Employees' State Insurance (abbreviated as ESI) is a self-financing social security and health insurance scheme for Indian workers. This fund is managed by the Employees' State Insurance Corporation (ESIC) according to rules and regulations stipulated there in the ESI Act 1948. ESIC is an autonomous corporation by a statutory creation under Ministry of Labour and Employment, Government of India.
The promulgation of Employees' State Insurance Act, 1948 (ESI
Act), by the Parliament was the first major legislation on social Security for
workers in independent India. It was a time when the industry was still in a
nascent stage and the country was heavily dependent on an assortment of imported
goods from the developed or fast developing countries. The deployment of
manpower in manufacturing processes was limited to a few select industries such
as jute, textile, chemicals etc. The legislation on creation and development of
a fool proof multi-dimensional Social Security system, when the country's
economy was in a very fledgling state was obviously a remarkable gesture
towards the socio economic amelioration of a workface though limited in number
and geographic distribution. India, notwithstanding, thus, took the lead in
providing organized social protection to the working class through statutory
provisions.
The ESI Act 1948, encompasses certain health related
eventualities that the workers are generally exposed to; such as sickness,
maternity, temporary or permanent disablement, Occupational disease or death
due to employment injury, resulting in loss of wages or earning capacity-total
or partial. Social security provision made in the Act to counterbalance or
negate the resulting physical or financial distress in such contingencies, are
thus, aimed at upholding human dignity in times of crises through protection
from deprivation, destitution and social degradation while enabling the society
the retention and continuity of a socially useful and productive manpower.
APPLICABILITY
Under Section 2(12) the Act is applicable to non-seasonal
factories employing 10 or more persons.
Under Section 1(5) of the Act, the Scheme has been extended
to shops, hotels, restaurants, cinemas including preview theatres, road-motor
transport undertakings and newspaper establishments employing 10* or more
persons.
Further under section 1(5) of the Act, the Scheme has been
extended to Private Medical and Educational institutions employing 10* or more
persons in certain States/UTs.
*Note: However in Some State threshold limit for Coverage of
establishments in still 20 Employees of the aforesaid categories of factories
and establishments These State Governments/UTs are in the process of reducing
the same. The existing wage limit for coverage under the Act is Rs.21,000/- per
month (w.e.f. 01/01/2017).
AREAS COVERED
The ESI Scheme is being implemented area-wise by stages. The
Scheme has already been implemented in different areas in the following
States/Union Territories of Indian Union
STATES
All the States except Manipur and Arunachal Pradesh.
UNION TERRITORIES
All union territories except Dadra & Nagar Haveli, Daman
& Diu and Lakshadweep Islands.
The scheme is notified in 325 complete Districts out of 393
Districts, where scheme was partially implemented and 89 Districts Headquarters
out of non implemented Districts.
The comprehensive and multi-pronged social security
programme is administered by an apex corporate body called the Employees' State
Insurance Corporation. It comprises members representing vital interest groups,
including, employees, employers, the Central and State Government,
representatives of Parliament and medical profession. The Corporation is headed
by the Union Minister of Labour, as its Chairman, whereas the Director General,
appointed by the Central Government functions as its Chief Executive Officer.
The broad based corporate body is, primarily, responsible for coordinated
policy planning and decision making for growth, development and efficacy of the
scheme. A Standing Committee, constituted from amongst the members of the
Corporation, acts as an Executive Body. The Medical Benefit Council,
constituted by the Central Government, is yet another Statutory Body that
advises the Corporation on matters related to effective delivery of medical
services to the Beneficiary Population.
The Corporation, with its Central Headquarters at New Delhi,
operates through a network of 63 Regional and Sub- Regional located in various
States. The administration of Medical Benefit is taken care of by the
respective State Government except in case of Delhi and Noida/Greater Noida
area in Uttar Pradesh where the Corporation administers medical facilities
directly. The Corporation has taken over the administration of 36 ESI Hospitals
in various States for developing them as ESIC Model Hospitals.
