How Do You Calculate ESIC Contributions on Overtime Wages in Facility Management?

Dear All,

We are a facility management company that does contractual work. We have to pay overtime (OT) with ESIC contributions. Can you guide me on the OT calculation for ESIC aspects?

According to me, you have to calculate the OT wages based on your monthly and hourly rates, then double the amount that is payable to the employee. After that, you have to calculate 6.5% of that amount towards ESIC.

Hoping for a prompt reply from all of you.

Regards,
Vikas Kumar

Dear Vikas,

The calculation for ESIC on OT that you have proposed is absolutely correct.

Thanks,
J. S. Malik

The above calculation is very correct. However, you may keep in mind that the OT should not be clubbed for determining the coverage of an employee under Section 2(9) of the ESI Act. OT is calculated for payment of contributions only and not for determining the coverage of an employee under the Act.

Hope you got the clarification.

Regards,
Sanagapalli