BALAJI R
SERVICE - PRIVATE
Dear Sir, In one of my earlier company they were following the "NOTIONAL WAGES" for determination of Coverage under ESI, Which is also as per the Act. Act says that, for coverage under the Act Wages Paid/Payable should be taken. But one of the ESI Inspector is interpreting that for determination of coverage consideration of "Notional Wages" should be restricted to Basic and DA only. Is it correct? If so is there any Case Law for this? If wrong? Is there any Case Law in support of this?. Further, ESI Act no where says about 'Notional Wages' it says only Paid/payable WAGES . Payable is nothing BUT total salary irrespective of his attendance. I would like to have the views of the learned stalwarts of CITE HR on this for my benefit as well as of the benefit of others. With Best Regards, R BALAJI
From India, Madras
Amitmhrm
473

HR Practices
Dear Balaji, It attracts all the components being paid in cash at the end of the month but doesn't attracts any incentives or bonus. In general Gross per month salary is considered for ESI contribution. Basic and DA is considered in case of PF contribution only. Regards, Amit Seth.
From India, Ahmadabad
BALAJI R
SERVICE - PRIVATE
Dear Sir, I have gone through your mail. I agree with your comments. Example:- An employee is drawing a monthly salary as detailed below:- Basic:Rs.5,000/- HRA Special Allowance and Incentive Rs.1,000/- Gross Earnings is Rs.10,500/-- As per Act he is out of ESI as his salary is more than Rs.10,000/- Querry If the above employee avails 5 days leave on LOSS OF PAY, whether he need to be covered and ESI to be recovered because of the reason his Gross Earnings has come down to As Per ACT the Definition of Wages is as follows:- WAGES 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 and includes any payment to an employee in respect of any period of authorized leave, lock out, strike which is not illegal or layoff and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include:- Any contribution paid by the employer to any pension fund or provident fund, or under this Act; Any traveling allowance or the value of any traveling concession. Any sum paid to the person employed to defray special, expenses entailed on him by the nature of his employment; or Any gratuity payable on discharge. The above definition has three parts. All remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, was fulfilled. And includes any payment to an employee in respect of any period of authorized leave, lockout, strike which is not illegal or lay off. And other additional remuneration, if any, paid at intervals not exceeding two months. But Does Not Include
Any contribution paid by the employer to any pension fund or provident fund, or under ESI Act.
Any traveling allowance or the value of any traveling concession.
Any sum paid to the person employed to defray special expenses entitled to him by the nature of his employment or Any gratuity payable on discharge. My querry is that whether the above employee needs to be covered because of earned less wages or we have to consider NOTIONAL WAGES. If so can you refer any case laws / judgements to substantiate the same. Sincere advance thanks. Best Regards, R BALAJI

From India, Madras
manjeet067
6

Professional
Dear Balaji While calculating ESI ,all the components are to be taken into the consideration whether it is HRA, conveyance, Spl Allowance,Over time etc. Any allowance (normally incentive)paid after the interval of two months is not covered for the deduction of ESI . ESI returns are to be filled twice in the year i.e.for the period of April to September and October to March, if any employee cross the limit of Rs 10,000/- per month any where in between these periods even then ESI contribution has to be payable till the competition of return period . In the case of Over Time it is not fixed and depended upon the requirements of the company so OT is not making any differance but ESI is payable on Over Time if an employee is falling under the limit of ESI with all other components. If an employee has renumation more then 10,000/- but get wages less than 10,000/- due to absent for few days in any particular month, then it does not attract deduction of ESI. So please keep in mind all these points while calculating the ESI contribution. Regards Manjeet Singh Tarn Taran (Amritsar)
From India
contactanil3
1

advocate
not answered the point. If iam daily rated say 700/- per day my payable salary is 21000/-P.M and i will not be an employee .is 15000/- P.M from 1-5-2010. Act defines employee as ------- whose wages paid or payable.pl clarify
From India, Palakkad
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