Understanding ESI Wages: What Counts as Income and Are Allowances Included?

As per the relevant rules, a person earning less than $15,000 in wages is eligible for Employee State Insurance (ESI). Could someone please help me with the definition of wages under the ESI Act? Are all the allowances included in wages, and is remuneration included or not? What are the types of remuneration?

Is a washing allowance included or not?

Understanding Wages Under the ESI Act

Under ESI, wages for coverage should include all wages earned by the terms of the agreement. Therefore, it is the gross salary that will attract ESI. While calculating the same, any traveling expenses reimbursed shall be excluded. At the same time, a payment of fixed nature as per terms of appointment to cover traveling/conveyance will come under wages.

Washing Allowance shall also be excluded. Similarly, all payments made to an employee at intervals of more than two months shall be excluded from the salary.

Regarding overtime wages, the amount paid will not be considered for deciding eligibility or coverage of ESI, whereas it will be considered for deciding the contribution. In other words, if the salary of an employee is Rs. 14,000, but he gets overtime wages of Rs. 1,500, he will not be excluded from ESI because his salary is less than Rs. 15,000 (Rs. 14,000). However, for the contribution towards ESI, the overtime will be taken into account, and the ESI will be contributed on Rs. 15,500.

Regards,
Madhu.T.K

Thanks for your reply, sir. This was really helpful. If you can do me one more favor, if you don't mind, can you tell me about the acts in Maharashtra related to labor law, when they change, and what are the reasons for regular changes? Can you please attach the latest acts in labor law? Please.

Regards.