ESIC Eligibility Dilemma: Can an Employee Continue ESI After a Salary Increase?

ESIC Applicability Question

I have a question on ESIC applicability. If an employee is registered for ESI and his gross salary is Rs. 14,000 till March, and in April, his salary is increased to Rs. 17,000 (gross), is he eligible to continue his ESIC contribution? The employee wants to continue ESI.

Thank you.

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 ₹15,000 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.

Regards, V. SUBBARAO
Email: [Email Removed For Privacy Reasons]

The contribution period for ESIC is from 1st October to 31st March. During this period, his salary was Rs. 14,000. According to ESIC rules, for salaries above Rs. 15,000, the employee is not eligible for ESIC contribution. Therefore, this employee is not eligible for contribution from April onwards.

Thanks,
Rupali

Hi, thanks for your kind reply. I have another doubt.

Employee's CTC and ESI Eligibility

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 15,450 - 780 = 14,670. This employee will be under the purview of ESI.

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

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

Dear All, I have a question on ESIC applicability. If an employee is registered for ESI and his Gross Salary is Rs. 14,000 till March, and in April, his salary is increased to Rs. 17,000 (Gross), is he eligible to continue his ESIC contribution? (The employee wants to continue ESI).

Eligibility for Continued ESIC Contribution

No, he or she will not be eligible for further contribution because the employee's wages exceed Rs. 15,000.

No, he or she will not be eligible for ESIC as the contribution of ESIC and 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: [Phone Number Removed For Privacy Reasons]

An employee who earns more than Rs. 15,000 per month will no longer fall under the purview of the ESI Act. If an employee's salary exceeds this amount in the middle of the contribution period, the contribution recovery will continue for the remaining 3 or 4 months, as applicable. In this case, the employee will remain under ESI coverage until September, as he exceeded Rs. 15,000 in April. Regardless of whether it is CTC or any other case, if the salary crosses Rs. 15,000, the employee will be out of the purview of the act.

Regards,
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 for 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.