Navigating Salary Breakdown: How to Maximize Take-Home Pay While Staying Compliant with PF, ESI, and Minimum Wages Act

One of our employees in the Chandigarh branch is requesting minimal deductions for PF & ESI. His salary is 12,000/- PM. Please help me create a breakdown to give him the maximum take-home salary while ensuring compliance with PF, ESI, and the Minimum Wages Act.

Questions on Salary Breakdown and Compliance

Also, please help me address the following questions:

1. Can the basic pay be less than 50% for employees whose salary is less than 15K? If there is a stated rule, please share.

2. Can entertainment allowance be covered under ESI? What is the maximum cap on this?

3. Is special allowance/other allowances a part of the PF contribution calculation?

4. Are there any allowances that can be added to the breakdown to avoid PF & ESI deduction amounts?

Dear Anamika, please note that ESI Contribution is payable on Gross Salary. PF Contribution is payable on Minimum wages applicable as per relevant State Government Notification. Your thoughts are not in conformity with EPF, ESI, and MINIMUM WAGES ACT.