Madhu.T.K
Industrial Relations And Labour Laws
Harsh Kumar Mehta
Consultant In Labour Laws/hr
Srinath Sai Ram
Hr Manager
+1 Other

Dear Seniors,

I have query with regards to ESIC contribution and benefit in the below case study:

1) If the first contribution of an employee is deducted in the month of March 2017 (ie. he falls in the contribution period 1st Oct to 31st March) then can he take benefit for the entire period of 1st July 2017 to 31st December 2017. Or is there a fix nos. of ESIC contribution to take benefit.

2) suppose if the employee or family member met with an accident or get ill in the month of April 2017 will he be able to take the benefit of ESIC.

3)Suppose an employee who is a member of ESIC is not able to contribute to ESIC for the entire period of 1st Oct to 31st March due to absence will he be able to take the benefit of ESIC. And also does the cause of absence plays any role (for eg case 1:he is absent due to illness/ or any other reason but not taken any illness benefit of ESIC, case 2: He is absent due to illness but is taking illness leave benefit from ESIC)

4)An employee salary is revised in the month of may 2017 and his gross salary is above 21000 but the revision is with effective from April 2017. But since his salary was 19000 gross at the time of processing April salary his contribution was deducted.So as per rule now he will have to contribute to the entire period of April to Sept 2017. So during this period hid contribution will be as per 19000 or his revised gross.

5)Suppose the gross salary of the employee is 22000 which include a monthly production bonus of 2000.This bonus is paid to employee only in the month he achieve the target. So will this component be considered to determine the ESIC eligibility of the employee.

Please answer to each case by mentioning the case number to avoid confusion.
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1. Sir,the issues relating to eligibility for claiming of various benefits under ESI Act or other laws are questions of facts and hence it is difficult to answer the same correctly. Further you have not mentioned as to what is meant by term "benefit of ESIC". Which type of benefits the insured person want to get from ESIC ? Production Bonus paid monthly is coverable as wages under said Act and contribution is required to be paid on such wages provided the employee is coverable under said Act in the base month of start of contribution.

2. It is also important that the insured person who want to claim certain benefits must know as to for how much days he/she has actually contributed in ESIS since the eligibility for benefits depend on the actual contributions. Instead of raising such long queries/questions, it will be more better if the claimant insured person may contact the Branch Office Manager of ESIC to which he/she is attached alongwith his/her ESIC Identity Card to know the exact position. Branch Manager ESIC is the appropriate authority to say finally in such matters.

3. It will be more better if you may go through the system of contribution periods and benefit periods and also download necessary literature on various benefits and contributory conditions from the website of ESIC and go through the same and if still there is some issue raise the same again with complete details of contributions paid etc.
Dear Harsh Sir,
Thank you for your revert. Please note this query is not about any individual employee. This query came to me while I was reading about ESIC. As per ESIC one of the contribution period is 1st October to 31st March and the benefir period for this contribution is 1st July to 31st December. so my query is clear If a employee's first contribution to ESIC goes in March will he be able to take benefit for the entire period of 1st July to 31st December or he will have to wait till next benefit period.
For getting medical benefits there is no contributory and benefit period conditions but it is available to an employee from the day one onwards. However, in order to be eligible for cash benefits (sickness benefit) he is expected to contribute for 78 days in the contribution period. That means if he has contributed only for 31 days in the month of March, 2017, he will not get cash benefit in the benefit period. For this person the benefit period shall be January 2018- June 2018 and not Oct- Dec, I presume because for a new employee the first benefit period will start after approximately 9 months of his first contribution month.

In the case of accident to employee while on duty, the benefit will be available even if he has not entitled to sickness benefit. However, for the accident taken place outside the course of employment or for the accident caused to family members only medical benefits will be available.

An employee covered will have to be covered till the end of the contribution period irrespective of any increase in the salary above the wage ceiling (of Rs 21000) Therefore, if the salary is increased in May, he will be covered till Sept, 2017.

Madhu.T.K
Consequently, it is suggested to increase Salary for ESI Covered Employees either from 1st April/1st October, to avoid such situations.ESI Insured Employee should log in to ESI IP Portal to know about eligibility of various benefits
Dear Seniors ,
Thank you Madhu sir and Srinath sir for explaining it so simply. One query of mine was if an employee salary is 19000 till May 2017 and in the month of June its revised to 22000. Then ESIC need to be deducted till sept 2016 which I am aware of. But will this deduction from june 2017 will be on 22000 or only on 19000.Do we have any option to keep a block of 21000 in such cases.
Please answer to my below query also.
5)Suppose the gross salary of the employee is 22000 which include a monthly production bonus of 2000.This bonus is paid to employee only in the month he achieve the target. So will this component be considered to determine the ESIC eligibility of the employee.
1. When salary exceeds Rs 21000, the contribution payable till the end of the contribution period should be calculated on the exceeded salary and not on the salary that this person was getting before this increase/ change took place. Therefore, contribution should be on 22000 and not on 19000 NOR On 21000.

It is to be noted that though there is a wage ceiling for coverage of an employee, there is no limit for wages for contribution. Therefore, contribution is to be paid on the total wages without putting any cap on the wages like rs 21000.

2. If the frequency of payment of incentive is more than 2 months, the same can be excluded for coverage and contribution. But in case it is payable every month it should form part of ESI qualifying salary. It is immaterial whether the person has earned it or not. If the terms of employment provide that the employee is entitled to a certain amount as incentive every month it should be part of wages even though the payment is purely based on achieving targets. But it should not be notional but actual amount paid or payable.

Madhu.T.K
Sir, if the Production Bonus is paid every month as per terms and conditions of employment and is not in the form of Over-Time, then on including Rs.2000/- every month (as per example given above) if his wages exceeds Rs.21000/-, ( i.e. wage limit) such employee, in my opinion, can be excluded for compliance. This is however, subject to condition that if in any month production bonus is not paid, then his wages will be again reduced to coverable limit, and in such situation said employee will again be coverable till expiry of that contribution period.
Dear Seniors,
While referring the previous talk in cite HR I found below discussion. Just wanted to know if its true (please ignore the 15000 limit as the discussion is before the amendment):
"Washing Allowance shall be taken in to consideration for ESI Eligibility i.e. 15000 gross salary but no ESI shall be deducted on Washing Allowance.
Its not a wages under ESI act."
It should be corrected as washing allowance being an allowance which is excluded from the scope of wages, it should not be considered for deciding coverage and also for contribution. Madhu.T.K

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