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How to Negotiate Salary Without Losing a Job Offer


Research

Before you attempt to negotiate a higher salary, research the average salary range for the position so that you’re well-informed during the discussion. Check salary ranges Labor Statistics website, research annual reports by industry and use reference materials available at libraries, such as the “Business Directory.” Because cost-of-living factors and geographical locations affect salaries, compare statistics that are representative of your area. Consider your years of experience in the industry, academic degrees and job-related accomplishments to help you come up with a counteroffer that’s fair and reasonable.

Professional Enthusiasm

During the negotiation process, make sure you discuss your salary needs with professional enthusiasm. Avoid criticizing the original offer, demanding better compensation or using a “pity party” mentality to manipulate the situation. The goal is to convey confidence and earnestly seek a compensation package that meets your skill level, years of experience and financial needs. Keep a positive attitude and don’t allow the negotiation process to become confrontational. If the company isn’t sincerely interested in you, they wouldn’t have offered you the job in the first place.

Bargaining Room

To make sure you don’t lose the job offer, express your willingness to give-and-take, so the employer doesn’t think you’re only interested if all of your expectations are met. According to the University of Minnesota School of Public Health, an effective negotiation strategy is to ask for a few perks you can do without. As a result, you can opt to give up those benefits in lieu of a higher salary. For example, you might cover your own relocation expenses, give up stock options for a year or forgo a company car to show your goodwill. This bargaining strategy seeks to find a compromise so both sides feel like they got a good deal.

Considerations

Several negotiating guidelines might help you strike a fair deal, without compromising the initial job offer. The Graduate College at the University of Illinois recommends negotiating salary only after a company has given you a formal offer. You need to make sure that the company is fully invested in you, so there’s no competition from other candidates. Don’t negotiate a higher salary unless you’re ready to commit to the job; the employer might agree to your salary request on the spot. Once salary negotiations have ended, don’t bring up other requests or demands that might negatively affect your standing as a new employee.

Ref:http://work.chron.com/negotiate-salary-losing-job-offer-8991.html

 
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Posted by on January 2, 2013 in Personal

 

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ESI-Wages


50 Wage heads & will highlight which Wage Heads should take in to account for ESI calculation & which should not.

1)      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)

2)      SUSPENSION ALLOWANCE/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./s.Popular Automobiles etc.in its judgment 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)

3)      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 SHIFT/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

Conveyance allowance is paid to the employee to compensate the expenses incurred by the employees on travelling etc. The travelling allowance or value of any travelling concession is also being paid to the employees in the nature of conveyance allowance, which is neither wages for the purpose of coverage of employees under Sec.2(9), nor it is treated as wages for the payment of contribution under Section 2(22) of the ESI Act.

In the case M/s.Hyderabad Asbestos Cement Products Vs. ESIC, Punjab & Haryana High Court, Chandigarh as well in the case of M/s.Harihar Polyfibres, the Supreme Court have held that conveyance allowance is not wage under Section 2(22) of the ESI Act.

(Earlier instructions were issued by this office vide No.P.11/13/97-Ins.IV dated 27.1.97.)

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 PARTIULAR 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 SERVICE 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.

COMMISSION 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..

 

Ref- http://www.yourhrworld.com/formats/search/manpower-planning-template-excel/

 
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Posted by on January 1, 2013 in Statutory Compliance

 

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About ESI


Coverage –  Act is applicable to non-seasonal factories using power and employing 10 or more persons and non-power using factories 20 or more persons.

Earning wages limit-  Gross Salary Rs. 15,000/- w. e. f. 01.04.2006.

Contribution :   By Employer         @ 4.75%

By Employee           @ 1.75%

Registration and number allotment–   Duly filled Form-01  Form-01 Employer’s Registration Form

For Employees Form 01 & Declaration Form no. 03 within 10 days of joining, kept one copy of Form-3 for record.  Form-3 Return of Declaration Form

Identity Cards : Form 4 the ESI Office will issue the same.

