Hello Priya
I broadly agree with the two replies on the subject. Under ESI Act, there is no difference between skilled and unskilled, casual or regular etc. All employees, employed even for a single e day, and whatever may be nomenclature and status given to him are to be covered if remuneration paid in cash is Rs 10000 or below (excluding OT, which is to be taken only for paying contribution, and not for deciding coverage). All payment paid in cash is to be considered but anything paid in kind need not be taken. As for HR allowance, if payment of rent is made by Company directly to the house owner, though taken for an employee, at need not be taken. Similarly reimbursement of actual conveyance or transportation expenses need not be taken. Further production and productivity incentives and such payment made in periodicity of more than two month need not be taken to pay contribution.
Please also remember, the benefits available to employee covered under ESI scheme, in cash (for leave, maternity, accident related disability etc) will also be based on the wage on which contribution is paid, and since benefit rates have been revised upward, your employee will stand to benefit depending upon the actual rate of contribution paid. However, for medical care, the rate of contribution paid will not make any difference since all are treated equally for medical care.
Instead of bothering about nomenclature of different component of gross wage just remember " anything paid in cash in consideration of contract for employment is wage, anything paid in kind or paid addional to contractual obligation in periodicity of over two month is not wage, and reimbursement of specific purpose like washing allowance and actual conveyance is not wage".
The ESI Corporation Headquarters at Delhi, has been issuing specific instruction on the subject based on court judgements. Often the field officers and Inspectors may not be aware of the instructions and policy stand of their own department, and will seek contribution on wages not legally correct. Please use Right to Information Act to seek copies of policy instruction from ESIC HQ New Delhi.
O. Abdul Hameed
Formerly Additional Commissioner ESIC
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