Understanding ESIC Contributions: How to Calculate When Salary Exceeds 15,000?

Can anyone provide any circular of ESIC regarding the salary paid for the month of November, 10,000/- ESI deducted 175/-, and during the month of December, salary paid @ 18,000/-? Please tell me the contribution for this amount, is calculated on 15,000/- or 18,000/- up to the next return period. As per my knowledge, ESIC contribution calculation should be on 15,000/-. If anyone replies, please provide the circulars. I will be thankful.

The employee is out of ESIC scope after the increment. Please stop paying the contribution.

Regards,
Viraj

After the increment, you can stop the contribution for the employee. You can save the employer's contribution, which is a benefit for the employer because the ESIC ceiling point is 15,000K.

Regards,
Ashish Kumar
[Phone Number Removed For Privacy Reasons]

Dear Ashish Golden,

After the increment, you can stop the contribution for the employee. You can save the employer's contribution, which is a benefit for the employer because the ESIC ceiling point is 15,000K.

Regards,
Ashish Kumar
[Phone Number Removed For Privacy Reasons]

Dear Ashish,

Please try to understand my question. We can stop all contributions after completing the period from October 2010 to March 2011. My question is only regarding the calculation of contribution payments on 15,000/- or 18,000/-.

Thank you.

To my understanding, ESIC has a block period during which the employee is covered, and payments cannot be withdrawn in between. Since the employee is out of the ESIC limit, the choice is with the employer to keep deductions at a minimum of 15k, maintain the facility, and simultaneously add them to Group Medical Coverage as applicable for all other non-ESIC employees. Any calculations should be based on the maximum amount limit, i.e., 15,000/-

Regards,
Shridhar

Dear,

Yes, you are correct. Increment between the contribution period means we should deduct the payment up to the ceiling wage, i.e., 15k X 1.75% basis we can deduct. Employer also should contribute 4.75% for the same wage until the contribution period ends. Once the return is filed, we will show him as a left employee.

This is my opinion.

Regards,
Sukumar R.K.
Manager - ER & IR
Lotus Footwear, Chennai

You have to remit the ESI payment for Rs. 15,000/- only, even if the salary is Rs. 18,000/-. Please refer to Mr. RK Sukumar's reply in this regard.

Regards,
S. Bhaskar
[Phone Number Removed For Privacy Reasons]

Dear Ashok,

You have to pay the ESI contribution on 18k only. Since if you go through the employee definition under section 2(9) of the Act, it clearly states that even if an employee crosses the wage ceiling, he should continue to be under coverage until the end of the contribution period. Further, the contribution will not be futile as the cash benefit will be disbursed based on the wages drawn by him in the concerned contribution period.

Hope you understand the issue.

There is no need for ESI deduction for a person who earns more than ₹15,000 per month.

Regards,
Stephen Marks.

Stop paying contributions to ESI and use Form 10 to remove the employee from the contribution list. Intimate ESI, perhaps through a declaration form from the employee.
Regards,
Stephen Marks.

ESI ceiling is Rs 15,000, so you can deduct the ESI up to Rs 15,000 (maximum of Rs 175). After increasing the salary, you can deduct the ESI on Rs 15,000 only up to the end of the half-yearly return period (up to March). After March, you can stop the deduction of ESI.

Thanks,
Sunil Sharma

As per my knowledge, if an employee receives a gross salary of more than 15,000 per month, they are out of the coverage area, so we do not deduct the ESI amount from their salary. If you have any doubts about it, please contact me.

Regards,
[Phone Number Removed For Privacy Reasons]
HR Executive

I am also of the opinion that there is no need to pay contributions once the salary exceeds ₹15,000/-. Firstly, it is challenging to track if you have many employees, and secondly, the employees would not receive any benefits.

Regards,
Viraj

You need to pay the contribution of Rs. 18,000. This amount represents his actual cash earnings, and both the Employee's and Employer's Contribution should be based on the actual salary earned.

In the next revision period, the employee will no longer be under coverage.

Regards,
Sunil

As per ESI rules, if any employee comes under ESI, they should pay the full contribution (e.g., 1st April to 30th September 1st half & 1st October to 31st March 2nd half) even if they exceed the ESI limit. If their salary is Rs.18,000, the E.S.I. amount will be Rs.315.

Thank you.

You have to report to the ESI office for this increment and can only stop ESI payment in March or October. Before this, you have to pay ESI for that employee.

Thank you.

Dear Ashok,

I am Rahul and I work at Mafoi Randstad. The question you have asked is simple. The contribution of the employee is until 31st March due to the ESI Half-Yearly return. Always remember, ESI deduction is based on the gross earned salary/wage.

As you said, the employee's salary paid is Rs. 18,000, so the ESI deduction is on Rs. 18,000. If you have any queries, please let me know. May I ask which firm you are working at?

Thank you.

Dear Ashish, please try to understand my question. We can stop all contributions after completing the period from October 2010 to March 2011. My question is only regarding the calculation of contribution payments on Rs. 15,000/- or Rs. 18,000/-.

Contribution Payment Calculation

Dear Ashish, you have to pay the contribution at 1.75% + 4.75% on the entire salary of Rs. 18,000/- until the end of the relevant contribution period, which in your case is March 31, 2011.

