yearly, etc.). Individuals drawing more than Rs. 15,001/- are exempt from the deduction of ESI.
From India, Madras
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From India, Madras
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Dear Mr. D. BALAVINAYAGAM,
Sir, to understand the definition of wages under the provisions of the Employees State Insurance Act, I am reproducing the definition below:
“Wages” means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled. It includes any payment to an employee in respect of any period of authorized leave, lock-out, strike (which is not illegal), layoff, and other additional remuneration, if any, paid at intervals not exceeding two months. However, it does not include:
(a) Any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) Any traveling allowance or the value of any traveling concession;
(c) Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(d) Any gratuity payable on discharge.
The ESI contribution is payable on all the allowances except the value of traveling expenses reimbursement and washing allowance as of the date. If the production incentive paid to the workers every month with the wages/salary is considered wages for the purpose of contribution under the provisions of the Employees' State Insurance Act, 1948.
The Employees Provident Fund & Miscellaneous Provisions Act, 1952. The definition of wages under the provisions of the Act is:
2(b) “Basic wages” means all emoluments earned by an employee while on duty or on leave or on holidays with wages in either case according to the terms of the employment contract and paid or payable in cash. This does not include:
(i) The cash value of any food concession;
(ii) Any dearness allowance (all cash payments by whatever name called paid to an employee due to a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission, or other similar allowance payable to the employee for his employment or work done in such employment;
(iii) Any presents given by the employer.
Therefore, the contribution under the provisions of EPF & MP Act 1952 is payable only based on basic wages. In a writ petition No.15443/2009 between APFC vs. G4 Security, the Punjab & Haryana High Court held on 1st February 2011 that minimum wages can be bifurcated into allowances and Provident Fund contributions will not be attracted on allowances. According to the judgment of the Honorable Punjab & Haryana High Court, the management is liable to pay contributions only on Basic wages.
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This correction ensures proper spelling, grammar, punctuation, and paragraph formatting while preserving the original meaning and tone of the text.
From India, Gurgaon
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Sir, to understand the definition of wages under the provisions of the Employees State Insurance Act, I am reproducing the definition below:
“Wages” means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled. It includes any payment to an employee in respect of any period of authorized leave, lock-out, strike (which is not illegal), layoff, and other additional remuneration, if any, paid at intervals not exceeding two months. However, it does not include:
(a) Any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) Any traveling allowance or the value of any traveling concession;
(c) Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(d) Any gratuity payable on discharge.
The ESI contribution is payable on all the allowances except the value of traveling expenses reimbursement and washing allowance as of the date. If the production incentive paid to the workers every month with the wages/salary is considered wages for the purpose of contribution under the provisions of the Employees' State Insurance Act, 1948.
The Employees Provident Fund & Miscellaneous Provisions Act, 1952. The definition of wages under the provisions of the Act is:
2(b) “Basic wages” means all emoluments earned by an employee while on duty or on leave or on holidays with wages in either case according to the terms of the employment contract and paid or payable in cash. This does not include:
(i) The cash value of any food concession;
(ii) Any dearness allowance (all cash payments by whatever name called paid to an employee due to a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission, or other similar allowance payable to the employee for his employment or work done in such employment;
(iii) Any presents given by the employer.
Therefore, the contribution under the provisions of EPF & MP Act 1952 is payable only based on basic wages. In a writ petition No.15443/2009 between APFC vs. G4 Security, the Punjab & Haryana High Court held on 1st February 2011 that minimum wages can be bifurcated into allowances and Provident Fund contributions will not be attracted on allowances. According to the judgment of the Honorable Punjab & Haryana High Court, the management is liable to pay contributions only on Basic wages.
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This correction ensures proper spelling, grammar, punctuation, and paragraph formatting while preserving the original meaning and tone of the text.
From India, Gurgaon
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Dear All. Please go through the attached files on ESI wages. S.Sethupathy, Excellent HR Services, Erode.
From India, Selam
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From India, Selam
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pls help me to explain washing allowance respected to ESIC contribution? and other details related leave encashment of workers and staff?
From India, Mumbai
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From India, Mumbai
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Infoanurag08
Washing allowance, paid to reimburse expenses for employees who wear a uniform, is excluded from wages. Leave encashment is also excluded from the definition of wages for PF contribution.
B. Saikumar
Mumbai
From India, Mumbai
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Washing allowance, paid to reimburse expenses for employees who wear a uniform, is excluded from wages. Leave encashment is also excluded from the definition of wages for PF contribution.
