ESIC Contributions: How Should Employers Calculate with Overtime Pay?

Dear,

If any employee's gross pay is $19,000, and after overtime it becomes $22,000, should the employer pay their contribution to ESIC based on $19,000, $22,000, $21,000, or not?

Please advise.

Regards

ESI eligibility should be based on fixed gross. If the employee's fixed gross is not greater than Rs. 21,000, you should pay the ESI contribution for the earned gross of the respective month. Whether it is Rs. 19,000, Rs. 22,000, Rs. 21,000, or Rs. 30,000, you should pay the actual earned gross because overtime will attract ESI.

Hi,

If my fixed gross is $19,000 and overtime (OT) is $3,000, how should the calculation be done? Please advise.

Thank you.

ESI contribution should be deducted from gross wages, i.e., normal wages + OT wages.

If the gross and overtime (OT) amounts exceed the ceiling limit of 21,000/-, should we pay the contribution? Sometimes, the gross and OT amounts are below 21,000/- as well.

ESI Deduction During Contribution Period

For example, the Gross Salary for the purpose of ESI as of 01.04.17 is Rs. 19,000/-. ESI would be deducted on Rs. 19,000/-. In May-17, he gets OT of Rs. 2500/-. Now, the Salary is Rs. 19,000/- + Rs. 2500/- = Rs. 21,500/-, and ESI would be deducted on Rs. 21,500/- (not on Rs. 19K or 21K).

In September-17, his salary is increased to Rs. 23,000/-. (Assuming no change in limit) From the next contribution period, he won't be a member of ESIC. However, in the current contribution period, ESI would be kept deducted.

Thanks.