Salary Increase and ESI Contribution: Do You Still Need to Pay for the Next 3 Months?

ESI Contribution Query for Salary Increase

If an employee's salary, covered under ESI, increases above ₹15,000 in December, is it required to contribute to ESI for the remaining three months, i.e., January, February, and March?

Regards,
Ravina

Yes, you need to continue with ESI contribution until March as the second contribution period is from October to March.

Regards,
M.V. Kannan

Dear Ravina,

The two contribution periods are April to September and October to March every year. Any employee who is covered under the ESI Act and moves out of ESI due to an increase in wages, then the employer has to continue to contribute to ESI until the end of the respective contribution period.

M.V. Kannan

Absolutely right. ESI contribution must be paid during a contribution period, even if the salary exceeds the limit. Contributions have to be paid.

Dear Ravina, As far as I know, there is no liability for contributing for the last three months. You can continue the ESI contributions as mentioned above.

Regards

In case the salary increases in Dec '10, then there is no need to do the same starting from Jan '11 onwards.

It's right! If the employee's (covered under ESI) salary increases above 15,000 in December, then it is required to contribute to ESI for the next 3 months, i.e., Jan, Feb, Mar.

Regards,
Madhu Mohan
Bangalore

If the employee's salary increases above 6500 in December, is there any rule similar to the ESIC rule for this scenario?

Hi, I am a little confused with ESI deduction. Please help me out.

If an employee draws below Rs. 15,000 gross per month, ESI will be deducted. In a month, if an employee has been paid a bonus, leave encashment, arrear salary, production incentive, or welfare benefit and exceeds the limit of gross Rs. 15,000, in this case, does ESI have to be deducted or not? If yes, from which amount should ESI contribution be considered for deduction? If not, why?

In my understanding, if the limit exceeds Rs. 15,000, ESI still has to be deducted from the gross salary. Bonus payment and welfare benefit are exempted from ESI contributions (ESI will be deducted from gross excluding bonus), and other payments will attract ESI contributions.

Kindly provide clear advice.