ESIC Calculation Confusion: Should Travel and Washing Allowances Be Included?

Clarification on ESIC Calculation

In our company, we have a gross salary that includes travel allowance and washing allowance. We need some clarification: should both components be included for the ESIC calculation, or is there any provision to exclude these components from the ESIC? Please advise.

Regards,
Jnkramn

Clarification on Exclusion of Allowances in ESIC Calculation

Section 2(22) of the ESI Act, which defines wages, itself excludes traveling allowance. As regards washing allowance, in my view, if it is paid to reimburse the expenses incurred by an employee because of the nature of employment, like wearing a uniform, it may be excluded. However, if it is paid to all employees as part of the salary, I am afraid it shall be included for contribution since it forms part of the first part of the definition of wages.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

ESI Deduction Calculation

ESI deduction calculation is based on the gross amount, but some allowances are not included for ESI calculation, such as washing allowance and night shift allowance. Only the TA amount is included in ESI calculations.

Thank you.

I have a doubt regarding the Night Shift allowance. During the time of the ESIC audit, they advised making necessary deductions for night shift allowances. We are also following the same practice. Please advise.

"Night shift allowance" is an additional remuneration paid to the employee for performing duty at night during the hours of darkness. This amount is paid as an incentive under the scheme of settlement entered into between the Management and its workmen and hence is considered wages within the meaning of Sec.2 (22) of the ESI Act. Therefore, ESI will be deducted on "Night shift allowance".

Thanks,
Brijesh Vishwakarma

I am on maternity leave. Should travel allowance and washing allowance be deducted from my salary? And what about the patient care allowance?