Understanding Pay Structures for Employees Under ESI: Can You Share Your Insights?

Hi all, can someone please help with the current/sample pay structure applicable for employees covered under ESI?

Thanks

Please note that ESI is applicable up to Rs. 15,000/- (Gross) for an employee, and it is deducted almost from the Gross Salary, except for some specific allowances. If you are providing some allowances on a monthly basis, it will obviously be applicable to all allowances.

Please specify your required pay structure so that we can better assist you.

Regards,
R B Yadav
Advocate

Ceiling value for ESIC is ₹15,000 (Gross) w.e.f. 01/05/2010. Employee's contribution is 1.75%. Employer's contribution is 4.75%.

Regards,
Ms. Mrunal Tambe

Suppose an employee's salary is ₹14,500 per month as gross. In February 2013, if he does overtime and receives an additional ₹1,000, should we calculate the ESI based on ₹14,500 or ₹15,500?

Thanks

Regards

You need to include ESI on 15500.

Overtime Allowance

In the case of the employer, as and when the employer finds the need to have work done expeditiously, in addition to the normal work during the course of the working hours, the employer offers the employee the option to do overtime work after the working hours. When an employee does overtime work, it implies acceptance of the same, thereby establishing an implied contract between the employer and the employee. Both the remuneration received during the working hours and overtime constitute a composite wage, making it a wage within the meaning of Sec.2(22) of the ESI Act. Therefore, contributions are payable on the overtime allowance. However, overtime allowances will only be considered as wages for the purpose of contribution calculation and not for determining the coverage of the employee under the Scheme.

This viewpoint was also upheld by the Supreme Court in its judgment delivered on 6.11.96 in the case of Indian Drugs & Pharmaceuticals Ltd. Vs. ESIC, in Civil Appeal No.2777 of 1980.

(Old instructions issued via memo No.3-1(2)/3(1)/68 dated 31.5.68).

Benefits: All are cash benefits except the Medical benefit in the list mentioned below:

• Medical Benefits – Self/Family
• Sickness Benefit – Self
• Maternity Benefit – Payable for a period of 12 weeks (84 days) on production of Form 18. A maternity bonus is also available, which is Rs.1000 (W.E.F. 01/04/2003) – Self
• Disablement Benefit – Self
• Dependent Benefit – Dependents
• Funeral Benefit – A one-time payment of Rs.10,000 (Amendment – 01.04.2011, earlier it was 5000) to meet the funeral expenses of the IP.

For ESI, if at the beginning of the month you have employed 10 or more employees, then you are eligible for ESI. You must apply for ESI Registration. If the gross salary of all the 10 employees is within Rs. 15,000, ESI contribution is mandatory. If any employee's gross salary is above Rs. 15,000, you can exclude them from ESI contribution.

Regards,
Lakshmi

If your establishment is covered under the ESI Act and your project is in an implemented area, then ESI is applicable. The nature of your project is immaterial. Alternatively, you may seek exemption from the appropriate government.

Regards

For the benefit of all, please share the components to be reckoned for ESI.

ESI Salary Ceiling and Components

As we are all aware, the salary ceiling for the deduction of ESIC is Rs. 15,000/- per month. Above that, it should be exempted. The components considered for the deduction of ESIC contribution should be the whole fixed allowances, inclusive of overtime. Any reimbursements should not be part of the ESIC deduction.

Thanks & regards,

Sumit Kumar Saxena

Also, I would like to ask one query: Is ESIC deduction applicable to vendors for part-time jobs done by external parties?

Hi everyone, this is Saikrishna Chunduri. I recently completed an MBA in HR. I want to know more about payroll management, attendance management, calculation of basics, ESI, PF, etc. Can you please provide me with any material in PDF format? Thank you.