Understanding ESI Contributions on Overtime
It is not a new provision. Overtime wages are not considered for deciding whether or not an employee is covered by ESI, but for determining the amount of contributions, the same is taken as wages. This means the total amount of wages, including overtime, will attract a contribution. Even if during any month the total amount exceeds Rs 15,000, the contribution should be calculated on that higher salary, not restricting the contribution to Rs 15,000. Therefore, if an ESI-covered employee's wages during a month, including overtime, come to Rs 17,000, then the contribution for that month shall be worked out on Rs 17,000 and not on Rs 15,000.
Regards,
Madhu.T.K