E.S.I. Scheme is social security legislation and it is contributory in nature. The contribution is paid by both employer and employee at a specified rate. The rates are revised from time to time. Currently, the employee’s contribution rate is 1.75% of the wages and that of employer’s is 4.75% of the wages.
As per Section 2 (22) wages means “all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock out, strike which is not illegal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include - (a) any contribution paid by the employer to any pension fund or provident fund, or under this Act.”
Definition of wages consist of two parts, first part is including components and second part exclude some things from wages such as contribution to pf fund etc.
II. The following items will form part of the wage both under Section 2(9) i.e for considering the employee for the purpose of coverage and Section 2(22) of the ESI Act for the purpose of charging of contribution:-
· Suspension allowance/subsistence allowance
· Overtime allowance
· Inam/ex-gratia payment:
· Wages paid during layoff:
· House rent allowance
· Night shift/heat/gas & dust allowance:
· Medical allowance
· Newspaper allowance
· Education allowance:
· Drivers’ allowance
· Food/milk/tiffin/lunch allowance
· Gazetted allowance
· Wages and dearness allowance for unsubstituted holidays:
· interim relief
· Attendance bonus
· Matinee allowance which is being paid to employees in Cinema Houses
· Compensatory allowance.
· Cash handling allowance paid to Cashier.
· Supervisory Allowance.
· Additional pay paid to training staff.
· Charge allowance
· Steno/Typist allowance
· Plant allowance
· Honorarium for looking after the hospital/dispensary
· Computer allowance
· Gestetner/Photocopier/Printer allowance
· Personnel/Special allowance
· Machine allowance
· Convassing allowance
· First-aid allowance
· Personnel allowance
· Area allowance
· Exgratia payment if payment is made within an interval of two months.
II. The following items will not form part of the wage either under Section 2(9) or under Section 2(22) of the ESI Act:
· Washing allowance:
· Annual bonus:
· Incentive bonus:
· Production bonus:
· Annual commission
· Conveyance allowance
· Service charges
· Exgratia payment during strike for travelling expenses
· Saving scheme
· Payment made on account of un-availed leave at the time of discharge.
· Commission on advertisement secured for newspapers, if not paid to the regular employee.
· Fuel allowance/petrol allowance
· entertainment allowance
· shoes allowance
· payment made on account of gratuity on discharge/retirement.
· Payment made on encashment of leave.