Hey All, I am Saloni, and I am handling the Human Resource Department for my restaurant. I am very new to compliance and benefits. Our chef and service assistants will be working 12 hours (9 legal and 3 hours overtime), and I have divided their salary accordingly. I am confused about one thing - I have added overtime allowance (double the normal per hour pay rate) in the total salary, and it's coming out to be Rs. 18,000 per month, which means employees are exempted from ESIC.
Question on Gross Salary Calculation
My question is: do we have to add overtime to the gross salary, or should the gross salary be calculated without overtime? Please check the breakup below:
Direct
- Basic: 7,199
- HRA @ 50%: 3,599.64 (Non-Taxable, 50% as we are in Chennai)
- Conveyance: 800 (Non-Taxable)
- Washing Allowance: 1,000 (Non-Taxable)
- Overtime Allowance: 4,799.52
- Lunch Allowance: 602
Total Gross: 18,000.44
Any expert insights will be of great help.
From India, Chennai
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Question on Gross Salary Calculation
My question is: do we have to add overtime to the gross salary, or should the gross salary be calculated without overtime? Please check the breakup below:
Direct
- Basic: 7,199
- HRA @ 50%: 3,599.64 (Non-Taxable, 50% as we are in Chennai)
- Conveyance: 800 (Non-Taxable)
- Washing Allowance: 1,000 (Non-Taxable)
- Overtime Allowance: 4,799.52
- Lunch Allowance: 602
Total Gross: 18,000.44
Any expert insights will be of great help.
From India, Chennai
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OT wages is part of the earnings and it should be included in payslip. If the person is in I.Tax net, his OT wages will be taxable income. Pon
From India, Lucknow
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616From India, Lucknow
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Thank you so much, sir. Please, can you clarify for me that after adding the overtime allowance as mentioned in my question, the gross salary is coming out to be 18,000, and if I take overtime out, it's 13,000. So, should the employee be covered under ESIC or not?
Thank you,
Saloni M.
From India, Chennai
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Thank you,
Saloni M.
From India, Chennai
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ESI Contribution on Overtime Wages
You have to deduct the ESI contribution from overtime (OT) wages and remit it along with the corresponding employer's contribution. However, OT wages shall not be considered as wages for excluding the chef from the ESI scheme.
Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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You have to deduct the ESI contribution from overtime (OT) wages and remit it along with the corresponding employer's contribution. However, OT wages shall not be considered as wages for excluding the chef from the ESI scheme.
Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]
From India, Thiruvananthapuram
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Please refer to section 2 (22) of the ESIC Act, wherein it is clearly mentioned that for calculating the rate of contribution, overtime will be included in its wages. However, when determining applicability or eligibility, overtime won’t be included in its wages. (Though overtime is never considered as fixed wages.)
Now, in your case, the employee is earning gross wages of Rs. 13,200/-, which is less than Rs. 15,000/-. This shows that ESIC is applicable, and the rate of contribution will be deducted on the total gross of Rs. 18,000/- for the same.
Regards,
Janardan
From India, Mumbai
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Now, in your case, the employee is earning gross wages of Rs. 13,200/-, which is less than Rs. 15,000/-. This shows that ESIC is applicable, and the rate of contribution will be deducted on the total gross of Rs. 18,000/- for the same.
Regards,
Janardan
From India, Mumbai
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The payment of overtime wages is nothing but the extra work done by the employee and paid at double the rate of wage as per statutory requirements. Overtime wages should be shown in the pay sheet as other cash payment or overtime wages, which will not attract any PF deduction, bonus, and gratuity on overtime wages. However, these OT wages will be considered for IT provisions.
Regards,
Adoni Suguresh
Sr. Executive (Pers, Admin & Ind. Rels) Rtd
Labour Laws Consultant
From India, Bidar
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Regards,
Adoni Suguresh
Sr. Executive (Pers, Admin & Ind. Rels) Rtd
Labour Laws Consultant
From India, Bidar
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Thank you all for the contribution. I understood the concept, and finally, I have come up with the salary breakup.
