Employee Wants to Opt Out of ESI Without Salary Increase: How Should I Handle This?

Dear Seniors,

Kindly guide me for the following issue: An employee whose monthly CTC is Rs. 10,242/- wants to stop his ESI contribution. What should be done?

Conditions:
1. Not to increase his salary/CTC.

Kindly guide.

Mrs. Arti Singh

Dear Arti,

Nothing can be done since the ESI limit is raised to Rs. 15,000/- (i.e., Gross salary). It is mandatory for him. Furthermore, it is beneficial for him only. Explain the benefits of ESI to him and continue to pay the contributions.

Regards,
SIDMAN

Dear Aarti,

If the employee is staying in an area where ESI Scheme is not applicable, i.e., it is a Non-implemented area, exemption can be claimed from the ESI Department regarding the specific case. If he is living in an area where ESIC is applicable, nothing can be done.

Regards, Anil Kulkarni.

Hello Arti,

ESI applicability is mandatory for all individuals whose salary is gross or CTC is below Rs. 15,000. Your solution suggests that if an employee does not agree to ESIC contributions regularly, then you should first receive their resignation immediately and let the employee go. Salary will be paid on a casual basis.

Thank you,
Chander
HR Executive
Mail: chander_kmr02@rediffmail.com

Dear Arti,

ESI is mandatory for employees who are getting a salary of Rs. 15,000/- inclusive of all allowances, not CTC. This means that Employer's PF contribution, bonus, gratuity, etc., should not be included.

In your case, his salary is below Rs. 10,000/-, hence ESI is a must for him. There is no way to exempt him from the ESI cap.

Jagan,
kommagani@rediffmail.com

Dear Mrs. Arti,

One of the social security benefits is ESI. Once the organization is covered under the ESI purview, every employee who is drawing a salary below Rs. 15,000 inclusive of all allowances is included. Therefore, ESI deduction on CTC is meaningless; hence, he should not be exempt from ESI coverage.

Regards,
Venki

Dear Mr. Chander,

This is for your information that even for casuals, the principal employer is responsible for the payment of ESI. It is statutory to employ casuals who are not covered under ESI.

Regards,
Vyas

Coverage under the ESI Scheme is not a matter of choice; it is a statutory obligation that must be complied with.

To answer your question, nothing can be done to accede to the employee's request. He will continue to be covered under the ESI Scheme until he crosses the Rs. 15,000/- per month gross pay limit.

Vasant Nair

There is no chance of exempting the ESI, as the limit has been increased to Rs. 15,000/-. Another option is to increase the salary to Rs. 15,500/- so that he can qualify for the exemption.

Rangarajan
9741155458

Dear Arti,

ESI is mandatory for employees who are getting a salary of Rs. 15,000/- effective from 01.05.2010, inclusive of all allowances, i.e., whatever you pay in payroll - basic, HRA, Conv. All, etc., but not CTC. This means that the employer's PF contribution, employer ESI contribution, gratuity, bonus, etc., should not be included.

In your case, his salary is below Rs. 11,000/-; hence, ESI must be deducted, and your organization is bound to deduct ESI. There is no way to exempt him from ESI.

Regards,
Madan Mohan
9971216078
Gurgaon, Haryana

Dear Anil,

Can you please elaborate on your point? What do you mean by non-implemented area? I am new to this concept, so please help.

Regards,
Meenakshi

Hi Pavithran,

Please explain the benefits of the ESI Scheme to the employee. Inform them that their employer pays more than what is deducted from their salary. This scheme is excellent, especially for those who cannot afford the high cost of medical treatment.

Regards,

Pavithran