ESI Eligibility Confusion: Should Subsistence Allowance Be Considered for ESIC?

Dear Seniors, I am an HR officer in a manufacturing company. We have suspended a few employees due to misconduct in the workplace. As per our standing orders, we are providing a subsistence allowance of 75% of the gross salary for more than 90 days while the inquiry is still in process.

ESI Eligibility Query

My question is whether ESI eligibility is based on their gross salary or on the gross of the subsistence allowance. For example, if his gross salary is Rs. 15,500/-, which exceeds the ESIC limit, but his subsistence allowance is Rs. 11,600/-, which is within the ESIC limit, should we consider it for ESIC?

I am eagerly awaiting your reply.

Thank you.

The question you have raised is difficult to answer because such situations are very rare. As mentioned, you are paying some employees a subsistence allowance of Rs. 11,600 per month, i.e., some percentage of the wage, and the rest is payable on the decision of the case if it is decided in favor of the employees. Therefore, in my opinion, the employees may not be coverable at present until the decision of the case. However, if the employees fail to win their case, then they will be coverable, and contributions are payable in respect of said employee from the date the employees are placed under suspension.

To be on the safer side, I suggest you take up the matter with the appropriate Regional/Sub/Divisional Office of ESIC, where your unit is covered, by providing all the relevant facts and asking them to advise you on the matter immediately to avoid any levies of interest and damages for late deposit of contributions in respect of said employees.