ESI Deduction Dilemma: Does It Continue if Salary Exceeds 15000?

Hi all members,

One of our employees' gross salary was below 15000/-, therefore, I have made his ESI contribution in April 2016. However, in May, his expected gross salary exceeds 15000/-. Please tell me, will ESI be deducted until October 2016 even if the gross salary exceeds 15000/-?

Best regards,
Karan Jaoker

Employee Coverage Under ESI Act

Sir, yes, the said employee will definitely be coverable until September 2016 (closing month of the Contribution period) because he was covered or coverable in the first base month of April 2016. The contribution will be payable on total wages as defined under the ESI Act, 1948, even though during the period from May to September 2016, his wages will exceed Rs. 15,000.

Relevant Sections of the ESI Act

Please see the relevant sections, namely the Proviso to Section 2(9) of the ESI Act, 1948, and Rule 50 of ESI (Central) Rules, 1950. For Contribution periods, please see Regulation 4 of ESI (General) Regulations, 1950.

Dear Karan Jaoker,

Please review the components of ESIC salary that you mentioned as being greater than ₹15000 per month. Overtime (OT) cannot be considered a component in this case. Instead, there should be some fixed allowances that can be considered part of the Gross Salary component to qualify for relief from ESIC.

Thank you.