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Employer contributions

Costing

While calculating the earnings in illustration 3,Why employer's contribution was not added to workers

Maheesh 32

CA Inter

★ 410

15-Aug-20 18:58

343

Answers (5)

Earnings of workers doesn't include employer's contribution because employer's contribution to ESI or PF goes to the account of ESI or PF . The worker don't get those earnings including with wages.

Sri Varshini

CA Inter

★ 575

15-Aug-20 19:41

Sri Varshini

Earnings of workers doesn't include employer's contribution because employer's contribution to ESI or PF goes to the account of ESI or PF . The worker don't get those earnings including with wages.

Yeah then why in the first illustration employer's contribution was added to Earnings of employee?

Thread Starter

Maheesh 32

CA Inter

★ 410

15-Aug-20 23:46

In illustration 1 they have asked to calculate Effective Hourly Rate. Effective hourly rate is calculated for the purpose of the company. For company employer's contribution is an expense but for the employee it is not an income. In illustration 5 while calculating expenses to the company we will add employer's contribution because it is expense to the company.