How to Calculate ESIC with Shift Allowance: Does It Affect the INR 15,000 Cap?

Hi all,

I have a query regarding ESIC norms. As per my knowledge, ESIC cap is INR 15,000. My query is in my company we have heads Basic HR TA Special Allowance and Shift allowance. We calculate ESIC on Gross earnings Basic + HR + TA + Special Allowance. If we pay Shift allowance (night shift) in a particular month, do we add the shift allowance to his gross and deduct his ESIC contribution after the addition of the shift allowance, irrespective of whether the gross went above INR 15,000? Like Basic + HR + TA + Special Allowance + Shift.

Night Shift Allowance and ESI Act, 1948

1. Night Shift Allowance is considered wages under the ESI Act, 1948, on which contributions are required to be paid.

2. In my opinion, you can exempt any employee if, by adding the amount of the said Night Shift Allowance, the employee's wages exceed the coverage limit of Rs. 15,000 per month. This exemption is subject to the condition that the coverage of the employee will continue until the close of the current contribution period, regardless of their total wages, as per the provisions of the Act.

3. In such a situation, the contribution will be required to be paid on the total wages, including the Night Shift Allowance mentioned, even if the total wages are more than Rs. 15,000, up to the close of the current contribution period.