Regards,
Sanagapallivr
Manager Gr I (Retd)
ESIC

1. An employee whose wages exceed the ceiling limit (Rs. 15,000/- at present) continues to be an employee until the end of the relevant contribution period (Proviso to Sec. 2(9) of ESI Act). Hence, contributions are to be paid until the end of March 2011.

2. Though there is a wage ceiling for the coverage of an employee, there is no ceiling in the definition of wages under Sec. 2(22). "Wages means all remuneration paid or payable to an employee..." Since a person drawing above Rs. 15,000/- is also an employee until the end of March 2011, all remuneration drawn by him, i.e., Rs. 18,000/- is considered wages. Hence, contributions are to be paid on the total wages earned by him and not restricted to Rs. 15,000/- as suggested by a few members.

I suggest members provide their replies only if they are sure about their correctness, and if possible, please quote the rule position. Incorrect replies only mislead others.

G.S.R. (E)- The following draft rules further to amend the Employees' State Insurance (Central) Rules, 1950 were published as required under sub-section(1) of section 95 of the Employees' State Insurance Act, 1948 (34 of 1948) in the notification of the Government of Indian in the Ministry of Labour & Employment vide No. G.S.R.164 (E), dated the 26th February, 2010, in the Gazette of India, Part II, Section 3, Sub-section (i), dated 27th February, 2010 for inviting objections and suggestions from all persons likely to be affected thereby till the expiry of the period of thirty days from the date on which the copies of the Gazette of India in which the said notification was published, were made available to the public;
And whereas the copies of the said Gazette were made available to the public on 27th February, 2010;
And whereas, objections and suggestions received from persons likely to be affected thereby have been considered by the Government;
Now, therefore, in exercise of powers conferred by section 95 of the Employees' State Insurance Act, 1948, the Central Government, after consultation with Employees' State Insurance Corporation, hereby makes the following rules further to amend the Employees' State Insurance (Central) Rules, 1950, namely:?
1. These Rules may be called the Employees' State Insurance (Central) Amendment Rules, 2010.
2. These shall come into force from the 1st day of May, 2010.
3. In the Employees' State Insurance (Central) Rules, 1950, in Rule 50, for the words “ten thousand”, wherever they occur, the words “fifteen thousand” shall be substituted.

My question here is how many of you are actually deducting ESIC contributions from employees once they are out of ESIC and paying it.

Dear Mr. Ashok,

The block period of ESIC is April to September and October to March of a financial year. In the event of an employee crossing the ceiling limit of Rs. 15,000/- in the above-referred block periods, ESIC has to be deducted until the end of the block period. In your case, the employee has drawn more wages from November, so the ESIC should be deducted until March. After March, there is no need to deduct, provided the concerned employee draws monthly emoluments of more than Rs. 15,000/-

Regards,
RAVI
09769987407

Relevant notifications are attached herewith.

Regards,
Karamjit

As per the ESI Act, you should deduct 1.75% from the ceiling amount of Rs. 15,000 and pay until the contribution period ends in March 2011. I hope this clarifies the matter.

Thank you,

Pushparaj

Though there is a wage ceiling limit for coverage of an employee, there is no ceiling limit in the definition of wages for payment of contribution. Hence, the contribution is payable on the total wages without any ceiling limit. As the cash benefit is regulated based on the average daily wages in a contribution period, such an employee gets fitted into a higher wage slab in the standard benefit table due to the payment of contribution on the total wages. (source - FAQ on ESIC- Maharashtra website)

This corrected text addresses the spelling and grammar errors in the original input and maintains the intended meaning and tone. The paragraphs have been properly formatted with a single line break between them.

Employees cannot be excluded from ESIC until the completion of the ongoing contribution period if it has already started. The rate of contribution for ESIC shall be based on the actual gross salary and not on a fixed amount of 15k.

Regards,
Anil Richhariya

The increased salary total effect up to October if the increase falls from April to October. After the increase from November will affect up to March. Thereafter, no need of coverage to ESI for the above ranged salaries 15000/- affected people.

Dear Ashok Jangra,

I have noted your point about the deduction of Rs. 18000 until the contribution ends in our practice. We are also implementing the same deduction for two other employees under similar conditions as you have specified.

Regards

We have few employees whose salary is less than 15,000 and these employees regularly make use of ESI Medical facilities for themselves and their family members. When we decided to give them increment this year, they have requested that their salary (in books) not be increased as they don't want to be out of ESI. And we don't have any other provision. Please advise?

Dear member,

Perhaps you will agree with me that the provisions of the ESI Act, 1948, and rules/regulations framed thereunder are not optional. Hence, an employee who draws wages exceeding the coverage limit is not eligible for coverage under the said Act. Whether to enhance the wages of said employees or not is necessarily an issue to be settled between management and the workers.

Thank you.

Dear Seniors,

Kindly share any guidelines on the ESI contribution continuity or discontinuity in case of an employee's wages increasing beyond the ceiling, i.e., Rs. 21,000, due to salary revision. Will the employee's ESI membership continue for them to receive benefits from ESI?

Regards,
PSLMAN