Respected All, Is ESI contribution calculated on overtime wages under The ESI Act, 1948? Regards, Pratul L.
From India, Nagpur
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2From India, Nagpur
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When ESI contribution of employees is calculated, the Over time for the month should be included even if the gross salary exceeds Rs.15000/- p.m.
From United Kingdom, Oxford
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From United Kingdom, Oxford
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For the purpose of coverage, overtime wages are not taken into account. However, when calculating the contribution payable by a covered employee, overtime wages will be considered as wages earned.
Regards, Madhu.T.K
From India, Kannur
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Regards, Madhu.T.K
From India, Kannur
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Hi,
I have never read or heard about ESI calculation on the overtime wage. I personally feel we don't consider O.T wages under ESI because overtime payment is considered "wage," not "salary."
Vishwanath
From India, Hyderabad
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I have never read or heard about ESI calculation on the overtime wage. I personally feel we don't consider O.T wages under ESI because overtime payment is considered "wage," not "salary."
Vishwanath
From India, Hyderabad
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Hi !! As Madhu said, to find out ESI eligiblity of an employee OT will not be considered. But for paying the contribution OT will be considered and amount will be paid on wages + OT. regards ravindra
From India, Bangalore
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From India, Bangalore
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If an employee is earning less than Rs 15,000 a month, they will be covered under the ESI, even if their monthly wages exceed this amount after including overtime earnings. However, when ESI contributions are paid for the employee, they will be calculated based on the total earnings (wages + OT).
Regards
From India, Bangalore
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Regards
From India, Bangalore
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ESI on overtime amount should be deducted as the employee is to be covered under insurance during his/her extra hours of duty. So, all employees eligible under the ESI Act, if they do overtime, then ESI should be deducted from the overtime amount. If an employee gets injured during his/her extra duty hours, then he/she can benefit from employment injury. However, overtime is not covered under the term 'wages' under the ESIC Act (Bharat Commerce and Industries Ltd vs. Regional Director, ESIC, (2005) LLJ 482 (MP)). Therefore, overtime should not be considered as wages when checking the eligibility of an employee for ESI.
Regards,
Anuj
From India, Lucknow
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Regards,
Anuj
From India, Lucknow
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Over time, including in ESI, suppose an employee is receiving a fixed gross salary of 20,000. For any respective month, if the employee gets 4,000 for overtime, the total salary for that month would be 24,000 (20,000 fixed gross salary + 4,000 overtime). If ESI is deducted, then on which amount is it deducted: 21,000 or 24,000?
From India, Bangalore
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From India, Bangalore
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1. Sir, contribution under ESI Act, 1948 is to be deducted on total wages of Rs. 24,000, which also include Overtime as per the case mentioned by you above.
2. If the person is covered as an employee, the amount of Overtime is to be essentially considered for compliance, but on adding OT amount, the employee cannot be declared as uncovered. Please see section 2(9) of the said Act.
From India, Noida
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2. If the person is covered as an employee, the amount of Overtime is to be essentially considered for compliance, but on adding OT amount, the employee cannot be declared as uncovered. Please see section 2(9) of the said Act.
From India, Noida
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Dear All,
As per Sec. 2(22) of the ESI Act, overtime is a part of wages, and overtime wages are not a regular earned wage. So, please do not confuse and deduct ESIC from there and deposit it to ESIC without hesitation.
However, you might be confused about what to do if gross wages exceed the applicability threshold. Please do not be confused. Once an employee is covered under ESIC and once their contributions start being made to ESIC, you cannot remove their name from ESIC before completing their contribution periods (April to September and October to March).
Thanks & Regards,
Ashish Shaw
From India, Kolkata
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As per Sec. 2(22) of the ESI Act, overtime is a part of wages, and overtime wages are not a regular earned wage. So, please do not confuse and deduct ESIC from there and deposit it to ESIC without hesitation.
However, you might be confused about what to do if gross wages exceed the applicability threshold. Please do not be confused. Once an employee is covered under ESIC and once their contributions start being made to ESIC, you cannot remove their name from ESIC before completing their contribution periods (April to September and October to March).
Thanks & Regards,
Ashish Shaw
From India, Kolkata
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Good afternoon, sir,
EXP: ESI FIXED - 21000.00
BASIC - 14500 (BASIC) + 6000 (HRA)
TOTAL ESI FIXED - 20500.00 (CORRECT)
OT PER HOUR CALCULATE = 20500/26/8 = 98.56 & NO. OF OT HOURS WORKED = 40 HOURS - TOTAL OT AMOUNT = 3942.00
TOTAL OT HOURS CALCULATED - 3942/98.56/2 = 20.00 (OT PER HOUR) 19 HOURS. THIS OT CALCULATION IS CORRECT, SIR.
From India, Bengaluru
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EXP: ESI FIXED - 21000.00
BASIC - 14500 (BASIC) + 6000 (HRA)
TOTAL ESI FIXED - 20500.00 (CORRECT)
OT PER HOUR CALCULATE = 20500/26/8 = 98.56 & NO. OF OT HOURS WORKED = 40 HOURS - TOTAL OT AMOUNT = 3942.00
TOTAL OT HOURS CALCULATED - 3942/98.56/2 = 20.00 (OT PER HOUR) 19 HOURS. THIS OT CALCULATION IS CORRECT, SIR.
From India, Bengaluru
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You can pay overtime wages based on wages. If that is done, it will be Rs 139 per hour as overtime wages (i.e., 14500 divided by 26, divided by 8, multiplied by 2). Multiplying that by the total overtime hours, let's say 40 hours, would give you Rs 5577 as overtime wages.
From India, Kannur
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From India, Kannur
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ESI ACT 1948.doc
Final Notification dt 6-10-2016 reg SEPARATE RATE of Contribution in New Areas under ESI Act 194.pdf