Confused About Gross Pay for Overtime and ESIC? Let's Clarify What Counts!

Hi all, I have read extensively in our forum about overtime, how it is calculated, and the criteria. I still have some doubts that I hope to get clarified. My organization is in Underwriting services.

Gross Pay Components

When we refer to Gross Pay, it includes Basic, DA, HRA, and all allowances. Does it also include the monthly performance bonus and shift allowance?

ESIC and Overtime Calculation

When calculating ESIC, do we include the performance bonus and shift allowance in the Gross Pay? Is it the same for Overtime as well? Every month, I have a different gross salary due to varying shift allowances and performance bonuses. I am finding it difficult to fix the Gross salary for calculation.

Kindly help.

Dear Shwetha.Spring,

For overtime work, you are liable to pay wages at the rate of twice the ordinary rate of wages. Shift allowance and monthly performance bonus are not to be included in the ordinary rate of wages. These are not fixed and are not paid to employees universally, ordinarily, and necessarily.

The definition of wages under the ESI Act is different. Under this Act, whatever you pay additionally to an employee is considered wages when it is paid at intervals not exceeding two months.

Hope you are clear now.