Missed Promotion Due to Lack of PF & ESI Knowledge – Can You Help Me Learn the Ropes?

Dear Senior,

I am working in an NGO as an HR Generalist. I want to know all the rules and procedures regarding PF & ESI. I was about to be promoted in the organization, but due to not having proper knowledge of the rules and procedures of PF & ESI, I was not promoted.

As far as my work experience is concerned, I have been working here for 8 months, and this is my first job. I completed a Master's in Personnel Management from Pune University in June 2010.

I request you all to please let me know all the facts, rules, regulations, procedures, and forms - everything about PF & ESI as soon as possible.

Eagerly waiting for your replies.

Thank you.

With Regards,

Shweta Singh

Dear Shweta, how are you? Please refer to the Labour Law Books; you will gain maximum knowledge. However, as you mentioned that you are new to statutory compliance, I would like to suggest that you start by reading these acts first. If you need any assistance, we are here for you.

Best Regards,
DK Sharma

Dear Sir,

I hope you are well. Thank you for your concern. I have previously studied the EPF Act of 1952 and the ESI Act of 1948 during my college days. Please do not take this the wrong way. I am interested in understanding all the forms, rules, and regulations associated with them.

Unfortunately, I have had limited opportunities to work with PF and ESI in my current organization. Every time I express my interest in working with PF and ESI, my senior mentions complications and promises to assign me tasks related to them from the following month. This has been going on for the past eight months, and I am eager to delve into this area.

I am very keen on gaining expertise in these matters. Could you please guide me on how I can become proficient in handling PF and ESI?

Seniors, your assistance in this matter would be greatly appreciated. I eagerly await your responses.

Thank you and regards,

Shweta Singh

Kindly search PF calculation on this site. I have found the following information a few days ago, which might be helpful:

The PF is payable on Basic + DA and the encashment of EL only, not on the whole salary.

If the Basic + DA of an employee is Rs. 10,000.00, then the deduction shall be as follows:

1. Employee Share @ 12% = Rs. 1,200.00 (Deposited in A/c No.-1)

2. Employer Share @ 8.33% (Maximum up to Rs. 6,500.00) = Rs. 541.00 (Deposited in A/c No.-10)

This is the maximum limit of the amount which goes to the EPF (As the Basic is more than that of Rs. 6,500.00 in the case as mentioned above).

3. Employer Share @ 3.67% (Difference between 12% and 8.33%) = Rs. 659.00 (Deposited in A/c No.1)

4. Admin Charge payable by the employee on the Total amount, i.e., Rs. 10,000.00 @ 1.1% = Rs. 110.00 (Deposited in A/c No.-2)

5. EDLI charges payable by the Employer up to Rs. 6,500.00 @ 0.5% = Rs. 33.0 (Deposited in A/c No-21)

6. Admin. Charges to EDLI @ 0.01% = Rs. 2.00 Minimum.

If you adopt a policy in lieu of EDLI from LIC or anywhere else and get the exemption from the competent authority, then in that case, you do not have to pay the EDLI charges to the PF Department. You have to pay the Admin. Charges to EDLI @ 0.005%.

Employee State Insurance Act, 1948:

ESI: Employee State Insurance is calculated at 1.75% on the gross salary of employees whose salary is below Rs. 15,000/- per month (w.e.f 2010), and the Employer contributes 4.75% on the gross salary of the employee. The aggregate 1.75% + 4.75% is remitted to the ESI Department.

4.75% of gross salary (Employer's contribution) + 1.75% of gross salary (Employee's Contribution)

Note: Individuals earning above Rs. 15,000 gross salary are not applicable for ESI Act.

Example:

Employee Side - 1.75% of gross/month

So if the gross of an employee is Rs. 8,000/month, then the ESI contribution would be Rs. 8000 * 1.75% = Rs. 140.

Employer Side - 4.75% of gross/month

ESI contribution would be Rs. 8000 * 4.75% = Rs. 380.

Salary Structure: (Varies from Company to Company and Cities to Cities)

BASIC + DA = 25-30% of CTC / 30-35% of CTC / 40-50% of CTC

(Dearness Allowance is a component that fluctuates to handle inflation)

HRA = Maximum 50% of basic (Metro cities) 40% of basic (non-metro cities)

Conveyance Allowances = Rs. 800 (fixed) (Varies from company/place to company/place)

Other Allowances like CTC mean the cost to the company, i.e., what are all the expenses incurred by the Company for any of its employees for a particular period (monthly/yearly).

Gross pay + employer's PF + employer's ESI + bonus = CTC

CTC is the cost to the company, and the components are:

- Basic
- HRA
- CONVEYANCE
- MOBILE REIMBURSEMENT
- MEDICAL reimbursement
- All allowances
- LTA
- Employer contribution of PF
- Employer Contribution towards ESI
- Total variable incentives
- Perks & benefits
- Insurance Premium (in case of Group insurance)

Hi Shewta,

I am also advising you to read the Act. Actually, the basic things you will come to know, then you can do it.

The basic rule of ESI is that the ceiling of ESI is 15000/-. On that account, both parties contribute. One is the Employee's and the second is Employers. Both of them have different calculations; the employer pays 4.75%, and employees pay 1.75%, meaning a total contribution of 6.5%. That is the basic rule of ESI.

Despite that, what type of salary components is the employer providing? As per the act, on washing allowance, ESI should not be deducted.

Thanks and regards,
Rajesh Kumar

I am working in a cement company on a contract basis. My ESI has been deducted from my salary for the past four years, but I have not been provided with any ESI card by the contractor. Could you please advise me on what steps I need to take regarding this issue? Additionally, I am concerned about the money that has been deducted from my salary over the past four years.

I would greatly appreciate your guidance on this matter.

Thank you.

Regards

I am working as an Executive and have some confusion regarding ESI. Suppose ESI is deducted, but no one has received a card or number. In such a scenario, if an employee gets injured, how will that employee benefit, and how will the remittance be paid?

Thanks & Regards,
Radhe Shyam Singh