P Ramachandran
Hr & Administrative Manager
Gm (hr)
Hr Executive
Hr Professional
+2 Others

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Dear All,
Can anybody tell me if gross salary is rs.6000.00 P.M. and we are paying rs. 500 extra as a other earning so, esic is applicable on other earning or not?
Also let me know that whether esic is applicable on other earning like arrears, bonus, leave encashment
Shalin Shah

Dear Shalin Shah
The Act was originally applicable to non-seasonal factories using power and employing 20 or more persons; but it is now applicable to non-seasonal power using factories employing 10 or more persons and non-power using factories employing 20 or more persons.
Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatre, road motor transport undertakings and newspaper establishment employing 20 or more persons.
The existing wage-limit for coverage under the Act, is Rs.10,000/- per month (with effect from 1.10.2006).

dear any payment made on monthly basis will attract ESI,other earnings,bonus on monthly basis .leave encahment is not paid every month so ESI wii not be deducted. tks j s malik
Dear Mr. Shah,
The wage ceiling for coverage of employees (excluding remuneration for over-time work) is Rs. 10000/- (w.e.f 1st October, 2006). Earlier it was Rs. 7,500/-per month w.e.f. 1.4.2004 (Rule 50 of ESI (Central) Rules 1950).

ESI is applicable for any kind of earnings. ESI is not applicable on any one time payments, like statuoty bonus, leave encashment, reimbursement claims. etc. regards Amit
Dear Sir, I have also one query if we have given arrears by back date effect from two month so esic is deducted or not on arrears. Regards, Shalin Shah
yes esic is applicable on your earning also on arrear of wages but not applicable on bonus & leave encashment. sumit kumar saxena, 9899669071, 0120-4131277
Dear Shalin shah, All emoluments paid to the employee other than bonus,leave encashment are chargeable under ESI. You can refer the attachment which will guide you in this topic

Attached Files
File Type: doc payments not to be treated as wages under esi.doc (54.0 KB, 605 views)

Hi Shalin,

Under the provision of ESI Act the defination of wages is very wide. Now a dys every payment payment made to workman is treated as wages and the contributions are payable by employee and employer. Under Section 2(22) 'wages' means all remunertion paid or payable in cash to an employee if the terms of contract of employemnt, expressed or implied were fullfilled and includes any payment to an employee in respect of any period of authorised leave, lock out, strike which not illegal or layoff and other additional remuneration it any paid at intervals not exceeding two months, but does not include

(a) any contribution paid by an employer to any pension fund or provident fund or under this act,

(b) any travellig allowance or the value of any travelling concession,

(c)any sum paid to the person employed to defray expenses entailed on him by nature of his employemnt or

(d) any gratuity payable on discharge

In short any payment made to worker regular basis shall be treated as wages and contributions are payable.Payment of increment arrears will be treated as wages and contribution are payable, where as agreement arrears will not. Annual bonus is not wages under ESI Act where as production/incentive bonus which is paid every month will be wages. Leave encashment during the period of service may be treated as wages whereas leave encashment at time of discharge or superannuation will not be treated as wages.

In your case the additional payment of Rs 500/- will be treated as wages and contribution will be payable. For more details/clarification you may contact me.

Hope this suffice your purpose.


avinash Kanoray


Dear Senior Members,
If ESI is not applicable to any one time payments, why does it apply on onetime payments made to people such as electrician, plumber, carpenter, coolie or hamal? Kindly let us know ASAP . My email address is .

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