B. Saikumar
Mumbai
From India, Mumbai
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As per the ESI Act, I doubt there is a provision to get an exemption on the following components while taking gross pay as the criteria for ESI eligibility:
1. Transport allowance
2. Washing allowance
3. Contributed EPF/Pension fund
Can experts clarify with clear proofs how far we can go legally while synchronizing with minimum wages as well as ESI exemption on the above components?
Is there any way to get complete ESI exemption? What is the procedure? Ours is a hospital.
As per the ESI Act, I doubt there is a provision to get an exemption on the following components while taking gross pay as the criteria for ESI eligibility:
1. Transport allowance
2. Washing allowance
3. Contributed EPF/Pension fund
Can experts clarify with clear proofs how far we can go legally while synchronizing with minimum wages as well as ESI exemption on the above components?
Is there any way to get complete ESI exemption? What is the procedure? Ours is a hospital.
From India, Visakhapatnam
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Hello Balaram,
The understanding of wages with reference to the coverage of employees and the payment of contributions is different. As far as the coverage of employees is concerned, you need to consider the entire gross salary (basic + all allowances) except for overtime, in terms of Sec.2(9) of the ESI Act 1948 read with Rule (50) of the ESI Rules 1950. Thus, an employee whose gross salary per month is Rs. 15,000/- or less will be covered by the ESI Act.
However, concerning the payment of contributions on various components, you should refer to the definition of wages under Sec.2(22) along with the ESI circular on wages provided by Mr. Sethupathy in this thread. This circular clearly excludes allowances such as traveling allowance, contributions to pension and P.F., and washing allowance, as you have mentioned in your post.
Upon reviewing the aforementioned provisions of the ESI Act/rules and ESI circular, you will notice that there is no point in adjusting the minimum wages payable to employees since all allowances (except overtime) are included for the purpose of covering an employee.
Regarding exemption from ESI, only the appropriate government, in your case, the State Government, can grant exemption under Sec.87 of the ESI Act. To seek this exemption, you need to make a request to ESI authorities. However, these exemptions are usually time-limited and require renewal periodically, likely to be granted if you offer better medical benefits to your employees. This implies that it is your responsibility to compensate employees for their medical expenses, making it advisable to cover them under ESI.
B. Saikumar HR & Labour Law Advisor Mumbai
From India, Mumbai
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The understanding of wages with reference to the coverage of employees and the payment of contributions is different. As far as the coverage of employees is concerned, you need to consider the entire gross salary (basic + all allowances) except for overtime, in terms of Sec.2(9) of the ESI Act 1948 read with Rule (50) of the ESI Rules 1950. Thus, an employee whose gross salary per month is Rs. 15,000/- or less will be covered by the ESI Act.
However, concerning the payment of contributions on various components, you should refer to the definition of wages under Sec.2(22) along with the ESI circular on wages provided by Mr. Sethupathy in this thread. This circular clearly excludes allowances such as traveling allowance, contributions to pension and P.F., and washing allowance, as you have mentioned in your post.
Upon reviewing the aforementioned provisions of the ESI Act/rules and ESI circular, you will notice that there is no point in adjusting the minimum wages payable to employees since all allowances (except overtime) are included for the purpose of covering an employee.
Regarding exemption from ESI, only the appropriate government, in your case, the State Government, can grant exemption under Sec.87 of the ESI Act. To seek this exemption, you need to make a request to ESI authorities. However, these exemptions are usually time-limited and require renewal periodically, likely to be granted if you offer better medical benefits to your employees. This implies that it is your responsibility to compensate employees for their medical expenses, making it advisable to cover them under ESI.
B. Saikumar HR & Labour Law Advisor Mumbai
From India, Mumbai
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I just wish to add to Saikumar ji that it is not only the better medical benefit but all the benefits substantially similar or superior to benefits under ESIS, then only you can seek an exemption as per section 87.
From India, Mumbai
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From India, Mumbai
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Dear,
Please let me know about the best player bonus (incentive) exempted from ESIC. I want to give it to my employee who is the best of the month, so I want to include it as a gift in the salary. Does this mean the best player incentive is exempted? Please suggest to me about this.
Ashok Patil
88888874678
9421309415
From India, Mumbai
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Please let me know about the best player bonus (incentive) exempted from ESIC. I want to give it to my employee who is the best of the month, so I want to include it as a gift in the salary. Does this mean the best player incentive is exempted? Please suggest to me about this.
Ashok Patil
88888874678
9421309415
From India, Mumbai
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