Understanding ESIC Contributions: Can You Access Benefits in These Real-Life Scenarios?

Dear Seniors, I have a query regarding ESIC contributions and benefits in the below case study:

Case Study on ESIC Contributions and Benefits

1) If the first contribution of an employee is deducted in the month of March 2017 (i.e., he falls in the contribution period 1st Oct to 31st March), can he take benefit for the entire period of 1st July 2017 to 31st December 2017? Or is there a fixed number of ESIC contributions required to take benefit?

2) Suppose the employee or a family member met with an accident or fell ill in the month of April 2017, will he be able to avail the benefits of ESIC?

3) Suppose an employee who is a member of ESIC is unable to contribute to ESIC for the entire period of 1st Oct to 31st March due to absence, will he be able to avail the benefits of ESIC? Does the cause of absence play any role? (For example, case 1: he is absent due to illness or any other reason but has not taken any illness benefit from ESIC, case 2: he is absent due to illness but is taking illness leave benefit from ESIC).

4) An employee's salary is revised in the month of May 2017, and his gross salary is above 21000, but the revision is effective from April 2017. Since his salary was 19000 gross at the time of processing the April salary, his contribution was deducted. As per the rule, will he now have to contribute for the entire period of April to Sept 2017? During this period, will his contribution be based on 19000 or his revised gross salary?

5) Suppose the gross salary of the employee is 22000, which includes a monthly production bonus of 2000. This bonus is paid to the employee only in the month he achieves the target. Will this component be considered to determine the ESIC eligibility of the employee?

Please answer each case by mentioning the case number to avoid confusion.

Understanding ESIC Eligibility and Benefits

1. Sir, the issues relating to eligibility for claiming various benefits under the ESI Act or other laws are questions of fact, and hence it is difficult to answer them correctly. Further, you have not mentioned what is meant by the term "benefit of ESIC." What type of benefits does the insured person want to get from ESIC? Production Bonus paid monthly is coverable as wages under the said Act, and a contribution is required to be paid on such wages provided the employee is coverable under the said Act in the base month of the start of the contribution.

2. It is also important that the insured person who wants to claim certain benefits must know for how many days he/she has actually contributed to ESIS since the eligibility for benefits depends on the actual contributions. Instead of raising such long queries or questions, it would be better if the claimant insured person contacts the Branch Office Manager of ESIC to which he/she is attached along with his/her ESIC Identity Card to know the exact position. The Branch Manager ESIC is the appropriate authority to make the final decision in such matters.

3. It would be better if you go through the system of contribution periods and benefit periods and also download necessary literature on various benefits and contributory conditions from the website of ESIC. Go through the information, and if there are still any issues, raise them again with complete details of contributions paid, etc.

Thank you for your response. I would like to clarify that this query does not pertain to any specific individual employee. This question arose while I was researching about ESIC. According to ESIC regulations, one contribution period is from 1st October to 31st March, and the corresponding benefit period is from 1st July to 31st December.

Therefore, my query is as follows: If an employee's initial contribution to ESIC occurs in March, will they be eligible for benefits for the entire period from 1st July to 31st December, or will they need to wait until the next benefit period?

Thank you for your assistance.

Sincerely,
[Your Name]

Eligibility for Medical and Cash Benefits

For obtaining medical benefits, there are no contributory and benefit period conditions. These benefits are available to an employee from the first day of employment. However, to be eligible for cash benefits (sickness benefit), an employee is expected to contribute for 78 days within the contribution period. This means if an employee has contributed only for 31 days in March 2017, they will not receive cash benefits in the benefit period. For such an employee, the benefit period will be from January 2018 to June 2018, not October to December. This is because, for a new employee, the first benefit period starts approximately nine months after their first contribution month.

Accident Benefits

In the event of an accident occurring while an employee is on duty, benefits will be available even if the employee is not entitled to sickness benefits. However, for accidents occurring outside the course of employment or involving family members, only medical benefits will be available.

Coverage Despite Salary Increase

An employee covered under ESIC will remain covered until the end of the contribution period, regardless of any increase in salary above the wage ceiling of Rs 21,000. Therefore, if an employee's salary is increased in May, they will remain covered until September 2017.

Regards, Madhu.T.K

Consequently, it is suggested to increase the salary for ESI-covered employees either from 1st April or 1st October to avoid such situations.

ESI-insured employees should log in to the ESI IP Portal to know about the eligibility of various benefits.

