Understanding ESIC Applicability and Employee Benefits in Relation to Salary Thresholds

Dear All,

I have a question on ESIC applicability. If an employee is registered for ESI and his Gross Salary is Rs. 14000 till March. In April, his salary is increased to Rs. 17000 (Gross). Is he eligible to continue his ESIC contribution? (The employee wants to continue ESI).

Thank you.

Hi Anan,

As you have mentioned, the employee's salary was increased to $17,000 (Gross) from April onwards. Please note that this employee does not come under the coverage of the ESIC act, which applies to salaries up to $15,000 a month.

Thank you.

Dear Coolhero,

Our employee needs to continue the ESIC facility, it seems. What should we do in this regard?

Thank you.

We cannot go as per the likes and dislikes of the employees, and neither is the choice of the employee validly justified as per the ESIC slab. If he still insists, then keep his gross salary of 14,000 on paper, and the rest amount can be paid to him as cash on a voucher basis as miscellaneous expenses. In this way, he can enjoy the ESIC benefit as well as the salary hike given to him.

Dear Anan,

In April/October, less than 15000 should be contributed by the end of the contribution period. Employees who are registered for ESI cannot be eligible for contributions starting from April/October onwards, even if they are willing to do so.

V. SUBBARAO
Email: subbaraovenkat.subbaraovenkat@gmail.com

Hi Anan,

The contribution period for ESIC is from 1st Oct to 31st Mar. In this period, his salary was Rs. 14000. According to ESIC rules, for salaries above Rs. 15000, the employee is not eligible for ESIC contribution. Therefore, this employee is not eligible for contribution since April onwards.

Thanks,
Rupali

Hi,

Thanks for your kind reply. I have another doubt.

The employee's CTC is fixed at Rs. 15,450, which includes the employer's PF contribution of Rs. 780. Can you confirm whether the employee is eligible for ESI or not?

Regards,
Anan

Dear Anan,

ESI is calculated based on the components of the salary sheet. In this case, the Employer's share of PF will not be included in the salary sheet. Therefore, his salary will be 15450-780=14670. This employee will be under the purview of ESI.

We will not see the employee's likes and dislikes in the context of Statutory Applicability. But instead of ESIC, you need to provide some medical benefits to him and his family members. For that, we need to tie up with one insurance company.

You can give the increased amount of Rs. 2001/- as Medical/Tel. or Conveyance reimbursement. In this case, his ESI will remain the same.

No, he or she will not be eligible for ESIC as the contribution of ESIC & EPF is calculated from your fixed salary and deducted from it. In other words, contributions are also included in your fixed salary.

For further queries, please contact:

09967410119

Dear Sir,

An employee crosses Rs. 15,000 in salary per month, he will come out of the purview of the ESI Act. If he crosses the salary in the middle of the contribution, his contribution recovery will continue for the balance 3 or 4 months as the case may be. In this case, he will continue in ESI up to September because he has crossed Rs. 15,000 in April. Whether CTC or in any case, if his salary crosses Rs. 15,000, he will be out of the purview of the act.

D. Gurumurthy
LL. HR & IR Consultant
Hyderabad.

ESI Eligibility Criteria

Is the ESI ceiling based on a gross salary of Rs. 15,000 or the earned gross salary? On what basis can we determine if an employee is eligible for ESI?

If an employee is earning a monthly gross salary of Rs. 16,000, but the earned gross salary monthly is Rs. 14,800, is he eligible for ESI?

Regards,
Raghava

Your employee has already exceeded the limit of the gross amount of ESI, which is ₹15,000 per month, but still, he wants medical benefits. This is an opportunity for you to prove yourself and convince him as per the ESI Act.

Prove yourself as a mature and experienced HR professional. Do one thing: ask management for a Group Insurance Policy, which will be beneficial for all employees covered under the policy. Your employees will surely appreciate you.