Register for ESI Record : Every employer shall maintain a register in Form-6 which is prescribed in rule-32.  Form-6 Register of Employees

Contribution periods   1st  : 1st April to 30th September

2nd  : 1st October to 31st March

Challans Deposit : Deposit in bank by 21st of every month.

Returns of contribution : On Form no. 5 in quadruplicate with Six Challans within or before  11 May & 12 Nov of every year mandatory certified by the Chartered Accountant if the member are 40 nos. or more w. e f. 01.04.2008.

Special Provision :

(i)     Within 42 days of the termination of the contribution period to which it related.

(ii)   Within 21 days of the date of permanent closure of the factory.

(iii) Within 7 days of the date f receipt of requisition in that behalf from the appropriate office.

Notice of Accident : As soon as practicable after the accident.

Maintenance of Accident Book : Form-11 any injury to an insured person. Form-11 Accident Book

Report to Accident :

  1. Immediately if the injury is serious. i.e. is likely to be cause to death or  permanent disablement or loss of a member.
  2. In any other case within 24 hours after the receipt of the notice or when the accident came to his notice or to his foremen or other official under whose supervision the insured person was employed at the time of accident.
  3. If the injury result in the death at the place of employment, the report to IMO and Local Office should be sent through a special messenger.

Every Employer shall send a report in Form-16 to the nearest Local Office and to the nearestInsurance Medical Officer in triplicate i.e. Form-16 Claim for Periodical Payment of DB

(1)   One deposit to Local Office

(2)   Second deposit to IMO

(3)   Kept for their records.

Benefit Period : If the person joined insurable employment for the first time say 5th January, but his contribution period will be 5th Jan to 31st March and his corresponding first benefit will be from 5thOctober to 31st December.

Sr. No. To be deemed as a wages Not to be deemed as a wages

1

Basic Allowance Contribution paid by employer on any pension / PF or ESI

2

Dearness Allowance Daily Allowance paid for period spent on tour

3

House Rent Allowance Encashment of leaves

4

City Compensatory Allowance Washing Allowance

5

OT Wages Amount towards reimbursement for duty related journey

6

Production Incentive Gratuity payable on discharge

7

Payment for day of rest Benefit paid under ESI

8

Night Shift Allowance Payment of Inam which does not form part of the terms of employment

9

Meal / Food Allowance

10

Suspension Allowance

11

Conveyance Allowance

 

Damages or contribution  or any other amount due but not paid in time-

Sr. No. Period of delay Maximum rate of damages in % per annum of the amount due

1

Less than 2 months

5 %

2

Grater than 2 but less than 4 months

10 %

3

Grater than 4 but less than 6 months

15 %

4

Grater than 6 months

25 %

Penalties : Different punishment have been prescribed for different types of offences in terms of section 85 :

(i)     Six month imprisonment and fine Rs. 5000/-

(ii)   One year  imprisonment and fine

And under section 85-A

(i)     Five year imprisonment and not less than 2 years

And under section 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 case where an employer deduct contribution 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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Posted by on December 26, 2012 in Statutory Compliance

 

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Compensation Management


6 Marks

 

