Harsh Kumar Mehta
Consultant In Labour Laws/hr
+1 Other

Dear All,
This is a query which raised recently in my Organization. I am slightly confused that whether the Overtime (if paid with Salary) comes under the purview of ESI. For example on employee's Gross Salary is 21000, i.e. the amount to be deducted from the employee is 377. But after adding the amount of OT is raised to Rs 24000. Now its my question
1. whether the amount of Rs 377 will be deducted after adding the OT
2. whether the amount of ESI will be increased to Rs 420.
3. whether the amount of deduction for ESI will be waived out for the increase in the amount of the Limit of ESI.
Request all of you to give a strong answer.
RATNADEEP KAR
Manager - HR
M-9674970355
14th August 2017 From India, Kolkata
Hi ,
Overtime are considered as wages under the ESIC act under Sec.2(22).(Refer : Wages | Employee's State Insurance Corporation, Ministry of Labour & Employment, Government of India)
So you will have to deduct Rs 420 for the gross salary Rs 24000/-
ESIC will be deducted on the full amount of Rs 24000/- as per the usual guidelines of ESIC.
There will be no waiver on the amount as it has increased above Rs 21000/-
E.g : If My salary is Rs 30000/- . Due to certain deductions/absenteeism, loans if my salary becomes Rs 15000/-. I would not be suddenly covered under ESIC.
Similarly for ESIC the normal gross salary of a person is considered for coverage. Salary may increase / decrease each month for employees basis receipt of Overtime. Incentives , Absenteeism. However the stipulated structure ( basic , da,hra , medical , conveyance , special allowance) remains constant.
i.e For a person with a salary of Rs 21000/- or below . If no absenteeism , bonus or overtime is present , then his salary will always remain Rs 21000. So 21000 should be wage decided for coverage.
14th August 2017 From India, Mumbai
Sir, under provisions of ESI Act, 1948, Overtime has a special status. OT is wages and contribution is payable, but the amount of OT cannot be considered to examine the exemption of any employee under said Act. The reason being, the amount of overtime is not permanent and changes in every month. Please see the definitions of term "wages" and "employee" under said Act.
14th August 2017 From India, Noida
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