CONTRIBUTION OF ALLOWANCES


Whether the allowances paid to the employees are subject to E. S1. Contribution deduction?

The allowances have been excluded by section 2(22) (b) and (c) of the E.S.I. Act. In a case it has been held that the cycle allowance given to the employees is nothing but traveling concession and the value of cycle allowance falls in exception (b) of section 2(22) of the Act. Similarly, the uniform allowance paid by the employer cannot be added to wages for calculating contribution under the Act All the same the payment of milk, tea and egg allowances has also been excluded from the purview of the wages.

Payment of lnam paid by the employer in pursuance of an agreement will be 'wages' notwithstanding that agreement was not a term of the original contract. In a case before the Supreme Court, it has been held that the term 'wages' includes House Rent Allowances; Heat Gas and Dust Allowance as well as Incentive Allowance.

1.Hyderabad Asbsestos Cement Product Ltd., Ballabgarh vs. Regional Director, ESI. Corpn., Chandigarh. 1982 Lab. IC 88 (Punjab) (NOC); Employees State Insurance Corpn. Chandigarh vs. Gedore Tools (India) P.Ltd. Faridabad, 1982 Lab. IC87 (Punjab) NOC; Employees State Insurance Corpn. NewDelhi vs. Pratap Names Labels Factory. 1982 Lab.IC41 (Delhi) (NOC)

2.Employees' State lnsurance Corp. vs. Enfield India, 1995 LLR 81 (Madras High Court).

3.Harihar Polyfibres vs. Regional Director, ESI Corpn. AIR 1984 SC 1680; 1984 Lab. IC 1568; 1984 (65) FJR 199.


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APPLICABILITY OF THE ACT & SCHEME:

 Is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establish-ments employing 20 or more person upto Rs.15,000/- per month w.e.f. 01.04.10. It has also been extend-ed upon shops, hotels, restaurants, roads motor transport undertakings, equip-ment maintenance staff in the hospitals.

COVERAGE OF EMPLOYEES:

 Drawing wages Upto Rs.15,000/- per month Engaged either directly or thru’ contractor

RATE OF CONTRIBUTION OF THE WAGES:

 Employers’ 4.75%

 Employees’ 1.75%

MANNER AND TIME LIMIT FOR MAKING PAYMENT OF CONTRIBUTION:

 The total amount of contribution (employee’s share and employer’s share) is to be deposited with the authorized bank through a challan in the prescribed form in quadruplicate on ore before 21st of month following the calendar month in which the wages fall due.

BENEFITS TO THE EMPLOYEES UNDER THE ACT:

 Medical Benefit
 Sickness Benefit(SB)
 Maternity Benefit(MB)
 Disablement Benefit
 Dependants’ Benefit(DB)
 Funeral Expenses

 In addition, the scheme also provides some other need based benefits to insured workers.

WAGES FOR ESI CONTRIBUTIONS:

 Registers/files to be maintained by the employers

CONTRIBUTION PERIOD:

 If the person joined insurance employment for the first time, say on 5th January, his first contribution period will be from 5th January to 31st March and his corresponding first benefit will be from 5th October to 31st December.

TO BE DEEMED AS WAGES:

• Basic pay
• Dearness allowance
• House rent allowance
• City compensatory allowance
• Overtime wages (but not to be taken into account for determining the coverage of an employee)
• Payment for day of rest
• Production incentive
• Bonus other than statutory bonus
• Night shift allowance
• Heat, Gas & Dust allowance
• Payment for unsubstituted holidays
• Meal/food allowance
• Suspension allowance
• Lay off compensation
• Children education allowance (not being reimbursement for actual tuition fee)

NOT TO BE DEEMED AS WAGES:

• Contribution paid by kthe employer to any pension/provident fund or under ESI Act.
• Sum paid to defray special expenses entailed by the nature of employment – Daily allowance paid for the period spent on tour.
• Gratuity payable on discharge.
• Pay in lieu of notice of retrenchment compensation
• Benefits paid under the ESI Scheme.
• Encashment of leave
• Payment of Inam which does not form part of the terms of employment.
• Washing allowance for livery
• Conveyance Amount towards reimbursement for duty related journey

PENALTIES :

 Different punishment have been prescribed for different types of offences in terms of Section 85: (I) (six months imprisonment and fine Rs.5000), (ii) (one year imprisonment and fine), and 85-A: (five years imprisonment and not less to 2 years) and 85-C (2) of the ESI Act, which are self explanatory. Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust.

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