Company Deducting Both Side Esic From Ctc? - JPG Download - CiteHR
Harsh Kumar Mehta
Consultant In Labour Laws/hr
Senior Manager- Admn
+1 Other

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As i wanted to know exactly the new ESIC rule and in CTC the both percentage is included or not.. as the hr of company didn't mentioned and said anything related to this but they are deducting both side esic from ctc..
1.75 and 4.75 from the employee ctc.
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1. Sir, the term "CTC" is no where used in ESI Act, 1948 and rules/regulations framed thereunder and I feel that the same is also not used in any of labour laws. I understand that it (CTC) reflects the costs to the company and this term is not "wages".
2. You may ascertain from your Pay Slip as to what are your "wages" as fixed by employer and in order to know what components are wages you can see the term defined in various labour laws including in Payment of Wages Act or Minimum Wages Act, ESI Act, 1948 etc. I think, if the employer is adding 4.75% employers' share of contribution in your so called "CTC", then there is nothing wrong. However, I think, employer cannot deduct his share of contribution also from "wages" as defined in various enactments.
Our HR head didnt mentioned any deduction at interview. She used term ctc is this only and didnt mentioned any deduction, but now they are deducting both side PF and also Both side ESIC from that salary.
As we know that Esic rule is not applicable but they are deducting it from previous 1 month.
1. Sir, I could not understand as to what do you mean by words "As we know that Esic rule is not applicable but they are deducting it from previous 1 month". Whether you are not covered or coverable under ESI Act ?
2.I think, at the time of interview, all employers indicate CTC (or what is called "package") to the new recruits.
Dear Mr. Sumitpant,
CTC is a term which denotes the cost the company is going to incur because of your employment (i.e) it incudes the salary, Employer's contribution towards EPF & ESI, Bonus, Gratuity, etc., Hence there is nothing wrong in deducting the EPF/ESI contributions of the company from your CTC. Please note that they should not deduct it from your Gross Salary. The Gross salary is a combination of Basic salary + Allowances. They will deduct your Contribution of EPF (12% of Basic+ Dearness Allowance - Statutory) and ESI(1.75% of Gross salary). You will be covered under ESI if your Gross Salary is equal to or less than Rs.15000/-. Unless and until your company is coverred under EPF Act as well as ESIC Act, they will not deduct the contributions from your salary. You may check with your senior collegues about the coverage of EPF and ESIC.
CTC mean Cost to Company. It is a plain term indicating total cost incurred by the company for hiring of a particular employee.
However, your write; " but now they are deducting both side PF and also Both side ESIC from that salary." Are they deducting 24% (12% employee + 12% Employer share) PF-FPF and (1.75% Employee + 4.75 Employers share) ESIC from your salary? I think it should not be the case. They should be deducting 12% EYEE's share(PF) and 1.75% Eyees' Share(ESI) from your salary, which is quite legal.
Arun Dixit
020 24376185
Dear, Arun sir Yes you are right they are deducting 24% from salary and also 6.5% of esic also from salary. And Showing only 1 deduction in slip.. Regards Sumit

Are they not depositing your salary in the bank?. As you say, in salary slip they are only deducting employees' contribution. Then how they manage the difference between actual paid and net payable salary? I mean, are all employees, after receipt of their respective salaries; reimburse to the employer their ESI and PF Share again? How many employees are working in the subject establishment? Is the subject establishment registered with Factories Act or Shops and Estt. Act?.

Anyway, if the management is deducting both the employee and employers share in respect of PF/FP and ESI from an employee, then this is not at all in accordance with the legal provisions and an aggrieved employee can lodge a complaint with competitive authority under Payment of Wages Act as also to respective PF Commission / ESIC Directorate. However, I still wonder, as to what proof the employee has that both employee and employers share is being recovered from him? Please let me know the detailed procedure of disbursing salary/wages.
Dear sir,
Please check the attachment.
This is the salary slip of my junior his ctc is 18500.
Pls check the slip and give your guidance.
As he s not at all satisfy with all the deductions and not able to understand the structure of his salary.
During interview they didnt told him about the esic deduction also pf.
But now each and evrything is they are deducting from his ctc..
Waiting for response

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Dear Sumit,
Seen the attachment. Salary Slip seems to be perfect. They have also given Bank A/c No. of the respective employee. This means the employees are getting the payment through bank.
Please note that the deductions w.r.t. ESIC/PF-FPF/State Prof. Tax/Labour W.Fund etc. are statutory deductions and they have to be deducted from the salaries/wages as and when the organization attracts the provisions of respective enactment . Every Employer is under statutory responsibility to deduct and deposit the contributions with respective Govt. Agencies. Hence, there is little space whether the subject employee is satisfied or not. It looks like your junior is confused about the CTC term.
Kindly enlighten him as cleared above and in previous discussions in this thread.
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