Dear sir,
Is overtime payment included in ESI deductions? Is overtime a criterion for employee coverage?
If my salary is $12,000 and OT is $6,000, then on which payment will there be ESI deduction? Are arrears also considered for ESI deduction? For example, if my salary is $10,000 and arrears paid are $6,000, then my salary would become $16,000 for that particular month.
Would the deduction be on $10,000 at 1.75%, or on $16,000 (out of coverage) at 1.75%? If the arrear amount is $4,000, making the salary $14,000, then what is the criteria?
Please answer.
Regards,
Vivek Kumar
From India, Mumbai
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6Is overtime payment included in ESI deductions? Is overtime a criterion for employee coverage?
If my salary is $12,000 and OT is $6,000, then on which payment will there be ESI deduction? Are arrears also considered for ESI deduction? For example, if my salary is $10,000 and arrears paid are $6,000, then my salary would become $16,000 for that particular month.
Would the deduction be on $10,000 at 1.75%, or on $16,000 (out of coverage) at 1.75%? If the arrear amount is $4,000, making the salary $14,000, then what is the criteria?
Please answer.
Regards,
Vivek Kumar
From India, Mumbai
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[QUOTE=vivek.wadhwa;2078672]
Dear sir,
Does overtime payment included in ESI deductions? - Yes.
Is OT criteria for coverage of employees? - No.
If my salary is 12000 and OT is 6000, then on which payment will there be ESI deduction? - 18000.
Arrears are also considered for ESI deduction. - Yes. Suppose my salary is 10000 and arrears paid are 6000, then my salary becomes 16000 for that particular month. - ESI to be deducted on 16000.
Whether the deduction will be on 10000 at 1.75% or on 16000 (out of coverage) at 1.75%? - 1.75% of 16000.
Or if the arrears amount is 4000, then the salary is 14000, what is the criteria? - 1.75% of 14000.
From India, Pune
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Dear sir,
Does overtime payment included in ESI deductions? - Yes.
Is OT criteria for coverage of employees? - No.
If my salary is 12000 and OT is 6000, then on which payment will there be ESI deduction? - 18000.
Arrears are also considered for ESI deduction. - Yes. Suppose my salary is 10000 and arrears paid are 6000, then my salary becomes 16000 for that particular month. - ESI to be deducted on 16000.
Whether the deduction will be on 10000 at 1.75% or on 16000 (out of coverage) at 1.75%? - 1.75% of 16000.
Or if the arrears amount is 4000, then the salary is 14000, what is the criteria? - 1.75% of 14000.
From India, Pune
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Sir,
I have noticed that some companies do not include OT, arrears, or bonuses for ESI deduction. Does this vary from company to company or is it mandatory under the Factory Act?
One question arises: why would a company add OT, arrears, or bonuses to the gross salary? This could potentially increase their liability, such as ESI at 4.75% on the increased gross salary. They could opt for cash payment and reduce their liability.
Please clarify this doubt.
Regards
From India, Mumbai
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I have noticed that some companies do not include OT, arrears, or bonuses for ESI deduction. Does this vary from company to company or is it mandatory under the Factory Act?
One question arises: why would a company add OT, arrears, or bonuses to the gross salary? This could potentially increase their liability, such as ESI at 4.75% on the increased gross salary. They could opt for cash payment and reduce their liability.
Please clarify this doubt.
Regards
From India, Mumbai
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It's a statutory obligation to add arrears payment to gross salary. It will amount to payroll fraud to do it any other way. In case you are paying arrears through voucher or cash:
1. The PF and ESIC departments can penalize you.
2. The employee can claim the amount was never paid to him.
Also, in Maharashtra, all payments of salary or wages exceeding Rs. 3000 per month need to be paid by bank transfer only. This is for any person receiving a payment of more than Rs. 3000 a month, and not for any single payment, so breaking up the payment into parts does not help either.
From India, Mumbai
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1. The PF and ESIC departments can penalize you.
2. The employee can claim the amount was never paid to him.
Also, in Maharashtra, all payments of salary or wages exceeding Rs. 3000 per month need to be paid by bank transfer only. This is for any person receiving a payment of more than Rs. 3000 a month, and not for any single payment, so breaking up the payment into parts does not help either.
From India, Mumbai
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ESI Rule 52-Amended-Aver age Wage Limit Increased For Certain Cases Under Exemption From Payment .pdf