Understanding ESI Contributions: What Counts and How It Affects Employers?

Dear all,

Q1: Out of the following, what can we include in ESI contribution calculation?
1. Bonus
2. Arrears
3. Overtime

Q2: If after an increment, the salary exceeds Rs. 15,000, does the employer have to pay their contribution until the end of the contribution period, or will they be exempted?

Q3: Can the same company that has ESI also adopt a Workers' Compensation policy? What is the relationship between the two?

Please reply.

Point 1: We will include only arrears and overtime. Bonus will be exclusive.

Point 2: ESIC contribution will be made at the end of the ESI contribution period.

Point 3: What is WC?

1. Bonuses and arrears of salary paid will not attract ESI, but overtime wages will attract ESI contributions.

2. In respect of employees whose wages exceed Rs 15,000 (or such higher limit as the Corporation may prescribe in the future) during the contribution period, contributions should be paid until the end of the contribution period.

3. Workmen's Compensation Policy
Workmen's Compensation Policy is a policy taken to cover risks of death or disabilities incurred during the course of employment. In respect of employees covered under ESI, this risk will be borne by the ESI Corporation. Therefore, concerning employees covered by ESI, the employer need not take a separate policy covering such risks but can limit it to those who are not covered by ESI.

Regards,
Madhu.T.K