  1. what do you understand by performance appraisal
  2. discuss the need for rewards for sales personnel
  3. distinguish between pay and commission
  4. discuss the advantages of job evaluation
  5. what are the  essentials of sound ppraisal system
  6. what is meant by commission
  7. what is meant by performance based pay system
  8. elucidate pay commissions
  9. discuss the limitations of traditional method of performance appraisal
  10. why the job evaluation is important for compensation management
  11. write basic applications of performance appraisal systems
  12. explain the classifications of compensation
  13. distinguish the basic features between wage and salary
  14. how a wage is fixed in India
  15. who are all the members in wage boards
  16. how the pay commission in summarizing the data for pay fixation
  17. define job evaluation. Distinguish it from performance appraisal
  18. what to you mean by incentive system. Discuss its features
  19. discuss balance method of wage payment
  20. what is commission salary plan. Bring out its merits and demerits
  21. how the compensation management is dealt in multinational organizations
  22. explain performance appraisal. Enumerate the trends in it
  23. discuss the measures to make a fringe benefit programme effective
  24. bring out the features of a good rewards system for sales personnel
  25. explain the traditional and new technique in job evaluation
  26. how to set a performance standard? Can we alter the performance standard frequently?
  27. explain the classifications of compensation
  28. how the wages are fixed up
  29. differentiate between pay and commission, which factors decides the decision of pay and commission
  30. write short note on “ rewards for sales personnel”
  31. list out the objectives of pay commissions
  32. how the wage board play a note in employee welfare
  33. explain ranking method of job evaluation. Bring out its merits and demerits
  34. what do you mean by incentive system. Discuss its features
  35. how will you calculate living wage and fair wage
  36. bring out the features of a good rewards for sales personnel
  37. examine the main provisions of minimum wage legislations in India
  38. discuss the performance standards of the employees in an organization
  39. what is profit sharing scheme. What types of problems do emerge in profit sharing scheme
  40. enumerate the requisites for the success of wage incentive paln

10 Marks

 

  1. explain the procedure of job evaluation
  2. how are the compensation classified. Explain
  3. discuss various theories of wages.
  4. describe executives compensation plan.
  5. elucidate the importance of pay commissions
  6. describe wage payment
  7. explain ranking method of evaluation. Discuss its merits and demerits
  8. discuss about the modern methods of performance appraisal
  9. explain salary administration
  10. discuss the need for incentives for sales personnel
  11. explain the importance of wage boards
  12. elucidate the need for compensation management in multinational organizations
  13. how managers can make a choice of performance appraisal system.
  14. discuss the new techniques involved in the job evaluation in the present scenario. What are the difficulties faced by the job evaluation during job evaluation
  15. explain the role and responsibilities of the performance appraiser at the time of performance appraisal process
  16. “ fringe benefits are normally used as a informal way rather than a ethical motivation in a company” critically evaluate
  17. “ salary administration in India is not so flexible, it is more static than dynamism” – comment
  18. discuss about the executive compensation plan and packages in India
  19. “ pay and commission are the tools equally powerful, it should be used as a double edged sword. If one is exceeding the other it will be a demotivating factor” . how do you foresee the above statement. Give suitable examples.
  20. compare and contrast the compensation management system in India companies and in multinational companies
  21. critically evaluate the functional role of pay commissions in India
  22. explain behaviorally anchored rating scales (BARS) method of performance appraisal. Bring out its steps involved and evaluation
  23. what do you mean by employees welfare and social security. What are the benefits that are provided under these schemes
  24. explain time wage method. Discuss its merits and demerits
  25. discuss the executive compensation plans and packages
  26. examine critically the role played by wage boards in the development of a wage policy for the industrial sector of the Indian economy
  27.  what do you mean by appraisal results? How does it work
  28. how will you formulate a good incentive system.
  29. describe the evolution of wage policy in India. How far wages have been standardized in India
  30. job evaluation must be case by case and industry by industry-justify this statement , how these concept of job evaluation should be practiced in each industry
  31. discuss the types and methods of incentives and fringe benefits in IT industry
  32. explain the wage and salary administration method in India
  33. how the wage fixation is implemented and  designed by the government in India. What are the pitfalls in the wage and salary administration in India
  34. explain the methods and procedures involved in executives compensation plan. How this compensation plan should be a motivation tool to the executives
  35. discuss the methods of compensation management is multinational organizations
  36. critically evaluate the role of pay commission in India
  37. Performance appraisal system in India is not much focused towards the employee orientation – agree (or) disagree. Give suitable support for your arguments
  38. explain point method of job evaluation. Discuss its merits and demerits
  39. what is cafeteria compensation plan. Discuss the situations in which this plan is more effective
  40. explain piece wage method. Bring out its merits and conditions where it can be followed effectively
  41. enumerate the incentives offered to sales personnel
  42. examine critically the role played by pay commission in compensating employees
  43. discuss the factors affecting wages
  44. what do you mean by straight salary plan? Bring out its merits and demerits
  45. what  do you mean by wage structure? What is minimum wages? How will you calculate minimum wages?
 

