Is It Mandatory to Pay ESIC Contributions for Salaries Above Rs. 15,000?

Dear Seniors, is it mandatory to pay ESIC contributions upon the limit of Rs. 15,000?

Regards,
Kunal

ESIC is not mandatory above ₹15,000 per month.

Regards,
Tushar Swar

You mentioned that ESI is not mandatory above 15k. Does this mean that it is optional above 15k? I apologize if my words seemed hurtful or demoralizing. I simply want to bring to your attention that sometimes our writing can be interpreted in unintended ways.

Thank you.

If an employee is drawing a salary of Rs. 15,000 per month (Gross), ESI contribution is payable. ESI contribution is not payable if an employee is drawing more than Rs. 15,000 per month, and such employees shall be outside the purview of the ESI Act.

Half-Yearly Return Submission

A half-yearly return is required to be submitted twice a year. The half-yearly return for April to September (six months) is to be submitted by the 20th of October, and for October to March, it is to be submitted by the 20th of April. This half-year is referred to as the contribution period.

During the contribution period mentioned above, if the salary of an employee exceeds Rs. 15,000 per month, ESI contribution shall be paid until the end of the contribution period, despite exceeding the salary ESI limit. The concerned employee shall receive ESI benefits until the date of the next contribution period.

If you have any queries, please do not hesitate to contact me.

Regards,
Sibabrata Majumdar
Management Consultant Legal & HR
Kolkata
[Phone Number Removed For Privacy Reasons]

Dear Kunal, don't worry. I am not misunderstanding you. I got your query, and the question you raised is valid, and I appreciate that.

The Employees' State Insurance Act, 1948

Under Section 2, Definitions, Sub Clause 9 (III), B, & 10 "Employee":

1. [or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), and includes such a person engaged as an apprentice whose training period is extended to any length of time] but does not include:

- (a) any member of the Indian naval, military, or air forces; or

- (b) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government:

Provided that an employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period.

(10) "Exempted employee" means an employee who is not liable under this Act to pay the employee's contribution.

Regards,
Tushar Swar

ESI Compliance Guidelines

1. ESI is applicable to every establishment with 10 or more persons, irrespective of the wage limit. The establishment must obtain a code under ESIC provisions without fail.

2. As per ESIC provisions, every employer with gross wages less than or equal to Rs. 15,000 per month is covered under ESI provisions.

3. The employer must contribute 4.75% of the monthly earned gross wages and deduct 1.75% from the employee's end.

4. Both contributions must be remitted on or before the 21st of every month.

5. No separate hard copy of half-yearly and annual returns are required to be submitted to the regional office. Filing the monthly return online and submitting self-certification is sufficient compliance under ESIC.

I hope these points help you understand the compliance procedure.

Thank you,

Regards,
Ashok Kumar Gundla
Sr. Associate - Labour Laws Compliance Management
Metier Advisory Services Pvt. Ltd
Mobile: [Phone Number Removed For Privacy Reasons]

Okay, fine. It is agreed that during the contribution period, if an employee's salary exceeds Rs 15,000 per month, ESI contributions shall be paid until the end of the contribution period. However, in the case where the salary exceeds the ESI limit, it is unclear whether the contribution should be based on Rs 15,000 or on the total salary earned plus Rs 15,000. If it is based on the latter, please provide any written explanation or notification in support of your statement.

Regards,
Bhupinder

If an employee earns Rs. 16,500/- including overtime of Rs. 1,000/-, should ESIC be deducted on the whole amount?

ESI is deducted on the monthly gross drawn, including overtime. Even if the monthly gross drawn exceeds Rs. 15,000 with the overtime amount, you need to deduct ESI on the gross amount, including the overtime.

Regards,

Dear Tushar, you mentioned that ESI is not mandatory above 15k. Does this mean that it is optional above 15k? "No mandatory ESIC above 15k." - Neeraj Bansal

If an employee receives wages/salary exceeding INR 15,000 per month as gross salary and also receives overtime pay in addition to this amount, ESI contribution is not required to be deducted due to the wage ceiling restriction.

Regards