ESIC Query [Thread 490866]

Hi Friends,
ESIC was deducted for my friend in a IT company since his salary was less than 15000 Rs, But even after he got increment with effect from January .
ESIC was deducted from his salary till March salary, when he inquired with payroll team.
One of the senior Payroll officer replied stating Govt will consider ESIC input once in a quarter & confirmed that ESIC will not be deducted with effect from April.
Kindly clarify the same, Thanks in advance.

Sir(s),
Kindly see proviso to Section 2(9) of ESI Act, 1948 read with Rule 50 of ESI (Central) Rules, 1952. The contribution deducted upto March, 2014, which is the closing month of the contribution period, appears to be correct.

Kathick,
As per the ESIC Act, the ESIC deduction for the employee should be done in two half yearly cycles - Apr to Sep and from Oct to Mar. The acid test is in the months of April and October. If in these two months, the employee salary is less than or equal to Gross Salary of Rs.15000/- he/she will have to contribute for remaining months of that particular cycle.In your friend case, even if your friend salary has crossed Rs.15000/- in January, he will have to contribute to the ESIC until March. Hence his company senior payroll officer has advised him accordingly. This is absolutely right as per the Act. You may inform your friend accordingly.
Regards
Nanda
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Both given answers correct. Also remember, you will contmue to get all the benefits till end of half yesr, in this case March.

Dear All,
As per Mr. Nanda, if salary of an employee has crossed Rs.15000/- in January, he will have to contribute to the ESIC until March (closing of the contribution period). Kindly elaborate what will be the wage for ESI contribution from January to March ---- either 15000 (ESI limit) or actual earned (15000+). If on +15000, please provide any written explanation / notification in support of your statement.
Regards
Bhupinder

Sir(s),

Kindly see proviso to Section 2(9) of ESI Act, 1948 read with Rule 50 & 51 of ESI (Central) Rules, 1952.

Section 2(9) defines as to who will be an 'employee' under the Act and adds such employees whose wages exceeds within any contribution period. Rule 50 lays down the wage ceiling, but also include those employees whose wages are increased during contribution period till close of contribution period. Rule 51 provides for rates of contribution.

In addition, sections 38 & 39 provides for payment of contribution in respect of all employees as defined under the Act.

If the wages of an employee are enhanced from Rs. 15000/- to Rs. 20000/- as on 1st January, he and his employer will be required to make contributions on actual wages of Rs. 20000/- at the rates as laid down under Rule 51 from 1st January to upto close of contribution period i.e. upto 31st March. There is no maximum limit of contribution under ESI Act.

In case, any of member has any doubt, I will suggest him to seek the clarification from the appropriate Regional/Sub/Divisional office of ESIC in the matter.

When the provisions of Act and rules / regulations are clear, there is hardly any necessity of any written explanation as desired by one of member in his remarks as above.

I agreed Mr. Mehta, but my query is that ........ Act does not says that contribution of the enhanced salary during the contribution period shall be on higher wages, Since the limit of ESI wage is 15000, Contribution be paid continued till the end of contribution period on the wage of 15000.
Regards,
Bhupinder

Sir,
You are free to interpret the provisions of ESI Act, 1948 and rules/regulations framed thereunder as you may deem appropriate, but for me the position is very much clear particularly as laid down under Rule 50 of ESI (Central) Rules, 1952.The contribution rates are laid down and contribution is deducted in respect of employees and the said Act/rules/regulations provides that an employee shall continue to be an "employee" upto the close of the particular contribution period during which his wages exceed to the coverable limit.

Dear bhupinderji
Kindly refer sec2(22)of the esi act, it starts with the word-- All remuneration paid or payable in cash.
This "ALL" word encompasses all the remuneration, which gives the solution to your query.
Regards
Ramesh

Dear Karthick,
Under the provisions of ESI Act -1948, we have to pay contributions of employees whose salaries are less than Rs.15,000/- per month. If any employee salary has been increased by way of increment or any other source in the middle of contribution period(April to sept & Oct to March), we will continue as a member and also remit the contributions up to the contribution period ends on March or september.The benefits are depend upon the contribution period.
Thanks & Regards,
V R RAO PULIPAKA