CTC Workings
Components PM
• Direct
- Basic: 7,199
- HRA @ 50%: 3,599.64
- Conveyance: 800
- Washing Allowance: 785
- Overtime Allowance: 4,799.52
Total: 17,183
Benefits
• ESIC @ 4.75%: 816.2134
Total Gross: 17,999.653
Please let me know if it's fine. Is there any senior member who can provide me with their email ID so that I can double-check my decisions? Thank you so much.
Regards,
Saloni M. [Email Removed For Privacy Reasons]
From India, Chennai
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CTC Workings
Components PM
• Direct
- Basic: 7,199
- HRA @ 50%: 3,599.64
- Conveyance: 800
- Washing Allowance: 785
- Overtime Allowance: 4,799.52
Total: 17,183
Benefits
• ESIC @ 4.75%: 816.2134
Total Gross: 17,999.653
Please let me know if it's fine. Is there any senior member who can provide me with their email ID so that I can double-check my decisions? Thank you so much.
Regards,
Saloni M. [Email Removed For Privacy Reasons]
From India, Chennai
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Salary Breakdown Details
Please find the details below. I hope this will clarify your doubts regarding the payslip with the salary breakdown as follows:
Earnings
• Basic: 7,199
• HRD: 3,599
• Conv: 800
• Washing Allow: 785
• Gross Salary: 12,383
• OT: 4,799.52
• Gross Earnings: 17,182.52
Deductions
• PF: 863.88
• ESI: 216.7025
• Ded: 1,080.5825
Net Salary
• 16,101.9375
Thank you.
Regards
From India, Mumbai
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Please find the details below. I hope this will clarify your doubts regarding the payslip with the salary breakdown as follows:
Earnings
• Basic: 7,199
• HRD: 3,599
• Conv: 800
• Washing Allow: 785
• Gross Salary: 12,383
• OT: 4,799.52
• Gross Earnings: 17,182.52
Deductions
• PF: 863.88
• ESI: 216.7025
• Ded: 1,080.5825
Net Salary
• 16,101.9375
Thank you.
Regards
From India, Mumbai
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Considerations for ESI Deductions from Gross Earnings
Please consider the following regarding the ESI deductions from gross earnings at 1.75% from the employee.
In the payslip, the salary breakdown is as follows:
Earnings
- Basic: 7199
- HRA: 3599
- Conv: 800
- Washing Allow: 785
- Gross Salary: 12383
- OT: 4799.52
- Gross Earnings: 17182.52
Deductions
- PF: 863.88
- ESI: 300.6941
Total Deductions: 1164.5741
Net Salary: 16017.9459
From India, Mumbai
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Please consider the following regarding the ESI deductions from gross earnings at 1.75% from the employee.
In the payslip, the salary breakdown is as follows:
Earnings
- Basic: 7199
- HRA: 3599
- Conv: 800
- Washing Allow: 785
- Gross Salary: 12383
- OT: 4799.52
- Gross Earnings: 17182.52
Deductions
- PF: 863.88
- ESI: 300.6941
Total Deductions: 1164.5741
Net Salary: 16017.9459
From India, Mumbai
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EPF numbers change to 10 or more employees. Kindly visit EPF to get the recent amendment.
Regarding your ESI query, you have to capture ESI for the said salary (i.e., 18,000).
Regards,
John N
From India, Madras
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Regarding your ESI query, you have to capture ESI for the said salary (i.e., 18,000).
Regards,
John N
From India, Madras
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Your restaurant in Chennai, being a catering establishment, is subject to the Tamil Nadu Catering Establishments Act, 1958. I hope that you have registered the establishment under the Act within 30 days of its commencement and obtained a registration certificate based on the maximum number of employees likely to be employed on any day during the calendar year. Additionally, please ensure you are maintaining the various registers and notices as required by the Rules.
Working Hours and Overtime Regulations
I would like to bring to your attention Section 7(2) of the Act. According to this section, the total number of hours worked on any day should not exceed 10 hours, which includes only one hour of overtime. Moreover, the total overtime hours should not exceed 54 in any quarter.
Kind regards, [Your Name]
From India, Salem
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Working Hours and Overtime Regulations
I would like to bring to your attention Section 7(2) of the Act. According to this section, the total number of hours worked on any day should not exceed 10 hours, which includes only one hour of overtime. Moreover, the total overtime hours should not exceed 54 in any quarter.
Kind regards, [Your Name]
From India, Salem
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