ESI Scheme, like most of the Social Security Schemes the
world over, is a self financing health insurance scheme. Contributions are
raised from covered employees and their employers as a fixed percentage of
wages. As of now, covered employees contribute 1.75% of the wages, whereas, the
employers contribute 4.75% of the wages, payable to their employees. Employees
earning upto Rs.137/- a day are exempted from payment of their share of
contribution. The State Governments, as per provisions of the Act, contribute
1/8th of the expenditure of medical benefit within a per capita ceiling of Rs.
1500/- per Insured Person per annum. Any additional expenditure incurred by the
State Governments, over and above the ceiling and not falling within the shareable
pool, is borne by the State Governments concerned.
E.S.I. Scheme being contributory in nature, all the
employees in the factories or establishments to which the Act applies shall be
insured in a manner provided by the Act. The contribution payable to the
Corporation in respect of an employee shall comprise of employer's contribution
and employee's contribution at a specified rate. The rates are revised from
time to time. Currently, the employee's contribution rate (w.e.f. 1.1.97) is 1.75%
of the wages and that of employer's is 4.75% of the wages paid/payable in
respect of the employees in every wage period. For newly implemented areas, the
contribution rate is 1% of wages of Employee and 3% payable by Employers for
first 24 months(w.e.f. 06.10.2016) Employees in receipt of a daily average wage
upto Rs.137/- are exempted from payment of contribution. Employers will however
contribute their own share in respect of these employees.
Collection of Contribution
An employer is liable to pay his contribution in respect of
every employee and deduct employees contribution from wages bill and shall pay
these contributions at the above specified rates to the Corporation within 15
days of the last day of the Calendar month in which the contributions fall due.
The Corporation has authorized designated branches of the State Bank of India
and some other banks to receive the payments on its behalf.
Contribution Period and Benefit Period
There are two contribution periods each of six months
duration and two corresponding benefit periods also of six months duration as
under.
Contribution period Corresponding Cash Benefit period
Contribution Period Cash
Benefit Period
1st April to 30th Sept. 1st
Jan of the following year to 30th June
1st Oct to 31st March of the year following. 1st July to 31st December.
Information - Benefits
The section 46 of the Act envisages following six social
security benefits :-
(a) Medical Benefit : Full medical care is provided to an
Insured person and his family members from the day he enters insurable
employment. There is no ceiling on expenditure on the treatment of an Insured
Person or his family member. Medical care is also provided to retired and
permanently disabled insured persons and their spouses on payment of a token
annual premium of Rs.120/- .
1. System of Treatment
2. Scale of Medical Benefit
3. Benefits to Retired IPs
4. Administration of Medical Benefit in a State
5. Domiciliary treatment
6. Specialist consultation
7. In-Patient treatment
8. Imaging Services
9. Artificial Limbs & Aids
10. Special Provisions
11. Reimbursement
(b) Sickness Benefit(SB) : Sickness Benefit in the form of
cash compensation at the rate of 70 per cent of wages is payable to insured
workers during the periods of certified sickness for a maximum of 91 days in a
year. In order to qualify for sickness benefit the insured worker is required
to contribute for 78 days in a contribution period of 6 months.
1. Extended Sickness Benefit (ESB) : SB extendable upto two
years in the case of 34 malignant and long-term diseases at an enhanced rate of
80 per cent of wages.
2. Enhanced Sickness Benefit : Enhanced Sickness Benefit
equal to full wage is payable to insured persons undergoing sterilization for 7
days/14 days for male and female workers respectively.
(c) Maternity Benefit (MB) : Maternity Benefit for
confinement/pregnancy is payable for Twenty Six (26) weeks, which is extendable
by further one month on medical advice at the rate of full wage subject to
contribution for 70 days in the preceding Two Contribution Periods.
(d) Disablement Benefit
1. Temporary disablement benefit (TDB) : From day one of
entering insurable employment & irrespective of having paid any
contribution in case of employment injury. Temporary Disablement Benefit at the
rate of 90% of wage is payable so long as disability continues.
2. Permanent disablement benefit (PDB) : The benefit is paid
at the rate of 90% of wage in the form of monthly payment depending upon the
extent of loss of earning capacity as certified by a Medical Board
(e) Dependants Benefit(DB) : DB paid at the rate of 90% of
wage in the form of monthly payment to the dependants of a deceased Insured
person in cases where death occurs due to employment injury or occupational
hazards.
