Understanding Salary Components: Are All Parts Eligible for ESIC Wages?

Sir, thank you for this. We have the following components as part of our Fixed Gross Salary: BASIC, HRA, SPECIAL ALLOWANCE, CONVEYANCE, PERSONAL ALLOWANCE, and MEASURED ALLOWANCE. Conveyance is fixed at Rs. 800 per month. Can we consider all these components as wages for ESIC eligibility?

Dear Friend,

ESI will be deducted from the monthly gross salary. If an employee's gross salary exceeds Rs. 15,000, ESI will be applicable as per the ESI Act from May 2010, earlier it was Rs. 10,000. If the above-mentioned breakdown is paid monthly, and if the total is Rs. 15,000 or more, ESI is applicable.

Understanding Salary Components for ESI Contribution

I wanted to know which salary components are applicable to ESI contribution and which are not. Please guide me on this with the provision.

Regards,
Kasim

[Phone Number Removed For Privacy Reasons]
Bangalore

Within the wage limits of Rs 15,000/-, almost all the allowances are considered wages under ESIC. Typically, if any allowance is paid to an employee for more than two consecutive months, it becomes a regular salary component, and ESIC is applicable on the same.

Regards

Fuel or Petrol Allowance and ESI

Fuel or petrol allowance comes under ESI.

Hi,

Definition of wages under the ESI Act

Under the ESI Act, the definition of wages is defined under Section 2 (22): "Wages" means all remuneration paid or payable to an employee if the terms of the contract of employment, express or implied, were fulfilled. It includes any payment to an employee in respect of any period of authorized leave, lock-out, strike which is not illegal, or layoff, and other additional remuneration, if any, paid at intervals not exceeding two months. However, it does not include:

a) Any contribution paid by the employer to any pension fund or provident fund or under this Act,
b) Any traveling allowance or the value of any traveling concession,
c) Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment, or
d) Any gratuity payable on discharge.

Accordingly, any amount payable to an employee who is covered under the Act is considered wages except for those mentioned in the exceptions above. However, any conveyance allowance or travel allowance is exempted from coverage. Similarly, the washing allowance is also exempted from coverage under the Act.

Current ESI coverage ceiling

The present ceiling for ESI coverage is Rs. 21,000/-, which is likely to be revised to a higher amount shortly.