ESI is applicable when some one's monthly salary- washing allo. is less then 15000/- pm.if an emp. gets daily salary as 300/- so his monthly salary considered as 300*26=7800 and he is under the ceiling limit of ESI. all earning amount other then over time is considered as ESI wage. in upper case if he will get production incentive or any production bonus of even 12000/- then his ESI wage will 12000+7800=19800-washing allowance-earned OT amount.
Esi is applicable on ot.
Esi is not applicable on allowance paid quaterly, hlf yrly or annual basis.
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In most of the manufacturing units, OT is disbursed in two ways:
one is OT1 i.e 1+1 for example his salary for day is 100 then it will be 100+100= 200
Second one is OT2, it is normally paid on for working on holidays for example salary per day is 100 then 100+200=300
OT 2 is paid as per the holidays listed by the respective govt and also as per agreement between workers and management regarding some local holidays.
Presently, in my organisation , we are following as mentioned above with a restriction on OT 2.
Coming to the ESIC contribution : the OT should not be considered and added while ESIC limit 15000 for coverage purpose, as the OT is not regular income of the employee. For employees who are below salary 15, 000 and covered in ESIC and also drawing OT , then ESIC is to be calculated( Employee 1.75% and employer 4.75%), as all the components are included for deduction of ESIC contribution .
This how we are following in my industry.
You may wait for seniors views on this subject.