How Can I Maximize In-Hand Salary for Fast-Food Employees After ESI and PF Deductions?

Dear All,

I am into the fast-food chain business. I want to increase the in-hand salary for my employees who are covered under ESI policies. For that, I have to reduce the basic pay. In my company, most of the employees are in the pay range of 4000-7000 K per month. Can anyone suggest a pay structure where I can provide the maximum in-hand salary to the employees after ESI and PF deductions? What is the lowest limit for basic salary as a percentage of Gross? Friends, please help me.

Dear Madhumita,

Greetings!

Rs. 2209/- is the minimum basic pay you have to give to an employee. A better idea is not to give the salary in split up; instead, you can opt for the Consolidated pay method where ESI & PF will not be deducted. According to the Workmen's Compensation Act, consider taking Group Insurance.

This is my view. If it is incorrect, please provide the correct answer.

Regards,
John N

But it is mandatory to provide ESI & PF benefits for the blue-collar people.

My main issue is that my employees need more salary in hand. They make a jump even for a ₹100 increase in salary. So, I want some pay structure where they get maximum benefit as liquid cash.

Dear Madhumita,

Greetings!

I am hereby attaching an Excel sheet, which gives you the sample pay structure for Rs. 7000/-. Just go through it and give your feedback.

Regards,
John N

Hi Madhu,

I would like to correct you on your salary breakup details that you have attached. Here, you have kept the HRA amount similar to the basic, but according to the rule, HRA should be 50% for Metros or 40% for other cities. Additionally, considering the Minimum Wage Details of your state will help determine the Basic Salary. As a general rule, most companies calculate the basic salary to be around 30%-35% of the CTC.

Furthermore, for salaries less than 5000, a consolidated pay structure as suggested by Mr. Johnny is the best way to increase take-home pay.

Regards,
Rachna

Dear All,

You all need to update your knowledge of Labour Law. As per the law, basic salary has to be as per the following order:
- Unskilled: Rs. 3050 + DA
- Semiskilled: Rs. 3150 + DA
- Skilled: Rs. 3250 + DA

The above information is as per the Bombay Shop Act, with the minimum DA applicable being Rs. 485 per month. Now, add 'A' into Basic. This total is the minimum basic we should pay.

You must adhere to the above law; otherwise, everyone will continue to keep the basic salary low.

Nitin Nikam

Hey, thanks to all for replying. Please refer me to some material or a link where I'll get the details of compensation and benefits in this kind of structure, or manufacturing unit. Also, labor law.

It's nice to see responses.

I feel that as we are working in the so-called HRD in our respective organizations, we should think about being both employee and employer-friendly. We should discourage practices such as a minimum of basic salary, no DA, etc., in any organization. We should not forget the main objective behind acts like EPF and ES. What an organization or a low/underpaid employee can't afford in crises or for their dependents will be taken care of to an extent by these acts and statutory bodies with a minimum contribution. We should educate the employer and encourage them to contribute to PF/ESI, as well as educate the employees/associates with benefits under these acts.

Regards,
Hari 😀

Hi Madhumita,

Try this one. Percentage will be calculated in Excel itself. I hope it will help you.

With cheers,
Pawan Krishna Reddy
Sr. HR
Hyderabad

Hi Pawan,

Thank you for your help. It was really helpful.

Hari, frankly speaking, the ESI department itself is too lethargic in processing claims. If you are handling ESI employees, then you must have faced all these issues. We have to wait for a year to get ESI cards, and even then, they manage to lose all the photos of the employees within that time.

By one year, very few employees stay in the same office, especially among crew members.

Regarding PF, I have been struggling for the past year to get my PF from my previous organization. I have to request every single signature by calling the PF department personally. It's still under process.

I am not thinking negatively about the PF and ESI boards, but something has to be done to speed up the process.

Thank you.

Hi Madhumita,

ESI cards should be received within 15 days from the date of submission. PF should be received within 45 working days from the date of submission of your application. Otherwise, we will lodge a complaint with the HODs through direct appointment. Please ensure to check on this.

Okay, with cheers,
Pawan

The same problem was faced by us. We tried the following.

If you want to deduct less EPF, it is possible as only basic + DA amount is taken for EPF. Put the remaining as other allowances.

In the case of ESIC, only medical and washing allowance is exempted. So you can make these two allowances to a decent amount, and the ESIC inspectors who visit your establishment cannot have any objection. Your staff can get the maximum in-hand salary.

Secondly, you can also give incentives once every three months. Any amount payable beyond once in three months does not attract ESIC. So you can mention their salary per month as Rs. 2500 to 5000/- and show the remaining as incentives paid once in three months.

Thirdly, you can pay as reimbursement of conveyance, with a little change in figure every month (e.g., Rs. 975 in one month, Rs. 1025 the next month).

However, you may please note that ESIC offers good benefits as well. Employees will realize only when some death or accident happens. The only difficulty is the procedures that are a little irritating.

Shiva, can we take the base salary, i.e., Basic+DA, as 30% so that the PF is calculated only on basic?

Hi all,

I need to know how to calculate ESI and PF for people in the salary range of 7500/- and below. The only deductions I have are ESI and PF. What is the current percentage for both of these? Please help.

Thank you.

Hi,

Good one... Can you please suggest the proper salary structure as per the law? The breakup of all segments, please.

Dear Madhumita,

I just read your message. It has been a long time. I hope you have overcome your problems regarding ESI and PF. Currently, I am facing the same issue. I would appreciate your opinion or suggestions. I am not fond of ESI and PF facilities as I believe that both employers and employees are not benefited in that case. I have completed my MBA in HRD and Marketing. I think the laws regarding HR are mostly designed to deceive both parties. I prefer providing the best facilities with almost all the benefits like ESI and PF, ensuring employees receive maximum cash in hand. Anyway, I am looking forward to your opinion. Please reply.

Binay Kolkata

I want the best salary structure for a Rs. 10,000/- per month salary. Friends, kindly revert with the best possible solutions.

Hi John,

I have gone through the salary structure provided, but it seems to be incorrect because as per the ESI Act, deductions are to be calculated on the gross salary. However, in the excel sheet, you have calculated the deduction based on gross salary and Employer EPF contribution. Moreover, reimbursements are not included. Can you clarify this?

Regards,
Navin

Hi friends, I'm also new to this field and I've got a new company where management wants proper establishment of HRD. Our company is a manufacturing company with 200 employees. I request you all to guide me on the establishment of HR.

Hi friends, I'm also new to this field and I got the company where management wants proper establishment of HRD. Our company is a manufacturing company with 200 employees. I request you all to guide me about the establishment of HR.

I wanted to know what the minimum wage per day is. My company wanted to register in the ESI and PF Act.

Rajesh
(H.R. Executive)

We deduct ESI if the salary is less than or equal to 10000 Rs. What is the procedure if the salary exceeds Rs. 10000? Also, what percentage of the salary constitutes the PF?

Hi all, can anyone please clarify the above queries? I work in the Admin Department.

Thanks & Regards,
Harmeet Singh

ESI, EPF, and Labour Ministry. All are looters, that's all. If you are covered by a mediclaim policy, the ESI says no, we provide better, so give us money. Why give when a work is worth 99 Rs. and ESI is asking for about 400-700 Rs.? They have their own laws changing every day. Just bribe the inspector and skip until you can, else close the concern, rename it, and then work again.

Please share salary components and percentages such as Basic, HRA, TA, and DA. Thank you.

Dear Sir,

ESIC deduction is on the gross pay, no matter what format of salary you implement. Your gross doesn't change; hence, ESIC contribution will remain the same.