Hello All, if someone's wages are increased in August 2014 but with effect from April 2014 from ₹12,000/- to ₹16,000/-, how much ESI needs to be paid for this period, and how much will be the employer & employee share to be paid to ESI for the months of September 2014 and October 2014?
From India, New Delhi
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From India, New Delhi
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1. An important issue is the date from which the increase in wages for the said employee was announced.
2. From your comments, it appears that the decision to enhance the wages was taken in August 2014. Therefore, according to the provisions in the proviso to section 2(9) of the ESI Act, 1948, contributions are required to be paid in respect of the said employee on the total wages he received up to and including the close of the contribution period. The current contribution period, as you are aware, will end in September 2014. Hence, in my opinion, ESI contributions at the prescribed rates will be payable in respect of the said employee on total wages of ₹16,000 per month for the months of August and September 2014.
3. However, please also ensure that the total amount of ₹16,000 does not include overtime payments. Contributions are required to be paid on overtime amounts, as employees cannot be exempted based on overtime work.
Thank you.
From India, Noida
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9442. From your comments, it appears that the decision to enhance the wages was taken in August 2014. Therefore, according to the provisions in the proviso to section 2(9) of the ESI Act, 1948, contributions are required to be paid in respect of the said employee on the total wages he received up to and including the close of the contribution period. The current contribution period, as you are aware, will end in September 2014. Hence, in my opinion, ESI contributions at the prescribed rates will be payable in respect of the said employee on total wages of ₹16,000 per month for the months of August and September 2014.
3. However, please also ensure that the total amount of ₹16,000 does not include overtime payments. Contributions are required to be paid on overtime amounts, as employees cannot be exempted based on overtime work.
Thank you.
From India, Noida
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ESI Wages.doc