ESI Benefits and Temporary Salary Hikes: Will a 3-Month Increase Affect Eligibility?

In case an employee's salary increases above Rs. 15,000/- for only 3 months in a year due to increased wages paid on account of higher productivity, will he cease to enjoy ESI benefits?

In case an employee's salary increases above Rs. 15,000 for only 3 months in a year due to increased wages paid on account of higher productivity, the employee will enjoy ESI benefits up to the contribution period (meaning till 30th April and 30th September). The management has to deposit his contribution at least on Rs. 15,000.

Thank you.

Regards,

If anyone receives an increment for only 3 months and their wages exceed Rs. 15,000, we will first need to determine in which month their salary increased. For instance, if the increase occurred in a middle month like May, then the individual will remain under ESI coverage as they have already made their ESI contribution for April. Starting from May, ESI deductions will be made from their salary based on the full wages received, not just limited to Rs. 15,000.

Meenu, is this higher wages productivity-linked bonus or a permanent increase in the wage rate payable to the employee?

Dear Meenu, What I understand from your statement is that an employee has been offered an enhancement due to productivity. This means the rise is not in the form of an increment. His/Her salary rate is stable or constant. In this situation, one cannot be considered an uncovered employee under the ambit of an act. You should deduct contributions on all the emoluments, including productivity bonuses, or else you have to pay the productivity bonus in the form of an incentive with a gap of three months. Then it will not fall within the purview of the act.

Regards,
KIRAN KALE

Kiran is correct. An employee will be exempted from ESI only if there is an increase in their monthly salary by way of increment, revision, etc. In that case too, until the contribution period is over, an employee has to pay or remit their contribution to the ESI Corporation.

Regards,
R. Devarajan