(f) Other Benefits :
Funeral Expenses : An amount of Rs.10,000/- is payable to
the dependents or to the person who performs last rites from day one of
entering insurable employment.
Confinement Expenses : An Insured Women or an I.P.in respect
of his wife in case confinement occurs at a place where necessary medical
facilities under ESI Scheme are not available.
In addition, the scheme also provides some other need based
benefits to insured workers.
Vocational Rehabilitation : To permanently disabled Insured
Person for undergoing VR Training at VRS.
Physical Rehabilitation : In case of physical disablement
due to employment injury.
Old Age Medical Care : For Insured Person retiring on
attaining the age of superannuation or under VRS/ERS and person having to leave
service due to permanent disability insured person & spouse on payment of
Rs. 120/- per annum.
Rajiv Gandhi Shramik Kalyan Yojana : This scheme of
Unemployment allowance was introduced w.e.f. 01-04-2005. An Insured Person who
become unemployed after being insured three or more years, due to closure of
factory/establishment, retrenchment or permanent invalidity are entitled to :-
Unemployment Allowance equal to 50% of wage for a maximum
period of upto Two Years.
Medical care for self and family from ESI
Hospitals/Dispensaries during the period IP receives unemployment allowance.
Vocational Training provided for upgrading skills -
Expenditure on fee/travelling allowance borne by ESIC.
Incentive to employers in the Private Sector for providing
regular employment to the persons with disability : Minimum wage limit for Physically Disabled Persons for
availing ESIC Benefits is 25,000/-. Employerss' contribution is paid by the Central Government
for 3 years.
Benefits & Contributory Conditions : An interesting feature of the ESI Scheme is that the
contributions are related to the paying capacity as a fixed percentage of the
workers wages, whereas, they are provided social security benefits according to
individual needs without distinction.
Cash Benefits are disbursed by the Corporation through its
Branch Offices (BOs) / Pay Offices (POs), subject to certain contributory
conditions.
Wages
Washing Allowance: It is a sum paid to defray special expenses entailed by the
nature of employment and as such this amount does not amount to wages.
(In lieu of old instructions issued vide Memo
No.Ins.III/2/1/65 dt. 8.2.1967)
Suspension Allowancce/Subsistence Allowance
During the suspension period the employee is not allowed to
actually work and he is not given full remuneration but the permissible subsistence
allowance is paid to the employee by way of remuneration for remaining attached
to the services of the employer as per the relevant service regulations
governing his contract of service, therefore, the subsistence allowance is part
of wage as defined under Sec.2(22) of the ESI Act and consequently on the
amount of subsistence allowance paid to the suspended employee, contribution is
payable.
Supreme Court has also held in the case of RD, ESIC
Vs.M/s.Popular Automobiles etc.in its judgement dt. 29.9.97 in Civil appeal
no.3850 of 1993 that suspension/subsistence allowance is wage and contribution
is payable under Sec.2(22) on the said amount.
(In lieu of earlier instructions were issued vide Memo
No.3(2)-1/67 dt. 3.6.67 & letter No.Ins.III(2)-2/71 dt. 10.8.1971)
Overtime Allowance
In the case of the employer as and when the employer finds
the need to have work done expeditiously, in addition to the normal work during
the course of the working hours, the employer offers to the employee to do the
overtime work after the working hours. When employee does overtime work it
amounts to the acceptance for the same, hence there emerges concluded implied
contract between the employer and the employee. Both the remuneration received
during the working hours and overtime constitutes a composite wage and thereby
it is a wage within the meaning of Sec.2(22) of the ESI Act. Therefore, the
contribution is payable on the overtime allowance. However, overtime allowances
will be considered as wage for the purpose of charging the contribution only
and will not be considered for the purpose of the coverage of the employee
under the Scheme.
The same view was held by the Supreme Court in its judgement
delivered on 6.11.96 in the case of Indian Drugs & Pharmaceuticals Ltd. Vs.
ESIC, in Civil Appeal No.2777 of 1980.
(Old instructions issued vide memo No.3-1(2)/3(1)/68 dt.