Thank you, Madhu sir and Srinath sir, for explaining it so simply. One query of mine was if an employee's salary is 19,000 until May 2017 and in the month of June, it's revised to 22,000. Then ESIC needs to be deducted until September 2016, which I am aware of. But will this deduction from June 2017 be on 22,000 or only on 19,000? Do we have any option to keep a block of 21,000 in such cases?

Please also answer my below query:

Suppose the gross salary of the employee is 22,000, which includes a monthly production bonus of 2,000. This bonus is paid to the employee only in the month he achieves the target. So will this component be considered to determine the ESIC eligibility of the employee?

Contribution Calculation for Salary Exceeding Rs. 21,000

When the salary exceeds Rs. 21,000, the contribution payable until the end of the contribution period should be calculated on the exceeded salary and not on the salary that the person was receiving before this increase or change took place. Therefore, the contribution should be on Rs. 22,000 and not on Rs. 19,000 or Rs. 21,000.

It is important to note that although there is a wage ceiling for the coverage of an employee, there is no limit for wages for contribution. Therefore, the contribution is to be paid on the total wages without imposing any cap on the wages like Rs. 21,000.

Incentives and ESI Qualifying Salary

If the frequency of payment of incentives is more than two months, the same can be excluded for coverage and contribution. However, if it is payable every month, it should form part of the ESI qualifying salary. It is immaterial whether the person has earned it or not. If the terms of employment provide that the employee is entitled to a certain amount as an incentive every month, it should be part of wages even though the payment is purely based on achieving targets. However, it should not be notional but the actual amount paid or payable.

Regards, Madhu.T.K

If the production bonus is paid every month as per the terms and conditions of employment and is not in the form of overtime, then by including Rs. 2000/- every month (as per the example given above), if his wages exceed Rs. 21,000/- (i.e., the wage limit), such an employee, in my opinion, can be excluded for compliance. However, this is subject to the condition that if the production bonus is not paid in any month, then his wages will be reduced again to the coverable limit. In such a situation, the said employee will once again be coverable until the expiry of that contribution period.

Dear Seniors,

While referring to the previous discussion on cite HR, I came across the following exchange. I would like to confirm if the information provided is accurate (please disregard the 15000 limit mentioned, as it pertains to discussions predating the amendment):

"Washing Allowance shall be considered for ESI Eligibility, i.e., for a gross salary of 15000, but no ESI deductions shall be made on the Washing Allowance. It is not considered as wages under the ESI Act."

Thank you.

Washing allowance, being an allowance that is excluded from the scope of wages, should not be considered for deciding coverage and contributions.

Madhu.T.K

If ESIC leave falls in two benefit periods, how is it calculated? For example, from December to June.

Sickness Benefit Under ESI Rules

Sir, as per Rule 55 of ESI (Central) Rules, 1950, an insured person, if entitled by virtue of their contributions, can claim sickness benefit for a maximum of 91 days in any two consecutive benefit periods. Therefore, there is no issue if the sickness falls under two consecutive benefit periods. A ceiling of 91 days is observed in sickness cases. If the sickness starts on 1st December, the benefit will cease after the employee has received 91 days of benefits. It is also considered whether the insured person received any sickness benefits during the preceding benefit period before 1st December; if so, the benefit days will be adjusted accordingly.

Ceilings for Other Benefits

Furthermore, there are separate ceilings for maximum benefits regarding maternity benefits, long-term disease cases (ESB), and, I believe, in the case of accidents, there is no limit on benefit days. Once the insured person is deemed fit by the competent authority/doctor in accident cases, the payment of benefits ceases.

Role of Branch Office Manager

All such calculations are carried out by the Branch Office Manager of ESIC to which the insured person is affiliated.

Hi dear HR colleagues, could you please help clarify the query below:

Eligibility for Maternity Benefits

Emp (Insured Woman) has come out of the ESI slab from April 2018, and her contribution was paid until September 2018. ESI has not been paid from October 2018 onwards as she is no longer in the ESI slab. According to the eligibility criteria, she is entitled to benefits until June 2019, for the benefit period starting in January 2019. Currently, she is pregnant and needs to avail Maternity Benefit, with her delivery expected in May 2019.

Therefore:
1. Will she be eligible for Maternity benefit? (Maternity leave period from May to October 2019)
2. After the contribution stoppage from October 2018, will she still be eligible for cash benefits during the Maternity Leave period?

Thank you for your assistance.

Sir, eligibility for any benefit under the ESI Act, 1948, is a question of fact and depends upon the contributions deducted and paid/payable by the employer in respect of an insured person. The Branch Office of the ESIC to which the insured woman is attached is the appropriate authority to certify such eligibility. Therefore, it would be better if the insured woman contacted the said office to confirm the period of her eligibility, if any.