Confused About ESI Deductions for Employees Earning Over 15k? Need Clarification!

We have appraised a few of our employees in June for whom ESI was applicable. We have paid their ESI for April 2012 and May 2012 and do not need to pay it from June 2012, as the salary has increased to more than 15,000/-. However, our consultant told us that according to ESI rules, since we have paid for the first two months in this six-month period, we have to pay ESI for the remaining four months, June-Sept 2012. I don't understand why we need to pay ESI when the employee is earning more than 15k per month, and it is not going to benefit the employee or employer.

Please let me know what the rule exactly says regarding this. Any help is appreciated! Thanks!

Regards

Your consultant is right; you are bound to pay ESIC up to complete the current contribution period (September 2012). After that, you can opt for coverage outside of ESIC. This is as per the ESIC Act.

As Ashok said, your consultant is correct. There are two contribution periods, each of six months' duration. Once paid in this block, you should continue paying until the period is completed. Changes can only be made at the beginning of the next contribution period:

Contribution Period:

1st April to 30th Sept
1st Oct. to 31st March

Thanks,
Lakshmi

JeDhru Softech - Payroll Outsourcing

Clarification on ESIC Rules for Salary Exceeding Rs 15,000

Please find the ESIC Rules (Central) 1950 and read the highlighted area, Rule 50. The same incident occurred with our company, and I had to go to the Regional Office to solve the matter. The officials told me, "You can contribute and deduct the Employer/Employee portion in case it exceeds Rs 15,000/- per month even after the current contribution period if the employee wishes to get benefits regularly from ESIC."

With Regards,
Debanka Das
(HR-Compliance)
P.P. Marketing Solutions Pvt Ltd.

Once you have paid ESI at the beginning of the contribution period, i.e., April or September, you are liable to continue paying ESI until the end of that contribution period. Therefore, your consultant's advice is correct in this regard.

Please let me know the salary limit from which the ESI amount can be deducted, i.e., whether the salary limit has been enhanced or not.

Yours faithfully,
S. Ghosal.

Will the ESIC deduction happen on Rs. 21,000 or on the actual gross?