31.5.68).
Annual Bonus
Bonus paid to the employees could not be treated as wage for
the purpose of charging of contribution under Sec.2(22), provided the periodicity
of the payment is more than 2 months. The said issue was also considered in the
meeting of the ESI Corporation held on 19.12.1968 and the Corporation agreed to
the recommendations of the Standing Committee that bonus may not be treated as
wage.Hence no contribution is payable on annual Bonus.
(Earlier instructions were issued vide memo
No.Ins.III/2(2)-2/67 dt. 8.2.1967).
Incentive Bonus
As per the decision of the Supreme Court delivered on
8.3.2000 in the case of M/s.Whirlpool India Ltd. Vs. ESIC in civil appeal
No.1903 of 2000, additional remuneration to become wages has to be paid at
intervals not exceeding two months as distinguished from being payable. Thus,
there has to be actual payment and the payment of production incentive does not
fall either under the 1st part or last part of the definition of the term wages
as defined in Sec.2(22) of the Act, hence no contribution is payable on the
incentive bonus, provided the periodicity of payment is more than 2 months.
(Earlier instructions were issued by this office vide Memo
No.T-11/13/53/19-84-Ins.IV dt. 19.9.84, Memo No.Ins.III-2(2)/2/69 dt,.
26.12.73, Memo No.T-11/13/54/18/82-Ins.IV dt. 14.7.82 & Memo
No.D/Ins.5(5)/68 dt. 18.9.88.)
Production Bonus
Production Bonus like incentive bonus is paid to the workers
as additional remuneration and hence like incentive bonus such additional
remuneration in order to become wages has to be paid at intervals not exceeding
2 months as distinguished from being payable. Thus, there has to be actual
payment and hence no contribution is payable, provided periodicity of the
payment is more than 2 months.
(Earlier instructions issued vide letter dated
4(2)/13/74-Ins.IV dated 2.9.85)
Inam/Ex-Gratia Payment
Inam represents a payment made by the employer to any
employee as a reward for the services rendered by him for which he is/was not
under obligation to render the same under the contract of service which is
expressed or implied but does not include the payment which have been made to
an employee in fulfillment of contract of service. This may include exgratia
payment.
Where Inam is being paid for special skill or higher
responsibilities/additional duties, it may be taken as remuneration and
contribution is payable.
Where the employer has introduced the scheme of Inam but
according to terms and conditions the employer has no right to withdraw it or
revise it, the same may be treated as wages and contribution is payable.
Where the employer has introduced the scheme of Inam and he
has right to revise or withdraw it at his discretion, the payment of Inam under
such scheme may not be treated as wages and contribution is not payable
provided the payment is made at an interval exceeding two months..
Where there is no scheme of Inam in writing but still
employer might be making payment under the head Inam on the basis of some
understanding between the parties, in such cases, the nature of payment and its
periodicity may be ascertained and whether payment of Inam is an exgratia
payment which is not covered by the contract of service. In case the
periodicity is more than 2 months, no contribution may be charged.
(Last instructions were issued vide letter No.D-Ins.5(5)/68
dated 21.2.1975).
Wages Paid During Layoff
During the period of layoff though the employee is not given
actual work and is also not given full remuneration but certain wages are paid
to the employee by way of remuneration for remaining attached to the
factory/establishment of the employer, therefore, such payments paid for the
period of layoff are also wages for the purpose of Sec.2(22) of the ESI Act and
hence contribution is payable on such payments.
(Earlier instructions were issued in 1968).
Annual Commission
Sales Commission would fall within the 3rd category of wages
as defined underthe Act as additional remuneration and there has to be actual
payment as the word used is paid and not payable, at intervals not exceeding
two months. The question as to why the period of 2 months is fixed was debated
in Supreme court in the case of Handloom House, Ernakulam Vs. RD,ESIC in Civil
Appeal No.2521 of 1999 when it was held that no employer shall have the
permission to draw the payment of contribution on the premise that annual
payments have to be work out. Normally, the wage period is one month, but the
Parliament would have thought that such "wage period" may be extended
a little more but no employer shall make it longer than two months. This could
be the reason for fixing a period of two months as the maximum period for
counting the additional remuneration has to make it part of 'wage' under the
Act. Therefore, the annual commission is excluded from the definition of the
wages and hence no contribution is payable on the annual commission.
