Amit Insha
Hr & Compliance
Chief Manager - Hr
Premkumar Nair
Manager (hr)-retired
Self Employed
Hr Generlized
+4 Others

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Dear ALL Senior members,
if factory is registered under Factories ACT 1948!!1
IS PF & ESI are to be deducted on arrear wages???
a) if wage revision is due to increase in min. wage by the state govt. from back date?
b) if wage revision is due to increment from back date???
Pls. answer with supporting stuff like section no of act or any judgement by any court of law.
This is very serious in terms of finances!!

Dear Akhil, IN ESI ACT where it is mentioned?? my Local inspector is saying that Arrear wage is a wage and thus ESI should be deducted! regards Manish Gupta
Dear Manish,
Mr Akhil is right as ESI is not to be deducted in Arrears wages. We have contacted ESIC Noida regional office in sector: 57 & its director Mr Sanjay Sinha has told us that ESI is not to be deducted in arrear wages.

Yes sir. even our Joint Director in Andhra Pradesh is also informed us, no need to deduct ESIC Contributions on arrears. But still we are deducting as no body will give in writing and there is no clarity in Act.
Prasad SBR

Dear mohanPal & Prasad,
I had the same view on ESI that "it should not be deducted on arrear wage" but where it is mentioned in the act or any notification in this regard?
Ret. Director ESIC Dr. Kheterpal had also mentioned that ESIC should not deducted on arrear wage but failed to tell the section no. in the act.??
Mr. Prasad you know how much money we are waisting of the employees as well as employer because we are not clear in this regard.
We have to find the exact rule!!!
Manish Gupta

I want to know about admin job profile. and what is the deduction of canteen & transport from employees salary?
hi all esic would be deducted on gross salary wheather an arrear would be added on guys why r u worried about that.
Hi All
Se.2(9) and Se.2(22) stipulates certain item for forming part of wages for the purpose of coverage and payment of contributions. In the said list, areares are not included and hence contributions need not paid on arrears.
Kanna vijayakumar

Sec.2 (22) read as under
(22) "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 lay-off and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include--
(a) any contribution paid by the employer to any pension fund or provident fund, or under this Act;
(b) any travelling allowance or the value of any travelling 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.

In the above definition the term "other additional remuneration, if any," what indicates?

In a general view also the arrears paid to the employee is also Wage/ Salary. Due some admn problems, if company is paying his/her annual increment after two or more months w.e.f. his/her annual increment due date. In such cases the amount paid his is wage or not?
If wage, then is should be deducted. If not there may be any notification from ESIC.



In case the management took a decision in writing or in an agreement with the employees union and give any arrears, the arrears belongs to the date of such decision will not been taken for the purpose of ESI...........
In case if the decision is taken earlier and paid the arrears now, then such kind of arrears will attract ESI........
Hence the employer has to prove himself about these evidences.........

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