New to ESIC? What's the Minimum Salary for Deductions?

Hi friends, I am newly arrived in this home. I want to know what is the minimum salary for ESIC deduction. The maximum is ₹15,000/-. Please help me. Thanks in advance.

Dear Sukanta, Basically, ESIC parameters are based on the size of the factory/work station/office. If an organization has 20 or more staff, then it must provide ESIC benefits to its employees. So, please correct your question.

Regards,

Thank you for your suggestion, but my question is, what is the minimum gross salary for deducting ESIC as the maximum gross salary is ₹15,000? If an employee earns more than ₹15,000 as gross salary, then ESIC is not applicable to his/her salary. This is the maximum limitation of gross salary for ESIC. Is there any minimum limitation of gross salary after which ESIC is not applicable?

Regards,

The Act did not prescribe any minimum wage limit, as it is a welfare legislation.

Regards,
B. Saikumar HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
Tel: [Phone Number Removed For Privacy Reasons]

Clarification on Minimum Salary for ESI Deduction

Now, first of all, I must clarify that there is a minimum salary for ESI. The question is, what is the minimum salary for ESI deduction?

Under the ESI, the minimum salary for deduction is Rs. 100 per day (Rs. 2600 per month). Before that, the minimum deduction was done on Rs. 70 per day. However, the deduction from the employer would be made at 4.75% irrespective of the wages paid.

Stay cool,
Atom

Dear HR Friends, we are located in the Hospital Area. I want to inquire whether ESIC is applicable for Eye Hospital Pvt. Ltd. We have a total of 74+ employees.

I would like to add that, as per the ESI Act, a gross salary of Rs. 15,000 is the ceiling for ESI. If anyone falls under this threshold, the company is required to make ESI deductions.

Clarification on Minimum Salary for ESI Deduction

Now, first of all, I must clarify that there is a minimum salary for ESI. The question arises: what is the minimum salary for ESI deduction? Under the ESI, the minimum salary for deduction is Rs. 100 per day (Rs. 2600 per month). Prior to this, the minimum deduction was based on Rs. 70 per day. However, the deduction from the employer would be fixed at 4.75% irrespective of the wages paid.

Stay cool.

Regards,
Kunal Kumar

This is a useful update on contribution. Rule 52 does not really fix any minimum wage limit for an employee to be eligible for ESI benefits, but it only exempts the employee from paying his share of the contribution if his average daily wage is Rs 100/- or less. However, the employer is liable to pay 4.75% of such a daily average wage. That means the Act retains the employer's liability irrespective of the wage of the employee. Nevertheless, this is a useful update from your side.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
Tel: [Phone Number Removed For Privacy Reasons]

Atomz informed you about the minimum wages for ESIC. However, you should follow the rules of minimum wages. According to the minimum wages for skilled persons, the minimum wage should be Rs. 178.50 per day. So, monthly it would amount to around Rs. 4700/-.

Regards,

The Act did not prescribe any minimum wage limit; it is a welfare legislation.

Minimum Wage Limits for Calculating ESIC

Minimum wage limits for calculating ESIC vary in different states and depend on the minimum wages set in a particular state. For instance, if the minimum wages are fixed at Rs. 3600 for 8 hours, then it is calculated on the gross salary, which includes basic salary, HRA, washing allowances, and other allowances provided by the company.

Regards

Understanding the ESI Act and Minimum Wage Implications

Regarding the ESI Act, it must not provide any minimum gross wages for the deduction of ESI because if it does, then it would be against the Minimum Wage Act.

ESI Act Provisions

The ESI Act states in Section 42(1): "No employee's contribution shall be payable by or on behalf of an employee whose average daily wages during a wage period are below such wages as may be prescribed by the Central Government."

Under Rule 52 of the ESI Central Rules, 1950, employees earning up to Rs. 100/- a day as wages are exempted from payment of their part of the contribution.