( Earlier instructions were issued vide Hqrs.letter No.
Ins.III(2)-2/71 dated 10.8.71).
House Rent Allowance
House Rent Allowance is wage in cases where it is being
paid. Notional amount of house rent can not be presumed as wages for deciding
the coverage. In cases where an employee is being paid house rent allowance,
the same will be included both for coverage and contribution. In cases where
the staff quarters have been allotted the amount of salary and wages paid will
count for coverage and contribution and no notional house rent allowance is to
be presumed in such cases.
In the cases of Braithawait & Co. Vs. ESIC and
M/s.Harihar Polyfibres Vs. ESIC, Bangalore, Supreme Court has also held that
house rent allowance is a wage under Sec.2(22) of the ESI Act.
(Earlier instructions were issued vide memo
No.T-11/13/11/15-Ins.III dt. 28.9.75, No.Ins.III(2)/15/15/74-Ins.Desk.I dated
Dec.,76, No.T-11/13/53/19-84/Ins.IV dt. 19.9.84 & No.D.Ins.II/11/3087/303
dated 1.3.1985).
Night Sift/Heat/Gas & Dust Allowance
It is an additional remuneration paid to the employee for
performing duty atnight time during the hours of darkness. This amount is paid
by way of incentive under the scheme of settlement entered into between the
Management and its workmen and hence are wages within the meaning of Sec.2(22)
of the ESI Act. This view was observed by the Full Bench of Karnataka High
Court in the case of NGEF Ltd. Vs. Dy.Regional Director, ESIC, Bangalore.
Supreme Court in the case of M/s.Harihar Polyfibers Vs. RD ESIC, Bangalore has
also held the same view. Hence, Night Shift Allowance, Heat, Gas & Dust
allowance are wages under Sec.2(22) of the ESI Act and contribution is payable
on the said amount paid by the employer to the employees.
(Earlier instructions were issued vide Memo
No.T-11/13/53/19/84-Ins.IV dated 19.9.94).
Conveyance Allowance
Fixed conveyance allowance flowing out of a wage settlement
or as per terms and conditions of employment should be treated as wages under
section 2(22) for all purposes except:
Amount towards conveyance paid or reimbursed to any employee
for incurring expenses for specific duty related journey
Reimbursement of actual cost of conveyance for coming to
work and going from work on production of ticket or season ticket and subject
to proof of actual expenditure
Payment of certain amount for maintenance of vehicle
depending upon cadre of the official and category of vehicle and subject to
production of records for actually maintaining the vehicles
Fixed allowance paid at an interval exceeding 2 months,
unless such payment is made as per contract or agreement.
Service Charges
Service charges are collected by management of the hotel on
behalf of their employees in lieu of direct tips and the same is paid to their
employees at a later date.
Such amount collected as service charges will not constitute
wages under Sec.2(22) of the ESI Act. In the case of ESIC Vs. M/s.Rambagh
Palace Hotel, Jaipur, the High Court of Jaipur has held that service charges
are not wages under Section 2(22) of the ESI Act. This verdict of the High
Court of Jaipur was accepted in the ESIC and hence no contribution is payable
on service charges.
(Earlier instructions were issued vide letter
No.P-12/11/4/79-Ins.Desk.I dt. 18.9.79)
Medical Allowance
The employees working in factories/establishments are being
provided medical services in kind by the employer but in certain
factories/establishments instead of providing medical services in kind, the
amount spent by the employees on medical care is reimbursed while in some other
organisations, employees are being paid monthly cash allowance in lieu of
medical aid/reimbursement of medical expenses. Where such payments are made by
the employer in lieu of the medical benefit, the same are to be treated as
wages under Sec.2(22) of the ESI Act and the contribution is chargeable.
