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Labour Codes: Code of Social Security 2020 and consequent changes for ESIC Compliance

Consequent upon the notification of the Labour Codes - specific provisions, mainly the definition of the "Wages" across all Codes, the impact on ESIC Compliance - Coverage  & Contributions would be as follows"

As per section 2 (88) of Code on Social Security, 2020 (CoSS) “Wages” means all remuneration, by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, expressed or implied were fulfilled, be payable to a person employed in respect of his employment or work done in such employment and includes,-

(a)                Basic pay;

(b)                Dearness allowances;

(c)                 Retaining allowances; if any,

But does not include any other components which are listed in sub clause (a) to (k).

(a) Any bonus payable under any law for time being in force

(b) The value of house accommodation, or of the supply of light, water, medical attendance or other amenities…

(c) Any contribution paid by the employer to any pension or Provident Fund

(d) Any conveyance allowance or value of any travelling concession

(e) Any sum paid to defray special expenses entailed on him by the nature of his employment

(f) House Rent Allowance

(g) Remuneration payable under any award or settlement

(h) Any overtime allowance

(i) Any commission payable to the employees

(j) Any gratuity payable on termination of employment

(k) Any retrenchment compensation or other retirement benefit or ex-gratia payment made on termination of employment

As per the above definition and the proviso, the exclusion portion in the sub clause (a) to (i ) shall not exceed more than 50% of total salary/remuneration, but the inclusion Basic +Dearness Allowance (DA) + Retaining allowances can even  up-to 100%.

Since the COSS Code, 2020 has come into force effective from 21st Nov 25, the employees who are drawing wages up to 21000/- per month as per section 2 (88) of COSS, 2020 are to be registered under ESIC and ensure the contribution on time as per the new wages effective from the effective date.

The new wage definition to be consider for the purpose of coverage as well as contribution.

for any queries, do concact

viswanathanvasudevan159@gmail.com


Comments

Admin said…
Great insights shared in this article! In industries like construction, following proper labour law compliance for construction sites is not just a legal requirement but also ensures worker safety and smooth project execution. Companies like Digiliance are really helping businesses stay compliant without hassle.
1 April 2026 at 01:43
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