Overtime wages ESI & PF

[venkat eswaran]

Dear all,

For overtime wages ESI & PF to be deducted? is it compulsory?

Expecting ur views

Venkat

[Ganeshan Kalyani]

Sir in my view overtime wags also forms part of the wage that the worker is getting paid. So both Esic and PF is deductible. Thanks.

[KASTURI SETHI]

Sh. Ganeshan Kalyani Ji,

Salary Head is same. Over time is also accounted towards salary. Sir, Do you agree ?

[MUKUND THAKKAR]

Sir,

PF & ESI is applicable only salary only . PF and ESI is not deducatable on over time. over time is payable as per factory act. if PF & ESI is applicable than same is effected on Bonus payment. if not part of CTC.

[KASTURI SETHI]

SH.MUKUND THAKKAR JI,

Thank you, Sir.

[Ganeshan Kalyani]

Sri Mukund ji I am unable to find the definition of Basic Salary as per PF Act. Can you please through some light on this.

[DR.MARIAPPAN GOVINDARAJAN]

The expression 'basic wages' is defined under Section 2(b) of the Employees' Provident Funds And Miscellaneous Provisions Act, 1952 as all emoluments which are earned by an employee while on duty or on leave or holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-

(i) the cash value of any food concession;

(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;

(iii) any presents made by the employer.

[KASTURI SETHI]

Thanks to Sh.M.Govindarajan, Sir for making the concept clear to me.

[Ganeshan Kalyani]

Thanks for clarification Sri Mariappan Sir.

AI Summary

Overtime wages excluded from basic wages under EPF Act, so provident fund contributions generally not leviable; ESI treatment disputed. Discussion concluded that the Employees' Provident Funds Act defines basic wages to exclude overtime allowance and similar allowances, so overtime is not included in basic wages for PF calculation and PF contributions are generally not leviable on overtime; forum contributors disagreed about ESI applicability and no definitive statutory resolution for ESI was provided in the thread.