(Earlier instruction were issued vide letter
No.Ins.5(5)/68-Ins.III dt. 21.8.71 & Ins.III/2(2)2/68 dated 24.6.71)
Newspaper Allowance
In certain factories/establishments the employees are
reimbursed the cost of Newspapers while in some other factories/establishments
the employees are paid monthly newspapers allowance instead of reimbursement of
the cost of the Newspapers. Where the amount is being paid regularly to the
employees by the employer as Newspapers allowance the same will be treated as
wages under Sec.2(22) of the ESI Act and the contribution is chargeable.
However, where the cost of Newspapers is reimbursed to the employees, no
contribution is to be charged on such payments.
Education Allowance
Employees are being paid monthly Education allowance for the
children studying in the Schools/Colleges. Where such education allowance is
being paid monthly, the same is to be considered as wages under Sec.2(22) of
the ESI Act and the contribution is chargeable on the said amount.
However, in such cases where instead of paying the education
allowance on monthly basis, the amount spent as fee is reimbursed to the
employees and booked under education allowance, in such cases no contribution
is payable.
Drivers Allowance
In some of the factories/establishments the officers
employed as employees are being paid drivers’ allowance per month. This
allowance is being paid to enable the officers to appoint a driver at their own
level and such drivers employed are not being paid salary directly by the
factories/establishments. Where such allowance is being paid to the employees
and the drivers are not engaged by the employees, in such event the allowance
paid as such will be considered as wage under Section 2(22) of the ESI Act and
contribution will be chargeable provided the employee is coverable under the
Scheme.
However, where the services of the drivers are being
utilised, in such event the drivers so engaged will be covered as employee and
contribution will be payable on the amount paid to the drivers as salary and
booked in the ledgers of the employer under the heading "Drivers’
Allowance".
Food/Milk/Tiffin/Lunch Allowance
Each case of payment of Food, Milk, Tiffin and Lunch
Allowance has to be examined on its merits depending on the following
conditions under which the allowance is payable:-
Tiffin/Food/Milk/Lunch Allowance paid in cash at a fixed
rate irrespective of whether the person is absent or on authorised leave etc.
may be treated as wages.
Tiffin/Food/Milk/Lunch allowance paid in cash with deduction
for leave or absence etc. may not be treated as wages.
Tiffin/Food/Milk/Lunch allowance paid in kind i.e. canteen
subsidy/food subsidy etc. may not be treated as wages.
(Earlier instructions were issued vide letter
No.P-11/13/97-Ins.IV dated 2.2.1999)
Gazetted Allowance
Certain factories/establishments are paying gazetted
allowance to its employees in lieu of duties performed by them on gazetted
holidays. Such gazetted allowance is not wage for the purpose of Sec.2(9) of
the ESI Act. However, it will be wage for the purpose of Sec.2(22) of the ESI
Act and the contribution are to be recovered on such payments.
Wages and Dearness Allowance for Unsubstituted Holidays
Such wages and dearness allowance paid to the employees for
the unsubstituted holidays are to be treated as wages under Sec.2(22) of the
Esi Act and the contribution is payable. High Court of Gujarat in the case of
ESIC Vs. New Assarw Manufacturing Co.Ltd. held the same view.
Exgratia Payment During Strike for Travelling Expenses
Like conveyance allowance if any exgratia payment is made
during the period of strike to some of the employees to incur certain
travelling expenses such amount will neither be considered as wage under
Sec.2(9) nor under Sec.2(22) of the ESI Act and no contribution is payable on
such amount. High Court of Bombay in the case of ESIC Vs. Willman (India) (P)
Ltd. in case No.210 of 1976, held the same view.
Interim Relief
Interim relief paid to the employees is normally paid when
either the wage is under revision or when the payment of Dearness Allowance is
delayed due to any reason. Whatsoever may be the case, if the interim relief is
paid to the employees by any employer, the same will amount the wages within
the meaning of Sec.2(22) of the ESI Act and contribution is payable thereon.
Saving Scheme
Certain factories/establishments are contributing towards
the saving scheme for the welfare of the workers. Such amount paid by the
employer as his contribution to the saving scheme, will not constitute wages
under Sec.2(22) of the ESI Act and the contribution is not payable. (Earlier
instructions were issued vide Memo No.P-12/11/4/77-Ins.IV dt. 15.11.80)
Attendance Bonus
It is a special allowance being paid by certain employers to
their employees to discourage the workers from absenting from the job. Any
amount paid by the employer to its employees as Attendance Bonus will
constitute wages under Sec.2(22) of the ESI Act and the same opinion was held
by Bombay High court in the case of ESIC Vs. Indian Dyestuff Industries Ltd..
