ESI Corporation has issued a circular/notification directing that where the wages of contract employees are not available for assessment of contributions, a formula of 60% - 40% of contractors' bills shall be adopted. Does any member have a copy of that circular? If so, could the member please share a copy of that circular/notification?
Thanks,
Adv. H.D. Gokhale
From India, Pune
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Thanks,
Adv. H.D. Gokhale
From India, Pune
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Please find the attachment. It is an old circular and I am not sure if the same applies even now.
From India, Kannur
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4487From India, Kannur
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The ratio of 60:40 is absolutely baseless. The Senior Officers of the Corporation who have decided this without applying their brains. Justification is given below:
PF Contribution: 14% Round figure i.e. Employer's Contr. Admn Chr. DLIS Contr. & Admn. Chr. ESI Contribution 5% Round figure Employer's Contr. 4.75% Gratuity 5% (4.81) Leave Wages 5% Bonus Minimum 8.33% Uniform / PPE 1% Welfare 2% Paid Holidays 2% Overheads 5% Profit Minimum 10% Bribes 1% (Labour License, PF/ESI inspection, Diwali gifts, grabbing contract etc. Total around 58%* This is the minimum expenses incurred by any small-scale company. The Best justified way to assess the wages is by multiplying the number of employees with the applicable minimum wages to the respective industries. (The number of employees can be identified from gate entries of the Principal Employer and/or the records available with them from billing/invoices etc.) * Percentages may vary from company to company. This is my way of justifying.
Regards, Suresh
From India, Thane
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PF Contribution: 14% Round figure i.e. Employer's Contr. Admn Chr. DLIS Contr. & Admn. Chr. ESI Contribution 5% Round figure Employer's Contr. 4.75% Gratuity 5% (4.81) Leave Wages 5% Bonus Minimum 8.33% Uniform / PPE 1% Welfare 2% Paid Holidays 2% Overheads 5% Profit Minimum 10% Bribes 1% (Labour License, PF/ESI inspection, Diwali gifts, grabbing contract etc. Total around 58%* This is the minimum expenses incurred by any small-scale company. The Best justified way to assess the wages is by multiplying the number of employees with the applicable minimum wages to the respective industries. (The number of employees can be identified from gate entries of the Principal Employer and/or the records available with them from billing/invoices etc.) * Percentages may vary from company to company. This is my way of justifying.
Regards, Suresh
From India, Thane
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Suresh, you can add all these expenses to your contract bill, no issue. ESIC's circular is about deciding the labor payment included in the total contract amount, which shall include everything. Prior to this circular, ESI was payable on the total contract amount/bill amount of the contract. 60% of the bill value to be taken as ESI qualifying wages is only a rough calculation. Moreover, this calculation applies only to such cases where the details of wages paid by the contractor are not available since he has left the establishment after finishing his work and submitting a total bill without showing how much he has paid as wages, how much he has spent on material/consumable purchases, how much he has spent on hiring a generator, concrete mixture, etc., and how much he has spent to bribe the inspectors. (If you, the employer, are perfect in all respects, you don't need to pay bribes to any of these inspectors, but when the employer requires a favor from them, naturally, you should also sound favors to them.)
Again, you cannot expect that ESI shall be deducted on 60% every subsequent time. It does not apply to subsequent bills, against which the employer is expected to collect full details of wage payments from the contractor before paying the bill.
From India, Kannur
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Again, you cannot expect that ESI shall be deducted on 60% every subsequent time. It does not apply to subsequent bills, against which the employer is expected to collect full details of wage payments from the contractor before paying the bill.
From India, Kannur
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As Mr. Madhu TK has attached the circular dated 09.08.2002 issued by the then Jt. Dir (Rev) to clear doubts while assessing ESI contributions for Only Labour Contractor.
But how would the contributions be ascertained when the contractor is supplying both labor and materials, i.e., job work with materials?
Can anyone clarify with some court judgment, if available.
From India, Durgapur
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But how would the contributions be ascertained when the contractor is supplying both labor and materials, i.e., job work with materials?
Can anyone clarify with some court judgment, if available.
From India, Durgapur
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