Understanding PF and ESI Contributions: How Does Absenteeism Affect Eligibility and Calculations?

Statutory Norms for PF and ESIC Contributions

For employees with a monthly basic wage above 6.5K, the PF contribution is 780. In case of absenteeism, if the monthly basic falls to 6.5K, the PF contribution is calculated on a pro-rata basis, in which case the PF contribution is less than 780.

For employees with a monthly gross above 15K: In case of absenteeism, even if the monthly gross reduces below 15K, they will not be covered under ESIC.

Whether the variable incentive will be a part of ESIC eligibility and calculation. Please clarify!

Regards,
George

Dear George, PF amount is deducted from the basic wage after the calculation of the basic salary. If attendance falls subsequently, the PF amount will reduce. There is no other condition except the attendance of the employee.

In ESIC, if any amount or incentive is paid in the salary sheet every month as a fixed component, then it will attract ESI as well. Kindly shed some light on the term "Variable Incentive" so that we can provide a better explanation.

Regards, Ratikanta Rath