Impact Of ESIC Amendment Format For Impact On CTC

Dear Expert,

The Employees' State Insurance Corporation (ESIC) has raised the monthly wage threshold to Rs 21,000, from the current Rs 15,000, w.e.f 1 October 2016.

Need a email format to inform about above changes and impact on CTC in a constructive way.

We are dealing with blue collared employees, I know they will not like more deduction in salary.

The employees who's salary is between 15,001 and 21,001 will now be covered under ESIC act.

Can you please help me on this draft???

I have made a draft but I don't know what impact it will make.

Draft:

Dear All,

Greetings for the day!

The Employees' State Insurance Corporation (ESIC) has raised the monthly wage threshold to Rs 21,000, from the current Rs 15,000, for coverage under its health insurance scheme w.e.f 1 October 2016.

As per the new amendment, the employees drawing monthly gross salary below Rs. 21001, will now be covered under ESIC and a deduction of 1.75% on Gross salary will be applicable. Company will contribute 4.75% of gross salary towards ESIC.

Illustration:

Deduction earlier to 1 Oct 2016 Deduction w.e.f 1 October 2016

Sr. No Gross Month Salary Deduction from Employee salary Company Contribution Gross Month Salary Deduction from Employee salary Company Contribution

1 12060 211 573 12060 211 573

2 15025 NA NA 15025 263 714

3 21000 NA NA 21000 368 998

4 22000 NA NA 22000 NA NA

Thanks....

First of all, keep in mind that there is no official notification released till now.

The effective way I followed in my company is

1. Educate or conduct bulk training session about the importance of ESI, benefits and comparison of ESI with other private medical insurances. I educated the same to Non ESI employees as knowledge sharing.

2. Assist the employees to get benefits from ESI.

3. Contact ESI to conduct Camp in your office. (If the employee strength is more than 50, they will come). Also, they can even conduct session to your employees to explain the benefits of ESI.

4. Try to make their mind that it is only beneficial to them. Showing about the employer contribution won't help to convince them.

After these steps which I have taken, now many NON ESI employees asked me that they are willing to come into ESI. Now, this latest news will give them joy. (Of course, there will be some employees who won't like it - as they never use ESI or other medical insurances)

Now, before sending official mail, give informal information to those employees between Rs. 15,001 to Rs. 21,000 about the news and convince them that they don't have any option and it is going to be followed in all the companies (this may avoid attrition and resistance).

Dear SARAVANAN,
Thank you so much for the detail mail. It will really help. I also want to know that what is the company's decision. Do they absorb everything or it is from both end. ?

Hi Hetal,
Thanks for your appreciation. Please don't mind about the company, as they will show these extra expenditure as Statutory expense in their balance sheet and reduce their tax payable.
Employer don't have any option than paying the contribution.
Small companies can change their salary structure by adding the components like Washing allowances which is exempted in ESI.

In addition, You can even express to the employer that they are exempted from Maternity Benefit Act and Employee Compensation Act for the employees covered under ESI Act.
So, for the employee who are taking Maternity Leave, she can get the salary from ESI. Employer will not pay the salary for those period.
Also, if an employee met with an accident during employment hours (from the time leaving from home in the morning and to the time reaching the home in the evening), all the expenses and compensation will be paid by ESI.

Is this upward revision from 15k to 21k applicable to Gujarat based enterprises also ?