# Earnings of a Worker
## Concept
Earnings = the net amount accrued to the worker for his/her labour — including amounts the worker will receive in the future (such as PF on retirement), but excluding statutory and personal deductions of the worker's own money.
## Build-up of Earnings
| Step | Component |
|---|---|
| Basic Pay | |
| + | Dearness Allowance |
| = | Basic + D.A. |
| + | Other Allowances |
| + | Bonus / Commission |
| + | Other cash payments (note: Overtime is generally excluded because it's not earned regularly) |
| + | Employer's contribution to PF & ESI (earned by worker, received in future) |
| = | Gross Earnings |
| − | TDS |
| − | Professional Tax / Statutory Deduction |
| − | EMI deduction for any loan |
| − | Any other deduction (e.g., excess contribution) |
| = | Earnings of Worker |
Note: Employer's contribution to PF & ESI is retained as part of earnings because the worker will receive it on retirement — it has been earned, just not yet received in cash.
## Earnings per Day — Important Rule
If the question asks "Earnings per day":
- Do NOT deduct the employee's contribution to PF — he has earned it, only invested it in PF.
- DO add the employer's contribution to PF — he has earned it, even though he'll get it in future.
## The Three Concepts — Side by Side
| Concept | Question it answers | Includes employer's PF? | Deducts employee's PF? |
|---|---|---|---|
| Gross / Net Pay | What did company pay him? | No (Gross), Net = after all deductions | Yes (in Net) |
| Labour Cost | What did the company spend on him? | Yes | No |
| Earnings | What did the worker earn? | Yes | No |