Considerations for Employees Beyond ESI Limit

That being said, I must give one more point to think about: if an employee is beyond the limit of ESI (earning more than Rs. 15,000), would the establishment be liable under the Industrial Dispute Act with regard to that employee?

Stay Cool,
Atom

Understanding Rule 52 and ESI Benefits

That's exactly what I said. Rule 52 deals only with a situation where an employee is exempted from paying contributions but does not fix any minimum limit for eligibility for ESI benefits. This means the employer will also be free from the liability of paying contributions. If so, it not only militates against the Minimum Wages Act but also against the ESI Act itself.

Implications Under the Industrial Disputes Act

As regards the implications under the Industrial Disputes Act, I must say that the definition of 'employee' under the ESI Act and the definition of 'workman' under the Industrial Disputes Act are different. Each act has to be judged independently, and one cannot import the definition of 'employee' under the ESI Act into the Industrial Disputes Act to exclude him from the purview of the Industrial Disputes Act merely because he draws wages in excess of ₹15,000/- per month.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
[Phone Number Removed For Privacy Reasons]

Understanding PF and ESI Deductions

I have recently taken up a job in a generalist HR role and wanted to understand if there is an option where an employee can have both PF and ESI deducted from their salary. I mean, if an organization already has the system of PF deductions, what benefits would be added by giving ESI deductions too?

Looking forward to your response.

Thanks

Thank you, Mr. Atomz and Mr. Saikumar, for the correct inputs. So it is very much right that ESIC is not the authority which governs or dictates the minimum wages. It is a different body, the "Labour Department." Am I right?

ESIC Contribution Requirements

Now, any organization (employer) that comes under the purview of the ESI Act (10+ employees) should contribute 4.75% of the salary paid, except on the salary paid more than ₹15,000 to its employees. Employees whose salary exceeds ₹100 per day and whose salary is below ₹15,000 per month should share 1.75% towards the ESI contribution. Am I right?

PF Act and Minimum Wages

Further, the same organization comes under the PF Act if the number of employees exceeds 20. Now, the Minimum Wages Act comes into play, which is different for different areas/states. I hope I am right.

Now, if the organization has less than 10 employees, is the Minimum Wages Act applicable? (which is strictly applicable once the PF Act is applicable).

Looking forward to your feedback.

Regards,
Abhinandan.

Minimum Wage Act and EPF Applicability

The Minimum Wage Act is always applicable, whether the establishment is under EPF or ESI. Now, why is the EPF department strict about it? This is because of the court ruling that "PF must be deducted on minimum wages." However, on the other side of this issue, the EPF department cannot enforce the employer to pay Minimum Wages because they do not have the authority to do so.

For instance, if a worker's salary is ₹3,000 per month, the EPF department cannot enforce the employer to pay the worker ₹4,050 (if the minimum wage is ₹4,050). They can only enforce the employer to make the PF deduction up to ₹3,000.

Note: The Punjab & Haryana High Court has ruled against the EPF department for deducting EPF up to minimum wages. The strict rule of EPF deduction is suspended until further notification.

Stay Cool, Atom

The maximum salary for contribution to ESI is ₹15,000, as rightly mentioned by you. What should be the minimum salary?

Minimum Salary for ESI Contribution

As per the Minimum Wages Act, the employer has to pay the minimum wages laid down by the state. You cannot pay less than the minimum wages. Now, ESI is payable on total emoluments, including allowances. Therefore, to my mind, the minimum salary for contribution to ESI is the minimum wages laid down by the state.

Regards,
Securityexpert

There is no salary slab for ESIC (the ESIC Act does not provide any slab). The only consideration is the maximum gross salary for ESIC deduction. The maximum Basic (+DA) should be 6500. It could be more if the employee opts for VPF.

Thank you for your reply. I would like to inquire about the rules and regulations regarding ESIC deductions. Specifically, to whom does it apply? What is the percentage rate for ESIC deductions, etc.?

Regards,
Sanjivani

If your hospital is in an ESIC implemented area, then definitely the ESI Act is applicable with effect from 16/03/2011, with a minimum of 10 employees.

