Salary Increase and ESIC Contribution: Does a Raise to 16,000/- Stop Deductions Immediately?

Dear seniors, I want to know if the employee's salary is increased from 13,000/- to 16,000/-, will his ESIC contribution be stopped immediately or will it be effective after the return goes for that particular period.

Regards, Vandana

There will be two 6-month contributions, as follows:

1. From April to September — called the contribution period.
2. From October to March — called the benefit period.

When an employee's salary increases above the limit, the company has to deduct their contribution until September. From October onwards, the contribution should not be deducted.

This is how it is calculated. Got it.

Regards

Is it mandatory for every Pvt Ltd Company to include ESIC in their payroll, or does it depend on state laws? Please let me know in which business sectors it can be included, such as manufacturing, service, healthcare, etc.

Awaiting your reply.

Regards,
Chaplin

If the employee strength exceeds 10, which means more than 10, then the company must opt for ESI. It's a social security measure for employees, so it's mandatory, whether it's a manufacturing, service industry, or real estate industry. ESI is compulsory.

Thank you.
Regards.

I am working in the healthcare sector (Pvt. Ltd. firm) located in Assam, and to date, the payroll includes Basic, HRA, TA, DA, and EPF. Now, I am planning to add ESIC or Mediclaim for the betterment of employees. As far as I know, Mediclaim and ESIC are both for health insurance. Now my question is:

1. Does the Company Have to Go for ESIC or Opt for Mediclaim?
Which one is better and mandatory?

2. ESIC Coverage and Salary Limit
Does ESIC coverage stop once employees have a salary of more than ₹15,000 per month?

3. Exemption from ESI under Section 87 of the ESI Act
Is an employer eligible for exemption from ESI under Section 87 of the ESI Act? If yes, what are the criteria (as our company is a healthcare company)?

4. ESI Coverage in Remote Areas
If the area where the company is situated is quite far from the ESI dispensary, will the ESI Corporation cover the organization under the ESI Act? If yes, please help me with the name of the state located in Northeast India?

Looking forward to your prompt replies!!

Regards,
Chaplin.

Dear Chaplin, first of all, check whether your geographical area is covered under the ESIC scheme or not. If yes, then below are answers to your queries:

1. If you would like to opt for something other than ESIC, then you have to prove that the benefits of that policy are better than ESIC benefits.

2. Once an employee's ESIC coverage stops, the company has to provide health insurance to that employee as per the Workmen's Compensation Act.

3. As mentioned in point 1.

Regards,
Tushar Swar

Dear Vandana, @venugopala: The explanation given by you is wrong.

Contribution Periods and Benefit Periods

There are two contribution periods, each of six months' duration, and two corresponding benefit periods also of six months' duration as follows:

- Contribution period: 1st April to 30th Sept - Corresponding Benefit period: 1st January to 30th June of the following year
- Contribution period: 1st Oct. to 31st March - Corresponding Benefit period: 1st July to 31st December of the year following.

Additionally, even if the employee receives a salary hike above 15,000 (gross), he should contribute until the end of the corresponding contribution period. For example, if an employee gets an increment and a salary above 15,000 in May, he has to contribute until September of that year. Many organizations do not contribute until the contribution period ends because the employee would be covered under a mediclaim policy. However, as per the act, he must contribute until the end of the contribution period for that half-year. Problems only arise when an ESI inspection is conducted.

Thank you.

Dear Shenbagarajan K, you are absolutely right, there are two contribution periods, and he will have to continue the payment until he reaches the end of the cycle, i.e., either Sep or Mar.

Regards,
Savio F