However, the periodicity aspect has to be kept in mind. In case the periodicity
is more than 2 months, the same will not constitute wages and no contribution
will be payable as in the case of incentive bonus.
PAYMENT MADE TO RICKSHAW PULLERS,HATHRAIRY PULLERS AND TRUCK
OPERATORS (INCLUDING LOADING & UNLOADING CHARGES WHEN THE LOADERS/UNLOADERS
ARE THE EMPLOYEES OF THE TRUCK OPERATORS:
Rickshaw pullers, Hathrairy pullers and Truck Operators (who
bring labour with them) no contribution is payable on the amount paid by the
employer if the amount paid is lumpsum amount including loading/un-loading
charges and no separate wages are paid by the employer.
Similar view was held by Bombay Division Bench in 1990 in
the case of Raisaheb Tekchand, Mohate Mills Vs. R.D. ESIC.
Hamals/Coolies Employed at a Particular Time
Where Hamals & Coolies are employed at a particular
place and a particular time, outside the premises of the factory/establishment
to perform a specific job on the spot in such cases no contribution is payable
on the amount paid to such Coolies/Hamals, however the contribution is payable
on the amount paid to the coolies and hamals for services rendered within the
premises of the employer.
Bombay High Court in the case of Parley Bottling Co.Ltd. VS.
ESIC,Bombay
1989 and Supreme Court in the case of ESIC VS.Premier Clay
Products, have held this view.
SHORT PERIOD CONTRACT FOR SERVICE - ELECTRICIAN, CARPENTERS,
MECHANICS, PLUMBERS ETC./REPAIR WORK DONE ON SHOP
In such cases also contribution is payable on the amount
paid by the Employer if the services are rendered within the premises. This
view was also held by Punjab and Haryana High Court vide its judgement dated
29.3.84 in the case of Modern Equipment Vs. ESIC in Civil Appeal No.3218 of
1989.
Expenditure on Servicing of Machines
No contribution is payable on the servicing of machines
where the job awarded is to the Engineer and instead of contract of service,
there is a contract for service for servicing of machines.
Expenditure on Annual/Periodical Services Contract
In the factories/establishments certain amount is being paid
by the employer to the supplier of machines or to the firms of repute for the
annual/periodical servicing of the machines and for such purposes the contract
is awarded. In such cases no contribution is payable on the amount paid for
annual/periodical service contracts.
Commisssion to Dealers/Agents
Where dealers/agents are appointed by the employers but no
regular wages are paid and it is not obligatory on the part of such
dealers/agents to attend to the factories/ establishments and they are paid
commission only on the quantum of sales, in such cases the amount paid by the
employer as commission/dealership does not constitute wage under Section 2(22)
of the ESI Act and hence no contribution is payable.
Service Contract
Amount paid to an organisation for maintenance of
Machinery/Equipments as part of service contract will not attract ESI
contribution.
PAYMENT MADE TO LABOUR CONSULTANTS, LAWYERS, ENGINEERS,
COUNSELS, CHARTERED ACCOUNTANTS:
The amount paid by the employer to labour consultants,
lawyers, engineers, counsels, chartered accountants does not constitute wage as
per provisions under Section 2(22) of the ESI Act and hence no contribution is
payable.
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:-
Matinee allowance which is being paid to employees in Cinema
Houses.
Shift allowance paid to employees who work on shift duty at
odd shifts.
Location allowance paid, in addition to Dearness Allowance
to meet the high house rent.
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 - Pay over and above the basic wage and
Dearness allowance for skill, efficiency or past good records.
Area allowance - given to employees living in a particular
area to meet the high cost of living in that area.
Exgratia payment if payment is made within an interval of
two months.
The following items will not form part of the wage either
under Section 2(9) or under Section 2(22) of the ESI Act:-
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.
Source http://www.esic.nic.in/
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