Is Your Company's Work Considered Wages Under the ESIC Act? Let's Discuss

Please suggest whether the below work done by a company is covered in the definition of wages under ESIC Act:

1. Advertisement & publicity expenses
2. Auditors remuneration & expenses
3. Printing & fabrication/installation of hoardings outside the company
4. Branding & exhibitions in trade fairs, etc.
5. Shooting expenses of an ad film of the company by professionals
6. Creative remuneration
7. Office maintenance inside the factory
8. Subscription of periodicals
9. Allocation of admin expenses

Understanding the Relevance of Accounting Heads in ESI Compliance

In my opinion, the booking of expenses under any accounting head or item is irrelevant and meaningless. The main important aspect is whether the amounts are paid to any person who qualifies as an "employee" as defined under the ESI Act, 1948, and the rules/regulations framed thereunder for work relating to or connected with the work of the unit/factory.

Because firms/employers are at liberty to book the expenses of wages or work done as per their discretion, the inspecting authorities under the said Act generally review the accounting heads of expenses to ensure compliance is properly made by the firms/employers. If the inspecting authorities trace any omitted wages under any accounting/item heads, as indicated in your remarks, they will definitely note and record such wages and claim contributions under the said Act.

The accounting systems are so different that in some firms/units, even the wages are found booked/entered in purchase heads.

Regards

Definition of Wages Under Section 2(22) of the ESIC Act

The term "wages" has been defined under Section 2(22) of the Act in three parts as follows:

1. All remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled.

2. It includes any payment to an employee in respect of any period of authorized leave, lock-out, strike which is not illegal, or lay-off.

3. It also includes other additional remuneration, if any, paid at intervals not exceeding two months.

However, it does not include:

- Any contribution paid by the employer to any pension fund or provident fund or under the ESI Act.
- Any traveling allowance or the value of any traveling concession.
- Any sum paid to the person employed to defray the special expenses entitled to him by the nature of his employment.
- Any gratuity payable on discharge.

The above is an extract from ESIC BARRACKPORE :: Always at your service.

Most of the headings in the original query (SL no 1-9) do not fall as elements of wages in my opinion.

Dear Friends,

ESI Inspection authorities mostly inspect the following Heads:
1) Salary & Wages Accounts
2) Repair & Maintenance expenses
3) Building Expenses
4) Other Heads as mentioned above

They try to search for those expenses that are booked by accounts under different GL / Heads. If there is any work in which manpower is engaged by the agency, and the company / PE cannot show their wages and ESI contribution, they may create liability and impose sanctions.

If some points are missing, please clarify.

Thank you.