Regards,

ESIC Deduction Details

ESIC is deducted from the gross salary. The maximum gross salary eligible for ESIC deduction is ₹15,000. ESIC is deducted at a total rate of 6.5% from the gross salary. The employer's contribution is 4.75% of the gross salary, while the employee's contribution is 1.75% of the gross salary.

Hope this clarifies things for you.

Regards,
Sukanta

In your example under deductions, you have shown the employer's contribution at Rs. 4.75%, thereby indicating that you have deducted the employer's contribution from the salary of the employee. If this is the case, it is incorrect. The employer should not deduct their contribution from the employee's salary but should remit their share to ESIC from their own account.

Thank you.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai
[Phone Number Removed For Privacy Reasons]

You are correct that previously it was Rs. 70/-. The current rate is Rs. 100 per day, but do you have any hard copy from ESIC itself? Keep searching.

Regards,
Zulfi.

Attachment for Rs. 100/Day Exemption

Please find the attachment for the Rs. 100/day exemption (point no. 5 Contribution). It is called the Citizen's Charter.

Regards,
Atom

The act is applicable for those establishments where more than 10 workers are employed; then they come under the ESIC Act 1948. Here, the employee contribution is 1.75% of the gross salary, and the employer contribution is 4.75%.

Benefits of the ESIC Act

The benefits of the act include sick leave, maternity benefit, paternity benefit, disablement benefit, accident benefit, and funeral benefit, which are mandatory.

Regards,
B. SHARAN HR Admin.

Clarifying the Role of Labor Department and ESIC

It is the labor department's duty to ensure that the employer is not violating the minimum wage regulations, and ESIC has no involvement in this matter. Therefore, let's not confuse the two issues. Additionally, neither I nor you have the authority to change the act or to determine its relevance. Let's focus on providing accurate information to the community.

Stay Cool,
Atom

Both the ESIC and PF departments have taken it upon themselves to ensure that statutory dues are paid on minimum wages, irrespective of whether minimum wages are actually paid. These matters are "entangled."

We cannot change the law, but if we do not consider all aspects, we may encounter problems. Therefore, it is essential when posting on the site to include riders that render the provision of the law ineffective for practical purposes.

Hi Sukanta,

There is no minimum salary for ESIC. Any employee under our payroll must receive ESIC benefits. The maximum limit now is 21,000, not 15,000.

Thanks & Regards,
Nagarjun R
HR Admin
Papas Trading Private Limited

Hi Friends,

I am the new one. Please clarify if the minimum wage limit is fixed. Please reply to me as soon as possible.

Thanks in advance.

Regards,
Gaurav Tomar
Officer HR

Dear,

Now, the ESIC limit is ₹21,000 per month and the PF limit is ₹15,000 per month.

Thank you.

Hi Dear Gaurav,

Now, the minimum wage is $7,568.42 per month for 26 days.

The corrected text with proper spelling, grammar, and paragraph formatting:

Maximum is now <= 21000 Rs, and there is no minimum range for gross. It's deducted from the net payable working days' wages.

Shall ESIC enforce Minimum Wages Act? Does ESIC require us to pay the contribution as per minimum wages? Is this a violation of Section 2(22) of the ESIC Act? Kindly inform me about the implications of this Adhoc C-18 notice. Can I challenge this notice at the tribunal?

ESIC calculation is done based on the gross salary. If the minimum wage is 9000, then whatever an employee receives in hand after the whole month as gross salary will be used for calculation.

The employee's contribution will be 1.75% of the gross earnings, while the employer's contribution will be 4.75% of the gross earnings.

Please note that the maximum gross earning considered for ESIC is 20000 per month. Anything beyond that amount is not accepted for ESIC. In such cases, the company may choose to opt for medical insurance for the staff or workers.

Dear all,

Please make an update in your records that the ESIC limit for employees, effective April 2017, is Rs. 21,000/- gross salary. This means that employees with a salary up to this amount will be covered under ESIC.

Regards