How to Calculate PF and ESI Deductions for an Employee on Extended Leave?

Got this problem. Kindly help me with a solution. The Payslip is as under: Now, supposing an employee has taken 15 days leave and has exhausted all leave, what would be his PF and ESI deductions? Should we take into account (for PF/ESI calculations) only the days that he has worked for, or do we do the normal PF ESI calculations on the basic/Gross as applicable?

Earnings:
Basic - Rs. 5280
HRA - Rs. 2640
Conveyance Allowance - Rs. 880
Gross - Rs. 8800

Deductions:
PF - ?
ESI - ?
Leave taken - Rs. 4620

Kindly revert as soon as possible.
Thank you in advance.
Paul Joshua

Dear PF and ESI will be deducted on earnings. If he has not received a salary for a few days as leave was not balanced, ESI and PF will be deducted on earnings.

Regards,
JS Malik

QUOTE=pauljoshua_in;814311] Got this problem, Kindly help me with a solution. The Payslip is as under. Now, supposing an employee has taken 15 days leave and has exhausted all leave, what would be his PF and ESI deductions? Should we take into account (for PF/ESI calculations) only the days that he has worked for, or do we do the normal PF ESI calculations on the basic/Gross as applicable?

Earnings Basic - Rs.5280 HRA - Rs.2640 Conveyance Allowance - Rs.880 Gross - Rs.8800

Deductions PF - ? ESI - ? Leave taken Rs.4620

Kindly revert asap. Thanks in advance, Paul Joshua [/QUOTE]

Thank you so much for that quick reply. Just another clarification with reference to the above point. So, would it imply that the ESI and PF be deducted from only the days he has worked for?

Regards,
Paul

Dear,

You are absolutely right. ESI and PF will be deducted only for the days worked. If he has not worked a single day in a month, then there will not be any earnings in that month, so there will not be any deductions towards ESI and PF. How can there be a deduction without earning?

Regards,
JS Malik

Hi Malik,

If an employee is on loss of pay for a month (due to zero leave balance and did not come to the office for personal reasons), PF will not be deducted as there are no earnings. But what about the employer's contribution for that month? The employee has not resigned but continued service the following month. In this case, how do I inform the PF office that there was one month loss of pay? Is there any form?

Regards,
Neelam

Dear [Recipient],

Every year, we send the yearly returns to the PF department in the form of 3A and 6A, where complete monthly details of each employee are provided. If there is no earning, the employer's share does not need to be paid.

Regards,
JS Malik

PF and ESI are deducted based on the earned wages only. Employer contribution is also based on the earnings only.

Dear Paul,

Provident fund and ESI will be deducted from earnings. Whatever you are paying to the employee, deduct PF and ESIC from that.

Regards,
Jagdish Pathak

Dear Paul,

PF is deducted on the gross earnings of Basic + DA of an employee for that particular month, whereas ESI is deducted on the total gross earnings of an employee for that particular month. You have to deduct salary only for the days he is not attending the duties and has not applied for leaves for those days.

Regards,
Naidu

Hi Shipra,

Regarding your query, if an employee attended the office for 20 days in a month and the remaining 6 days were adjusted with their accrued leave balance, the PF and ESI deductions would typically be calculated based on the total of 26 days.

So, to answer your question, yes, the deductions for PF and ESI would be calculated on the total of 26 days in this scenario.

Regards, Shipra

Hi Dear,

I agree with the comments of Mr. JS Malik regarding PF/ESI contributions (employee & employer) being paid only on the days when the employee is actually paid. If an employee is on loss of pay for the whole month, no contributions (employee & employer) are required as there are no earnings for that particular month.

However, when sending the PF Annual Return (Form-3A), it is necessary to mention breaks in reckonable service. This information is required by PF authorities for calculating Family Pension, etc.

I hope the above explanation is clear.

Thanks & Regards,
Vadlamani SR

Dear all,

Every earning is deductible either for PF or ESI. It does not matter whether the individual is on any leave.

One unique formula - Every earning (salary) means deductible for either ESI or PF. For your reference, please go through the ESI and PF deductible amounts.

Thanks,
niscy

Dear All,

I'm a new member who has joined citeHR and have read the above discussions. I have a question regarding earned leave. If an employee has accrued about 5-6 days of leave and has taken all these earned days off due to some reason, do we need to deduct and pay PF and ESI for the days he worked or for the full month?

Your advice on this matter would be greatly appreciated.

Thank you.

Dear friend,

You have to deduct the PF/ESI against salary for the days for which you are paying salary. Physical absence is the criteria. For example, if you are paying for 15 days, you have to contribute for these days only. If you are paying a salary for absent days too, you have to contribute ESI/PF for those days as well.

Bai,
P. Sathish Kumar