Piece Rate Workers and ESI/PF Limits: How Do You Handle Wage Records and Compliance?

We are a manufacturer of readymade garments. Many workers are employed on Piece Rate Wages, and their wages in some months exceed the limit of ESI & PF.

What is the rule in the case of Piece Rate Workers whose wages exceed the limit prescribed under the ESI or PF Act? How should their record of Wage Payments be maintained in the books of account and the manual Payment Register?

Once they get coverage, exceeding the salary does not bar them from getting an exit; they have to continue to contribute.

Say one worker gets a salary of 14,000, and in one month, he earned 23,000 (including OT and other allowances), so his ESI would be deducted on the full 23,000. Similarly, for EPF, upon agreement with the employee and employer, the upper capping limit may be fixed at a 15,000 ceiling.

Coverage of Piece-Rated Workers Under ESI Act

Regarding the coverage of piece-rated workers under the ESI Act, 1948, and the rules/regulations framed thereunder, the formula to calculate the "average daily wages during a contribution period" has been defined under Rule 2(1-A) of the ESI (Central) Rules, 1950. Similarly, the method to calculate the "average daily wages during a wage period" has been defined under Rule 2(1-B) of the Rules mentioned above. I hope you will examine and decide on the issue accordingly.

Wage Register for Piece-Rated Workers

Similarly, concerning the Wage Register for the payment of wages to such piece-rated workers/employees, I hope you will review the proforma of such Register as laid down under The Payment of Wages Act.

Regards