Amendment 1st July 2019 ESI - reduction of 1.5% in employers% contribution to 3.25% from 4.75% and 1% reduction in employees’ contribution to 0.75% from 1.75% - CiteHR
Alokwelfare
Welfare Officer
Loginmiraclelogistics
Asso.prof.(commerce & Management) Pg
Hr.krishnakumar
Dy. Manager (hr)

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Government has reduced the contribution of EMPLOYEES’ STATE INSURANCE ACT- (ESI) Act to 4% from 6.5%, It will help to increase the take home salary of Our workers. This includes a reduction of 1.5% in employers% contribution to 3.25% from 4.75% and 1% reduction in employees’ contribution to 0.75% from 1.75%.
It is effective from from 1st July 2019 .
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Hi Alok Singh,
Pl.note the Employers' contribution is reduced from 4.75% to 3.15% (not to 4.00% as you mentioned). Similarly Employees' contribution reduced from 1.75 % to 0.75% . Plesse see the notification copy attached in this regard.

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File Type: pdf ESI Gazette Notification-Contribution Rate Reduced From 4.75 to 3.15 Percentage.pdf (294.2 KB, 106 views)

@kumar S please read the carefully and i also mention as .75&3.25% employees would now have to contribute just 0.75% of their salary (basic plus allowances), instead of the existing 1.75%, while the employers contribution will come down from 4.75% to 3.25%, according to the ministry of labour and employment.
Hi Alok singh,
You stated as -
"Government has reduced the contribution of EMPLOYEES’ STATE INSURANCE ACT-
(ESI) Act to 4% from 6.5%, It will help to increase the take home salary of Our workers
This includes a reduction of 1.5% in employers% contribution to 3.25% from 4.75%
and 1% reduction in employees’ contribution to 0.75% from 1.75%
It is effective from from 1st July 2019 .
21st June 2019 From India, New Delhi."
" (ESI) Act to 4% from 6.5%,"
First of all, it was NOT 4% but 4.75% which now reduced to 3.15%
Secondly,
" ...while the employers contribution will come down from 4.75% to 3.25%, according to the ministry of labour and employment.
Today From India, New Delhi
Alok Singh.
Welfare Officer"..
Unquote -
Again you mentioned ..from 4.75% to 3.25% which is NOT, whereas it should be read as "from 4.75% to 3.15% "
The notification extracted here below for your ref:
" ... (a) in clause (a), for the words “equal to four and three-fourth per cent of the
wages”, the words “equal to three and one-fourth per cent. of the wages” shall be
substituted; (Unquote 31/4th ie. 3.15%)
(b) in clause (b), for the words “equal to one and three-fourth per cent (Unquote- 1.3/4th%) of the wages”, the words “equal to three-fourth per cent (Unquote- 3/4th ie., 0.75%) . of the wages” shall be substituted.
[F. No. S-38012/01/2016-SS-I)
VIBHA BHALLA, Jt. Secy. "
Dear Sir,
Due to amendment / judgment on wage components, we wish to restructure the wage structure to get benefit from PF & ESI, which are as follows:
Wage / Salary Components
---------------------------------
Basic
HRA
Washing Allowance (Max-1000)
We propose to restructure the total gross salary into the above three components by fixing 61%, 35% and 4% respectively.
We wish to know whether the above proposed salary structure will satisfy in view of changes in PF & ESI calculations. Currently, we are having more than 5 wage components and we wish to rationalise and restrict them to three components as mentioned in my previous querry. The components such as HRA and Washing Allowances are already existing in our current wage structure.
Even though if we implement the proposed salary structure, the TAKE HOME SALARY of the employee / worker will also be reduced to that extent. It is a major concern for the industry in the case of low salaried employees / contract workers, whose salaries are being protected in terms of the Minimum Wages Act.
Also we seek clarification / best advice on the other variable allowances such as Attendance Bonus, Night Shift Allowance, Overtime wages etc., in view of PF judgment / ESI amendment.
Further, we wish to know how to calculate Gratuity and Leave Encashment of an employee? Whether it is only on Basic Wage or PF Gross (Basic + Children Edn. + Washing Allow.) as directed by SC .
In view of the above your expert advice is helpful to the HR community to avoid any show-cause notices from the respective departments.
Regards,
Krishna Kumar
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