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Fringe benefits


1. Definition of fringe benefits

Employee benefits (also called fringe benefits) are various non-wage compensations provided to employees in addition to their normal wages or salaries.

2. Purpose of fringe benefits:

The purpose of employee benefits is to retain people in the organization and not to stimulate them to greater effort and higher performance.

3. Advantages of fringe benefits:

Advantages for employer

• Improves efficiency and productivity as employees are assured of security for themselves and their families.

• Premiums are tax deductible as corporation expense, which means savings with quality coverage.

• Helps attract and retain better qualified employees.

• Provides high risk coverage at low costs easing the company’s financial burden.

Advantages for employees

• Employees with personal life insurance enjoy additional protection.

• Confidence in company’s schemes boost staff morale and pride in company.

• Employees enjoy cheaper rates negotiated through their employer than they could obtain as an individual.

• Peace of mind leading to better productivity as employees are assured of provision for themselves and families in any mishap.

4. Types of fringe benefits:

• Premium Payments: This is the period of time a worker has worked, and payment is based on daily or weekly.

• Payment for time not worked: Which include payment for sick leave and for time during which an employee is under medical care. Payments for holiday, vacations, call back time, dressing time, portal-to-portal time and wet time.

• Payment for employee service: This include Cafeteria subsidies, union credit, house financing etc.

• Payment for special duties: Such as working on grievance redressal procedures and labour contract negotiations.

• Payments for health & Security benefits: These include retirement plans, social security payments, Saving plans, Profit sharing plans, Group Life Insurance etc.

• Other expenditure: Like holiday bonus, on educational reimbursements, employee uniforms, work cloths, supper money or meal allowance etc.

 

Ref:http://www.yourhrworld.com/formats/search/manpower-planning-template-excel/

 
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REQUEST TO INCREASE SALARY.


REQUEST SALARY INCREASE Ref: http://www.fortunehrs.com/downloads.php?metaid=14

 
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Posted by on December 25, 2012 in Personal

 

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Wages


“ 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 1[any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff and] other additional remuneration, if any, 2[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 ;
(b) any travelling allowance or the value of any travelling concession ;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment ; or
(d) any gratuity payable on discharge ;

Washing Allowance is a sum paid to defray special expenses entailed by the nature of employment and as such this amount does not amount to wages. (Ref : Instructions issued vide Memo No.Ins.III/2/1/65 dt. 8.2.1967).

This amount should be reasonable to exclude from wages.

I am giving below an extract from ESIC-Chinta Se Mukti which is very informative.

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 ALLOWANCE/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 SHIFT/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:

1. Amount towards conveyance paid or reimbursed to any employee for incurring expenses for specific duty related journey
2. 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
3. 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
4. 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 PARTIULAR 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 SERVICE 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.

COMMISSION 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.. “ 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 1[any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff and] other additional remuneration, if any, 2[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 ;
(b) any travelling allowance or the value of any travelling concession ;
(c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment ; or
(d) any gratuity payable on discharge ;

Washing Allowance is a sum paid to defray special expenses entailed by the nature of employment and as such this amount does not amount to wages. (Ref : Instructions issued vide Memo No.Ins.III/2/1/65 dt. 8.2.1967).

This amount should be reasonable to exclude from wages.

I am giving below an extract from ESIC-Chinta Se Mukti which is very informative.

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 ALLOWANCE/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 SHIFT/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:

1. Amount towards conveyance paid or reimbursed to any employee for incurring expenses for specific duty related journey
2. 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
3. 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
4. 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 PARTIULAR 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 SERVICE 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.

COMMISSION 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..

 
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Posted by on December 19, 2012 in HRD

 

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