ESIC Eligibility Confusion: Should Employees Contribute for 6 More Months After a Salary Hike?

If the employee received an increment in the month of Jul-2016 with effect from Apr-2016, who was ESIC eligible before the increment, now, after the increment, crossing the ESIC eligibility. However, as per ESIC rules, the employee has to share the next 6 months for ESIC contribution. Is this correct? I need urgent help/reply.

In the situation mentioned, the employee will remain coverable up to the close of the current contribution period, even if their wages have exceeded the coverable limit of Rs. 15,000. Contribution must be deducted on the total amount of wages during this period, regardless of whether it exceeds the coverable limit from July to September. The current contribution period will end on 30th September. Please refer to the relevant provisions of the ESI Act, 1948, and the rules/regulations framed thereunder.

If any contractual worker crosses the ESI limit and the company wants the same benefits as under ESIC, what is the best course of action for the company without impacting costs?

Pradeep

You have rightly conveyed the provisions of the scheme to remain a contributor until the close of the currency period, and employees and employers are liable to pay contributions even beyond the ceiling limits of Rs. 15,000/-. For example, if the salary is increased to Rs. 20,000/- per month, the contribution is also payable on Rs. 20,000/- per month. However, I am puzzled as to why the benefit calculations are restricted at the ceiling limit. The contribution is payable at Rs. 20,000/-, but the benefit is limited to Rs. 15,000/-. I could not understand the logic.

Regards, P K Sharma

Dear Rajiv,

You can opt for a Workmen's Compensation policy from any General Insurance Company. However, when it comes to comparing the benefits on par with ESIC, it is unlikely that you will find a match. ESIC provides benefits without any limits, whereas General Insurance policies have certain restrictions in place.

P K Sharma