Service / Personal
Management Consultant - H. R
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Dear Sir, If the gross salary exceed 15000 including washing allowance , then do we need to include the employee for Esi contribution excluding the washing allowance amount. kindly suggest. Thanks Prasath N
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The definition of gross salary is all the emoluments that employee get. Distribution of amount is altogether different organization to organization.
It is very clear in the Act if gross salary exceed from the ceiling which is 15000/- employee will not get benefited under the act and will automatically come out from the ESI.
Dear prasant , as per my opinion, you can’t deduct esic on washing allowance .
Washing Allowance - First its nature of payment is to be decided - and how it is paid - every month along with wages following an agreement or contract of service - depending upon its nature of payment the coverage of the employee will be determined. If it is not a conditional payment / could not be withdrawn at time by the employer, or otherwise paid regularly as stated, it should be part of the wages as defined under the ESI Act and coverage of the employee will accordingly be decided - he be out of coverage of the ESI Act since his salary will be above the wage limit of 15,000/- a month inclusive of washing allowance being a part of payable wages. This should be ratified by the Appropriate ESI authority. This what I feel, should be your stand.
For ESI deduction, all emoluments paid in salary will be taken into consideration. In case the salary exceeds Rs.15000/, the employee will be coming out of the ESI Act.
Guys, refer FAQs on ESI website. If washing allowance is reasonable,say Rs. 250 per month or so, it will mean that it is paid to 'defray' the expenses. As such it will not be considered as wages as far as ESI Act is concerned.
Coverage of the empoyee is based on paid or payable wages. If ''washing Allowance" is not a cponditional payment but is payable or paid every month every month as condition of service under contract of employment / agreement, it should be taken into consideration calculating wages of RS15,000/- for coverage of the employees under the ESI Act.
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