Understanding ESI Deductions: How Are Overtime and Arrears Calculated?

Does overtime payment include ESI deductions? Is OT a criterion for the coverage of employees? If my salary is 12,000 and OT is 6,000, then on which payment will there be an ESI deduction? Are arrears also considered for ESI deduction? Suppose my salary is 10,000 and arrears paid are 6,000, then my salary becomes 16,000 for that particular month. Will the deduction be on 10,000 at 1.75% or on 16,000?

Over time payments attract ESI contributions but do not trigger ESI coverage. If the gross salary, excluding OT payments, is less than Rs. 15,000 in the first month of the contribution period, then the employee is covered under ESI for the entire contribution period, and ESI contributions are payable on gross earnings, including OT payments.

ESI Contributions on Arrears

Regarding ESI contributions on arrears, there is no ESI contribution on arrears. Many posts are available on this forum on this topic, including mine.

Regards,