Salary Increase and ESI Contribution: When Does the Exemption Start?

Dear All,

I have an issue in my organization where one employee joined with a gross salary of 8500/- per month, and after some time, it is now 11000/-. Previously, we contributed to ESI for him as per the ESI rule. According to the rule, he is exempted. Will this be effective from the increment month or not? If not, for how many months do we have to contribute to ESI for the employee? Under which section or according to which law will this work? Please specify the law, section, or rule.

Regards,
Manmath

Manmath,

It is not mandatory to contribute ESI to a particular employer once the gross crosses 10000/- per month. It is purely at the discretion of the employer.

Dear Mamath,

It is not the case that if the salary of any employee exceeds more than 10000/- per month during the contribution period, then you have to deduct ESI on 11000 (in your case) and deposit the same until the end of the contribution period, which is from April to September and October to March. Please refer to Section 2(9) of the ESI Act, 1948, for the definition of an employee.

Thank you.

J. S. Malik

Dear Manmath,

During the half-yearly contribution period, which is from April to September or October to March, assuming that the salary was Rs. 8500 in April and May, and the increment was from June onwards to 11000. Earlier, the contribution was based on 8500, but now it will be on 11000 until September (that is up to the half-year end).

Bala

Dear Sahoo,

As per my knowledge, if an employee is covered by ESI and then his salary increases to more than ₹10,000.00 per month, we have to deduct ESI contributions for that particular period. However, the deduction will be based on ₹10,000.00 and not on his actual salary, whether it is ₹11,000 or ₹100,000. It does not matter.

Thank you,
Neeraj

Dear friend,

When an ESIC-covered employee crosses the salary limit of Rs. 10,000, he ought to contribute until the contribution period ends. From the next contribution period, he will be treated as an exempted employee.

For example, Mr. X is drawing Rs. 9,500 in April 2008 and contributing to ESIC for April and May. In June 2008, he receives an increment of Rs. 1,500, making his total earnings Rs. 11,000. In his case, he has to contribute until September 2008 for the entire earning.

Thank you.