ESI Coverage & Contribution

Dear Seniors,
We have covered our employee under ESI act, I have a doubt about the contribution part that some of our drivers fixed salary is below Rs.15000.00 but if I include their incentives, constantly they will cross above Rs.15000. I have calculated as below
Wages Incentive Total Wages Employee contribution Employer contribution
1.75% 4.75%
12000 7800 19800 347 941
Kindly guide me the above calculation is right?
if possible please send the act that can we include the incentive part and the same has to take for the contribution
Thank you in advance
Regards
Sintralla

Wages Incentive Total Wages Employee contribution Employer contribution
1.75% 4.75%
12000 7800 19800 347 941
The table is bit confusion so sending again

If you pay incentive on every month and if the wages excedd Rs 15000/ including incntive, then the workman will not be covered under ESI.
T Sivasankaran

It depends on few things,
Incentive is fixed or variable.
Paid monthly or Quartely or half yearly.
on what basis this incentive is paid

Dear Mr.Rajeev,
Incentive is varibale
paid by monthly
Incentive paid based on the kilometer runnin

Than in my opinion this incentive will not be included in the computation for the purpose of eligibility of the employee under the ESI Act, but ESI will be deducted on that amount, just like Overtime.
Rest I will again confirm it.

yes,
Case I
If his total salary is 14000.00 and Incentive is 2000.00(Variable), than for the purpose of his coverage in the ESI Act, his salary (excluding incentive) will be considered, but ESI will be deducted on Salary + Incentive. One more thing is there that as ESI online deduction has started, so the system automatically takes the figure of 15 K for the ESI deductions or contribution.
Means he will be covered but ESI will be deducted on 15000.00 only, as the incentive is variable, so in case if the total salary including incentive is less than 15000.00 than ESI will be deducted on full, but is it is more than 15 K, than ESI will be deducted on 15K.
Case II
If his total salary is 15500.00 and Incentive is 2000.00(Variable), than He will be exempted from the ESI .

Every employee is covered under if salary is less then 15k,
incentive doesn't matter.
ESI contribution will be deducted both salary +incentice

Dear Sintrallaa,
If the total salary is Rs.15000.00 per month excluding incentive so esi is applicable both of amount.
In your case Salary is Rs.12000.00 + Incentive Rs.7800.00 Total Amount is Rs.19800.00 then ESI is applicable on total amount.
Regards
Amar Pundir

If your driver is drawing his average salary + incentive more than 15000 then add min 200 to his salary and cross him from ESI deduction it will solve your problem of ESI remittance. the Extra incentive paid can be adjusted every month.
Durgesh Pandey